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☕ Palantir, ready for a pullback or something else?

Dec 05, 2024

Good morning! 👋

The markets are down a skosh in early going.

The news is billing this as a case of bitcoin enthusiasm failing to cross over to equities but that’s not true.

Behind the scenes traders are watching the US10YR yield jump to 4.201% and selling off a skosh to avoid their version of a margin call.

Technically speaking and in case you’re interested, every major hedge fund or trading firm has to deal with something called VaR which stands for “value at risk.” And the higher the leverage they use (meaning the amount of money they’ve borrowed, the more important the VaR).

VAR is used in several ways.

VaR helps traders quantify the potential downside risk of their portfolio and to adjust their positions and strategies accordingly. If rates are up and they’re over VaR, they sell down. If rates are dropping and they’re under VaR thresholds, they tend to buy up.

VaR is also commonly used to optimize capital allocation across different trading strategies or assets based on their risk levels. Media outlets tend to blather on about “rotation” which used to be a thing back in the day, but as I’ve mentioned many times that’s a largely myth these days. Usually, it’s a shift in VaR.

Not to get too far off track, but VaR must be reported regularly to ensure the markets can work (and so that regulators think they have a handle on systemic risk which is arguably debatable at this point, but that’s just me 🤦‍️)

Anyhooooo…

I think the past of least resistance is higher so it’s likely there may be some green on your screen by the time you read this.

Here’s my playbook.

1 – How high can bitcoin go?

Speaking yesterday, Fed Chair Jerome “JPow” Powell said something that made my mouth hit the floor, [Bitcoin’s] “not a competitor for the dollar, it’s really a competitor for gold.” (Read)

Two things come to mind.

What does Powell know? The Fed doesn’t tie its shoelaces without something going on in the background, so his remarks beg the question.
What impact does this have on the US Treasury? And, of course, why now?

Bitcoin proponents have “heard” what Powell said and already selectively interpreted that as good for bitcoin which crested $103k this morning.

Political types are already proclaiming the move to be a reflection on President-Elect Trump’s anticipated actions.

The tin-foil hat club, meanwhile, is suggesting what’s happening will ultimately cause the “death” of all things financial. Aliens landing will be a bonus, or so the story goes.

Me?

I’m not so sure any or all of this is true based on what I know about how capital markets actually work having spent 4+ decades in the game. But I do know that I couldn’t be happier for everybody who’s on board!

My focus is on what happens next.

The much bigger (and order of magnitudes larger) issue is how China sees this vis-à-vie the battle to get BRICs using “digital money” … on China’s terms.

I also wonder what Powell knows about the prospect of a digital Dollar… everybody inside the Beltway seems to have gone radio silent.

How high can bitcoin go?

I am not nearly smart enough to figure that out but there seem to be plenty of people out there who have a lock. I’ve seen a wide range of figures from $80k to $500k+.

My take is bitcoin will continue to appreciate until buyers run out of money.

Meanwhile, I’m going to be putting my effort into banking and one bank in particular with a near lock on digital clearing. It’s not only a double-digit runner, but has a nice juicy dividend, high ROIC and trust shareholder yield.

Hopefully you’ve got this covered, too. If not, you know where to find me.

2 – Broadly speaking, there’s still plenty of “rally” fuel

All three indices have run up sharply recently as I’ve repeatedly shared with you all year.

There’s still plenty of fuel.

AI isn’t even outta first gear yet.

Customizable medicine is just around the corner.

Quantum computing is on the horizon.

Btw and in case it’s of interest, the next issue of One Bar Ahead® drops this Friday and with it, two new research recommendations as the “wave” accelerates. They’re both almost entirely off the radar but, like Palantir when I first told you about it (at the $6-$10 range), could gain steam quickly. If you’re good, excellent!

3 – Speaking of Palantir

The haters are still out there doing what they do best. But hey, it’s a free country.

What I want to bring to your attention is that Palantir is trading at $71.39.

If you have been waiting for a pullback, you’ve a) been probably been waiting for a long time and b) best get ready.

We’re coming into the end of the year and there are still a phenomenal number of Wall Streeters who are offsides (meaning they’ve missed out). They have the motivation and the means to engineer a sharp, quick pullback that’ll scare the pants off anybody who is not mentally prepared for it.

So, I am telling you to prepare for that now, ahead of time.

Have a plan.

If it’s to capture profits, fine.

If it’s to buy more, fine.

If it’s to do nothing but gloat on the Internet and take cheap shots while hiding behind an anonymous Internet handle, fine.

Chance favours the bold, or however that saying goes.

Keith’s Investing Tip: The world’s most successful investors and traders do NOT fly by the seat of their pants, and I encourage you not to do that either. Instead, figure out what you want to accomplish then orient your thinking, your strategies and your tactics towards making that happen. Bluntly, be in to win or you won’t… win.

4 – OPEC delays, oil rises

Not that this is a surprise, but OPEC members have apparently agreed to delay production increases. US Crude is up roughly $0.43 as I type but Brent (which is what the rest of the world typically prices off of) has risen slightly less at $0.41 as I type. (Read)

My guess is that OPEC has suddenly had a wake up call… China’s demand is down while US production is up.

Breakout the popcorn and find some divvies!🕺

5 – Healthcare horror has me thinking

Police don’t yet have a motive behind the horrific assassination of UnitedHealthcare CEO Brian Thompson, but reports suggest what happened may be coverage related. (Read)

That got me thinking.

Insurance companies want you to believe that dang near everything is covered in their adverts and on their web pages. Then, when you need coverage, nothing seems to be.

If there’s ever an industry that needs an overhaul, seems to me that getting insurance companies out of the proverbial driver’s seat would be a great place to start.

Reining in big pharma, too.

MyPOV: Healthcare should be a strategic national priority for everyone, not a for-profit activity benefiting few. I’d like to see a serious discussion about a return to some sort of health care co-op structure. Not surprisingly, those have been largely shut out of the system… 🤔