Last Trading Day of 2024

2025 Data Points To Consider

Alright guys I will post yesterday’s data here and then hopefully get a new letter out on New Years Day. I am happy and thankful for all of my subscribers, followers and I hope that you guys have learned something new this year from all of the work that goes into the letters and podcasts. After trading markets and being involved in deciphering every central bank move, I believe I have learned a thing or two about how our financial system truly works. I try to convey the best I can as to why things are the way they are and hopefully paint a mental picture in your head so that you guys can start to formulate your own theories, implement your own risk adjusted metrics in all facets of your life and truly become the best person that you can become.

There are so many oddities to our world, in fact too many that it would be impossible to decipher all of it. Its like that 2 slit experiment, by which somethings behavior changes once its observed, trading and investing is very much like that. It is within these dynamics that I truly find fascination in and I hope that through all the fog, we together can make sense of it all.

Over the last 2 years the SP500 and Nasdaq markets more so have enjoyed a post covid stimulus inflationary nominal asset price run, however now with the global central banks cutting short rates, we believe 2025 will look very different. We believe the structural imbalances will finally rear their ugly heads and that a transition from blind buying everything goes up, will become weak longs being frustrated by volatility. So we hope you stay the course and continue to read what I write, listen to the pods when I do them and elevate your thought processes in all ways. The world is changing rapidly but as you know and as the old saying goes…the more things change the more they stay the same!

Alright so as far as yesterday’s trackers, let’s start with MicroStrategy and the Gamma tracker that we created 30 days ago, which is now underwater. The stock is down -20.3% since 12/1 and the return on selling options every week has returned +11.3% so overall the return is -8.9%:

We started this tracker to see exactly where the breaking point is for these retail followers that continue to believe Saylor can raise 0% WACC funds to buy Bitcoin…this is a very flawed strategy and one that looked much better when BTC was <$20k and not when its $100k that is for sure. The fact that the equity holders of MSTR are the ones paying 1.77x is evidence of this flawed strategy and one we will never be convinced is viable in the long run, basically MSTR share holders are getting 0.182% of Bitcoin for their shares.

Magnelibra what are you talking about, how are MSTR equity buyers paying 1.77x?

Well take for instance the investment of buying 1 share of MSTR vs Buying $300 of Bitcoin.

MSTR stock trading $300 and each share of MSTR represents a claim on .00182 of a Bitcoin. With Bitcoin trading $93,000, let’s do the math of what a direct $300 investment in Bitcoin gets you:

$300 / $93000 = .00322 of a Bitcoin

So now compare the .00182 you get with MSTR vs .00322 of Bitcoin:

3.22/1.82 = 1.77x

Even worse, owning a claim on BTC is way different than actually owning BTC. Not only are the MSTR shareholders paying the 1.77x vig to the sellers (ConvBond holders) they are the accepting the lowest potential claim on the asset ladder. So when Saylor goes on all these roadshows, just know all the suckers he talks about accepting to pay $2 or $3 for something that costs $1, it is the MSTR equity buyers he is referring to:

Ok let’s take a look next at the MEGA8s tracker where with one day left, we will reset the data and start the clock back over for 2025 and set the MEGA8s back to an equal weight of $100k across all 8 stocks. We hope this tracker and the subsequent hedged application we add brings value to how you look at investing and the buy and hold strategy. Anyway there won’t be a hedge now for the end of the year as the calls don’t offer value at this point, so the next update will be the final tally for the MEGA8s for 2024 and then we will start a fresh tracker back at unchanged for 2025:

Nvidia and BroadCom were the 2024 standouts btw. We don’t believe we will see this grouping have it as easy in 2025 due to the increase in volatility and broader diversification that may come with it, but we will track it as always for our subscribers. The 21wkMA on the total market cap chart is once again being attacked and we feel the clearer path would be to break this in Q12025:

Ok let’s take a look at the settlements page where the Nasdaq was the big contract loser and Nat Gas the standout winter as the Polar Vortex and Russian pipelines seem to be providing a clear boost to the sector:

As far as our MCA GABP CTA markets sentiment, we hope in 2025 that this data helps with some of the trend followers out there. We use this as a proxy trend indicator and even for a discretionary CTA, there are always tools and data points that can assist, that take in data and do not infer any emotionality to the markets other than the inputs used based upon time, price level and various other metrics to provide outputs as guideposts:

Ok the last chart here you have seen before but it is the data chart that gives us the most angst moving into 2025. This bond curve move out of negative territory, has historically come with volatility to readjust things. Will 2025 prove differently? We doubt it. This spread has moved from a low of about -176bp (-147.1 monthly print) to its present +33bp:

We are also watching this Tether chart vs Bitcoin, this also gives us another data print pointing toward volatility. We don’t like Tether or what it represents given its anonymity, there are a lot of games that can be played with this thing, its no wonder Cantor Fitz is involved given the amount of TBills these guys represent. Anyway you remember Circle and its USDC and the Silicon Valley Bank debacle…well Tether is 3.5x larger. This BTC/Tether looks like its peaking again as it did in Nov 2021. The spread has dropped from a recent high of 15.4x to 13.5x:

Ok another data point is this and this one seems to be one that many are ignoring so compare this housing data chart to our negative carry chart and you may start to see some important dates lining up:

Alright guys, we hope you enjoyed this one, and we hope you continue if you can to support our work. There is a lot at stake everyday, for everyone and we understand that there are many things you can read, listen too, etc. We hope that our work here provides you with a unique and fresh perspective and we hope that you continue this journey with us and help our cause by at the minimum, sharing with everyone you know. The more informed a populace is, the better society will ultimately become. Its up to each and everyone of us to play our parts, till next time. Cheers!

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