Bitcoin shrugs at the skittish stock market… How it could overtake gold… The FTC is down but not out… Jamie Dimon says A.I. is "not hype"… An-E 2.0 debuts in less than two hours…
By Michael Salvatore, Editor, TradeSmith Daily
Unlike stock investors, bitcoiners started out this week with a big win.
While the U.S. stock market slumped, dropping 0.37% in sluggish, heavy trading… the king of crypto surged nearly 6%.
Take a look at the two charts compared over Monday's trading session…
Notably, bitcoin is acting like a safe haven from the skittish market action.
That might sound like a normal thing, but in reality it's a bit unusual. Setting aside bitcoin's inherently greater volatility, it's shown a strong correlation to stocks for the last several years. All we need to do is zoom out to see it.
Can we really call bitcoin a "safe haven" from market volatility after one day of breaking this correlation? Well, yes and no.
Bitcoin is a safe haven. But not from stock market volatility.
It's more a haven from the slow-but-sure currency debasement as the money supply in the U.S. — and around the world — continues to grow without any backing beyond the underlying economy and military might.
Bitcoin is designed to be, first and foremost, a hard asset with a fixed supply that will be more difficult to acquire over time. It's the first of its kind in this regard, and nothing else has really come close. Its qualities of being permissionless, durable, and easily transferable are all bonuses.
It's for these fundamental reasons and the catalysts covered in these pages — like the fast-approaching halving event and the listing of bitcoin ETFs — that I continue to recommend buying and holding a little bitcoin as you would something like gold coins.
It will be volatile… and difficult as it tends to be, you can try to sell out of it at the highs if you like.
But personally, I think bitcoin is a great long-term growth buy that will continue to stand the test of time.
It's even challenging the ultimate time-tested asset: gold…
Since their launch six weeks ago, bitcoin ETFs have taken in a net $8 billion more assets under management (AUM) than gold ETFs.
That's impressive growth, but just as important is their relative size. At this stage, with a bitcoin bull market likely in its first inning, bitcoin ETF AUM is at 40% of gold ETFs.
Eric Balchunas, ETF analyst for Bloomberg, shared this analysis on X, formerly known as Twitter. His projection? That bitcoin ETFs could overtake gold ETFs in AUM within the next two years.
Taking gold's anemic price action and the aforementioned first-inning feel of this bitcoin bull market, I'd have to agree. At least in the short term.
It's hard to count out gold, being a millennia-old store of wealth for one and a key industrial metal for two. On the latter point, gold is used in semiconductors… meaning it actually has a part to play in the A.I. picks-and-shovels boom in a way bitcoin can't claim.
Still, there's no denying bitcoin's worth as a growth asset. Its price gains have absolutely dominated gold in the last decade-plus. (The below chart is in logarithmic scale, because if you chart it by percentage gains, gold looks even more like a straight horizontal line.)
Am I saying to sell your gold and go all-in on bitcoin? Not even close. Gold is not the kind of thing you sell… it's something you only want to buy more of over time to protect your wealth.
Plus, in a worst-case, "ATMs go dark"-style scenario, you don't want to be stuck with all your wealth in digital assets. Holding gold will always be prudent.
The solution is simple: Own both in as pure of a form as you can manage. In other words, not just ETFs.
Buy some physical gold and hold it yourself… and buy some bitcoin and store it "cold," or offline… to give your future self a gift and/or lifeline.
Shifting gears…
❖ The FTC's had a hard time, but it's not giving up…
The Federal Trade Commission has been happy to (try to) block a number of proposed mega-mergers in the past few years.
Thing is, it hasn't been successful. At all.
Two and a half years since Lina Khan took up the FTC chair position, the FTC has won a resounding… zero of the mergers and acquisitions cases it challenged. Microsoft's well-challenged acquisition of Activision-Blizzard last year (one of the largest tech deals ever at $69 billion) and Meta's $400 million acquisition of Within spring to mind… but there are many more.
A poor track record hasn't been enough to slow it down. On Monday, news came out that the FTC would sue to block the $24.6 billion merger of Kroger (KR) and Albertsons (ACI) — what would otherwise be the largest grocery merger of all time.
The suit claims the merger will lead to higher grocery prices and poor wages for employees — just as much hot-button political issues as economic ones.
