“When we had zero interest rates… people did stupid things. When we had zero interest rates for 11 years – people did very, very stupid things.” … Stanley Druckenmiller – projecting an economic ‘hard-landing’.
Roger Bannister ran a four-minute mile… by having a relay race of pace runners next to him. He figured that if he could keep up with the pacers, then he’d break the record. If you work with people who are regularly pushing breakthrough work – it’s likely that you will push as well. If you’re in a sector or location where entrepreneurs regularly build businesses of scale – it’s likely you will as well. Using a pacing team isn’t an accident – it’s a choice.
Some would love you to believe… that learning can be done alone, in a tower, with a laptop / book. Unfortunately, until we engage with other people or systems, all we’ve done is memorize – we haven’t understood a word. That’s why we need teachers!
‘I’ll be there for the Quality moments’… is a phrase often said by busy parents or bad business managers. Unfortunately, (a) you can’t predict those quality moments, and (b) those quality moments start as ‘ok’ times. Therefore, when you’re feeling a little creative – don’t wait to dive in. When you’re feeling healthy – get out and do something with others. Because when you look back on them – they’re all Quality moments.
I’m not a techie…. Some people (when they hear a tech discussion starting) go for a run or mentally check-out because it’s a convenient excuse to ‘exit-stage-left’. Per SG: We’re long past the point where an active professional can simply choose to not understand how tech works. You’re either a user or you’re being used, and it’s vital that you know which you are.
The Market:
Imagine my disbelief when not one NY Knick’s player recognized Howard Stern sitting courtside at their playoff game. It turns out, none of their generation had listened to Howard. It’s the same story in virtually every profession including finance. That’s why crypto and digital assets are so interesting to people born after 1985. It seems that no young finance prodigies spend time listening to 2 old geezers from Berkshire Hathaway. Would they recognize Munger and Buffett if they sat courtside at a Knick’s game? Probably not. But not out of disrespect – simply because new financial problems are not solved from examining dinosaur bones. Munger and Buffett are practicing old-school thinking that is still tied to old-school financial models. Honestly, it’s hard for me these days to swallow the traditional Wall Street narrative of: ‘Save for retirement’, ‘Open an IRA’, ‘Park your money in a Vanguard fund’ … and in 40 years yada-yada-yada. Am I surprised that Warren and Charlie are not crypto-converts? No. But I am surprised that they’re using the same words and examples that they used 5-years ago as reasons not to invest in blockchain, decentralized finance, and/or BTC and ETH.
InfoBits:
- Warren Buffett says the good times may soon be over… as the U.S. economy’s “incredible period” is coming to an end.
- Workin’ 9-to-AI… By some estimates, 300m global jobs could be affected by AI, but it could also boost global GDP by 7%.
- The USDA predicts… that this year will mark the first decline in beef production since 2015, and that per-person consumption will experience the greatest decline since 1987.
- In the next 30 days, Wendy’s will roll out… an AI-chatbot-powered drive-thru via its partnership with Google.
- Last quarter’s # of North American-made EVs… increased 39% YoY as manufacturers strained to meet demand.
- SoftBank’s Vision Funds One and Two… invested just 10% of what they invested a year ago when valuations were at their peak. Now, that’s market timing for ya!
- The Bank of England raised interest rates… for the twelfth consecutive time with no end in sight.
- Adidas has decided to… sell most of its Yeezy inventory and donate the proceeds to charity – incurring a $500m loss.
- The Beverly Hills-based PacWest Bank… is expected to be the next lender to fall as panicked depositors are moving their cash elsewhere.
- 28% of Americans have no confidence in… J. Powell’s handling of our economic crisis. That’s the lowest confidence ever recorded for any FED Chair since they started asking the question in 2001.
Crypto-Bytes:
- Bittrex U.S. filed for bankruptcy… following the April 30th shut down of its operations.
- Jane Street and Jump Crypto are pulling back… from trading digital assets in the US as regulators clamp down.
