Why This Permabear Turned Bullish

Everyone gets a loot bag! [Morning Reckoning] May 09, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Why This Permabear Turned Bullish Asti, Northern Italy May 09, 2024 [Sean Ring] SEAN RING Good morning Reader, When it comes to investing, I’ve been a wimp most of my life. I always had “the next crash” on my mind. Inevitably, there hasn’t been a crash since 2008. (I don’t count the Covidiocy Crash of 2020 because it lasted about five seconds.) That permabearish attitude, while seemingly safe, has come at a cost. I wasn’t taking risks, but the opportunity costs are significant. How much wealth did I potentially miss out on during the intervening period? It’s too painful even to attempt a calculation. Options expert and colleague Alan Knuckman always says, “Optimism wins.” But I came from the Yuri Maltsev School of Economics. He used to say, “A pessimist is an optimist with better information.” In 2024, it’s the time of the Knuckman. You’d have to be crazy not to participate in this market. And you know what the best part is? If you’re a stock person, you’re winning. The SPX has rallied 1,000 points since November. If you’re a gold bug, you’re winning. We finally broke $2,000 and have stayed there. If you’re a sucker for silver, you’re winning. If we break $30, it’s off to the races. You’ve had your best rally in four years if you're a copper watcher. And despite the recent sell-off, the crypto bros have recovered their usual arrogance. It’s all good. Why is that? Because it’s an election year! Everyone gets a loot bag. [We noticed you’re inactive, We noticed you’re inactive]( ACCOUNT # NAME CASH LINE STATUS 000083880573 {EMAIL} Inactive A recent routine analysis of our customer records revealed that you are currently missing out on the most profitable trade ideas in our company. On Monday mornings, our most successful trader is set to deliver a real-time time update - LIVE - to a select group of Paradigm Press readers. [Make sure your name is on this list now.]( [LEARN MORE]( The Politics of the Bull Monetary Politics Unlike my erstwhile colleague Jim Rickards, I’m not a Washington insider. I don’t get invited to their cocktail parties, and I’m not in anyone’s Rolodex. And that’s just fine by me. But since those in DC are so eager to put themselves in front of cameras, I don’t have to be. After all, politics is show business for ugly people. And Jay Powell puts himself out there a lot. In a recent interview with CNBC, superstar fund manager Stanley Druckenmiller questioned why Federal Reserve Chairmen are even on 60 Minutes. “You’re not a rock star,” Druckenmiller opined. To be fair to Powell, he’s obligated to appear before Congressional committees and the public by law or custom. He has to say something. But what he’s not saying is all the more interesting. Chairman Powell has never said, “The Fed now accepts we can’t get back to 2% inflation, so we’re good with 3%.” He’s also never said, “I utterly loathe Donald Trump so much that I will cut rates if Biden’s in trouble this summer to the detriment of the economy and my reputation.” And he’s too nice to say, “These lunatic West Coast-San Francisco Fed-MMT-Yellen acolytes infecting my bank are a bunch of retards, but at least they won’t vote against a rate cut even though we’re at full employment and running a 7% fiscal deficit.” And that’s what it’ll come down to for Powell. When Biden’s numbers get worse over the summer, Powell will give up the ghost. He must, or The Donald will fire him the minute he sits behind the Resolute desk. Powell will appear to relent. He’ll say, “Welp, you morons… I mean, colleagues… got me. You were right. Let’s cut. But just 25 bps, okay?” Traders will wet their pants with happiness, and the S&P 500 will roar up to between 5,700 and 6,000 before the election. Of course, the fear of the impending inflation will send gold to $2,500 or so. And those greedy silver traders will lick their chops sending silver to $35. Crypto bros, who pretend that Bitcoin is an inflation and crisis hedge instead of a tech play, will love that rate cut as both BTC and the Nasdaq hit new highs. Drinks all around! And what of the fiscal side? Fiscal Politics The Husk of a Man Currently Known As Joe Biden has spent more money in office than any other person in history. It’s currently not known if the President cares. But we know for sure his handlers don’t. As expected, a Democrat administration is YOLOing it. But what’s so awful is that the Republican House is so complicit in this taxpayer theft. Everyone wants to give out a goody bag to their constituents, and all the Congress Creatures wish to receive as much money in their coffers as possible for re-election. So the spending isn’t going to slow down one iota. In fact, expect it to ramp up as we approach November and as Biden’s polling numbers start to dwindle. The Dems must spend a boatload of cash to get their man back in. It won’t be easy, but it’s possible. The Outcome All this is excellent news for investors, at least for the remainder of 2024. The present administration, like all administrations, save LBJ’s, will do absolutely anything to remain in the Oval Office. Heck, they’re even trying to start a kinetic war with Dubya’s old buddy Pooty Poot. But hopefully, that doesn’t happen. Biden wants to be a wartime President even more than that jackass Speaker Mike Johnson wants to call himself “a wartime Speaker.” The delusions of grandeur - and adequacy - run high inside the Beltway. Wrap Up What? No charts? Not this time. We don’t need them. All you need to know is that it’s looting time for this “democracy.” The people will vote for anyone who will ease their discomfort with a swag bag. The politicians will beg for money to run their campaigns. The people behind the throne will do anything to remain in power, including to pretend Joke Biden is cognizant. There’s nothing you can do about it. Well, there’s one thing: profit. Get your stocks, gold, silver, and crypto while the sale is still on. It lasts for the remainder of 2024. This year, we’re not selling in May and going away. All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com X (formerly Twitter): [@seaniechaos]( [Congrats, you earned this…]( As one of my readers, you qualify for [this special deal.]( Only a small fraction of our readers will have the chance to see this. Fortunately, you’re one of them. All you have to do is [click here now to see how to claim your special deal.]