“So, what’s the compromise?” Every no-compromise solution has failed. If there was a way to solve our problems without giving something up, we would have done that already. So, if a persistent problem is important – the question is not: ‘Should we compromise?’, but rather: ‘Which changes are we going to make first?’
What’s the price? Salt is essentially free, but salt used to be expensive – like gold expensive. Per SG: We keep seeing the price deflation of things that we were sure would remain expensive: computer chips, disk storage and now content. Once computers start illustrating, writing and composing – the opportunity will be to have computers work with you, and not compete against you.
“How can you still be living here?” My mic drop answer is always the same: “Have you been listening to your own BS for so long, that you’ve forgotten your roots? News Flash: ‘Money doesn’t make you smart.’” I have lived in Pittsburgh for over 4 decades, and have built some incredible relationships. Without this area’s work ethic, mentors, friends, and universities – I’d be left trading time-shares in the Poconos and sneakers on eBay. Factually, it takes 10,000 hours (6 years) to really understand an area and its people. Figure out your priorities ahead of time: people vs beach / healthcare vs swimming pool / education vs country club. You are the customer, so choose wisely, because you really only get to understand 3’ish locations in your lifetime.
The Market:
The top 10 stocks are… responsible for 86% of the overall S&P index’s return. This is the most extreme concentration on record.
J. Powell did NOT say ‘Pause’: I cannot see how our FED’s decision to not say Pause – powers the S&P on a new, sustainable bull run. It’s more likely that we wobble up and down in our 3800 to 4200 channel. It’s back to trading without a trend – which means you need to be right on timing and direction.
How are overall earnings? 72% of the NASDAQ has reported falling earnings to the tune of a -7.5% Q1 Earnings Recession. The latest Jobs Report came out much hotter than estimates – which opens the door to further rate increases. Interestingly, of the 253,000 new jobs created in April, 378,000 were ‘fake jobs’ created via the Birth/Death model. Therefore, without the BLS injecting the 378k fake jobs – the Jobs Report would have been negative. The street and Powell both knew this, and hence Friday’s rally.
InfoBits:
- “The U.S. regional banking crisis is far from over.” … Former Dallas FED Pres. Robert Kaplan.
- Mercedes-Benz says cutting ties with China is “unthinkable”… and it’s also financially catastrophic given China is their largest overseas trading partner.
- Hedge funds are betting against the U.S. Dollar… and are pro-Gold.
- “We've started to see consumers rotate… towards non-discretionary spending and reduced basket size."…Fiserv
- Apple’s savings account launched last month… and attracted almost $1B in deposits in its first four days, and 240,000 accounts were opened by the end of the product’s first week.
- Morgan Stanley is preparing a fresh round of 3,000 job cuts… with banking and trading being hit the hardest.
- Writers Guild of America members went on strike… after failing to reach a new compensation deal with TV and film producers.
- IBM expects about 30% of its 26,000 back-office staff… to be replaced by AI within 5 years.
- Adidas shareholders sued the shoemaker… over its un-Yeezy split with Kanye West following the rapper’s anti-Semitic comments.
- Fund managers from Morgan Stanley to JPMorgan to UBS… prefer bonds over stocks.
- Oil prices plunged below $70/barrel… on fears of lower demand.
- The NYPD is urging people to help fight auto theft… by putting Apple’s Air Tags in their cars.
- 48% of US adults are worried… about the safety of their bank deposits. That is higher than during the 2008 global financial crisis.
- Apple’s still got it… as global smartphone shipments fell 14.6% in the quarter, Apple grew iPhone revenues 1.5%. Apple is still printing masses of cash, but it’s not growing. At some point, growth will become an issue, but it isn’t right now.
Crypto-Bytes:
- PayPal’s Venmo app will allow users to transfer crypto… between Venmo accounts, PayPal accounts, and external wallets. This move takes crypto into the world of being a legit currency you can use to buy avocado toast and pay back your friends for movie tickets.
- Bitcoin whales have purchased $2B in BTC… in the past 2 weeks.
- Coinbase launched an international exchange in Bermuda… while Gemini announced a derivatives platform anchored in Singapore. U.S. = You snooze ‘n you lose!
- Last month Kraken secured a license to operate in Ireland… and Bittrex abandoned America altogether.
- Sen. Lummis (R-WY), revealed that a newer version of her bill… which aims to build a framework for crypto regulation, could be unveiled within the next 6 weeks.
- Rep. McHenry (R–NC), said that his crypto bill… will address both securities and commodities questions – a key sticking point for crypto regulation.
