“I don’t have any good ideas…” Hogwash, ideas are 0.8 cents each = a dime-a-dozen. The hardest part is not finding a good idea, but rather choosing which good idea to work on. If you ask ChatGPT for ten titles for a book, or a dozen ways to hold a surprise party – you’ll be delighted with the results. AI and templates have made it easier than ever to find good ideas. The magic is in choosing and dedicating the will, guts, and effort – to bring the idea / opportunity to the people who need it.
“Smoothing-off those rough edges…” is easier than ever. Using power tools, cleaners, market research, AI, committee meetings, and online reviews – you will absolutely get everything moving in the same direction. But once you smooth the edges, won’t it be hard to gain traction? Often smooth things don’t have texture, or anything worth talking about. And if smooth isn’t the goal, that puts ‘learning how to manage conflict’ back on the front burner – yes?
“Too much entrepreneurship…” Remember the rivalries: the Pittsburgh Steelers vs the Cleveland Browns, Larry Bird vs. Magic Johnson, and now Musk vs. Zuckerberg. You gotta love the fire, the passion, the trash talking, and the spirit of competition. Hey, bring back ole #23’s (Michael Jordan’s) sense of urgency and risk taking. Neither Musk nor Zuck need this battle, but both are embracing it. Maybe there’s no such thing as: Too Much Entrepreneurship?
The Crypto Market:
Last week’s animal spirits were released into an OPEN crypto-marketplace – due to a U.S. judge declaring Ripple’s XRP token – NOT a security. Per AP:
1. If XRP is not a security, then a majority of the other cryptocurrencies will probably be classified as non-securities. This would create regulatory clarity.
2. Regulatory clarity will lead to more investors allocating capital to the sector.
3. Exchanges, such as Coinbase, are already adding XRP back to their platforms – giving more investors access. COIN’s stock is up 100% over the last 30 days, and 37% in the last 5 days.
4. The SEC needs to decide how they wish to proceed with their regulatory oversight of the crypto tokens.
5. This legal decision will embolden entrepreneurs and companies in the crypto industry. Some will take the path of ‘I told you so’ / arrogance, but others will use this new information to adapt their strategy and move onward.
InfoBits:
- U.S. household net worth is contracting… as fast as retail money markets are expanding. This is the same behavior that was seen before the Dot Com bust, the Global Financial Crisis, and the COVID recession.
- China is inching toward deflation… with consumer inflation flat and producer prices falling in June.
- Sarah Silverman is suing AI companies… for copyright infringement of her new book: “The Bedwetter”. This case will spark far-reaching consequences.
- Medicare agreed to cover Legembi… as the Alzheimer’s treatment was shown to slow cognitive decline by 27% in early stages of the disease.
- Bank of America will pay $150m in fines… and reimburse customers for opening fake accounts and charging excess fees. Wells Fargo – move over!
- The Uber pivot… Domino’s (the world’s largest pizza company) signed a deal with Uber to list its menus on the Uber Eats and Postmates food-delivery apps.
- Farmers Insurance is the fourth major insurer… to pull out of Florida in the past year, as rising costs and more frequent extreme weather conditions weigh on profitability.
- A ‘team-coffee’… with 3 co-workers, for 30 minutes costs $1,500 says Shopify.
- The U.S. has 1B sq. ft. of unoccupied Office Space!
- Hollywood says ‘CUT’. SAG-AFTRA actors (160,000 strong) joined the Writers Guild in striking against studios. This will bring an industry and some state economies – to a standstill.
- Amazon’s Prime Day was the… “single largest sales day in company history.” U.S. consumers spent $12.7B, representing a 6.1% YoY growth.
- The FDA approved the first over-the-counter birth-control pill. The OTC pill will hit pharmacies early next year – broadening access to contraceptives.
- The NASDAQ has a weight problem… and will undergo a special rebalancing for just the third time in its history. Microsoft, Apple, Nvidia, Amazon, and Tesla, now account for over 43% of the index. The special rebalancing will try to diversify the index away from these tech giants.
Crypto-Bytes:
- The XRP (Ripple) coin surged… after a US judge ruled that the cryptocurrency firm did not violate securities laws by selling tokens on public exchanges.
- Former Celsius CEO Alex Mashinsky was arrested… for misleading customers and trying to manipulate crypto prices. Celsius imploded last year while owing billions to customers.
- ETH has closed in the green every month in 2023.
TW3 (That Was - The Week - That Was):
Tuesday: Market participants are awaiting Wednesday’s CPI reading on consumer prices for more clarity on whether there has been a considerable slowdown in inflation. The pre-word is that tomorrow's CPI is going to come out very tame and that's going to light a big fire in market land and send the S&P into a frenzy. For those of you who like to gamble, taking a couple contracts of the QQQ or SPY calls might be a good bet. But if the ‘word on the street’ is wrong and the CPI comes in hot – you lose it all. IF this market does get stupid over the CPI tomorrow, a handful of names that look good to me are: ADBE, SMCI, AVGO, ISRG, UPST, JD, ZM, and CRM.
Wednesday: Today is CPI day. The CPI was expected to drop to 5.0% YoY, and the data actually dropped it to 4.8%. FYI: the disconnect between this economy and this market is as wide as I've ever seen. I'm going to go against the grain here, and take some profits. Why? Gaining almost 600 DOW points in two days, heading into earnings and a rate hike, in a system where credit is contracting – puts us way out over our skis. The only way this market holds up without a massive correction, is if they stop pouring money into the darling stocks that have lifted the indexes, and spread things out to the mid and small cap names. That way the darlings can work off their excess with time, and the market can remain higher on the backs of the small guys. NOTE: The NASDAQ is going to do a rebalance on the 24th. They will strip some of the weight from those darlings, and we could see a falter over the next week or two.