( [LEARN MORE]( In Case You Missed It… Cocky Bears Outmatched: Tech Triumphs Greg Guenthner, Editor [Greg Guenthner] GREG GUENTHNER Good Morning Reader, A dicey April pullback has given way to a fresh rally as the market’s former momentum leaders gain traction. The bears might have gotten a little too cocky during the April swoon, leaving the door open to an unexpected snapback as investors refuse to sell in May and go away… Facts are facts… and we can’t deny what’s happening in the markets right now. While we were all expecting a bigger correction in April, stocks have reversed higher and have repaired much of the damage. Barring a massive failure here, we should concentrate our efforts on finding quality long setups, rather than pressing any shorts that have taken a hit over the past two weeks. Friday’s not-so-hot jobs number has clearly sparked a glimmer of hope amongst the rate-cut crowd. Stocks are now also aided by the hope that perhaps the economy isn’t as strong as many feared early last week. Yes, I know that sounds a little crazy. But this has been the market’s fixation since the days of the 2022 bear market. And while we don’t know when the bulls will get their precious rate cut, we will have a better idea as to where stocks might be headed in the short term if the averages can continue to bounce after reclaiming key support. Either way, volatility is down and Friday’s rally has helped push the averages back toward the area of the mid-April breakdown. As always, price trumps narrative. If we continue to see stocks build on this move, we need to go with the flow and flip bullish for trading purposes. While some weaker groups have found their footing this month, the resilience of the Q1 tech leaders has been the biggest story… AAPL, TSLA Finally Find Buyers The unshakable semiconductors are back on the top of the heap as this sector works on its third straight week of gains coming off the April lows. NVIDIA Corp. (NVDA) is now only a 5% rally away from its all-time highs. This is no small feat considering the stock is coming off a 20%-plus correction following a record-setting Q1 performance. In fact, the Magnificent Seven are (almost) all piecing together significant rallies now that the bulk of quarterly earnings have hit the wire. Two notable laggards – Apple Inc. (AAPL) and Tesla Inc. (TSLA) – finally found traction and pushed higher after failing to participate in the first quarter melt-up rally. Perhaps more importantly, both stocks rallied on “bad” earnings, according to the financial media and Wall Street analysts. Apple beat top and bottom line estimates, yet reported a 10% year-over-year drop in iPhone sales and offered lackluster guidance. Meanwhile, Tesla reported quarterly profits sinking to 3-year lows, and a slew of other concerns we covered in last week’s note. One of our main concerns heading into spring trading was how some mega-caps like AAPL and TSLA were decoupling from the melt-up. But I think it’s time to cross that worry off the list. Unless we see these two names completely fill those earnings gaps and move lower, our bias should remain to the upside. 2 More Earnings Winners Alphabet Inc. (GOOG) is another important earnings winner to watch as the rally continues to unfold. GOOG launched to new highs, jumping almost 10% after reporting an unexpected earnings beat. You might recall that GOOG wasn’t looking too hot back in March as it corrected 15% off its January highs. But a strong snapback and subsequent earnings explosion have vaulted this stock back to top-performer status as it builds on its 20%-plus year-to-date gain. One of the prime drivers of GOOG’s strong earnings reaction was a 20% pop in YouTube ad revenue, demonstrating that the advertising rut from the previous bear market is now firmly in the rearview. “Advertising is so back,” a recent CNBC piece declares. “After a brutal 2022, when brands reeled in spending to cope with inflation, and 2023 defined by layoffs and cost cuts, the top digital advertising companies have started growing again at a healthy clip.” GOOG isn’t hogging all the ad money, either. In fact, we’re seeing signs of a bigger turnaround amongst the social media also-rans. Snap Inc. (SNAP) was the first of these names to come back from the dead after beating earnings estimates in late April. If you have any familiarity at all with this name, you might remember that many analysts were quick to bury it after a miserable earnings report back in early February that sparked an instant 35% selloff. Somehow, SNAP managed to flip the script this go-round, posting its strongest growth in two years. Shares continue to drift higher into May, with the stock now approaching a bigger base breakout. Pinterest Inc. (PINS) was the next social media name to break its losing streak following a stronger-than-expected earnings report. PINS shares kicked off the new trading month with a big earnings beat, launching a 20% rally back toward year-to-date highs. Like SNAP, the stock was caught in a 3-month slump following a previous earnings miss. Now, it’s working on its own breakout as it pushes toward levels we’ve not seen since late 2021. I like SNAP and PINS here as they consolidate near breakout levels. Both stocks remain well off their all-time highs and are on the edge of coming back into favor with investors following some pleasant earnings surprises. If market conditions continue to improve, I suspect we’ll see speculators trickle down the cap scale into names like these that are showing strong upside reversals. By no means are market conditions perfect (they rarely are!). But now is not the time to press your shorts. Instead, I’m looking for unloved trade candidates like SNAP and PINS that are beginning to turn around and change the narrative. Best, [Greg Guenthner] Greg Guenthner Contributing Editor, Morning Reckoning feedback@dailyreckoning.com Thank you for reading The Morning Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Sean Ring] [Sean Ring, CAIA, FRM and CMT]( is a former banker and financial educator and is the editor of the Rude Awakening. Sean has trained interns and graduates from Goldman Sachs, Morgan Stanley, Citi, Bank of America, Standard Chartered Bank, DBS (Singapore), the Abu Dhabi Investment Authority (ADIA), Bank Indonesia (the central bank), HSBC, Barclays, RBS, and BlackRock. He knows the global economy is being corrupted by forces that most people can't understand and has used his unique and worldly experiences to help people navigate the markets. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your The Daily Reckoning e-mail subscription and associated external offers sent from The Daily Reckoning, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@dailyreckoning.com. 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