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Today is a very green, or risk-on day in the markets. In fact, the last few weeks have seen an upward trajectory in equity prices, due to the building confidence that inflation is tame, and jobs are getting harder to come by. Housing sales and new home construction is down. Finally, the people I know around me say that business is slowing down. That is good for the US Federal Reserve Bank's dual mandate to promote stable prices (inflation coming down) and maximum employment (we are softening). It meant, well before yesterday's Fed FOMC announcement, that interest rates were coming down. So, what am I doing? I am adjusting our quantum algorithm to analyze less risky stocks using heuristics and anecdotal observations that have held true over the past few years. Instead of 3,300 stocks (common) listed on the US exchanges that traded that day...we are now looking at 1,340 stocks that are better bets for serious investors. These aren't the meme stocks, and they avoid the most risky, and anomalous stocks. These stocks are more solid, tend to pay dividends (not all, but many), and have fewer surprises. they tend to trade normally with respect to kurtosis and skewness, although the third and fourth movements don't really matter to most investors. In short, we down-select to a lower risky set of stocks, then optimize the results. We do maintain that a global set of US-listed stocks, coupled with passive ETFs, can help an investor find the diversification, and optimization of risk-reward that they cannot get by reading the paper, listening to Bloomberg (we like to), or even studying individual stocks. We find the patterns and help make a very complex optimization simple and easy to afford for investors. For those who want adventure, we identify both the best and worst stocks, so intrepid investors can invest both long and short...taking advantage of the difference in performance without bearing all the market direction risk. OK, that wasn't very silly. We like to wear, sell, and give away t-shirts that spread our message. However, our message until now is hard to understand, not interesting to 99% of the human race, and, well, boring. So, we don't sell very many t-shirts. We made a very text-heavy design today, and went to buy the shirts in volumes that match our expected demand, and the cost will be more than we could ever hope to sell them for. In fact, I wouldn't even buy the t-shirt for the price quoted. I looked at what is popular now in shirts, and people like patterns, cartoons, anime, and very short slogans like Just Fo Cat. I have not seen a popular shirt with a bibliography or explanation of terms. Never seen a good one that says 7X4Y.sfn3s is a formula used to make investment strategies. Must have missed the t-shirt pun on Fama French. I am about to change the game. Take a risk. Go crazy. We are thinking of using a photograph by an artist we like where we have permission to use it...and write a pithy one-liner. At the bottom, our website in small letters, in case people are wondering and want to learn more. Could even just do a QR code, forget the URL. So, it would look like this: pithy phrase Picture QR code. No service mark, no URL, unless I can work it into a pithy phrase...We accept the challenge. We also have the challenge of sizes. I think M/L/X/2X/3X at a minimum. How do you predict the size of those buying your T-shirt? Please let us know if you would like a T-Shirt once we design it.
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Here is our tweet on the subject.
It is inevitable that the style of war fighting is changing to leverage new (and old) technologies.
Israel targets pagers used exclusively by Hizballah or Hezbollah, the radical Islamic terrorist organization. Pagers, as in prostitutes and drug dealers in the 1980s, along with pay phones. Pagers, as in 'I don't have the money to buy a flip phone, so I carry a pager,' or pager, as in a worker on the level 3 support desk of an enterprise IT department that needs to be reached 24 x 7 when a problem happens. Now, in the modern day, those pagers could activate a network, that we know includes the Iranian Ambassador to Lebanon, to act and react immediately, and in a coordinated and synchronous manner. What happened? A Tom Clancy, super secret spy action by some country (might not be Israel), caused all Hizballah operatives and supporters that are senior or important (e.g., operatives, logistics, coordination, communications, transport) enough to get a pager now bear a mark of shame. They will forever be known as Hizballah. Israel is not allowed to massively attack Lebanon because of civilian impacts to infrastructure, and quality of life (as seen in Gaza protests and Kamala Harris's recent statements), but they can isolate and target a distributed terrorist organization via obsolete technology.
The second event in the last 24 hours is Ukraine blowing up a massive weapons depot using drones. These drones are suspected to have jet engines (so they are a little more expensive), but they still could be the quad-copter types carrying a bomb.
This is a massive military victory for Ukraine. Drone warfare can reach hundreds of miles into an enemy territory and destroy strategic targets. I used to be able to buy a drone at Five Below, for $5.00, and learn how to fly a helicopter. Of course, these cost more than five dollars, but in the grand scheme of things, Ukraine can afford to launch a thousand of them in a night, on an attack deep into Russia, and not think twice about it. Probably the biggest issue is how to reduce, reuse or recycle the cardboard boxes they came in. You know...to fight global warming.
I hope you enjoyed this post. We are thinking about Russia's term, Hybrid War, and think that as the world pushes conflicts to last for years (think WW2 only lasted six years, but Ukraine has been fighting, actively for three years), innovations occur.
Those innovations will be harmful for NATO defenses, in our opinion, and require a rethink of military strategy and defensive posture in the twenty-first century. We found an anomaly in $AMED Amedisys Inc.Something is going on with $AMED Amedisys Inc. It does not have a normal stock price distribution with respect to the third movement of stock prices, the kurtosis. Some people have 'junk in the trunk' and this stock has fat tails, both up and down.
