“The Next One”… That’s the answer Duke Ellington always gave when reporters would ask him: What’s your favorite composition? “The next one” is the essence of the artistic process. Forget about rehashing the past. Per Seth G: You’re only fully alive when you’re in-the-zone between now and what’s next.
Why? Why is easy to sell, but difficult to deliver. That’s because WHY is all about knowledge, understanding and forecasting. When someone gives you a WHY, just ask them to predict a week, a month, and/or a year from now. After all, if someone knows WHY, then telling you WHAT is going to happen should be easy.
The Market:
“You need a well-organized small group”… Those are the first two challenges of anyone seeking to make an impact. Change requires tension. Groups that are too large are incoherent, and groups that are too small can be too comfortable. Your goal should be to: (a) organize the people you already have (saving money and time), and (b) find a way to give them the tools that will allow risk-taking and communication with others. Building the right-sized group and allowing for increased rates of failure are the basic foundation of a culture change.
InfoBits:
- Amazon believes it will run out of U.S. warehouse workers next year.
- 42 state Attorney Generals are suing Meta… for building addictive product features geared towards children into both Facebook and Instagram – all the while knowing their negative impact on mental health. 42% of high schoolers experience persistent hopelessness, while 30% of females admit to making a suicide plan.
- General Motors is having engine trouble… as this week they announced a bit of good news encased in a ton of bad. While both net income and revenue beat expectations, profits were down 7% YoY, and the ongoing UAW strike is eating away at their cash flow. They admitted to their EV targets being stupidly optimistic, and Cruise (their self-driving car unit) facing a major setback.
- I think the biggest catalyst for stocks will be… the US Dollar (DXY) breaking below $105. [It’s currently around $106.5.]
- "We went from zero percent rates to 5%... in the fastest time period since the 60s. It's remarkable that we haven't had a recession. If you have a client sitting on a lot of cash, I would hope you're getting them into treasuries.” - Morgan Stanley CEO James Gorman.
- The 10-Year Treasury rate hit 5% for the first time since 2007.
- New car financing… can cost up to 14% for the worst credit scores, and used car loans can go as high as 21%.
- The percentage of subprime auto borrowers… 60+ days past due hit a record rate in September. Nothing says ‘market-rally’ like people defaulting on loans.
- It’s a great time to be a DINK (double income, no kids). In the US, couples without children have the highest median net worth of all family types.
- The California DMV suspended Cruise’s robotaxi permit… effective immediately. It seems Cruise withheld the full video from an accident that killed a pedestrian.
- Twitter’s mobile app, U.S. downloads… are down 57% YoY.
- U.S. GDP grew at an annualized rate of 4.9% in Q3. That’s the fifth straight month of growth, and is the largest gain in nearly two years.
- Small businesses are facing +10% borrowing rates.
Crypto-Bytes:
- Peter Brandt has used this BTC blueprint for ~2 years, and believes:
o The Bitcoin (BTC) bottom is in.
o All-time-highs are not coming until Q3 2024.
o Bitcoin will experience a ‘chop-fest’ in the meanwhile
- Crypto: ‘Haters gonna Hate’:
o 2013 – Bitcoin Is A Joke… The Insider
o 2014 – Bitcoin Is (Nearly) All Dead… The Action Institute
o 2015 – Jamie Dimon: “Bitcoin Will Not Survive”… Coindesk
o 2016 – Bitcoin was going to change the world. What happened?… Vox
o 2017 – Technology Will Kill Bitcoin… Forbes
o 2018 – Bitcoin: 10 Years of Smoke and Mirrors… Karen Webster
o 2019 – Bitcoin Will Be Dead By 2030… Timothy Peterson
o 2020 – Bitcoin is over… Mark Dow
o 2021 – Bitcoin is a scam which will only end in tears… the Daily Mail
o 2022 – Crypto is Never Coming Back, Bitcoin Is a Failed Experiment, Bitcoin Is A Scam… CNBC’s Jim Cramer, JPM’s Jamie Dimon, to Berkshire’s Charlie Munger
- Over 56% of all bitcoin in circulation… has not moved in the last two years. That is a level of conviction from bitcoin holders that cannot be found in any other financial asset.
- Chainalysis says that… North America is the largest crypto market by total transaction value, but 76% of that volume is from institutional investors.
TW3 (That Was - The Week - That Was):
Monday: The FOMC’s most recent dot-plot revealed that another rate hike may be appropriate, and that higher rate would be in place for longer. Markets expect the Nov 1 FED decision to be a pause on rates, and wait on more data before the Dec. meeting. The rise in yields is raising borrowing costs – which is putting more pressure on economic growth.
Tuesday: GOOGL and MSFT will be reporting quarterly earnings after the bell tonight. They will set the stage for either a fade back down, or a continuation bounce. The Magnificent 7 are moving higher this morning: AAPL, AMZN, TSLA, NVDA, META, MSFT and GOOGL.
