October 26, 2024

 

The S&P 500 fell 1.0% this week as bonds sold off and commodities rallied. The US Aggregate Bond index lost 0.9%, gold rose 0.8%, and Bitcoin lost 2.7%. The Bloomberg Commodity Index jumped 2.0%. 

Economic data remains fairly strong. Jobless claims, durable goods orders, and consumer sentiment all point to a resilient US economy. The Citi Economic Surprise Index has risen for three consecutive months and is at the highest level since April. 

Next week, traders will be closely following mega cap tech earnings. The top seven stocks in the S&P 500 presently account for about 30% of the overall index weight. That's the highest level of market concentration since the Nifty Fifty Bubble in the 1960s.  

 

 

 

Faith In The Next Generation of Investors

 

 

The reason there was no 5 Things last week was because I was in Orlando presenting at my first MoneyShow. The highlight of the event for me was speaking at MoneyShow University alongside Charles Payne, Katie Stockton, and several other financial thought leaders.

The audience largely consisted of young people who will be graduating college soon. At the start of my talk, I asked everyone to raise their hand if they just started trading stocks in the last four years. To my surprise, almost everyone raised their hand. There are more young people participating in the stock market than ever before. Technology has made it easy to trade and many started trading when they were bored during the pandemic. I explained how the last four years have been typified by unusually easy financial conditions, so I wanted to prep the audience for what may lie ahead when monetary conditions aren't as rosy. They got the message and were surprisingly thoughtful when they came up to ask questions afterward. Participating in the event made me bullish on the next generation of investors!   

 

 

 

The Market Is Leaning Toward a Trump Win

 

 

Billionaire investor, Stan Druckenmiller, recently said he thinks the markets are pricing in a Donald Trump victory in next month's presidential election. “You can see it in the bank stocks, you can see it in crypto,” Druckenmiller told Bloomberg News. “In the last 12 days, the market and the inside of the market is very convinced Trump is going to win.” Banks and crypto would likely benefit from Trump's plans to deregulate. Online betting markets that allow people to take direct stakes in the election outcome are also leaning toward Trump. On the eight platforms tracked by RealClearPolitics, Trump’s probability of victory ranged from 57% on Smarket to 62% on Polymarket. In late September, Harris had a solid lead on most markets. 

When asked whom he plans to vote for, Mr. Druckenmiller flatly said: “I certainly would never support either one of them.” 

 

 

 

Pandas Are a Bullish Signal for US and China Relations 

 

 

China is sending two giant pandas, Bao Li and Qing Bao, to the National Zoo in Washington DC. This will end a year long hiatus where there were no pandas, and it's a good sign that geopolitical strains between the US and China are probably starting to ease. The pandas are on loan to the zoo for 10 years and the US pays $1 million annually to support China's conservation efforts.

In 2019, I wrote about why 'panda diplomacy' is an important part of how China conducts business. If China perceives a country a friend, it lends them pandas. When it believes a foreign land to be an adversary, they take back the pandas. Since my RealClearMarkets article about China taking back pandas, the iShares China Large Cap ETF (FXI) is down 7%, while the S&P 500 has risen 121%. Perhaps now that China is stimulating its economy AND playing nice with the Pandas, the China/EM trade can finally reignite in a more sustainable fashion.   

 

 

 

Rooting for the New York Knicks

 

 

The combined private market value of the NBA's New York Knicks and NHL's New York Rangers is estimated by Forbes to be $9.9 billion. The current enterprise value of Madison Square Garden Sports (MSGS) is only $6.3 billion. This is an arbitrage opportunity I expect to close over time, so Silverlight portfolios are long MSGS. MSGS is a publicly traded stock that gives investors direct ownership of two premier sports franchises. 

MSGS is up 21% year-to-date and the stock is approaching an all-time high. One thing that could help the shares continue to levitate higher is the team winning more games. That looks more probable this year than at any point in recent history. The team has a talented young club, great coach, and recently acquired NBA all-star Karl Anthony Towns to be the new starting center. When the NBA season opened this Tuesday, the Knicks started out with the third shortest odds of winning this year's NBA championship, just behind the Boston Celtics and Oklahoma City Thunder.

Takeaway: if you're a Silverlight client and happen to see the Knicks playing on TV, you have a financial reason to root for them—you own part of the team!   

 

 

 

Exciting Breakthrough in Brain Science

 

 

An international team of neurosurgeons recently made a groundbreaking discovery that could revolutionize heart attack treatment and organ transplants. The team successfully revived a pig's brain 50 minutes after removing it from the body by connecting it to a liver. This experiment, conducted at the First Affiliated Hospital of Sun Yatsen University in Guangzhou, demonstrated that the liver's production of ketones, a key nutrient for brain metabolism, played a key role in restoring brain activity. The researchers believe this "ex vivo brain maintenance technology" could extend the critical window for resuscitation and improve outcomes for heart attack victims and organ transplant recipients.

 

 

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This material is not intended to be relied upon as a forecast, research or investment advice. The opinions expressed are as of the date indicated and may change as subsequent conditions vary. The information and opinions contained in this post are derived from proprietary and non-proprietary sources deemed by Silverlight Asset Management LLC to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Silverlight Asset Management LLC, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any of these views will come to pass. Reliance upon information in this post is at the sole discretion of the reader.​​