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January 2021

China is Using its Currency to Stockpile Copper and Grains

January 25, 2021John Banks

In the TradeSmith Decoder model portfolio, we have a large position in a top-tier copper miner that was up more than 190% as of last Friday’s close. For that we say: “Thank you, China.” There are other crucial factors driving the price of copper higher — and grains, too — but China is a big one. China has been using its exceptionally strong currency, the yuan, to stockpile copper and grains. This activity means China is exporting inflation to the

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The SPAC Supernova Will Likely End With a Spectacular Collapse — But Not Yet

January 19, 2021John Banks

The Special Purpose Acquisition Company, or SPAC for short, had a supernova kind of year in 2020. The after-effects could be felt, in a bullish way, well into 2021, as hundreds of billions of dollars’ worth of SPAC-driven merger and acquisition (M&A) activity waits to be unleashed. In 2020, the total amount of capital flowing into SPAC deals smashed all previous records, besting the prior record year (which was 2019) by nearly 10-to-1. Alternately known as “Blank-Check Deals” or “Backwards

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Scenes from an Epic Market Mania: Bull Raids and Meme Stocks

January 15, 2021John Banks

Speculative areas of the market are not just red hot, they are white hot. Initial Public Offerings (IPOs), a barometer of speculative froth, are on fire. In the past few days alone: Petco Health and Wellness (WOOF) jumped more than 63% on their first day of trading. Poshmark (POSH) saw its share price more than double on the first day. Affirm Holdings (AFRM) nearly doubled on day one, then continued to rise. And of course, two big-name IPOs from December,

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Why a New Commodity Supercycle Could Now Be Underway

January 14, 2021John Banks

Goldman Sachs thinks a new commodity supercycle could be underway. We think they might be right. If they are in fact right — which is easily possible — base metals like copper, along with other commodity staples widely used in construction, vehicles, and home appliances, could be looking at price gains that stretch out over a decade, or even multiple decades. A recent Goldman Sachs research report, published in November 2020, laid out the case for a “structural bull market”

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Bitcoin Will Not Replace the U.S. Dollar (It Will Do Something Better Instead)

January 13, 2021John Banks

As the institutional world starts taking Bitcoin seriously, new questions are emerging. For instance: Will Bitcoin replace the U.S. dollar? Will it push aside major fiat currency competitors? Could Bitcoin usher in a fiat-free world? In our view, the answer is “no” three times over. The destiny of Bitcoin is not to replace or dominate fiat currencies. It is to offer a global store of value, and to put a check on the governments that issue fiat currencies. One of

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Saudi Arabia Juices the Oil Price

January 11, 2021John Banks

A little over a month ago, on Dec. 8, 2020, TradeSmith Decoder went long a sizable basket of oil and gas stocks in the model portfolio. Price action was flashing a green light — always a requirement for new positions — and our bullishness was rooted in the beaten-down profile of energy stock valuations; the demand-boosting prospects of a vaccine-powered recovery; the outlook for a weakening U.S. dollar (which could help lift the oil price); and the rising prospect of

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‘Getting Brexit Done’ was a Bullish Deal — for Europe

January 8, 2021John Banks

Brexit, as you likely know, is shorthand for “British exit,” in reference to the United Kingdom parting ways with the European Union (E.U.) after a 47-year relationship. Brexit was made real through a U.K. referendum vote whose results shocked the world — few expected it would happen — in the summer of 2016. For four long years, in an excruciating process that often felt like drilling a tooth without novocaine, the U.K. and Europe struggled to “get Brexit done” (a

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Political Regime Change in Washington Pours Kerosene on an Inflation Fire

January 6, 2021John Banks

On Dec. 17, we wrote to you with the following headline: “The Stars are Aligning for Inflation’s Grand Return — and Bitcoin’s Dominance as an Inflation Hedge.” Bitcoin was trading around $23,000 at that time. A few weeks later, it is up more than 52% (pushing $35,000 as we write this note). Perhaps needless to say, the TradeSmith Decoder portfolio had a spectacular finish to an already excellent year. We anticipate 2021 could be even better — because of that

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The Fate of Jack Ma, and Alibaba’s Reversal of Fortune, is a Warning for the U.S. Tech Giants

January 5, 2021John Banks

Imagine the U.S. government deciding that a visionary entrepreneur like Jeff Bezos or Elon Musk was too rich and too outspoken. Then imagine Bezos or Musk being kidnapped — and completely removed from the public eye — even as the government openly and aggressively put their tech empire under siege. This is apparently happening to Jack Ma, the e-commerce visionary who founded Alibaba in 1999. In China, Jack Ma is the rough equivalent of Bezos and Musk combined. Alibaba, the

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December 2020

Apple is Still Serious About an Apple Car

December 23, 2020John Banks

Apple still wants to disrupt the electric vehicle (EV) industry, and it could have some form of EV in production as soon as 2024. This comes from a Reuters scoop, as told to Reuters by an inside source. No matter how you slice it, Apple getting into the EV space would be a seriously big deal. Nor would they be starting from scratch: Apple has played with the idea for years. Project Titan, the code name for the Apple car,

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The Solarwinds Hack Looks Increasingly Like an Act of War

December 22, 2020John Banks

The Solarwinds hack that broke into U.S. government agencies, along with hundreds of Fortune 500 companies, is increasingly looking like an “act of war” per various sources in the U.S. government and Congress. “It’s pretty hard to distinguish this from an act of aggression that rises to the level of an attack that qualifies as war,” Sen. Chris Coons of Delaware told reporter Andrea Mitchell. “[T]his is as destructive and broad scale an engagement with our military systems, our intelligence

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