- The new Grayscale Funds Trust has filed 3 new funds… with the SEC including: Grayscale Ethereum Futures ETF, Grayscale Global Bitcoin Composite ETF, and Grayscale Privacy ETF.
- The SEC’s Peirce says… that Europe’s MiCA (Markets in Crypto-Assets) can serve as a model for U.S. crypto regulation.
- 26% of family offices (wealth management firms serving high-net-worth clients)… are invested in crypto. That percentage has increased 62% YoY.
- The Texas legislature is adding… the right to use, transact and hold digital assets as “a mutually agreed upon medium of exchange” to the state’s Bill of Rights.
- Florida Governor Ron DeSantis signed a bill… that restricts the use of central bank digital currencies (CBDCs) – directly following Pres. Biden announcing the start of CBDC research. DeSantis believes that our FED wants to “crowd out and eliminate other types of digital assets like cryptocurrency.”
TW3 (That Was - The Week - That Was):
Monday: One thing to remember is that while the market is convinced the FED is done with rate hikes, we will get the latest CPI reading on Wednesday. And we still have the debt limit to react and over-react to – for another 20’ish days.
Tuesday: Okay the markets are in pause mode until we see the CPI tomorrow. Also, the S&P has entered a range where it has topped out for over a year. I am watching the ticker APP as a possible play – if it can get up and over its 200-day at $17.75.
Wednesday: The Bureau of Labor Statistics reported a 4.9% increase in inflation YoY. This is down 0.1% from the last report and is the first time CPI has been under 5% in nearly 2 years. But what isn’t being talked about is:
- The MoM increase in inflation came in at 0.4%, which signals that inflation is accelerating MoM even though the YoY number is falling.
- The labor market is the strongest it has been in decades.
- And consumers are still spending – admittedly with credit cards.
We finally have the Fed’s interest rate above the inflation rate, which has historically been an important achievement in our fight against inflation. Despite all of the uncertainty, the S&P is up 8% YTD, the Nasdaq is up 22%, and Bitcoin is up 70%.
Thursday: This is a very funky market. 300-point splits between the DOW and NASDAQ are not sustainable over the long run. Something's gotta give.
Friday: Elon Musk is stepping down as CEO of Twitter. Ms. Linda Yaccarino will be the new Twitter CEO. She is currently the Chairman of the World Economic Forum, and the WEF’s Taskforce on the Future of Work. The Debt discussions have been canceled and moved to next week – such drama. MAT looks pretty attractive to me. Moving up and over $18.50 could cause it to see $19.50 in short order.
AMA (Ask Me Anything…)
Last weekend, Berkshire Hathaway shareholders traveled to Omaha, Nebraska (the Mecca of Capitalism) to sit in a stadium and watch Warren Buffett and Charlie Munger answer questions. One of the highlights was a young 13-year-old girl who asked the duo about the future of the US dollar, including its role as the global reserve currency. Buffett did not directly answer the question, but rather spent most of his time speaking about the weaknesses and a lack of other currencies that could accept reserve status. “Nobody knows how far you can go with a paper currency before it gets out of control, and particularly if you’re the world’s reserve currency. You don’t want to try and pick out the point where it does become a problem because then it’s all over. Forget any tokens, that’s madness, when it comes to the reserve currency of the world. But it’s also madness to just keep printing money.” Buffett’s measured words are commendable, but the translation is essentially: ‘We’d better be careful because we are playing with fire! We have never seen a fiat currency (that enjoyed global reserve status) get pushed to the limit.’
Next Week: Will the Tech Bid Sour?
- For 6 weeks, we’ve been in the same 4100 to 4200-point range. The longer we are in the range – the more gamma risk, open interest, and hedging activity we’re accumulating. The S&P levels to look out for are 4060 on the downside, and 4240 on the upside. Breaking those levels will trigger an immediate and additional 100 S&P point move.
- Single stock risk within the S&P 500: Both the financial sector (XLF down 7% YTD) and the energy sector (XLE down 7% YTD) closed lower on the week. The only sector keeping this market afloat is the mega-tech sector: (AAPL, AMZN, META, MSFT, GOOGL, NVDA, and TSLA).