Wednesday: There is a GDP reading tomorrow, and the PCE inflation data on Friday. Something still doesn't feel right, and I think that the debt market is hiding something. The NASDAQ is off 325 points, and the S&P cut through its 200-day like a knife thru butter. Octobers have a way of humbling people, and this one is sure working on it. It appears that 4150 is the next stop on the S&P. I've been fearing a credit event for weeks, and it smells like something is breaking somewhere.
Thursday: This morning GDP came in hot, the PCE a tad lighter. Durable goods were a lot higher. It was not a Fed friendly release, if you're looking for the Fed to cut interest rates. Car Market Records:
1. Avg. New Car Pmt. = a record $730/mo.,
2. Avg. New Car Loan = a record 9.9%,
3. Avg. Used Car Loan = a record 13.9%,
4. Avg. New Car Price = a record $49,000, and
5. The Auto Loan Delinquency Rate = a record 6.1%.
Friday: I suppose they're going to try and manufacture a bounce after yesterday’s rout. They've got to get that S&P up over 4150, or the trap door could open. There are rumors of a black Monday coming. Crashes are extremely rare, but we are sitting on all of the ingredients to make one happen.
AMA (Ask Me Anything…)
- Hello Bello declares bankruptcy: Yes, the baby care brand founded by celebrity couple Kristen Bell and Dax Shepard (with their 20m Instagram followers) – has declared bankruptcy. Hello Bello even had widespread brick-n-mortar distribution in stores like Walmart. Their demise began with Apple’s privacy updates in 2021. Hello Bello (like many small businesses) had banked on targeted, digital ads on platforms like Facebook and Instagram – being cheap, reliable ways to get in front of prospects. The data privacy changes made this targeting less effective and made customer acquisition and retention too costly for small businesses on a tight budget.
Next Week: Are the Mag-7 Headed Off a Cliff?
Bitcoin… the World’s most Important Chart: It’s currently the perfect product: (a) most don’t understand or trust it, and (b) our government hates it, but (c) when volatility increased to a point of global-thermonuclear-war – everyone declared Bitcoin to be their mobile store-of-value. The world also put GOLD on notice as setting up for a break higher, and the owners of the Magnificent Seven aware of a potential collapse.
We are having sustained Tech-Troubles… The S&Ps are up ~7% YTD, while the small caps (IWM) and financials (XLF) are down -7%, and energy is flat on the year. Some of the Magnificent Seven (GOOGL and AAPL) are beginning to show some real signs of distress. But we still have META higher by +138% YTD, TSLA up by +92%, and NVDA higher by +183%. [Watch NVDA if it loses the $400 level – because it’s a quick-n-easy shot down to $350 and then $300.]
The Russell is finding its Inner-Bear… as it has declined ~20% since July. Due to higher interest rates, it will be a lot more difficult for small businesses to obtain and pay-off loans going forward.
Financials have Considerable Implications… and due to their bond losses companies like Charles Schwab (SCHW) are down ~40% YTD. The KRE (regional bank ETF) is approaching its banking crisis low. Jamie Dimon came out and announced that he’s selling 1m shares of JPM because his family needs the money. I guess with all of this inflation even the Dimon household needs an extra $135m. Remember, traders run the major financial institutions. And when traders (who are in-the-know) see action in these major institutions like they saw last week – it becomes a herd mentality that is tough to stop. Be careful, something is very close to breaking in the financial sector.
Bonds Consolidated… but we’re not out of danger yet as we’re still close to 5% on the 10-Year T-Bill.
The FED cometh on strong data (GDP & Spending)… and the data does not support anything other than ‘pause’ or ‘raising rates’. Due to the downward action in stocks, our FED will be very careful with their statement on Wednesday. [FYI – 39% of the U.S. population own stocks, and only 9% own treasuries.]
SPX Expected Move (EM):
- Last Week’s EM = $94… and we were down $104 on the week.
- Next Week’s EM = $97.
- Think risk mitigation and capital preservation from now thru mid-November!
TIPS:
HODL’s: (Hold On for Dear Life)
- PHYSICAL COMMODITIES = Gold @ $2015/oz. & Silver @ $23.2/oz.
- 13-Week Treasuries @ 5.5%
- **Bitcoin (BTC = $34,115 / in at $4,310)
- **Ethereum (ETH = $1,790 / in at $310)
- Apple (AAPL = $168 / in at $177)
- BITO (Bitcoin Strategy ETF = $17.25 / in at $17.22)
- CCJ – Uranium = ($38 / in at $33.8)
- DO – Diamond Offshore ($12.3 / in at $15)
- NFGC – Newfound Gold ($4.3 / in at $3.8)
o SOLD Jan. $5.00 CALLS
- UEC – Uranium Energy Corp ($5.5 / in at $4.8)
- QQQ – Dec. $350 Puts for $8.85 per
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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