This is a NASDAQ listed stock that trades between $90 and $99. It typically trades 400k shares per day. It has a small beta of 0.10785 against the S&P 500, down from a 5-year BETA of 0.78 (according to Yahoo Finance). It has a market capitalization of $3.2B, a PE ratio of 35, EPS of $2.81 (thank you Yahoo Finance). This stock has a very low variance of 0.0000074 or 7.4 x 10-6, or about 20% of the variance of the S&P 500 Equity Index ETF. This stock is very leptokurtic. It's standardized kurtosis measure is 36.451. It is highly leptokurtic (normal distribution for kurtosis is a 3.0, and the next highest kurtosis stock has a score of 6.83. This stock is the 184th stock in our long Chicago Quantum Net Score CQNS market analysis, out of 1,338 stocks and ETFs. It scores well because the variance is lower than would be predicted by the BETA score, and that is better than 85% of all stocks analyzed on September 16, 2024. It has a relatively good match of low BETA and even lower variance. No dividend paid in the past year. Leptokurtic means there have been surprises, or high-standard deviation moves in the stock. In late October of 2023, we saw a "V" shaped move, up and down, that eventually led to a rally up. Rally is a funny term, as it was up maybe 4%, but for this stock that is a very large move. In middle to late April, 2024, the stock fell sharply for a few days, then recovered (again, another 3% move in total up and down), then crashed 4% at the end of May, then soared higher by 5% at the end of June. There were analyst ratings events close to a few of the events, and earnings for one. I wonder if these short, explosive moves are related to options? If so, why end of month moves? So, this is a leptokurtic stock. It typically moves gradually with very small moves and a very small BETA and stock price variance. However, we see , we see a few dramatic moves. There is a pending acquisition of Amedisys by United Healthcare Group (UHG) Optum unit for $101 / share, but like all mergers these deals are not 'sure things' and this one is undergoing anti-competition review by at least the Department of Justice, Oregon regulators (OHA). Source Our next step is to see how we can profit from this anomaly. Maybe you can too. Thank you for reading our BLOG. Think about buying a stock market analysis off our website to gain dozens of insights and stock anomalies each day. For more formal clients, we can set up an invoice and payment by check, typically monthly or quarterly. Thank you, Chicago Quantum US Advanced Computing Infrastructure, Inc. Jeffrey Cohen, President and Investment Advisor Principal  This blogpost will analyze Former President Donald Trump's debate transcript from the ABC News debate on September 10, 2024 with Vice President Kamala Harris. This blogpost focuses on the words he used in the debate, used without editing or 'cleaning up duplicates', based on the ABC News (partial) transcript released on September 11, 2024 here. In 90 minutes he spoke exactly 1,033 words, about 8% fewer than VP Harris.. Twenty most frequently used words:
These are conversational words, easily spoken words, fairly balanced between positive and negative. His topics were generally active, about the world, people, and convey a sense of urgency. It was very conversational, fully of storytelling. He did say Biden 13 times. He said Great 11 times. There are different styles present (going - rebel, know - opinions, look - sensing, like - feeling). The top three words cover the gist of it: People, Country, Going. If I gave you a sentence to finish that said American People and our Country are going __________, I think you could fill in those blanks.However, with the exception of Never (27 times), he was pretty positive or at least neutral, with a focus on time. Maybe we are running out of time. There was a large discussion of foreign policy and national security that was covered in another blog-post, so we will leave it there.
President Trump discussed the economy quite a bit.
He spoke about Crime (10 times), and discussed Abortion (8), Criminals (8), and Destroying (8), Destroyed (5) America. He discussed Killed (8) and Afraid (7). I remember his discussion of firing government employees that do a poor job Fired (5), and Fire (4). He did lightly support the Police, with four mentions. Finally, the key topics of the day in politics were mostly all covered a few times in Trump's debate answers. He covered a very broad range of topics. Here are some general observations after watching the debate live two days ago. 1. President Trump was passionate, or at least had a high emotional content, by the end of the debate. I think he cares deeply about what he was saying, and what he is seeing and doing. I detected a little fear of World War 3, of America losing her way, and her power, through the introduction of 21 million illegal immigrants from 168 countries and through a world without a SuperPower, or Super Hero? 2. President Trump reminds me of when I sit with certain older men, like I used to with my father before he passed away, and hear them tell stories of their past. Bruce Springsteen's song "Glory Days" always comes to mind (and is worth a listen if you don't know it). President Trump tells stories. He is a "Rebel" in the nomenclature of Dr. Taibi Kahler (Mastery of Management) who wants you to react to, and learn from, his stories. However, this debate told the same stories he has told on the campaign trail. I had a sense of hearing the same things, just in a different format. President of Hungary says he is a good guy, the Taliban leader stops sniping US soldiers, how the wars would never have started, and how we will close them out quickly through diplomacy (he never suggests killing, only talking). 