Hey guys, welcome to another edition of the Magnelibra Markets, where financial market meet expert trading analytics. Today’s episode #65 is entitled “Broadcom Earnings Boost Shares Up 20%”
Quick Disclaimer: The following podcast is for educational purposes only. This is not a solicitation to buy or sell commodity futures or options. The risk of trading securities, futures and options can be substantial and may not be appropriate for all listeners.
Broadcom earnings way up as revenue grew 44% YoY to a record $51.6 Bn. The big driver was its semiconductor revenue at $30.1Bn where AI revenue was $12.2Bn of that figure. Also helping was its quarterly dividend +11% to 0.59 cents a share. Shares are soaring today up nearly 20% trading at $215:
We highlighted the breakout levels on the weekly chart to show you how strong the bull market in this one has been. Since its low in Oct 2022 at $41.51 its on a 5.18x run! Even with this move AVGO will not move into the 8th spot on our MEGA8s just yet as Tesla has had an epic run as well solidifying its 7th spot and in 8th is Berkshire. Technically Broadcom’s market cap is slightly above Berkshire, but we like to see more than just a days bump, so for now AVGO will not be admitted to our MEGA8s. Tesla is +35 bucks today to $424 +9% on the week:
Ok so looking at the MEGA8s real quick:
Its interesting to note that this static long basket of MEGA8s has had a remarkable run and even the hedged version is up solid. For this week we have the QQQ 525C at $4 so our B/E is the Qs at 529. Let’s see how today settles things out, but for now the MEGA8s continue to shine.
What else did we see, well we keep hearing about Blackrock and its call for adding Bitcoin to ones portfolio. We can’t help but laugh considering we know for many years prior to this, the big Wall Street players all hated Bitcoin and the crypto industry and now they are all in? We have to call BS on this, they are only in it for the fees and accumulation of the assets on the dime of the retail, we get it, retail is stupid and its why they make so much money. However being in this for so long we know better, we know to look at this one way and one way only, with skepticism. The very people telling you to buy at $100k are the same people who told you not to buy at $6k, now think very hard why that is. Think hard as to who is buying up here and who was selling down there! Here we have a little reminder of what both Larry Fink of BlackRock and Jaime Dimon of JPM Chase had to say about this stuff 7 years ago:
“Crypto Currency is an “index of money laundering. Bitcoin just shows you how much demand for money laundering there is in the world,” Fink, the head of the largest asset management firm in the world, said at an Institute of International Finance meeting. “That’s all it is.” Larry Fink 10/13/2017
CEO Jamie Dimon took a shot at , saying the cryptocurrency is a fraud. It’s just not a real thing, eventually it will be closed, it’s worse than tulip bulbs. It won’t end well. Someone is going to get killed,” Dimon said at the Delivering Alpha conference presented by CNBC and Institutional Investor. Jaime Dimon 9/12/2017
So let’s just say we are extremely skeptical at all the FOMO up here, but Bitcoin continues to hold the $100k level, but it is a battle for sure. You guys know our line in the sand is still $93500:
We also saw yesterday the latest Federal Reserve Data where they continue to break records with their deferred asset, (losses) which are now $213Bn:
We aren’t sure of the overall ramifications for this, but this is basically a subsidy allowing them to accumulate losses over time.
Ok onto our MicroStrategy/Vol Tracker where it looks like the option premium will once again be fully realized and the tracker continues on its positive returns:
Ok lets look at yesterday’s settles where we corrected some of our data in regards to Coppers YTD return, we believe we have a closer reality using our future rolls as to its return this year. Anyway most markets were hit yesterday and the big loser was Silver -$1.34:
The US bond market continues to move toward a more normal positive sloping yield curve and yesterday’s move was indicative of that trend as the 30Y on the heals of bad reopening auction gained 7 bp on the day:
As far as the rolling returns the Ultrabond is the 5 day loser and Nat Gas the winner with Bitcoin and Nat Gas 30 day winners and FX the big losers sans the Yen:
Ok guys one last thing we have been contemplating is this 60/40 traditional portfolio theory of diversification. When we look at investing today and compile it against the monetary mechanisms that exist and the propensity of AI to drive all alpha into a few components, we can’t help but the future of investing is already here and traditional ways of doing things are now defunct. Here is how a traditional 60/40 might look:
When we look at this next graphic which is taken from the latest SIFMA report we can see that over the last 15 years, the allocation to bonds have grown by almost 12% and the allocation to equities has fallen by 2.5%. This is the expected path because of the baby boomers, we get it. However what we don’t see in the data is the rationality behind it. Yes we understand the need for matching fixed income liabilities, however is it appropriate this diversification vs quantifying the potential loss of alpha? We don’t believe so, we believe that $1T of alpha was lost because of this and this may continue to be the wrong path given the propensity for growing government debt and the prospectus for stagflation in the future because of this. So our premise is pretty simple, we believe the prospect of safety that is borne by having fixed income assets does not outweigh the potential loss of alpha. We believe this is why we are in the alternative asset space, because eventually the traditional ways will have to be rectified to counter this misalignment and gross miscalculation by the investing masses. We aren’t sure what the migration will look like, but one thing is certain, moving this much capital into fixed income at the opposition of bearing more investment risk, seems quite counterproductive for the investor. This is something we have always talked about, but convincing the masses to change their ways, well that’s easier said than done. Case in point, keeping 4% in cash when inflation is running at 3% annualized and general interest rates are probably 3% giving you a zero real return…somehow the masses accept that:
Anyway see what you think, also for any new subscribers, please think about joining up, the prices will return back to their upper bounds on Sunday, so if you sign up today you get the massive discount that we have been running all week. We hope you find our work insightful, we hope you like, share and if you are financially able, support our work. We know if you follow our data, if you follow our insight, that you will become a better investor, a better trader and you will look at not only investing in a non linear way, you will have a very different view of the world. Till next time…Cheers!
DISCLAIMER: For educational purposes only. This is not a solicitation to buy or sell commodity futures or options. The risk of trading securities, futures and options can be substantial and is not for everyone. Such investments may not be appropriate for the recipient. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. Nothing contained in this message may be construed as an express or an implied promise, guarantee or implication by, of or from Magnelibra Capital Advisors. Magnelibra the Commodity Trading Advisory and its proprietary long/short commodities, futures and options managed accounts may hold long and or short positions in the various futures and markets that Magnelibra covers. We will never claim that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Although care has been taken to assure the accuracy, completeness and reliability of the information contained herein, we make no warranty, express or implied, or assume any legal liability or responsibility for the accuracy, completeness, reliability or usefulness of any information, product, service or process disclosed. If you are interested in opening an individual managed futures and options account to compliment your overall investment portfolio you can visit our website at https://magnelibra.com for more information. We are implementing a new trading program launching at the start of the new year, which will include access to Bitcoin futures and options. Please contact or make inquires directly to our introducing broker Capital Trading Group, please contact Nell Sloane at nsloane@capitaltradinggroup.com
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