Kroger stock fell about 2% in Monday's trading, but that seems to be more about garden-variety volatility than anything to do with this case.
The FTC has shown investors it's plainly not capable of blocking even difficult mergers, like Microsoft's. There's little reason to think it will be successful this time. So KR shareholders should rest easy… Well, at least on the merger front.
In other words, I wouldn't rush to buy KR on speculation it'll complete this merger. Especially when other high-quality grocery stocks, like Walmart (at a Strong Bullish 89 and a 92 BQS) and Costco (89 and 88) are out there.
❖ Interesting comments out of Jamie Dimon this week…
The JPMorgan Chase CEO, known for occasional incendiary remarks on new tech (especially bitcoin, and look how that's gone), had some clear words on A.I. at the JPMorgan Chase Global High Yield & Leveraged Finance Conference on Monday.
Here's MarketWatch:
Dimon told CNBC-TV on Monday […] that, compared to the internet bubble of the late 1990s, A.I. offers more substantial prospects.
Dimon said he's a "big optimist" for artificial intelligence and that it's already being used in many ways.
"When we had the internet bubble the first time around, that was hype," Dimon said. "This is not hype — it is real."
Golf claps for Mr. Dimon… But TradeSmith has known about this for quite some time.
It's why we stuck our neck out in the first quarter of last year to say very much the same thing… and spent $18 million to develop a suite of market-leading trading software powered by A.I. and quantitative analysis. Chief among these tools was An-E, the predictive algorithm that forecasts price moves 21 trading days in advance.
Dimon also had some key thoughts on the economy… Again, from MarketWatch:
Dimon said financial markets are pricing in a 70% to 80% chance of a soft landing, but his view is "about half" of that.
"Right now confidence is up, equity markets are up, spreads are getting closer to historical lows… the markets are high," Dimon said.
But he added that the fiscal stimulus and the interest-rate cuts by the U.S. Federal Reserve "may play out over multiple years" and that even if the market stays out of a recession this year, the economy could still waver after that.
"I'm kind of cautious," Dimon said.
Dimon is a shrewd business leader. It pays to pay attention to what he says.
Just as interesting is the idea that interest-rate cuts may dole out over several years. That's an expectation the Fed has effectively trained away with the 2008 and 2020 crises. Those waiting to pull the trigger on buying a home may not like to hear that… but it's right in line with what the Fed has promised.
As Dimon suggests, a degree of caution is warranted here. Take your wins to the bank when appropriate, and secure some high yield while you're at it.
Whether you're an investor or you don't have a single penny in the market today, you need to pay close attention to what's happening with A.I. I'm issuing an urgent A.I. Code Red that's about more than your finances. It's about your future.
Your ability to test drive An-E 2.0 with a handpicked selection of stocks will disappear as soon as we go live.
It's your last chance to secure exclusive access to The 2024 TradeSmith Market Outlook Video, reserved for VIP attendees.
During today's presentation, TradeSmith CEO Keith Kaplan will give out one free stock pick to attendees… one that An-E projects will move higher in the next month. (Here's a hint: This company has a firm foothold in generative A.I. tech.)
And all that pales in comparison to the debut of An-E 2.0, the latest version of our analytical engine that's designed to turn small, predicted moves in stock prices into gargantuan short-term wins.
That's it for today. Tune in tomorrow for a piece from Lucas Downey showing you why two growth stocks joining the dividend-stock club are about as bullish a catalyst as you could ask for…
As of Monday's close, 100% of the open trades in Jason's TradeSmith Investment Report model portfolio were in the green. Not a single down position… with open gains as high as 68% in just over six months.
It's a stunning achievement. But then again, it's not all that surprising.
Jason uses a proprietary algorithm to help him sniff out the moves of Wall Street's biggest players. Wherever they're sending their money, it pops up on Jason's radar… letting him build an all-star stock portfolio for you to take advantage of.
TradeSmith is not registered as an investment adviser and operates under the publishers' exemption of the Investment Advisers Act of 1940. The investments and strategies discussed in TradeSmith's content do not constitute personalized investment advice. Any trading or investment decisions you take are in reliance on your own analysis and judgment and not in reliance on TradeSmith. There are risks inherent in investing and past investment performance is not indicative of future results.
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