🗞 SPACs, NFPs, and Now This

WHILE YOU POUR THE JOE… ☕️
Vampire Diaries

DOGE is doing more in a month than any other government agency has done in years.

Elon and his team just raided the Social Security database. They found that there are people - drumroll - over 130 years old and up to 369 years old still “Alive” and collecting Social Security income. 👀 

So that brings up a very serious question.

Either vampires are real, and we need to start buying silver, or the government is as corrupt (if not more) than conspiracy theorists thought it to be.

I’m betting on the latter.

Speaking of conspiracies, let’s get on with today’s email 📧…

PUMPED WITH AIR
I’ve Got a Bridge to Sell You

I don’t know what’s worse, the Air Forces on Saylor, or Cohen’s skinny jeans. 🙄 

Anyway, this is the guy behind MicroStrategy on the left, and one of GameStop’s activist investors on the right.

In case you missed it, both GameStop and AMC announced they’d be investing in Bitcoin, which is not too far away from what MicroStrategy has been doing lately.

The issue is, this is only turning companies into leveraged Bitcoin funds, nothing else. 🪙 

If they're not actually making money, these companies are diluting shareholders by raising worthless capital, to then buy Bitcoin and leverage up their balance sheets to the hilts.

That means:

• Bitcoin does well, the company’s valuation skyrockets.

• Bitcoin pulls back, bankruptcy. 📉 

Now I want to bring your attention to another potential area that feels bubbly right now, and that’s artificial intelligence (AI) names today.

Especially the leader and NASDAQ darling Nvidia.

I don’ know if you noticed but pretty much all technology companies have been reporting pretty terrible earnings. I mean they’re good, but the growth isn’t enough for today’s mania driven markets. 🔥 

That should tell you all you need to know, but back to Nvidia.

If this name is going to be part of the down moves in technology, then we think it might be as a result of a discrepancy in inventory or cash flows, but of course that would need an outside force to come along and trigger it.

Queue Super Micro Computer stock. 🔎 

Don’t get me wrong, I was bullish on SMCI at the lows, but those are now far behind, and this announcement from management got me thinking. 🤔 

Why would they delay their filing date (again), this time to the day BEFORE Nvidia reports their own quarter?

Could it be that, since their one of Nvidida’s largest customer, they’re trying to delay the bad news to give the king room to breathe?

Is the entire market now convinced that Nivida is going to beat again and that’s why it’s dragging the S&P and NASDAQ up with it? 📈 

Honestly, I don’t know, and because I don’t know I am staying away from trading either of these names until we can come to a reasonable view.

Of course once we do, it’ll be known in our Twitter account.

That being said, I want you to focus on this chart right here: ⬇️ 

If you’ve been with us for a while, then you know about this one, the commitment of traders (COT) report. 📰 

Specific to the S&P 500 futures contracts, going back to the financial crisis of 2008. I want you to focus on two things mainly:

1. Red Line: Commercials (your banks and prime brokers) are now as short the index as they were during 2007-2008. 👀 

2. Green Line: Institutions (money managers and funds), which are only made up of pensions and momentum funds, everyone else has underperformed so much that they’ve stepped off.

Apart from commercials being as bearish as they were during one of the worst economic crisis in history, institutions are now “Tapped out” to the upside, meaning there’s no more inventory to keep buying here. 🤷‍♂️ 

That leaves you with a lot of downside tail risk, happens every time a single trade gets too crowded.

I guess you could say they’re thinking stocks only go up, and that bet could turn on its head really quick if Nvidia says the wrong thing in its coming earnings announcement. 🙃 

TRADE OF THE WEEK
Clear as Day

If you watched our latest YouTube video, then you would’ve had a smile on your face after seeing Ternium stock up by as much as 3.5% today on earnings. 🥳 

That’s not even cute anymore, we see a clear path now for $35-$40 as let out in our pitch.

By the way, there’s a section in that video where we pinpoint why homebuilders are doing so poorly 📉, but if you were subscribed back in September, then you’d be sitting on a pretty hefty profit from al the short positions we pitched back then as well:

Now that being said, all of these expansion readings we’ve been getting in the PMI data for construction are clearly all pointing to infrastructure and defensive construction.

That is why we’re reiterating our buys in:

• $CLF

• More $TX

• $XLI and $XLB

We’re working on the next round of stock pitches to do a deeper dive on, but bear with us as this week is going to be much more hectic than usual 😩, and I would much rather postpone a good write up than give you a half-assed attempt.

Which is exactly why I made this 3,000 word breakdown on how global macro strategies work, the same ones that got us to the short in homebuilders and the longs in primary metals above. 🫰 

You can read it here, just bring a pen and paper and make sure to hit me back with any questions you may have!

GO AND MAKE IT HAPPEN
From the Father Himself

Everyone Knows about Buffett and his strategy, same goes for most of the household investment names out there.

However, there’s no free lunch on Wall Street, if they want you to know about it, it’s because they can’t deal in the long-term nature of value investing.

John Maynard Keynes is famous for being an economist, yet few know he ran a hedge fund that pioneered this global macro strategy, and they’ve kept it hidden from you.

Hopefully today’s book recommendation 📖 can shine a light on it, along with the newsletter we plugged above (psst.. There’s a full video coming out on it, so make sure you’re subscribed).

To your success,

G. 🥃