TGIT: Mixed Signals, New Trade Ideas and a Haunting Forecast

VIX tricks, the Kelly criterion, home building, bottom fishing, Pony AI, D.R. Horton, a new Rising Star and much more. First time reading? Join other risk-takers, entrepreneurs, traders, investors, data geeks and alpha types. Sign up for free here.

Thank goodness it's Thursday! (5/1) America woke up to news that the U.S. and Ukraine have signed a natural resources pact that includes oil, natural gas and rare earth minerals. Months in the making, the terms of this agreement are Ukraine's efforts to keep American dollars flowing—a financial arrangement concluded with the fanfare of a shotgun wedding. It promises to have staying power because it protects strategic economic and geopolitical interests.

Meanwhile back at home, Americans are wallowing in economic pessimism while maxing out their credit cards. Last Friday's Bank of America figures show card spending up 3.1% year-over-year in April, while March retail sales jumped a hefty 1.4%, driven by automobiles, smartphones and overpriced restaurant meals. Online electronics purchases surged 7.5%, as if grabbing gadgets now might somehow soften future economic blows.

Not surprisingly, it's the affluent leading this spending parade. The top 5% of customers increased their spending by 3%, proving market volatility can't dampen their appetite for conspicuous consumption.

The cognitive dissonance is remarkable: Major indices indicate consumer confidence has plunged to decade-low levels, yet spending barrels ahead uninterrupted—a peculiar economic suicide note written in installment plans and credit card statements.

Stay lucky.

Letter to Editor

D.R. Horton (DHI)—America's largest home builder—crashed 30% as housing starts plummeted 11% in a single month. This isn't just a hiccup; it's economic cardiac arrest. While Wall Street's cheerleaders fidget nervously with their spreadsheets, the company has slashed its guidance, exposing the naked emperor parading through real estate portfolios nationwide. But with a P/E ratio at 9.4 vs. the sector's 17.1, the company’s stock is either a once-in-a-decade bargain or a crumbling facade. We assess the situation here. Read Full Story

613,100 — Number of lots in D.R. Horton’s portfolio
— D.R. Horton's Q2 FY25 earnings release

Amid interest rate uncertainty and fear of recession, homebuilder Lennar (LEN) sits neglected in Wall Street's bargain basement, practically wearing a "75% OFF" tag on its lapel. This oversold gem—with its diversified portfolio ranging from luxury McMansions to starter homes for desperate millennials—offers bottomfishing investors a rare glimpse of value in the middle of the market's foam-flecked hysteria. Analyst/trader Errol Coleman advises active investors that selling the 100-strike put offers immediate cash and potential ownership at a historic discount. Read Full Story

Tech darling or train wreck? Pony AI (PONY) shares have whiplashed investors from $20 to $4 and back to $10 with the ruthless efficiency of a Wall Street algorithm. The autonomous vehicle company's 30% revenue nosedive leaves it burning cash while maintaining an optimistic valuation. Yet analysts remain unfailingly bullish, projecting 100% upside despite mounting losses and Trump's tariff hammer hovering overhead. Read Full Story

The ever-popular Rising Stars video series profiles people from all walks of life who’ve mastered options trading. The latest installment features Ross Young, a high school Spanish teacher turned trader. Young shares the lessons he’s learned from his trading journey and describes how options trading has reshaped his financial future. He began by investing modest amounts monthly and credits his financial success to his philosophy of consistency, patient capital-building and disciplined trading strategies. His story and video are here. 

Nick Battista's Life Cycle of a Trade series often shows how to resurrect a losing trade. When Meta Platforms (META) hit its stratospheric peak, Battista pounced with a short call spread that initially looked about as promising as prospects for bipartisan tax legislation. But after earnings sank like a stone for Silicon Valley's golden child, our $0.70 loss morphed into a $112 payday. This isn't financial astrology—it's mechanical precision with the 30-delta rule. Watch the latest Life Cycle here.

The Kelly criterion—that rare mathematical formula worth its weight in actual gold—separates serious investors from degenerate gamblers playing financial Russian roulette. While Wall Street's finest claim mystical intuition, this Bell Labs breakthrough delivers cold, hard science that helps determine precisely how much to wager when the odds are in your favor. It's the mathematical middle finger to both reckless risk-takers and pathologically cautious money-hoarders. Read Full Story

When the VIX Drops by 20  ↘️

The VIX just pulled off its fastest drop from 50 to 30 in history—a move that historically signals a fat 35% market gain over the following year. But before you mortgage the house to buy the dip, remember that stocks remain more overvalued than a Manhattan studio apartment. With Shiller P/E ratios still hovering at a nauseating 30—double the historical average—we're watching the ultimate high-stakes poker game. Trump's tariff threats loom over markets like a guillotine, ready to separate investors from their capital. Will history's bullish patterns hold, or are we witnessing the setup for capitalism's next magnificent face-plant? Read Full Story

AI 2027's Haunting Forecast 👻

While tech optimists blather on about digital utopias and AI-enhanced productivity, a sobering new report from researchers who hold credentials from OpenAI and The Center for AI Policy delivers the intellectual equivalent of a cold slap across the face.

AI 2027 maps out a quarter-by-quarter progression toward humanity's potential obsolescence, predicting artificial general intelligence (AGI) will arrive within two years, followed by superintelligence mere months later. This isn't sci-fi alarmism—it's a meticulous forecast built on insider knowledge of current research pipelines.

Even AI kingmaker Geoffrey Hinton has dramatically revised his AGI timeline from "30 to 50 years" to as soon as 2028. Google DeepMind acknowledges human extinction as a possible outcome. The implications are staggering: catastrophic job displacement before retraining infrastructure can possibly adapt, the philosophical collapse of human exceptionalism and, potentially, our collective demise.

The forecast may prove wrong, but its plausibility demands immediate action. For once, the tech industry's favorite cliché rings true—we're standing at the precipice of disruption without precedent. The time for abstract debate is over.

This is our most recommended, essential investor read of 2025. Read AI 2027 here.

Are We on the Verge of a Man-made Recession or a Manufacturing Renaissance? 🤔

America's latest gross domestic product (GDP) report reads like a satire of economic orthodoxy—a negative number hiding an economy firing on several cylinders. Companies are frantically gorging on imports like doomsday preppers at Costco. Meanwhile, investment in equipment used in manufacturing has surged 22.5% as corporations scramble to build domestic production—essentially what Trump's economic nationalism promised. Welcome to the funhouse mirror economy of 2025. Read Full Story

More Cowbell

Is a recession inescapable? 

Top 10 stocks to watch in May.

Tariffs on China: Sharp talk from the Shark Tank.

Earnings preview: Apple reports after today's close.

A comprehensive beginner’s guide to trading options. 

Nate Silver analyzes Musk’s declining popularity. 

The trade war is taking its toll on the greenback. 

Will Journalism write Kentucky Derby history?

ICYMI: tastylive’s best videos of the week.

Politico’s take on Trump’s first 100 days. 

ICYMI: Last week’s Luckbox TGIT.

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