DHUnplugged #680: Too Many Bulls

Everyone is bullish – that seems a bit overdone at this point.

Tax Trap – Watch-out!

Economic data remains strong – jobs data showing weakness (JOLTS)

Bond yields sink – herd mentality and Fed bulls working it.

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Warm Up
- So many bulls!
Deafening.... (we know what that usually means..)
- A new book for young investors - can we discuss or still a secret?
- China - credit rating issue
- My favorite charade,, scheme, scam of 2023

Market Update
- Gold at all-time high!
- Bitcoin Update - Moving
- Alt assets picking up - good or bad?
- Big money into Money markets - watch out for this trap

- Bitcoin hit $44,000 on Tuesday, its highest in almost a year and a half, fueled by bets that U.S. regulators will soon approve stock-market traded bitcoin funds.
- Bitcoin is up 55% from the year's low of $26,533 on Oct. 11.
- UP 165% YTD
- Still way off record high of $69k - Nov 2021

- Hitting ATH
-- Reasons?? Risk -off or USD sinking?
- Gold miners ETF still 10% below 2023 peak
--- Time to buy?

Rare Earth Metals
- Rare earths are a group of 17 metals used to make magnets that turn power into motion for electric vehicles, cell phones and other electronics.
- China began to rapidly expand in the industry starting during the 1980s and now controls 87% of global rare earths refining capacity
- US spots in Alaska and other western states starting to look for ways to mine - in "clean" and efficient manner
- FYI - RARE is not really rare
- Considered RARE only due to difficulty in extraction process
- These elements rarely exist in pure form; they are usually found within other minerals, making them costly to mine.

Oil Prices
- Now Sitting at $72
--- OPEC+ can't seem to agree and now concern demand waning

- Ratings agency Moody's downgraded its outlook on China's government credit ratings to negative from stable
- Moody's expects Beijing's support and possible bailouts for distressed local governments and state-owned enterprises to diminish China's fiscal, economic and institutional strength.
- Moody's though retained China's "A1" long-term rating on the country's sovereign bonds,
- Seems like this is going to be happening for a while - rolling downgrades of countries with excessive debt

- Greater Toronto Area home prices fell in November as higher borrowing costs crimped affordability, while the level of sales edged higher for the first time in six months
- The seasonally adjusted average home price fell 2.2% in November from October to C$1,104,062 ($815,769), marking the fourth decline in the last five months.
- New listings climbed 16.5% year-over-year but decelerating from the 38% pace of increase posted in October.

- A major Swiss bank admitted to conspiring with U.S. taxpayers and others to hide over $5.6 billion from the Internal Revenue Service
- Banque Pictet, the private banking division of the 218-year-old Pictet Group, will pay about $122.9 million in restitution and penalties as part of an agreement with prosecutors
- Where does that money go?
- Between 2008 and 2014, the bank had 1,637 accounts on behalf of American clients, who collectively evaded approximately $50.6 million in U.S. taxes, the DOJ said.
- The accounts themselves held more than $5.6 billion of the roughly $20 billion in total assets from U.S. taxpayers that the bank managed during the relevant period.
----- Does taxpayer have to pay anything?
- Swiss banks are not so special anymore...

VIX and Gamma
- An epic rally in U.S. stocks has sent Wall Street's fear gauge to a post-pandemic low.
- GAMMA - Among the factors closely watched by market participants are the funds that take their signals from market volatility, selling when volatility picks up and buying when it subsides. As market gyrations have calmed, these volatility-targeting funds have become buyers of U.S. equities, sucking up some $30 billion worth of purchases in the week ended Nov. 30, according to data from Nomura Securities.
- If stocks average only a 0.5% move daily over the next month, the funds could buy around $21 billion more worth of equities,
- Another volatility dampener comes from options dealers, who act as intermediaries between buyers and sellers. These dealers are now net long "gamma" - meaning they have to sell stock futures when markets rally and buy futures when markets sell off in order to square the risk on their books.
- The VIX has been below 13 for roughly 20% of its three decade history.
--- The last four times a similar drop happened saw the S&P 500 decline, on average, by 8.5% over the next 31 days, data from Cantor Fitzgerald showed.

Airline Deal
- Alaska Air has agreed to buy Hawaiian Airlines for $1.9 billion.
- That is more than a 300% price tag above closing last Friday
---- Alaska Air stock sunk 12% on the news
---- Hawaiian Air trading below the approx $18 per share offer at $13.79
----- Big concern that there will be DOJ block on the deal

Layoffs are Good! ?
- Music streaming service Spotify will lay off 17% of its workforce, or about 1,500 employees.
- The company is taking "substantial action to rightsize our costs," after a period of expansion while capital was easier to access
- Stock still down 50% from it's high in 2021

Weight Loss Drug - Loss
- Pfizer's twice-daily version of its experimental weight loss pill has now joined a long list of other scrapped drugs that aimed to treat obesity but came with unintended consequences.
- Participants were getting nauseous and not tolerating the treatment well
- Nov 2021 stock hit a high of $61 and now trading at $29
---- Stock price is back to where it was Pre-pandemic and BELOW trend  - Straight line trend would put it at $50

Tax Trap
- Investors and institutions have piled $5.84 trillion into money market mutual funds, as of Nov. 29,
- That is huge considering MM funds paying 5%+
- Watch out for the tax suprise this year
---- $100k in MM @ 5% is $5,000 additional taxable for 2023

Interesting....*** FAV OF 2023 ****
- Tech firms injecting BILLIONS into companies for AI (example)
- Microsoft $10B to OpenAI and OpenAI sings big contracts for Azure for >$400M / year (from less than $1M a year ago)
-- MSFT takes position in OpenAI, but also gets to show BIG numbers in revenue
---- Is MSFT paying for Azure with their own $$
--MORE - Amazon plowing $4 billion into Anthropic which has agreed to spend just as much over next 5 years on Amazon's cloud services.

Apple bundling What?
- Media stocks jumped on Friday following a Wall Street Journal report that Apple and Paramount Global are in early-stage talks to offer a bundle of the two company's streaming platforms.
- The companies have talked about bundling Apple TV+ and Paramount+ in an offering that would cost less than subscribing to the two separately
- Needless to say - Paramount and Warner Brothers jumped last Friday

Announcing the Entries for the 2023 - DHUnplugged CTP Cup
- Matheau Phillips (2022 Winner)
- Anson Brady
- Taylor Rivera (2)
- Jeff Salcedo
- Jen Devall
- Mike Kazmierczak

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ANNOUNCING The Winner Closest to the Pin -
Croc's (CROX)

Winners will be getting great stuff like the new DHUnplugged Shirts (Designed by Jimbo) -
PLUS a one-of-a-kind DHUnplugged CTP Winner's certificate..




Al Irving

There once was a Fed quite spry,
Led by Powell, sharp-eyed and sly.
Interest rates danced,
Inflation's wild prance,
A financial waltz 'neath the economic sky.


Anthony Irante

In the realm of crypto so grand,
Bitcoin and Ethereum took a stand.
With blockchain they play,
In a decentralized way,
To reshape finance's command.

JCD Score ()

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