5 Honest remarks that we don’t hear often enough:
1. “I don’t care enough to do what you’re asking.”
2. “I don’t trust you enough to hear you out.”
3. “I don’t believe it’s worth what it will cost in time, money or risk.”
4. “I’m afraid of the changes it will cause.”
5. “I don’t believe that I’m the kind of person who can do this.”
Per SG: Honesty is refreshing, but also helps us do a better job of positioning change. Instead of stalling and deflecting with talk about features, quality, or budgets – maybe the best response is one of the above – followed by: “Thank You.”
Startup Costs: The real startup costs are the missteps, errors and learnings that every new project goes through on the way to success. They’re not mistakes – they’re just a non-written part of the plan.
Gatekeepers keep Disappearing. When vinyl records cost +$500,000 to produce and films +$5m to make, you assumed that it was something worth your time. Today, many songs and videos have exactly one interaction. 87% of the self-published science articles contain stats that are made-up, and methods that can’t hold up to scrutiny. There are no breakthrough studies in aerodynamics, Ai, Cancer and Cardiac research, and bridge design because peer reviews are required prior to publication. Your PEERS will know when you’re just making stuff up. Often, the gates need to be kept.
The Market:
Commercial Real-Estate == USE it or LOSE it…
- Lyft plans to rent out nearly half its office space in SF, NYC, Nashville, and Seattle.
- Salesforce opted to lease out 412k square feet of its SF office space.
- BuzzFeed signed a sublet deal for its NYC office this past week.
- Yelp, Twitter and others are terminating leases.
- Meta and AMZN nixed plans to expand their NYC offices.
- 35% of employed Americans have the option to work-from-home full time, and 87% take advantage of it.
- Occupancy rates in major cities are below 45% vs. 95% pre-pandemic.
In Crypto-Land: If Bitcoin can get and stay above $22,700 – it’s a bullish sign. Otherwise, it has a high probability of making new lows in the $16k region. Ethereum (ETH) is trading around $1,400, but will be propelled higher into ‘The Merge’.
In Equities: J. Powell said: “There will be pain in households." September has not been kind to markets. The S&P is under its 200-day, and is facing rising rates. The Atlanta FED is just a smidge away from forecasting a negative Q3 GDP print. This is NOT a bullish scenario. September will see the S&Ps touching 3931. We may ‘test’ the summer lows, and we should see a dramatic increase in volatility.
InfoBits:
- Q2 GDP came in negative by -0.6%... confirming the recession. The PPI came in at 8.9% - confirming the highest producer price inflation since 1981.
- Ford is cutting 3,000 jobs… to focus on transitioning into more of a software focused car company.
- Russia and Iran will establish a global gas cartel… and Moscow will launch its own precious metals exchange. Finally, Russia and Iran can’t be as corrupt as the 2 exchanges that are already out there!
- Americans are dining out rather than eating in… as grocery prices look scarier than menus. The inflation gap between groceries and restaurants is the largest since the ’70s.
- Apple employees are pushing back… against the company’s 3-days a week in-office plan.
- The IPO market is on pace for its worst year in decades.
- Harvard could lose its "richest U.S. college" title to the Univ. of Texas.
- France is giving €4,000 to people who exchange their car for an e-bike.
- Twitter whistleblower says… Twitter has neither the incentive nor the resources to measure the full scope of bots on its platform, and the security vulnerabilities are off the charts in number and severity.
- If fusion can be successfully commercialized… it has the potential of generating nearly unlimited supplies of low-carbon, low-radiation energy – threatening the dominance of fossil fuels.
- Europe is experiencing its worst drought in over 500 years.
- U.S. new home sales fell 12.6% YoY to a 6.5-year low.
- Retailers believe that consumer health has deteriorated. Lower and middle-income consumers are only buying lower-margin essential goods.
- Inflation adjusted, e-commerce retail sales fell 2% YoY. Per CB, the only time we've seen this was during the 2008-09 recession.
- Last month home prices declined… the most in 10 years, and the 2nd worst in 30 years.
- In 2022, the number of young adults using marijuana… over the past year = 43%, over the past month = 29%, and daily = 11%. Those are the highest levels ever recorded.
- South Korea has broken its own record… for the world’s lowest fertility rate as it faces the prospect of its population halving by the end of this century.
- California will prohibit the sale of new gas-powered cars by 2035.
- The gas crisis in Europe rages on… U.K. energy bills could increase by 80%.