3. President Trump did not answer any question directly. This did not sit well with me. 4. There were two significant new points from President Trump, and that was National Security. I recall the early comment about World War 3 and how we are heading straight towards it with the Biden/Harris administration. He mentioned negotiations from a position of strength preventing war, and how things said early in the Administration, the lack of negotiations by the current administration contributed to war breaking out, along with the visible sign of 'weakness' or 'negligence' in the withdrawal from Afghanistan. I still remember people falling off US military aircraft as they clung to tails or landing gear for dear life to exit the country. I think on those we left behind, and the weapons, and military bases, and materials, and friends / collaborators who were left to face the new Afghan government. This is a place where I agree with President Trump and I fear for my children. The second point was the Affordable Care Act or Obamacare. He suggested we keep it, improve it, and only replace it if we have something better and cheaper for American insureds. We agree, our health care costs have skyrocketed higher (private insurance) since Obamacare. We are not sure why that is...but somehow the higher costs of guaranteed coverage, kids eat free until 26 years old, new healthcare providers (e.g., CVS and Walgreens and Immediate Care), and other added benefits are spread to us too. Our 'best' healthcare option has a $13,000 maximum out of pocket, per year, and this year we paid thousands in costs before the deductible kicked in. That is on top of already higher premiums (maybe $2,000+ per month for a small family). 5. The immigration point was lost on most listeners, but I think I understand what he is saying (my second largest driver is Rebel, so I have a good ear for it). In a nation of strong norms and cultures (we have many cultures, but there are shared values and ideas), the influx of a large number of immigrants can change America, especially in pockets. He never explicitly said "Little Italy" in New York City or "Little Havana" in Tampa, Florida, or the fact that there are more Poles in Chicago than Warsaw (at least there were when I last looked). However, his anecdote that Haitians eat outdoor dogs and cats (lots of cultures eat small animals), was not about those poor cats stuffed in a bag, but about a challenge to our norms and values when 20,000 immigrants from a strong, foreign culture migrate into a town like Springfield, Ohio (58,000 people in 2022). If we can control our border, and our immigration, then we can ensure that the country can handle the influx, distribute it, and ensure we have social services, schools, police presence, jobs, and protect the current groups in the same socio-economic class (remember Black Jobs.) However, this point gets lost in polite company, when the focus is on political correctness, and the message is list. President Trump is an old man who grew up in a different era, and tells it straight. When 20,000 immigrants enter a small city, they want to work, and will take any job, for any legal pay, that will have them. They may not have language skills, or transferrable educational credentials, but they will work hard. Those jobs likely were held by someone, who now has to find a new job (hopefully a better one), but could end up unemployed and forced out of their neighborhood as it changes to the influx culture. President Trump made his argument in his closing remarks. 1. Why hasn't VP Harris done the things she speaks about? Because these are fringe ideas that America does not believe in, like giving up fossil fuels. 2. America is weaker now, being laughed at. America is no longer a leader (SuperPower), and are not central to events. We are heading into WW3. "We're going to end up in a third World War. And it will be a war like no other because of nuclear weapons, the power of weaponry. " 3. Illegal immigration is destroying our country. Here is the Word Cloud (thank you to wordclouds.com). https://imgdlvr.com/pic/wordclouds.com/20240912-8614/public If you would like to collaborate on activities like this, or receive a deeper briefing, please contact us here.
Thank you for reading. If you like the blogpost (and appreciate the effort), please drop a comment below and share the blogpost with your friends and social media circles.  Good morning. Kamala Harris debated Donald Trump on ABC News on September 10, 2024. She communicated ideas about ways to stimulate demand and give tax credits to people to pay for two important life events, buying a first home and having a child. She spoke about putting abortion back into Federal Government jurisdiction (which just means a different set of legislators make those decisions), and she defined our enemies clearly as Russia, Iran, North Korea and less clearly China, saying she does not speak with, nor curry favor with dictators. This blogpost focuses on the words she used in the debate, used without editing or 'cleaning up duplicates', based on the ABC News (partial) transcript released on September 11, 2024 here. In 90 minutes she spoke exactly 1,103 words. Twenty most frequently used words:
Now, let's highlight a few things. The Former, President of the United States, Donald Trump, was in her words 31 or 32 times in 90 minutes. When we watched the debate live, my wife walked away saying "stop doing that" because instead of speaking about her own candidacy, she quickly started talking about her opponent. If we add the word "Trump's", it takes this count up by 7 to 38 or 39 times. She also speaks about people, or 'the People.' This makes sense because when she was in law enforcement, she represented "the People" as in "the People vs. John Doe." The other thing we see is that she is is opinions-based, very direct and believe-driven. Those words are:
Dr. Taibi Kahler does a good job explaining this, and you can also see this 'type' in other personality profile tests. She also used words that were technical or proper:
We are struck by how frequently these words were used. She believes in taxes and in our opinion, a military-driven security posture and war. She also highlighted abortion. She also mentioned Ukraine and Israel relatively frequently when compared to America (10 vs. 50). We added up all the derivatives of America she used. She also mentioned Ukrainian President Zelenskyy four times. You can see the topics that she was asked to debate on, including energy, the economy, the military, foreign policy, and taxes in the words she spoke. Our summary of Harris's debate performance is that she spoke very, very often about Former President Donald Trump and his policies, his actions and his beliefs and character. She has a military-focus in foreign policy and national security. Also, there were many filler words used: including, actually, want, well, and important. Here is the Word Cloud (thank you to wordclouds.com). https://imgdlvr.com/pic/wordclouds.com/20240912-8075/public If you would like to collaborate on activities like this, or receive a deeper briefing, please contact us here.
