Raise Cash And Hedges

Cash and short term hedges are being raised by 2% – 4%, as per our model.

Hotter PPI

Please click here for an enlarged chart of Block Inc (NYSE:XYZ).

Note the following:

• This chart is about the big picture, not an individual stock.  The chart of XYZ stock is being used to illustrate the point.
• The chart shows a 20% move up in XYZ stock.  Block is the maker of the popular Cash App.  The move up is the result of Jack Dorsey, founder of Block, announcing that XYZ will implement 40% job cuts.  Dorsey was also a founder of Twitter.  When Elon Musk bought Twitter, Musk made massive job cuts.  At that time, Musk's critics were aghast and claimed the job cuts were so drastic that Twitter would fall apart.  When Twitter not only continued to function but also started adding new features with a much smaller staff, other tech companies noticed.  After Musk's move, a large wave of layoffs among tech companies followed.
• It is conceivable that Dorsey's move may have an impact similar to Musk's move.  More large scale job cuts may follow.
• The difference between the job cuts at Twitter and those at Block is that Dorsey is reorganizing the company to take full advantage of AI.
• In our analysis, this time layoffs are not only coming to tech companies but they are coming to corporate America in general.   Corporations are going to look at how Dorsey is reorganizing Block, and they are going to start reorganizing to fully take advantage of AI.  
• Further, in our analysis, there is going to be a wide dispersion in how it impacts different companies in the stock market.
  • Many stocks will experience major up moves because their labor expenses are going to go down.    
  • Stocks of many companies, such as software companies that sell per seat, are going to be adversely impacted.  Examples are Salesforce Inc (NYSE:CRM), Workday Inc (NASDAQ:WDAY), Figma Inc (NYSE:FIG), and Monday.Com Ltd (NASDAQMNDY).  We published a list of 18 stocks with nine likely winners and nine likely losers in software.
  • As people lose jobs, many consumer discretionary stocks will lose as well as companies catering to white collar workers such as American Express Co (NYSE:AXP).  
• Investors should expect a big societal change and high volatility in the stock market.
• On an optimistic note, OpenAI, the maker of ChatGPT, has raised $110B at a valuation of $730B.
• Producer Price Index (PPI) came hotter than expected.  Here are the details:
  • Headline PPI came at 0.5% vs. 0.3% consensus.
  • Core PPI came at 0.8% vs. 0.3% consensus.

Iran

The risk of a U.S. attack on Iran is rising.  Oil, gold, and silver are ripping on Iran fears.

India

India's Q3 GDP came at 7.8% year-over-year vs. 7.2% consensus.  Among major economies, India continues to grow quickly and presents one of the best opportunities for long term investors.  We have continuously covered India for nearly two decades.

Investing is never simple.  Now, there is a new fly in the ointment.  India's economy has a major component of IT and business process outsourcing services.  Expect AI to decimate such services and hurt India's economy in the process.  As full disclosure, we have a short position on Indian IT company Infosys Ltd (NYSE:INFY).

Pakistan and Afghanistan

An open war has broken out between Pakistan and Afghanistan.  Neither country is economically material in the global context, but the war creates geopolitical instability that, in turn, impacts the stock market.

Magnificent Seven Money Flows

Most portfolios are now heavily concentrated in the Mag 7 stocks.  For this reason, it is important to pay attention to early money flows in the Mag 7 stocks on a daily basis. 

In the early trade, money flows are negative in Apple Inc (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc Class C (NASDAQ:GOOG), Meta Platforms Inc (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT), NVIDIA Corp (NASDAQ:NVDA), and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are negative in SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ).

Momo Crowd And Smart Money In Stocks

Investors can gain an edge by knowing money flows in SPY and QQQ.  Investors can get a bigger edge by knowing when smart money is buying stocks, gold, and oil.  The most popular ETF for gold is SPDR Gold Trust (NYSE:GLD).  The most popular ETF for silver is iShares Silver Trust (NYSE:SLV).  The most popular ETF for oil is United States Oil ETF (NYSE:USO).

Gold

The momo crowd is buying gold in the early trade and is especially aggressive in gold ETF (GLD), silver ETF (SLV), VanEck Gold Miners ETF (NYSE:GDX), and Global X Silver Miners ETF (NYSE:SIL).  Smart money is inactive in the early trade.

Bitcoin

Bitcoin (CRYPTO: BTC) is range bound.

What To Do Now

Consider continuing to hold good, very long term, existing positions and add tactical positions based on signals. 

The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever Generate Wealth Newsletter.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.