Crypto-Bytes:
- South Carolina is the latest state… to accept cryptocurrency payments.
- Revolut has been granted permission… to provide cryptocurrency services throughout Europe.
- The FED has issued guidelines… that allow “crypto banks” to access Federal Reserve accounts and services. This means banks offering service to crypto holders like Wyoming-based Custodia and Kraken Bank will be able to access FED “master accounts” without the need to go through an intermediary bank.
- FTX US may be allowed to buy BlockFi for a mere $15m. BlockFi was one of crypto’s hottest VC-backed startups before suffering a similar liquidity crunch as other crypto lenders during the market drawdown.
- Depository Trust & Clearing Corp. launched a private blockchain project… aimed at settling trades more quickly for clients, and is now processing over 100k equity transactions per day.
- The Gov. of the Bank of Finland said: "Central banks must prepare for a digital future in which demand for cash as a medium of exchange may decrease.”
- The Ethereum Foundation confirmed that The Merge… will be completed at some point between Sept. 10th and Sept 20th.
- Bitcoin Depot will take its crypto ATM business public via SPAC… next year in a deal worth $885m.
- Japan may cut corporate tax rates for crypto firms… in an effort to entice crypto-startups to remain in the country.
TW3 (That Was - The Week - That Was):
Monday: An energy crisis in Europe has added to the muted investor sentiment as Citigroup believes UK inflation is on track to rise above 18% for the first time in almost half a century as energy prices rocket. For weeks investors had been feeling confident that inflation had possibly peaked and that the central bank would soften the magnitude of its future interest-rate increases. Last Thursday, FED-head James Bullard said he would lean toward a 0.75 bps increase in September. I find it interesting that with J. Powell in Jackson Hole, the market is down over 600 points. Are they trying to send the dear boy a message? The NASDAQ (which led the bear market bounce) is down 300. The indexes are all in between their respective 50 and 200-day moving averages – so they could wander anywhere.
Tuesday: Europe’s currency tumbled on growing concerns about its economic prospects, while energy prices in the region surge. The yield on the benchmark US 10-year climbed above 3% for the first time in a month. The bad news is that the market hasn't put in much of a bounce considering the Friday and Monday plunge. The NASDAQ is the best dirty shirt in the hamper, but that's only because PANW beat estimates and announced a 3 for 1 split. Oil is up sharply. The Richmond Fed was supposed to come in -5 but came in -8. Estimates for new home sales fell to 511k while estimates were for 575k. The energy patch is having a day for itself on news that Saudi may actually curb oil production.
Wednesday: FED-head Neel Kashkari said that his biggest concern was that "If we are wrong, and markets are wrong, and inflation is much more embedded at a much higher level than we appreciate – then we are going to have to be more aggressive" in bringing it back down. The hawkish outlook is keeping the U.S. dollar elevated. Until Powell speaks at Jackson Hole on Friday, I think the market is stuck in neutral. I'm going to keep an eye on SLB and BIP and see if either of them looks to be buyable.
Friday: I've said for months, Powell won’t back down. They're going to drive rates to about 3.75 - 4.00 percent and that's going to hit this economy like a ton of bricks. If the overnight levels are at 4%, the Mortgage rates are going to be +6%. How many $500k houses or $70k trucks are going to sell at rates like that? For years our FED would hike rates until the market whined too loud, and they'd ‘pivot’ back to cutting. Not this time. Powell will take rates to 4% and then sit there without a ‘pivot’ back down. Will our economy thrive at higher rates? Are companies that borrow money to buy up their own stocks going to enjoy this? I'm going to pass on buying this. September is often the worst month of the year. The S&P is still under its 200-day, and has to face rising rates. This isn't looking good. Powell was Hawkish, he's going to stay hawkish and that is a very different world than we're used to. Volatility is going to be paramount.
AMA (Ask Me Anything…)
What did J. Powell say? “While higher interest rates, slower growth, and a softer labor market will bring down inflation, they will also bring some pain to households and businesses. History shows that the employment costs of bringing down inflation are likely to increase with delay. Our aim is to avoid that outcome by acting with resolve – right now. The longer high inflation continues, the greater the chance that expectations of higher inflation will become entrenched. Central banks can and should take responsibility for delivering low and stable inflation. Our responsibility to deliver price stability is unconditional.”
Is the world hurting? YES = in a report from S&P Global on the economy.