Thank you for reading. If you like the blogpost (and appreciate the effort), please drop a comment below and share the blogpost with your friends and social media circles. National Security Topics An analysis of the national security and foreign policy topic identifies an area of significant white space between the candidates. I will summarize a few points and include verbatim transcript below. I found the World War 3 comment stated by President Trump. It was very early in the debate: "And what, what's going on here, you're going to end up in World War 3, just to go into another subject." President Trump believes President Biden has set the USA onto a path to World War 3. He predicts dire consequences of a VP Harris victory:
Approaches Trump President Trump's plan is to act decisively to secure peace through direct diplomacy, backed by the US military. Other countries find common ground with him, whether receiving money, prisoner release, trade, or other quiet benefits in return for what the USA requires. Harris Kamala Harris prefers peace without direct negotiations through strong, multi-country alliances and indirect warfare (give material to those fighting, but keep our soldiers off the battlefield). Kamala said in the debate that President Trump will negotiate a bad deal, in bad faith, with poor skill, and knowingly negotiate against the interests of the United States. He would put America's interests first and this would hurt America's interests. She would keep Ukraine fighting with US weapons and money, indefinitely, and work to being safety and security to both a new nation of Palestine and the State of Israel. Different Plans Israel Trump had an approach to protect Israel through economic sanctions on Iran, and suggested it was working and the war would not have happened. Iran was broke. Harris will pursue a two-state solution with equal protections for Palestine and Israel. It starts with a cease fire deal and a release of hostages by Hamas. China Trump wants fair trade and an even playing field, with China held to the same rules he will hold the EU and other nations to. He wants a return of tariffs to support domestic manufacturing. Harris suggests a trade "policy about China should be in making sure the United States of America wins the competition for the 21st century." This is done by alliance building, supporting America's workforce (which we agree with), and "investing in American based technology so that we win the race on A.I. and quantum computing." She suggests we shouldn't allow China to buy American semiconductors, or chips, stating: "he ended up selling American chips to China to help them improve and modernize their military." I am pretty sure President Trump wasn't running a value added reseller business, so she means that American vendors were legally allowed to sell US licensed technology (e.g., NVIDIA chips) to China. She would not allow that. Diplomacy vs. Proxy Wars (a new Cold Wavs. Direct War Declaration The text is a little hazy here on Harris's position, but we will try to fill in the blanks. President Trump If President Trump is elected, he will cause both wars to end before inauguration day, via diplomacy. President Trump relies on diplomacy first, whether with the Taliban in Afghanistan, Iran (they had tough sanctions), China (tariffs and removal from joint military engagement), Europe and NATO (pay your fair share, engage in your own defense), kept a cold war in Ukraine and Russia, and there was actual peace and economic integration between Israel and the Palestinians, even jobs in Israel with daily crossings. Vice President Harris If Vice President Harris is elected, Israel: 100% diplomacy. Her administration will work 'around the clock' to negotiate a cease-fire deal and cause Hamas to free the hostages (in case it hasn't happened by January, 2025). She would 'chart a course' for a two-state solution. She would provide Israel defensive weaponry, calling out Iran first, and its proxies (e.g., Hezbollah and Hamas). She recognizes Iran as the primary enemy of Israel. Ukraine: War directly or through European allies This progresses towards a moral imperative to defend Ukraine. Harris would not give up Ukraine in its 'righteous defense.' Her role in the defense of Ukraine was "I shared with him American intelligence about how he could defend himself." Not sure if this is an admission of an act of war, or just poor OpSec. This is after "Russia invaded, tried through force to change territorial boundaries to defy one of the most important international rules and norms, which is the importance of sovereignty and territorial integrity. " Harris also ties in US alliances with the defense of Ukraine, which is a foreign policy expansion, stating: "understanding that the alliances we have around the world are dependent on our ability to look out for our friends and not favor our enemies." She arranged a 50-nation alliance to help support Ukraine. This is her red line, drawn very clearly, calling out a bifurcation of countries into friends and enemies. She characterizes Russia as an expansionist enemy with eyes on the European Union, stating: "Otherwise, Putin would be sitting in Kyiv with his eyes on the rest of Europe. Starting with Poland. " In conclusion President Trump President Trump would favor pragmatic diplomacy and sanctions, with tough talk, to keep the peace. He protects Israel by throttling the wealth of Iran. He protects Europe by having them defend themselves better, and by respecting Russia and China. Regarding China, Trump ended joint military exercises and meetings, but his main focus was on fair trade (which was likely better for the relationship). Regardless of who sits in the White House, President Trump sees us heading into World War 3. "We're going to end up in a third World War. And it will be a war like no other because of nuclear weapons, the power of weaponry. Vice President Harris VP Harris has a strong, values-based belief system when it comes to foreign policy. VP Harris stated she is not open to negotiating with undemocratic leaders. She draws a distinction by labeling countries as friends or enemies. She thinks of Hamas as a terrorist organization, but charts a course for a two-state solution. She suggests a righteous defense of Ukraine is important not just for Ukraine, but to support our global alliances and stop an expansionist Russia. Harris, in our opinion, is a cold war warrior. For the original transcript, visit ABC News here. Good morning, we watched the debate last night on ABC. We discussed it this morning, but everyone was in a rush so not much was said. Here is an analysis of the debate. We will start with the official ABC transcript (which is stated to be partial) and go from there. Abortion
