Marketers use… expensive, cloud-based tools to automate Customer Relationship Management (CRM). What if customers don’t want to be managed? Per Seth G: What if customers want Leadership instead? (Customer Relationship Leadership = CRL) CRL is voluntary, done WITH customers and NOT TO them. Most importantly: it is not-an-app, but rather involves understanding a point-of-view.
Financial Illiteracy is our largest economic issue. It’s a disease where the gap between the rich and everyone else continues to widen. Overcoming it won’t be easy because Schwab, Fidelity and Vanguard have spent billions telling you that you’re not smart enough to compete. 3 steps to financial literacy:
1. Eliminate the broker by using better tools: Think-or-Swim, Tasty, or IB.
2. Stop paying fees: use low-cost exchanges.
3. Reduce decision-making bottlenecks by just using common-sense.
Many of our choices are unseen, expensive and challenging. When we plan an outdoor event, we are choosing to be anxious about the weather. When we purchase with a credit card, we are choosing to pay the debt fees. When we continue working a dead-end job, we are minimizing tomorrow’s work/life balance. These (and many others) are all invisible choices that we need to stop ignoring.
The Market:
U.S. Small Businesses in April:
- 43% were unable to fully pay their rent (highest in 3 years).
- 52% of all restaurants became +60 days delinquent.
- ~60% are earning less than they did YoY.
Millennials and Gen Z’ers can blame their financial woes on Baby Boomers… because the over 55 crowd own 75% of all household wealth. Boomer spending is keeping the economy going. Boomers also contribute to any delay in interest rate cuts – which is troubling our youth who are battling inflation and higher borrowing costs.
InfoBits:
- ChatGPT has a new ‘memory enabled’ feature… that allows it to remember specific user details and preferences across chat conversations.
- China approved Tesla’s full-self-driving software.
- U.S. companies are sitting on an all-time-high amount of cash.
- U.S. Gov’t deficit since 2020… now exceeds the combined spending of: World War I, World War II, and the entire 1970-1990 time period.
- 78% of Americans believe… social media companies have too much power & influence.
- The Case-Shiller home price index rose… at its fastest rate since Nov. 2022.
- U.S. Consumer Confidence fell to a ~2-year low… on food & gas price concerns.
- Our DEA will move to reclassify marijuana… as a less dangerous drug. No legalization or decriminalization yet, but it should grow demand materially.
- Dave & Busters is letting people wager on arcade games.
- Construction job openings fell by 40%… the largest monthly drop on record.
- Treas. Sec. Yellen is panic’d over the 10-Year’s rising rate… so she is re-starting QE on May 29.
- United Healthcare was hacked… and they stole the personal health info. for one-third of all Americans.
- The FTC is fining AT&T, Verizon, and Sprint… for selling their customers' location data without consent.
- Rabbit’s founder is trying to convince everyone… that their Star-Trek looking product is more than just a pretty Android app.
- Weight loss drugs lead growth… as Wegovy + 106% and Ozempic +42% are becoming the brand names for obesity and diabetes respectively.
Crypto-Bytes:
- Binance’s C. Zhao was sentenced to 4 months in prison. C. Zhao is worth ~$43B. He will be the richest person to ever serve time in a U.S. federal prison.
- April was the worst crypto month since the FTX collapse of Nov. 2022.
- The $56,961 level was the make-or-break zone for Bitcoin. Its RSI was just above an oversold level – forming an interesting bullish continuation pattern.
- Tether reported a record-breaking profit of $4.52B for Q1. It’s the world's second largest ‘printing-money-out-of-thin-air’ entity – after our FED.
o Amid all the recent stablecoin activity, a stablecoin bill is making its way through Congress. Stablecoin legislation will accelerate adoption giving crypto yet another huge leap into the mainstream.
- Coinbase’s revenue increased +187% YoY to $1.1B.
- Block’s gross profit increased +22% YoY. They’re buying more Bitcoin.
TW3 (That Was - The Week - That Was):
Monday: A strong finish last week from GOOGL & MSFT bolstered chip stocks on AI growth optimism and on cloud strength. This week brings earnings from Apple and Amazon along with results from most of the remaining S&P 500 companies.
Thursday: Wednesday’s late day sell-off erased most of the FOMC/Powell no-change in rates rally. The FED left its key interest rate unchanged at 5.25%-5.5%, as expected, and indicated that its next move will probably be to cut rates. Chair Powell also downplayed the prospect of further interest-rate hikes, which is what ignited the rally originally. Chair Powell also said that they remain focused on bringing inflation back to its 2% target, and there was progress toward that goal. He said that the labor market was normalizing, citing job openings dropping to a three-year low. The odds of a FED rate cut by the September meeting are now at 50%, and markets only expect one rate cut by year-end. Overnight the dollar/yen saw volatility driven by a second possible government intervention. But other than a handful of tech companies, the forward guidance out of hundreds of other companies isn't good.
Friday: The uncoupling between market and reality continues. The JOBS Report showed that we created only 175k jobs last month (less than the 240k estimate), and the unemployment rate increased. But because the Birth/Death model injected 366k fake jobs into that total, we actually LOST 191,000 jobs in April. Last night, Apple told us that their revenues decreased -4% YoY, and iPhone sales (even with price increases) were down -10% YoY. But they announced a $110B stock buy-back (the largest in history) so the world loves them again. And in a world of ever-increasing prices – a services inflation indicator (PMI) came in 5% LESS than expected. So, between the lower Jobs Report, the lower PMI, and higher buy-back – markets were off-to-the-races on Friday. But everywhere I look I see a bad economic climate. CNBC is reporting that hundreds of banks are in trouble, after failing the last series of stress tests. Steve F. revealed that: J.P. Morgan Chase + Bank of A. + Citi hold a combined $7.4T in off-balance sheet / unknown assets. And if that isn’t enough, the latest numbers show that +40% of Americans are living paycheck to paycheck.