The U.S. economy contracted in July as manufacturing output dropped modestly, but the service sector recorded a sharp decline in activity. The rate of the manufacturing decline was the sharpest since the initial stages of the pandemic, and is sitting at its lowest level in 2 years.
Next Week: Our FED strikes Fear…
- SPX the 2-Sigma beast: On Friday, the S&Ps were down over 3%, and the NAS was down over 4% - as our FED struck fear into every investor’s heart. We sliced thru the 4211 on the SPX like a ‘hot knife thru butter’. The experts predicted that the SPX would move $82 all week, and just on Friday we moved $164 (a 2-Sigma move). Watch out for: Margin-Call Monday.
- FED tone inflicts damage: Our FED told the markets NOT to expect them to reverse course any time soon as: “Historical records caution strongly against prematurely loosening monetary policy.”
- Last week’s meme news has been replaced with fear and loathing. Last Friday broke the hearts-n-minds of retail traders that were holding on for dear life (HODL).
- We lost 4211 on the /ES in a hurry… and we’re already half-way toward losing 3931. If/when we pass thru the 3931 level on the S&P’s, then watch what people rotate into. On Friday, the market was 100% correlated – so there wasn’t much to rotate into that wasn’t moving lower, but going forward Tip #1:
o Watch the correlations… and where buyers are finding value,
o Watch the dollar (DXY) == clearly a ‘duck-n-cover’ position, and
o Watch the bonds (/ZB) == any rallies in the bonds will be bad for equities. The 2-Year is at 3.4% and the 10-Year is at 3% … and that ‘inverted’ difference will only increase as our FED continues to raise rates.
- Volatility Futures have yet to wake up? I’m looking for volatility futures (/VS) to slip into ‘backwardation’. Right now, September Volatility = 26.15 and October = 27.16. Tip #2: If there’s fear and loathing in the marketplace, why aren’t the Sept. Vol. futures HIGHER than the Oct. Vol. futures?
o I’m not shouting ‘capitulation’… until volatility backwardation shows-up.
o Volatility backwardation… will show-up when 3931 becomes a reality.
o The more the volatility builds… the more the S&Ps are going to selloff.
o The scared retail investor… will NOT be bottom-fishing any time soon.
- SPX Expected Move:
o Last Week’s EM was $82, and we moved over $164 to the downside.
o Next Week’s EM = $109. We moved over $150 points in one day.
Tips:
HODL’s: (Hold On for Dear Life)
- CASH = Nexo @ 8% on USDC – waiting for their acquisition dust to clear.
- PHYSICAL COMMODITIES = Gold @ $1,750 /oz. & Silver @ $18.86 /oz.
- **BitFarm (BITF = $1.34 / in at $4.12)
o Selling more CCs for income,
- **Bitcoin (BTC = $21,250 / in at $4,310)
- **Ethereum (ETH = $1,620 / in at $310)
- GME – DRS’d and HODL
- **Grayscale Ethereum (ETHE = $11.59 / in @ $13.44)
- **Grayscale Bitcoin Trust (GBTC = $12.67 / in @ $9.41)
- GS – Bot Sept 2: +$335 / -$330 PUT Spread for $2.30
- Innerscope (INND = $0.021 / in at $0.0052)
- SPY: Bot Sept 30: +$393 / -$383 PUT Spread for $2.03
- VIX: Bot Sept: +$30 / - $35 CALL Spread for $0.75
** Denotes a crypto-relationship
Trade of the Week: Tip #3: If you’re not in INND … what are you waiting for? The personal, hearing-aid market is huge ($100B). The question mark surrounding INND is market execution.
- Let’s make sure the legislation gets signed in October.
- There’s potentially a share cancellation for 20% INND’s float … which should increase their price in about 2 weeks. They’re buying back an existing convertible note … so things could get messy, but we’ll know soon enough.
- INND has made some amazing partnerships: WMT, CVS, AMZN etc. — for a ‘family’ run business (Mark, Matthew and Kimberly Moore). INND is forecasting selling $10k/month in every WMT == so that’s $150m in WMT revenues … let alone CVS, AMZN, BestBuy etc.
- I’m hearing price estimates of $0.10 to $0.35 (assuming share cancellations) by the end of Q3. I’m hearing estimates of $1/share based upon actual sales numbers by end of Q1 2023.
- The stock seems to have found a little bit of a ‘floor’ around 2 cents – so I’m still nibbling.
Follow me on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
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