I just found an interesting exchange on abortion. I will post the text (verbatim), and add some commentary at the end. Trump calls out Harris in a lie. FORMER PRESIDENT DONALD TRUMP: Excuse me, I have to respond. Another lie. It's another lie. I have been a leader on IVF which is fertilization. The IVF -- I have been a leader. In fact, when they got a very negative decision on IVF from the Alabama courts, I saw the people of Alabama and the legislature two days later voted it in. I've been a leader on it. They know that and everybody else knows it. I have been a leader on fertilization, IVF. And the other thing, they -- you should ask, will she allow abortion in the eighth month, ninth month, seventh month? FORMER PRESIDENT DONALD TRUMP: Would you do that? Why don't you ask her that question -- FORMER PRESIDENT DONALD TRUMP: That's the problem. Because under Roe v. Wade. FORMER PRESIDENT DONALD TRUMP: You could do abortions in the seventh month, the eighth month, the ninth month - VICE PRESIDENT KAMALA HARRIS: That's not true. What I notice is that in Colorado, there is one of three functioning abortion clinics in the United States that does abortions at and after the 28th week (the 7th month) of a pregnancy. They have been doing this since the 1970s (Roe v. Wade timing). I read about it in Reuters yesterday, because they sometimes get a protester, and they have bullet proof glass. They will perform abortions in the 7th or 8th month of pregnancy. It isn't like they enjoy it (from the article), but they do it. One example was that the mother had an illness that she just learned about. In conclusion, it is true. Under Roe v. Wade, you can (and do) perform abortions in the seventh and eighth month, and in Colorado (and two other undisclosed locations), they still do. Good morning. I have been watching a lackluster stock market today, and bitcoin, and oil, and interest rates, and to keep busy I have been reading and analyzing the CNN interview. I have the full transcript put out by CNN, which is available here. Governor Walz Words:We will start with Walz, the candidate for Vice President. Below is his Word Cloud (www.wordclouds.com, thank you) of his answers according to the CNN Transcript, with no edits.  Walz is incredibly simple spoken. Simple, value-laden words:
Here is the word cloud: https://imgdlvr.com/pic/wordclouds.com/20240830-0637/public From the speech, I noticed content:
Vice President's Words:Note: We included all of her answers verbatim, with no editing, from the CNN transcript. She is definitely running for President of the American people. Her top three words were People, American and President, with America close behind. She spoke about herself a great deal, with top words being:
Her filler words were in full force: Clear, Important, Including, One, and Actually. She did speak of Joe Biden. There wasn't much discussion of policies in the speech. I see a few words, like investing and invest, and tax, inflation, and credit. However, the speech largely avoided the economy and economic policy. There are few words on foreign policy. Fracking was there, but in response to a question. There was no discussion of America's energy or industrial policy. I see "Bacon" which could upset leaders in muslim countries (she said she cooks bacon and feeds it to her family). It stood out for me in the transcript.  In terms of her positions, policies and important matters of state:
With regards to the New Cold War, she has a few well hidden ideas that came out being couched as things Joe Biden did that she was proud of: - The way to handle Israel and the Palestinians is a Two-State Solution, and a 'deal' is urgent. She said it at least four times in quick succession. Diplomacy & deals. - She is for expanding our NATO, SEATO and new AUKUS+India+Japan+Indonesia alliances. She will protect sovereignty and territorial integrity. This is directly targeted at Russia and China, whether she realizes this or not. She will continue our New Cold War. A few things that were absent that I expected to see: - more active, policy statements (things to do, and how, when and why) - proud to be an American, free, strong and independent (her mom and dad were immigrants) - speaking like a president in a polished and formal way, serious - The government's debt and deficits, interest rates, currencies, trade flows and the markets. - The private sector and how to promote jobs, income, opportunity and wealth. - America as a promise, a place to come to, and a treasure to protect (patriotism) - Big picture strategy and strategic thinking. - A grand challenge for America. Is there a race to 2050 we need to win? A goal to unify us? The Kamala Harris Word Cloud can be found here:
https://imgdlvr.com/pic/wordclouds.com/20240830-2937/public I hope you enjoyed the post and analysis. We are available for consultation on multiple matters, whether the stock market, the South China Sea, Enterprise IT Infrastructure, Global Outsourcing, and even Iranian energy. We manage money with the custodial agent support of Charles Schwab. Let us know...we are here to serve. 10-year UST note futures trading at 3.792% this morning. The 13-week UST bill at 5.03%. The 2-year UST note is trading at 3.943%. The spread between the 2&10 years notes is -0.151%, which shows a pretty flat yield curve.
This is good news for stocks, as lower interest rates lessen the 'pull' of risk free income away from equities. There is an issue. This may not be sustainable. What would happen if the economy weakens AND the US Federal Government has to borrow more to finance deficit spending. Typically, the government pays down its debt during positive economic growth (like the last few years) and has 'dry powder' for when things turn lower. The bad case for us is that politicians feel the need to grow spending (as opposed to shrinking it) and cannot raise enough tax revenue to pay for that, plus the increase in interest expense (which is something like an extra trillion dollars per year as the debt rolls over). This re-creates the inflation boogey-man, which requires higher policy interest rates, which creates a debt crisis. That being said, it is unlikely that our technocratic leadership at the US Federal Reserve will let that happen, and everything should be fine. We are not pouring our clients, nor our own assets, into long-term debt at sub-4% rates until US Fiscal Policy is resolved and starts taking action to resolve our unstable spending and borrowing situation. Here is the funny part. I am not sure that this is about elections...it is about a collective, bipartisan focus on our economic health and prioritizing our spending. By Jeffrey Cohen
Short note. We continue to be surprised by the strength of real estate stocks, but then we see that interest rates continue to fall.