Thursday: The PPI also came in slightly below estimates, and of course we're green across the board. The darlings (MSFT, NVDA, NFLX, TSLA, AAPL & AMZN) are leading the show. The next level of S&P resistance is between 4500 and 4520.
Friday: Dow futures already bounced after healthcare giant UNH and JP Morgan both reported a quarterly beat and raised guidance. The S&P and Nasdaq both notched fresh 52-week closing highs on Thursday while the S&P closed back above 4500 for the first time since April 2022. 84% of S&P 500 stocks are now trading above their 50-day moving averages. When this number has exceeded 80%, the S&P has gone on to generate an average gain of 6.1% in the next 6 months, and 12.3% in the next year.
AMA (Ask Me Anything…)
The SEC rumbled, tumbled, and fumbled… A U.S. judge declared Ripple’s XRP token – NOT a security. This decision marks a significant victory for Ripple and a massive setback for the SEC (Gary Gensler) who has been embroiled in a legal battle with them since 2020. The judge stated, “XRP, as a digital token, is not in and of itself a ‘contract, transaction, or scheme’ that embodies the Howey requirements of an investment contract.” This included sales of XRP on exchanges, which the court ruled are not securities transactions. However, in an interesting twist, the court also ruled that Ripple’s XRP institutional sales did violate securities law.
So, if the crypto sales on exchanges are NOT securities – then the SEC and Gary Gensler have NO jurisdiction over them. This ruling is significant for several reasons:
1. Precedent-Setting: This is the first time a U.S. court has ruled on whether a cryptocurrency is a security. The decision will set a precedent for future crypto cases with the SEC.
2. Regulatory Clarity: The ruling provides some much-needed regulatory clarity for the crypto industry. This may influence how other crypto-currencies are regulated.
3. Impact on Ripple (XRP): This a major win for Ripple, and could lead to increased XRP demand and adoption – especially in the U.S.
4. Market Reaction: The positive market reaction to the news underscores the significance of the ruling to the broader crypto industry.
5. Implications: The outcome of the Ripple vs. SEC case was seen as a bellwether for the crypto industry. This will influence the classification of other crypto-currencies, potentially shielding them from similar lawsuits.
Next Week: The Price Distortions are Epic…
Extreme Moves are Everywhere:
- Tip #1: Per JC, Asset Prices Trend, and Volatility Mean Reverts. Volatility is ridiculously low; therefore, the short-term trade is to bet on volatility expanding and prices declining.
- Per TC: Last week saw the largest inflow to large-cap funds in 8 months.
- Bonds are basically flat YTD, while stocks are up solid double-digits; therefore, stocks are overbought, bonds are oversold
- The Put/Call ratio is at the bottom of its range; therefore, risk is to the downside.
- Everybody is trying to dramatically reduce inventory.
- Tip #2: Crypto BTC & ETH have topped; meanwhile, Altcoins are having a moment.
- Tip #3: The PEG ratio (price / earnings / growth) is over 2.4, last seen in the Dot Com era == Look Out Below!
SPX Expected Moves… this is where order-flow begins. 4 out of the last 5 weeks we have breached the Expected Move; therefore, we have an inefficient market. Market Chaos happens when risk handicappers get it wrong, and the market gets ripped apart at the seams (to the upside or downside).
Bonds… With last week’s rally in bonds, interest rates declined and the yield curve became even more inverted. Which means:
- Will our FED not raise rates, but a 96% probability says that they will.
- Professionals are beginning to price in a Recession.
Energy & Financials…
- Energy is down 2% YTD.
- Financials are flat YTD, and fell dramatically after their Friday earnings (JPM, WFC, and C).
The U.S. Dollar… collapsed in over-night trade this past week – showing a 3-sigma move to the downside.
Mega-Market Cap stocks… are up ‘huge’ (> 46%) YTD. If they do NOT give us the same last-half of the year, the overall market rapidly declines.
The Consumer… The retail ETF (XRT) is up 8.5% YTD, and WMT is at an all-time-high, but, when the CEO’s of Walgreens (-21% YTD), Conagra (-15% YTD), and General Mills (-10% YTD) talk about changing consumer behaviors in order to accommodate the impact of higher prices and reduced buying power – you need to worry.
SPX Expected Move:
- Last Week’s EM = $60, but we moved over 100 points (almost a 2-Sigma move) to the upside.
- Next Week’s EM = $56, and this is insane. We moved $100 last week; therefore do not sell short-duration options.
- Tip #4: I have a hunch that more significant moves will occur over the next 10 days prior to the next FED announcement.
TIPS:
- Tip #5: Vanguard has a new savings account paying 4.5% APY with FDIC coverage to $250,000. The account has $0 fees, $0 min. balance, $0 transaction fees, and NOlimits on how often money can be transferred.
HODL’s: (Hold On for Dear Life)
- PHYSICAL COMMODITIES = Gold @ $1959/oz. & Silver @ $25.2/oz.
- 13 Week Treasuries @ 5.25%
- **Bitcoin (BTC = $30,300 / in at $4,310)
- **Ethereum (ETH = $1,925 / in at $310)
- Apple (AAPL = $190.72 / in at $177)
- Big Bear Holdings (BBAI = $2.03 / in at $2.90)
o BOT Sept $4 CALLS for $0.35
- DNN – Denison Mines ($1.24 / in at $1.32)
- MESO – Mesoblast Ltd. ($4.78 / in at $3.60)
o SOLD July $5 CALLS for $0.85
- NFGC – Newfound Gold ($5.03 / in at $3.75)
o SOLD July, Oct. & Jan. $5.00 CALLS
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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