TW3 (That Was - The Week - That Was):
Monday: The news of the day is that First Republic bank was taken over by the FDIC and sold to JP Morgan. I’m liking a few charts such as: NVDA > $280, TOST > $18, EQT > $35 and TGTX > $24. Momentum is carrying the morning, despite more bad news like GM laying off hundreds more.
Wednesday: Tuesday saw the fear of smaller banks going under take over the market, and we saw: PacWest -30%, Western Alliance -25%, Metropolitan Bank -21%, HomeStreet Bank -15%, Zions Bank -10%, KeyCorp -7%, HarborOne -6%, and Citizens Financial -5%.
Thursday: It’s the Apple effect. Rumor has it they're going to announce a $90B stock buy-back program, and that’s what has the NASDAQ sparked up. I am liking STNE over $13 – now that it’s finished consolidating at $12.50. If it looks strong tomorrow morning, I think I'm going to get some.
AMA (Ask Me Anything…)
Per HT: If you missed the latest by Stanley Druckenmiller, https://youtu.be/dXxWajc-tgI . Stanley is still looking for a hard landing later this year, and doesn’t trust our FED’s J. Powell to stay true to his mission. A couple more hi-lites:
- Factually: Stanley Druckenmiller is one of the world’s best investors. He’s compounded capital at over 30%/yr. for over 30 years.
- Stanley is short the US Dollar and long Gold. He sees our FED having to return to a loose monetary policy, which would drive the dollar lower versus other foreign currencies. And as the Dollar weakens, gold will appreciate in price.
- Stanley tends to buy stocks or assets that he likes before his firm completes their diligence. If their due-diligence uncovers something negative, then he will immediately cut his position. This approach of “invest now, research later” flies in the face of most investment advice, but it’s clearly working well for one of the best hedge fund managers of all-time.
Is the banking crisis over? The best-case scenario from here (per AP) is that regional banks have enough time and enough access to liquidity – that they can avoid failure moving forward. Depositors will be safe and the government won’t need to print trillions of dollars to backstop the whole system. The worst-case scenario is that banks keep failing, the government has to step in with trillions of dollars in support, and the devaluation of the U.S. Dollar re-accelerates inflation. Let’s hope for the best.
Next Week: High Volatility within a Narrow Range…
- Our 30-day trading range of 4100 to 4200… defines everything including volatility. The Expected Move for all of last week was $72 – yet we moved over $90 on Friday. Whenever you trade in a specific range for a long period of time, you continue to accumulate open interest. We will either explode higher above 4211 (on the S&Ps), or break-down from the 4106 level to 3931. The risks to trading this market are beginning to eclipse the rewards, and you’re seeing a flight to safety – Gold in particular hitting all-time-highs.
- When this range breaks, it will get nasty in a hurry. If it were not for Mega-Tech (APPL, MSFT, and NVDA), we would be there already be in-the-soup, because Energy (XLE) and Financials (XLF) are already at their break-down limits.
- TRADES:
o Tip #1: Short META = BOT out-of-the-money Put Spreads in July ’23.
o Tip #2: Watch NVDA and MSFT for similar Put Spread buying.
o Watch AAPL over $177.
o Tip #3: Gold: Precious metals are gearing up for a potential rip-roaring rally, as gold is retesting all-time highs. I would like to see a confirmed breakout holding above its $2,020 highs to feel more confident about adding to our gold & silver positions.
o Tip #4: Tri Pointe Homes (TPH): is working its way higher from a basing formation, while currently posting multi-year highs. If TPH is above $28, we want to own it with a target of $42 over the next 3 months.
o Fair Warning: Nothing good happens to this market 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 = $72. We breached the lower edge of the EM, but we ended inside the EM.
o Next week – EM = $69 = keep your hands and feet inside the vehicle!
TIPS:
HODL’s: (Hold On for Dear Life)
- PHYSICAL COMMODITIES = Gold @ $2025/oz. & Silver @ $25.9/oz.
- 13 Week Treasuries @ 5.1 to 5.45%
- **Bitcoin (BTC = $29,700 / in at $4,310)
- **Ethereum (ETH = $2,000 / in at $310)
- **Chainlink (LINK = $7.07 / in at $7.17)
- Big Bear Holdings (BBAI = $2.74 / in at $2.90)
o BOT Sept $4 CALLS for $0.35
- DNN – Denison Mines ($1.06 / in at $1.32)
- Innerscope (INND = $0.003 / in at $0.0052)
- MESO – Mesoblast Ltd. ($3.36 / in at $3.60)
o SOLD July $5 CALLS for $0.85
- NFGC – Newfound Gold ($5.05 / in at $3.75)
o SOLD some more July & Oct $5.00 CALLS
- STNE – StoneCo ($13.60 / in at $13.02)
- TPH – Tri Pointe Group ($29.30 / 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!
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