What we don't really understand is why the 10-year note is trading so much higher (rates lower). This is the market talking, and not a simple measure of arbitrage. It implies a much more inverted yield curve, which is typically an advance warning signal for recession. This is weakening the U.S. Dollar, which is now trading at $1.110 This has been below $1.10 since late December 2023. This means it costs more Dollars to buy a Euro, and the Euro is considered 'stronger' or a better place to park assets. It also could mean that financial assets are flowing back to Europe from the USA. The U.S. equities markets have been on a steady and steep upward climb since August 7, 2024. The rally has lasted for eight straight days, and today it looks like we could see a ninth day of increases. There seems to be a rotation, but we cannot pinpoint it. Gold is higher, as well as residential mortgage-backed securities. This is because interest rates are lower, sure, but what about credit quality? At the end of the day, what is an investor to do? Give us a call and let's discuss it. Good morning to our faithful followers, and sometimes visitors. We have been learning a great deal about the U.S. residential real estate business due to a position we took.
However, last night we checked out Google Earth in the South China Sea, and see some islands have new satellite coverage. Newer 2024 images that we can use on our website, and in our analysis. We will be updating our South China Sea research today, and into early next week. We have also been putting aside articles to process on the region. It appears that China and the Philippines have had discussions and may have made a deal. Not sure. We will go through our backlog, and look around for open source intelligence on the area. We offer consulting (for an hourly or daily fee) and project work on the South China Sea. Please reach out if you are interested in a free consultation or quotation. Jeffrey Cohen President, US Advanced Computing Infrastructure, Inc. Good morning.
CPI all items is down to 2.9% for the year, with all items less food and energy up 3.2%. Key highlights: Services cost more led by transportation and shelter. Automobiles costs less, especially used. Electricity is more expensive, and gasoline is down a bit. Services is slower to correct, as those economic cycles may take years to play out. They use capital goods and/or are real-estate based. Labor is a part of the story. Automobiles becoming less valuable...never really understood this cycle. Electric vehicles, computing, and normal economic growth, along with the closing of coal-fired electricity plants creates larger growth in demand for electricity (dE/dT) than the growth rate of the production of electricity. The U.S. Federal Government should support new construction of renewable energy systems like nuclear, wind, hydroelectric and solar, along with heat-capture systems. More energy means more heat. Chicago Quantum proposes to design a system that captures the heat of electricity production and usage and release it in Chicago during the winter months, creating a literal oasis of beautiful weather all year round. We propose using quantum mechanics to do this efficiently and effectively. Original post by the Bureau of Labor Statistics: https://www.bls.gov/news.release/pdf/cpi.pdf By Jeffrey Cohen, President, US Advanced Computing Infrastructure, Inc. Illinois Registered Investment Advisor, and friend to all in the markets Story is a work in process. This has been an unusually bad week for high beta stocks that have low volatility (relative to their high beta). As the market has corrected, so too have these stocks. A few examples: TNA - The 3x small cap ETF, Direxion Daily Small Cap Bull 3X Shares, is down 25%, and looks very much like a hill, up fast and down fast. OPEN - Open Door Technologies down about a third this week on a lower earnings forecast for Q3 BETR - Better Homes and Financing down sharply today on news of a 50:1 reverse split SMCI - Super Micro Computer, Inc. is down 25% this week, along with Intel $INTC, potentially on earnings. QBTS - D-Wave Systems down 25% on quantum computing concerns RGTI - Rigetti Computing also down 25% on quantum computing concerns  This is all happening at the same time that the S&P 500 ETF is down around 5%, but mostly in a downward direction. Today the market is higher, taking back about a third of the loss, but the damage to high BETA stocks is already done.  In conclusion, the benefit of holding high beta and low volatility stocks is that they do very well when the market is rising steadily. They move higher, often in lock-step with the overall market, and rarely have negative surprises. However, when the markets correct, these stocks also move quickly downward. The news driving the declines seems independent (reverse split, earnings surprise, etc.) but the declines happen. If you invest in high beta stocks, hedge against the downside risk.
The other thing about these stocks is that the market has a short memory, and it is likely that if they can find their footing and rise again on good market news, they can keep their position and market focus, and rise again. By Jeffrey Cohen President, US Advanced Computing Infrastructure, Inc. Update 13:30 ET: The 10-year UST auction completed, and the 10-year yields are back where they were on August 2, 2024. Just like that, the 10-year note rally is behind us. The market is resisting a sub-4% yield on the 10-year UST. A few thoughts on why it happened, but none of it informed. 1. Inflation expectations are higher than we thought, maybe as high as 3%, which makes this a 1% real interest rate. 2. There is no recession, so no need to shelter money for 10 years at 1% real rates. 3. This was all a short-term play on rates anyway (long on fixed income)...and the air is out of the balloon after a few days. 4. The markets just don't like Harris/Walz and don't believe they will improve US Federal fiscal policy (by cutting spending and debt growth). This could be a political statement that America must not be Progressive when it comes to actual policy (vs. words). This hurt equities today...and of course we are long so we are personally impacted by these moves.  U.S. equities (S&P 500) gave back the gains today. This is a 5-minute chart that goes back to August 1, 2024, and captures the recent move.  Ten-year UST Note yields are back up... Was this just a Fed FOMC-induced fixed income temper tantrum?
Was this a great 'unwinding' trade from Japan?
 This could be end of irrational exuberance, helped along by Summer trading desks and market technical instability.