- The World according to Tech…. This week Google and it’s 3-Sigma move to the upside was the big winner, and single-handedly held-up the S&P 500.
- The case FOR a U.S. Treasury default: Currently, our FED is fighting inflation with a limited toolbox. What will fight inflation faster than any tool the FED has – is a Treasury default. A Treasury default will cause: (a) interest rates to explode higher, (b) spending to stop on homes ‘n cars, and (c) inflation to collapse. Our FED’s goal will be achieved.
- VVIX risk is building: The VVIX (the volatility of the volatility index) has recently moved from 88 to over 100, and denotes increased hedging activity. In this type of environment, keeping your trading powder dry is a good thing. Sit on your hands, and let the market come to you.
- TRADES:
o Tip #1: Long VIPS > $15.50 looking for a $24.50 target == Internet Retailer VipShop Holdings $VIPS is already working, pushing up against the highest levels since last summer.
o Tip #2: Nothing good happens if Financials break below last summer's lows (XLF < $31), or if Small-caps (IWM) break below $170.
- SPX Expected Move (EM):
o Last week – EM = $69. We were mildly lower on the week.
o Next week – EM = $64 = Keep your hands and feet inside the vehicle!
TIPS:
This market feels heavy – like it’s circling a black hole and trying not to get sucked in. For 13 months, this market has done nothing but go sideways. We will either break-out into a new bull leg, or break-down into a meaningful correction. I’m in the correction camp.
- When you see credit card debt at historic highs – it’s not people trying to get rewards points.
- When you see paycheck-to-paycheck living at all-time-highs – the struggle is real.
- And when you see average earnings fade YoY while prices paid are still in the stratosphere – things aren’t so hot.
I’m beginning to think our FED gives us another 25 bps in June – and that is NOT priced into this market. I see a ton of reasons why this market should go lower, and only one (our FED buying stocks) why it won’t.
HODL’s: (Hold On for Dear Life)
- PHYSICAL COMMODITIES = Gold @ $2016/oz. & Silver @ $24.1/oz.
- 13 Week Treasuries @ 5.1 to 5.45%
- **Bitcoin (BTC = $26,400 / in at $4,310)
- **Ethereum (ETH = $1,775 / in at $310)
- **Chainlink (LINK = $6.57 / in at $7.17)
- Big Bear Holdings (BBAI = $2.38 / in at $2.90)
o BOT Sept $4 CALLS for $0.35
- DNN – Denison Mines ($1.10 / in at $1.32)
- Innerscope (INND = $0.0023 / in at $0.0052)
- MESO – Mesoblast Ltd. ($3.64 / in at $3.60)
o SOLD July $5 CALLS for $0.85
- NFGC – Newfound Gold ($4.61 / in at $3.75)
o SOLD some more July & Oct $5.00 CALLS
- TPH – Tri Pointe Group ($29.82 / in at $26.50)
o BOT July $35 Call
Follow me on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, R.F. Culbertson, contributing sources and those he interviews. You can learn more and get your subscription by visiting: <http://rfcfinancialnews.blogspot.com/>.
Please write to Mr. Culbertson at: <rfc@culbertsons.com> to inform him of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference <http://rfcfinancialnews.blogspot.com/>.
If you'd like to view R.F.'s actual stock trades - and see more of his thoughts - please feel free to sign up as a StockTwits follower - "taylorpamm" is the handle.
If you'd like to see R.F. in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing:
https://www.youtube.com/watch?v=K2Z9I_6ciH0
Creativity = https://youtu.be/n2QiPSe_dKk
Investing = https://youtu.be/zIIlk6DlSOM
Marketing = https://youtu.be/p0wWGdOfYXI
Sales = https://youtu.be/blKw0zb6SZk
Startup Incinerator = https://youtu.be/ieR6vzCFldI
To unsubscribe please refer to the bottom of the email.
Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Please make sure to review important disclosures at the end of each article.
Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.
All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.
Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.
R.F. Culbertson
<http://rfcfinancialnews.blogspot.com>
No comments:
Post a Comment