Welcome To The Back to The Future 2022-2023 Stock Market! Here Is Our Plan To Continue to CRUSH SP 500 Index Returns for the Rest of the Year
Hey Subscriber,
Our 2022 Playbook to KEEP ON Crushing the SP 500/QQQ Index Funds Part 1
Clearly the bounce off the massive March 14 bearish sentiment was a classic rip-your-face off "dead cat bounce."
Those of you who go back a ways with me remember
1) We will be Short QQQ/ARKK options from time to time and LONG low p/e high dividends nat gas + coal + tankers and bulk shipping+ food staples + LNG+ fertilizers all working.
2) The Fed told us today they are raising the cost of money 10X (.25% to 2.50%) over the next 10 meetings--ie a massive negative Macro S-Curve-- and at the same time SELLING $1.2 TRILLION in Treasuries and Mortgage Bonds over the next 12 months--something that needless to say has NEVER EVER been done in macroeconomic history.
Together, these rearguard/WAY too late monetary moves combined are THE strongest negative macroeconomic S-Curve transformation since--well ever (WWII Bonds were NOT OWNED by the Fed) means avoiding a US recession would be an economic miracle.
ON the other hand, the "Screw Russia Trade aka SRT" IS the MOST rapidly growing demand S-Curve transformation I have ever witnessed. While the stock market indexes melt, our SRT portfolio (LNG, Oil Tankers, Bulk Shippers, Natural Gas Infrastructure) and soon some other SRT plays (food commodities and other SRT beneficiaries).
Key Point: The "SRT" trade is reordering the global business of oil/nat gas/ coal/LNG /wheat /corn/oats/fertilizer
3) The Fed "Put," ie, their active protection of the US stock market is gone. The declining stock market indexes and 10X higher borrowing costs (5.25% 30-year mortgage rate today with 45% LESS refinances in Q1) reduce consumer demand for houses and cars and other big discretionary purchases which are big drivers of 7% inflation (and the 9% inflation print we expect for March).
3) NOW the next chip to fall is the beginning of the earnings calls and outlooks--is the market prepared?
"High Octane" tech has blown up-- "OG Low Octane" tech is strong ergo in the coming 10X higher interest rate world and removal of $6-7 TRILLION of $$$ from the monetary system-- thus ABSOLUTE VALUATIONS MATTER Absolutely.
My Take: After 12 years of economic fluffing, WE have transitioned into a "Back to The Future" stock market.
Dividends historically deliver 55% of total stocks return. In the era of $9 trillion of new "free" money injected into the US economy from 2010-2021--valuations did NOT matter, and high secular growth was highly valued--and we made rediculous 30X times the average 10% stock market returns--30 times the normal stock market returns (and now 25X higher cash of cash dividends from our UI portfolio vs. 10-year bonds now LOSING 25% of their value.)
So again --we are NOT in the "every tech stock/IPO/SPAC works" market--that market died in June 2021.
For the foreseeable future, we are in the "Back To The Future" investing environment, i.e., a monetary transformation where what has NOT worked for 12 years NOW WORKS...and in a world where we now have a literal absolute reverse monetary environment where $5-$6 trillion of more on monetary stimulus is being REMOVED from the monetary system instead of being blown in every day.
At the same time, "no risk" investments like 10-year bond value are being crushed (the most since the '70s).
BOOM--SO if high growth is not working, and 100% safe (bonds held to term) is not working (getting crushed)...and business valuations now MATTER because the discount of future earnings is now 10X HIGHER (.25 to 2.50 and higher)...
THEN below market P/E stocks with STRONG earnings growth and HIGH DIVIDENDS are the ONLY GAME in town or "the most attractive girl at the Wall Street "beauty pageant."
Welcome to the Back to the Future + Massive Russian Economic Sanctions investment world
We are up 40% ish in 2022 (including dividends) while the SP is down 6% and QQQ 11%.
Of that performance, we are very proud.
But enough about me--when do we bottom?
A) When the Fed has proven they have landed our 8 engine economy on just one engine (aka "soft landing)
B) The Russian invasion of Ukraine ends (good luck on that--not to be Debbie Downer but Mr. Putin does not need the love of the Western World--he is living out his dream for the last 20 years that the Western World appeasing global goobers enabled)
Our MacroMarket Timing Index Is BELOW our 15 reading which since 1989 means recession coming in 4-6 months
Now because the model we built/licensed from the London School of Economics was not built with data from a $6 trillion Fed stimulus reduction/10X Fed funds rate increase and oh yea 7%+ inflation that will get to 9% plus when March data is included from a friggin war in Europe . . .
. . . I am just going to take a leap here and say IF America does not have two consecutive quarts of negative GDP in 2023 (bearing in mind Europe is already in recession, Russia is cruising to a 20% contraction/economic depression and China has a $3 trillion real estate development industry in depression)-- then I am turning in my macroeconomic forecasting beanie cap (bearing in mind our system called 2000, 2008, and 2020 bear markets).
Unless there is a SERIOUS change in global macroeconomics, I am calling the 2023 US recession as, if I have not made it clear, the likelihood of the US Fed to orchestrate a "soft landing/no recession" after what they announced today is about as likely as me NOT pouring a very big Gin martini after banging out this update.
In other words, avoiding a US economic recession is virtually impossible unless peace is declared tomorrow and somebody discovers $10 trillion of new oil/gas deposits that we can start to tap tomorrow.
And we will continue to make very nice profits from our SRT portfolio!
Have a good night!
PS--we will update you on how our INVUP is trading on the OTC--at a $25 bid btw--and how to register your INVUP at your broker-dealer.
Also, have a call with the really impressive new CEO and the team at INVU getting scheduled...my old buddy Anthony Scaramucci made an intro today--the new INVU CEO was one of the principals of his $10 billion SkyBridge Captial hedge fund for a decade...he brings a TON of Street credit to INVU and access to capital.
Enough for one day!
Toby