We did have market uncertainty from the introduction of VP Harris and Tim Walz into the 2024 U.S. presidential race. We do not under-estimate the impact of a diverse and progressive word-salad, San Franciscan challenge to a felonious, conservative, loud and abrasive New Yorker. I feel a race like William Jennings Bryan against Barry Goldwater, and the only thing we are missing is the mushroom-cloud advertisement. Thank you to the U.S. Library of Congress for preserving this ad. The thing we noticed the most in this latest market correction, the thing that really surprised us and made us tweet furiously and sit confused in front of blaring, red screens of doom, was the response of U.S. interest rate futures.
What? Who cares about fixed income? Isn't that the boring area where grandma puts her nest-egg, and clips coupons every six months to make those sweet apple pies? No, fixed income is a significantly larger market than U.S. equities. Here is a perspective I shared with my daughter yesterday taking her to music lessons:
Net-net, the 13-week UST rate and the 10-year UST rate both crashed. The value of fixed income rose quickly and decisively. We think this was the play on Monday. Gotta go...markets open in 4 minutes. Have a great trading day, and good luck to all #GLTA. New Clients Welcome +1.312.515.7333 Non-discretionary investment advice. Run for the hills. The VIX is inversely correlated to the US stocks, especially the NASDAQ 100 but also the S&P 500. At the same time, the 10-year US Treasury Note is showing yielding 3.7%, which is also down from around 3.9%, 4%, and 4.25% we have seen recently. There is a flight to cover the 10-year, or to lock in that yield to ride out a potential U.S.-led global macro-economic storm.
At least, that is the narrative. The other narrative is that a large trade came in to buy long-duration US Treasuries last week after the Fed FOMC held rates steady, taking one last ride on falling rates. That trade crowded out other equity trades, and is causing volatility in the Japanese Yen. The result is a rout in US Equities, and Japanese Equities. We read last night of a trade called a volatility control trade that has sold off $64B in U.S. equities since Thursday. Could be a thing...we run a volatility controlled, high beta model and it was down significantly on Friday. So, what do we see: US Equity Futures are down almost 5% this morning - S&P 500 down 3.44% - NASDAQ 100 down 4.7% - Russell 2000 down 4.25% VIX up US Treasuries up Gold down Oil down Bitcoin down significantly Japanese Yen up (against the US Dollar) Grains are down, mostly. Metals are down, livestock is down, and energy is down. I would guess that the 'buy the dip' forces are gathering to pick up the pieces after today's storm. Good luck to all. Our Chicago Quantum Net Score top pick is down again in pre-market. This is an aggressive sell-off of risk in the markets. The VIX rose twice recently, and reached its peak as the NASDAQ Composite 100 fell.  Thank you Koyfin for the visualization.
The VIX is the sense in the market of the future volatility. It drives the price of insurance (calls and puts) on major indices like the QQQ and SPY. I look at this like a cause and effect, but I might have gotten it backwards. I usually think that the VIX reflects nervousness in the market, fear of future volatility, and therefore it goes up, and then stocks react. It could be that way for some investors. Alternative Hypothesis: What if the cost of calls and puts goes up, because investors are buying more of them to hedge the market, or even to profit from a change in the market? What better way to profit from a sell-off than to buy calls and short the market (upside protection), or to buy into the market and buy puts to protect against a fall (downside protection). When we look at the attached chart, it looks like the market purchased more calls and puts, and drove up the price of insurance, then the market fell, the options blew out, and the price dropped again. As the price drops, and less insurance is purchased, the market rises again and the cycle continues. Not sure this makes sense in the real world, but the chart is a little too perfectly aligned to be a coincidence. VIX is low, market rises. VIX rises, market falls. This is only true in NASDAQ 100 and to some extent the S&P 500, but not the RUSSELL 2000. That market moves independently of the VIX, or if anything this last time it went up with the VIX. That could be a coincidence, or just market participants making two bets at once (sell the large caps while buying the small caps). Hope you liked this post. Comments and replies welcome. Good morning to my faithful and interesting readers. I appreciate you. Please comment if you would like something different, more info, a follow-up, or just to say hello.  The largest stocks, typically growth stocks with high expectations, fell yesterday. The largest market capitalization stocks, the ones where the money flows into when people buy passive index funds (like the S&P Index 500 or NASDAQ Composite 100) were lower, and significantly so.  As seen above (thank you Finviz for the three visualizations), the largest rectangles tended to be red, with a few notable exceptions in "main street stocks" like Home Depot, Cat, Exxon Mobil and Chevron, Berkshire Hathaway, Coke and Pepsi, Merck, J&J and Abbvie. The homework we did last night showed 16 of the top 26 US listed stocks, by market capitalization of equity, fell yesterday and some of the declines were material, significant and meaningful. NVIDIA and TESLA falling more than 5% in a day. Most stocks being down 2% or more. This has the impact of reducing the total value of the stock market, without most people noticing. Technical analysts would call this day a distribution day, because people sold the most valuable stocks (maybe closing out long bets), and also bought smaller stocks (maybe closing out short bets). This is our hypothesis of what happened, investors moved to the sidelines on Thursday.  You can see the largest rectangles, by far, were red. The losses were focused on the most valuable stocks.  This chart, also from Thursday, July 11, 2024, also shows the impact on stocks. This view is by industry, and only shows S&P 500 Equity Index stocks that fell on that day (1-day change).  The silver lining is that small caps screamed higher yesterday. This is an ETF that we like that moves with small capitalization stocks in a magnified way. It rose almost 11% yesterday.