Morgan’s Moments…
‘The Failed Move’ is my favorite price pattern.
1. Everybody sets their stops right below support levels.
2. Smart money knows this, and they subtract 1 Std. Dev. to get their range.
3. Stops are triggered (at support), the longs get taken out – giving smart money their liquidity.
4. Prices move into the 1 Std. Dev. range, smart money buys – causing prices to squeeze higher.
The avg. Bitcoin rise (YoY) post-halving is 3,224%. Per Anthony P:
- The number of on-chain wallet addresses with over 0.1 BTC has not declined.
- The hash rate on the network remains strong and growing.
- And, the number of digital transactions continue to rise.
That tells me globally, people are finding more security and uses for digital assets that are free from political manipulation. Remember, along with large Bitcoin gains come declines that will take your breath away. Nothing has changed except our bankers and politicians continue to mismanage an economy to a point where more people are getting worried.
Next Week: Bad Jobs Report = Good == Huh?
Background: No matter how you slice it, we had an extraordinarily volatile week. Apple was given a pass on its earnings miss because it’s buying-back a ton of stock. [Hey, if all else fails, and no one wants to buy your crap, just buy it back yourself.] And within moments of the Jobs Report hitting the wires – all of the volatility was sucked out of the room. But nothing good in the medium or long-term comes from a Bad Jobs Report. If you take a step back on the week, the S&Ps started ~5,100 and we ended the week at 5,132 – well within the $82 weekly Expected Move.
On Friday, the Volatility vacuum-cleaner… allowed tech to make a tremendous move higher and finish the week – basically unchanged. It was the tech sector that saved-the-week.
There’s an Opportunity in Bonds… as they are catching a significant bid (driving rates lower), and that makes sense with QE re-starting. I suspect that bonds will continue moving higher next week. Tip #1: The opportunity lies in buying a Bearish Put Spread against TLT, at the end of next week, after it touches $90.
Markets are Pricing in Rate Cuts… again: This market does know that we had only 1 pseudo-bad Jobs number – yes? The FED Watch Tool is pricing in a September rate cut, and predicting a second rate cut by year-end. Tip #2: If the rate cut probabilities are correct, our economy is in considerably worse shape than anticipated.
Earnings and Considerable Economic Concerns: As we hear from more companies on their earnings calls – one consistent theme is that J.Q. Public is ‘tapped-out’. Amazon: “Customers are trading down on price and seeking out deals.” McDonald’s: “The macro headwinds have been more significant than we anticipated.” And Starbucks: “With stimulus savings almost spent, customers are being more exacting about where and how they spend their money.”
It’s All Tech and Nothing but Tech: The energy sector (XLE) is getting hammered – and history will tell us whether it is geo-political risk abating or a global slowdown being priced in. Specifically: NVDA, TSLA and AAPL drove this market higher last week. Unfortunately, tech will be the last to know about a recession and a ‘tapped out’ consumer. Tip #3: Tech will be where Put Spreads will have their largest impact.
SPX Expected Move (EM):
- Last Week’s EM = $82 … ended +$32 … but Tuesday was -$90
- Next Week’s EM = $64 … we moved +$64 on Friday. Be careful.
TIPS:
Tip #4: As miners continue to be range-bound, the GDXJ offers us the ability to put on an Iron Condor in June from $45 to $36. The thought process goes like this:
- GDXJ Current Price = $40.50
- June Standard Deviation = $4.5, therefore $45 is the high and $36 is the low.
- In June, SELL the -$45 / +$46 Call Spread & SELL the -$36 / +$35 Put Spread for $0.30.
HODL’s: (Hold On for Dear Life)
- 13-Week Treasuries @ 5.4%
- PHYSICAL COMMODITIES = Gold @ $2,310/oz. & Silver @ $26.8/oz.
- **Bitcoin (BTC = $63,700 / in at $4,310)
- **Ethereum (ETH = 3,100 / in at $310)
- **ChainLink (LINK = $14.2 / in at $7.78)
- **IBIT – Blackrock’s BTC ETF ($36 / in at $24)
- INDA – India ETF ($52.7 / in at $50)
o BOT Nov, +$53 / -$55 CALL Spread
- LUNR – Intuitive Machines: ($5.5 / in @ $6.40)
o SOLD: May $7 and June $7.50 Covered Calls
- **MARA – Marathon Digital = ($17.5 / in at $12)
o Sold June $40 Covered Calls
- **RIOT – Riot Bitcoin Mining ($10.4 / in at $12.5)
o Sold June $25 Covered Calls
- Various Bullish Call Spreads:
o GLDJ – Gold Junior Miners: June = BOT $41 Calls
§ Now @ $2.25 – in @ $3.60
o MARA – Marathon Digital: Jan. = BOT $25 / SOLD $50
§ Now @ $2.60 – in @ $3.50
o NUE – Nucor Steel: Jan. = BOT $220 / SOLD $240
§ Now @ $2.10 – in @ $5.35
** Crypto-Currency aware
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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