July 16 Biweekly Strategy Webinar Q&A

Below, please find subscribers’ Q&A for the July 16 Mad Hedge Fund Trader Global Strategy Webinar, broadcast from Incline Village, NV.

Q: Is gold (GLD) dead, or is it just resting?

A: It is just making a pit stop on the way to $5,000 an ounce. It’s currently around $3,365 an ounce and is moving sideways. This is often what you get: in the middle of a long-term bull trend, you get a long sideways move. But nobody really wants to sell, and what’s happening is that the upside breakout in Bitcoin to new heights is drawing speculative money out of the precious metals markets into crypto plays, of which there are dozens of now. They’ve all had tremendous moves. So, gold will resume, probably when the stock market starts to go down, which could be any day.

Q: What is your upside target for silver (SLV)?

A: Well, silver broke out and did hit a new high for the year last week. What buying is happening in precious metals is rotating out of gold into silver. The ProShares Ultra Silver ETF (AGQ), which was a LEAPS we put out a year ago, is now at max profit, so if you have that position, go ahead and take your profit. I think it’s 140% profit instead of hanging on till January when it expires.

Q: With the big, beautiful bill increasing government spending and debt, are we primed for runaway inflation?

A: The answer is yes, we are. But it may take months for the markets to realize that. The thing with international trade is it takes a long time for effects to be felt, because goods have to be loaded on ships to cross the ocean, clear customs, get loaded on trucks, and moved to the stores. What companies are doing is they’re using up existing inventories at old prices before they start passing on the new, higher prices. If you go into a Subaru dealer right now, they are offering pre-tariff prices. Once they run out of inventory, the price of a Subaru rises from $30,000 to $40,000. So that shows you what’s coming our way. That is a big increase, and we’re expecting a lot of big increases. And of course, the government is trying to hide the inflation by firing three-quarters of the Bureau of Labor Statistics staff, which means they have cut the number of data points they’re collecting by 75%. And guess which ones they cut? Chinese imports because those are showing the biggest price increases. So, all government inflation data from here on can be viewed as corrupted and artificially low. If you don’t believe me, The Economist magazine in London did an excellent piece on exactly what’s happening there. And that is happening not just with inflation data, but with all other economic data as well. It’s all being trashed, wiped out from government websites, and so on.

Q: What are the best interest rate plays out there if the Fed lowers interest rates?

A: Home builders like DR Horton Inc (DHI) and Lennar Corporation (LEN), REITs like Crown Castle International (CCI), and regional banks like the SPDR S&P Regional Banking ETF (KRE). You might say small caps, but half of all small caps are banks. They’re regional banks, so the better way to go there is just buy the regional banks, and you should get serious moves on this if we do get our 300 basis points in rate cuts.

Q: What are the best tech stocks to buy on the next dip?

A: All of the AI leaders, so that would be NVIDIA (NVDA), Meta Platforms Incorporated (META), Netflix (NFLX), and Amazon (AMZN).

Q: Stocks like Schlumberger (SLB) and PPL Corp. (PPL) are showing good value. When is it time to buy?

A: Right before an economic recovery (and not just a U.S. Recovery, but a global recovery) is when the demand for oil increases, and that’s when the energy plays start to kick in again. Right now, we’re still having a price war at OPEC, so it’s a no touch.

Q: How do you suppose the fuel switch got turned off on the Boeing aircraft and the India crash?

A: Poor training. And notice that all these Boeing crashes are happening in emerging countries, where you can get a commercial pilot’s license with only 200 hours of flight time, as opposed to 1,200 hours in the U.S. and 800 hours in Europe. All you have to do is flip the wrong switch, and your engine shuts off. But the plane still should have been able to keep climbing on one engine, which means the plane was overloaded because it crashed on one engine. I’ve gotten every FAA crash report for the last 50 years, and they all have the same things in common: You get not one error, but a multiplicity of errors that compound and lead to these catastrophic crashes. Having been in three plane crashes myself, I’m something of an expert on the subject (Paris, Palermo, and Austria).

Q: What oil stocks do we buy on an economic recovery? When will it happen, if it happens?

A: If the trade war doesn’t end, there is no recovery for a start. If it does end, you will get a recovery. And you would go after Occidental Petroleum (OXY), and ExxonMobil (XOM) for the dividend, which is currently at 3.67%. You know, at some point, people are going to look for cheap stocks, and oil—along with pharmaceuticals and home builders—are among the cheapest stocks in the market right now.

Q: What is your favorite big bank right now?

A: That’s a good question. I’m buying Wells Fargo (WFC) because they’re the cheapest large bank in the market. This is because, for the last decade, they’ve been the most set back by an endless series of fines from the SEC and the FCC for their dubious business practices. They also faced capital restrictions. Getting caught stealing from churches because they were too dumb to notice is not good for business, and it’s terrible for the share price. However, the new management is now in place, and a turnaround is underway. Administration has lifted the remaining restrictions and forgiven any remaining fines as a deregulation play. Little known is that Wells Fargo is also the fifth largest buyer of their own stock in the country; they have a $40 billion budget to buy back their own shares. Wells also has a decent implied volatility on the options at 40%, and I’ll probably put out a trade alert as soon as the stock stops going down. It is up on the day after a sell-off, so I will be watching this space.

Q: Should I take profits in silver? The ProShares Ultra Silver ETF (AGQ) hit 55 last week.

A: If you have the LEAPS, yes, free up the capital. You’re at 90% of max profit, so roll it into another trade. However, long-term silver holders, hang on, I think we’re headed for the old high of $50, which we haven’t seen since the Bunker Hunt short squeeze in 1979.

Q: What would happen if Jay Powell got fired?

A: You might get an immediate rally in the bond market, and after that, they’ll crash, because that means a superheated economy and extremely high inflation, which will be almost impossible to get rid of.

Q: What is the number one contrarian play in the market right now?

A: That would be to buy dollars, the WisdomTree Japan Hedged Equity Fund (DXJ), and sell short euros (FXE) against it. It’s the most overweight trade in the world right now. We could get a reversal at any time, and it could be big, since the positions are so one-sided. It’s the lopsided classic—too many people at one end of the canoe-type trade.

To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, click on GLOBAL TRADING DISPATCH, TECHNOLOGY LETTER, JACQUIE’S POST, then WEBINARS, and all the webinars from the last 12 years are there in all their glory.

Good Luck and Good Trading,

John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

 

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