In conclusion, what we saw was an exit of the equities market (maybe exiting long positions), and a rotation of buying into small cap stocks (maybe to close out shorts). We sell analysis of individual stocks, and we sell access (on a daily basis) to our full market analysis, which we call the Chicago Quantum Net Score analysis. If you would like to learn more, give me a call at 312.515.7333 or check out the website at www.chicagoquantum.com. Optimism leading into July 18, 2024 for ToughBuilt Industries as it approaches OTC?New Update: The June 28, 2024 short data came out from NASDAQ and short interest has more than doubled to just over 300,000 shares. With the move to OTC on June 18, 2024 (market open), 1.4 million shares outstanding, and another 1.05 million warrants in the money, this could be a wild ride as shorts cover, or don't cover, and wait for resolution. $TBLT: Where did all the new shorts go? Short volume lower than I have seen in many months! ToughBuilt Industries: Confidently going into OTC! In the chart below, we plotted the last four trading days against short volume (Source FINRA), excluding 'excluded short volume.' This is calculated as total shorts (all exchanges) divided by total volume. We have seen this percentage fluctuate around 50% for all the months we are in this stock, with likely as many days above 50% as below. Thank you FINRA for the data.  We do see very few shares available to short. Thank you shortables dot com for the data. Also, the cost to short stocks is far higher than it has been in the past, running around 100% of the price over the year. So, you pay for the stock anyway, so why short it?  What is our hypothesis? 1. The stock is seeing lower volume, after a period of very high volume. It is possible that the 'short squeeze' crowd has accumulated the stock and is ready for a huge burst of price before the stock moves to OTC. This gives the 'pumpers and dumpers' a chance to exit their stock position with a gain while the stock is still on NASDAQ. Confidence: 10% 2. The stock has doubled the float since the offering, from 770 thousand shares to 1.4 million. There are an additional 1.05 million warrants that are near the money at current prices. Those warrants gave investors the chance to short the stock already, including naked shorts that will be covered with warrants. Maybe the shorts are already 'all in' and covered by warrants? Confidence: 50% 3. The uncertainty over the company's latest news on July 3, 2024 could have been priced into the stock via the shorting. The company's stock, in our opinion, is undervalued against fundamentals, assuming they are a going concern and continue to trade on NASDAQ. It is possible that the stock would have run much higher had the uncertainty around their board of directors and financial statements been absent. Confidence: 20% 4. The stock has been fully shorted already, and since June 20, 2024, based on the recent doubling of the stock price. Confidence: 20% Where do we go from here? We love the company and the company's stock. We think this stock undervalues the company and is trading at a significant discount given the history of dilution (which we think is behind us based on improving fundamentals), and the uncertainty over their financial reporting. The 'big date' of July 18, 2024 when the stock gets suspended from trading and delisted at market open puts a huge risk factor on this stock. We will be buying more, adding to our long position, after the uncertainty is behind us. We are an investment advisor, registered in Illinois. We sell investment advisory services for a fee, and offer an analysis of ToughBuilt, delivered by way of a two-hour conversation, for $250. We are non-discretionary investment advisors, so you pay us for our time, efforts and expertise, not based on how much money you invest.
Good morning to my faithful readers. There is a significant update on ToughBuilt Industries Inc., NASDAQ ticker symbol $TBLT.
We sell investment advice on this stock, and are open for business today. Please reach out and we will tell you what we see. By close of business tomorrow we will be publishing a blogpost on the stock. We are at market closed on July 3, 2024, with a long weekend ahead of us. I am happy to be able to relax with family, friends and fireworks to celebrate our nation. I check the publicly available bills of lading on ToughBuilt, and boo-yah, another hit for ToughBuilt shipping StackTech TM products to Lowe's. July 2, 2024 on the Maersk Essen, we see 1,098 cartons weighing a combined 30,752 pounds shipped to Lowe's to fill two orders for a total of 1,722 units of StackTech. We found eight bills of lading showing shipments arriving on June 24, 2024, on both the CMS CGM Endurance and the Gustav Maersk to Lowe's both in Seattle and Los Angeles, and each BOL had about 550 cartons.
We generally see the first generation of StackTech products in Lowe's and occasionally they get in the 3-drawer large box which is what we would buy as the middle of our stack. I have been buying product for personal use (and gifting) from Menards recently, mostly bags and tools. I also bought a Quickset Workbench which has been great for fixing interior doors. Solid and stable. I can plane and sand a large interior door on it with only two clamps. The product selection on the shelves is thinning out in Chicagoland, which means that Menards may not be restocking my local stores. They have been getting shipments to fill my orders, which I pick up in-store. There is absolute silence in terms of press releases, SEC filings, and social media. This stock has been at zero borrow (no shares available to short) since the run up in share price happened on June 20, 2024. Consistently zero borrow, or the ability to borrow maybe 3000 shares, which goes to zero quickly. The cost of borrowing (the fee) now exceeds 100%, so shorting the stock for a year costs the full price anyway, plus what is paid when buying the stock to cover the short. We have no available financial statements (10-K and 10-Q) since September of 2023. This has no immediate impact on investors, but if it continues then the stock moves to an over the counter listing, and is more costly to trade. We remain optimistic on the stock and the company. Good luck to all. Jeffrey Cohen Happy Fourth of July Holiday for those who celebrate. |
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