How much should you spend? Logically, it’s always somewhere between not nearly enough and an endless money pit. It’s always better to pay a little more and get something you can use – than to pay too little and end up with nothing. It’s also better to live without until you learn exactly what you need.
Convenience… COVID took convenience to a new level, and that’s how it will stay. After 16+ months of consumer dependence on connectivity and omnichannel experiences, the baseline for convenience is higher than ever – and consumer, retail expectations will keep it there. Therefore, it’s up to you (the retailer) to learn how to be profitable under the new regime without sacrificing convenience.
The Meandering NO: 20% of the time a new idea just won’t work for someone, but with the other 80% - they’re just saying NO because they’re afraid. They can’t tell you that they’re afraid, so they make up objections and add in a little anger and bravado to really hide what is going on. This is the meandering NO. A meandering NO can’t turn into a logical YES because the objections are not real, and the objector is not listening. Engagement will turn the meandering NO into a yes. We need to: (a) experientially show people what they are missing, and (b) emphasize engaging with their peers in order to wash away their fears. The last 50 years of tech-adoption have shown us that this happens every single time a shift spreads across the culture – every single time.
NOT doing what you WANT, but doing what you NEED… is a very special and rare form of leadership. Combine that with bravery, generosity, insight, and humility – your actions will not be forgotten and will prove to be the foundation for a business.
The Market:
Your smallest, viable audience: Per SG: Demetri Martin tells the story of seeing a necklace for sale and it saying: “Diana” on it. “Wait,” he said to the owner of the jewelry store, “You’d probably sell more if it said ‘Not Diana’ on it. Because just about everyone is NOT named Diana.” The absurdity of this story is why focusing on the smallest viable audience makes more sense than trying to make average stuff for average people.
Stick with the Plan… It’s much more likely that you win with a 5-year plan than a 1-year plan. Why? Because you need to build your team over time, develop promising talent, and make smart decisions when required. There are times when you need to throw in the towel and blow things up, but that usually comes with new leadership. When the current plan is working – even just meeting expectations, it’s best to stick with it, and make incremental but consistent improvements in customers and profitability.
The market is still worried about COVID. The only question is whether there will be a jump in hospitalizations and deaths due to further restrictions. COVID will remain in the headlines for the foreseeable future, but doubtful that it will bring a substantial market pullback. Markets rarely correct for the same reason twice, especially back to back. If there’s a correction, it’ll likely take the form of sector rotation – either back in tech stocks or into small caps because of further stimulus.
Speaking of stimulus… Congress is close to passing an infrastructure bill. I can’t tell how much of it is already built into the stock prices, but steel and other industrial metal stocks have been perking up in expectations and many like: CLF, X, AA, FCX, and XME are looking constructive. There was talk that the infrastructure bill might include spending on clean energy which explains the recent strength in solar, EV, and charging stations. In the meantime, earnings season is in full effect, and the ‘Monsters of Tech’ have reported. After rallying 10% ahead of their earnings, most experienced the classic: ‘Buy the Rumor – Sell the News.’ behavior.
InfoBits:
- 33% of American increases in net worth… went to the top 1%.
- 50% of American increases in wealth… came from rising stock prices.
- 10% of the wealthiest Americans… own 90% of all the stocks – while the bottom 50% hold less than 1%.
- Square dropped $29B to buy Afterpay… because (BNPL) ‘Buy Now Pay Later’ is Zillennials' favorite option. Afterpay’s 16m users are an immediate value-add to Square’s business.
- 50% of Gen Z shoppers and 70% of Millennials… are more likely to make a purchase if they can BNPL it.
- Taco Bell has resorted to serving plain black beans in hard shells… as national ingredient shortages plague restaurants.
- Elle Woods just received her Harvard JD... as Reese Witherspoon’s Hello Sunshine media company was acquired by Blackstone for $900m. This deal is an endorsement of companies run profitably, and of Witherspoon's bet that Hollywood needs more stories told by women and for women.
- The FDA plans to give full approval… to Pfizer (PFE) and BioNTech (BNTX) coronavirus vaccine by the start of the next month.
- Carrots have turned into Sticks: Companies and governments tried carrots like: free donuts, tickets, and money in exchange for vaccinations. Now enter the sticks: (a) NYC is making vaccinations mandatory for most venues, and (b) many companies and our government are requiring vaccinations to return to work.
- GoPuff just raised another $1B… to deliver your goodies in 10 minutes. Their competition is not Instacart and/or Amazon, but rather the local bodega.
- Lyft has achieved profitability… at least on an EBITDA basis.
- Uber beat earnings estimates… but also revealed that its core business lost $509m in Q2 of 2021 as it splurged on incentives to attract drivers.
- Ads follow Eyeballs... and eyeballs are glued to digital. Five of the world's largest tech companies own 50% of all global ad sales which generate: massive audiences, precise targeting, and direct-buying. Legacy media companies deliver: thousands of shows, movies, and live programming. So who’s wagging who here?
- Amazon told employees… to delay its timeline for returning to in-office work until early 2022.
- Celeb-preneurship is thriving: The old celebrity model of stars getting paid to put their name and face behind a brand's product – is gone. The new model has the celebrity owning the products and its marketing. That's led to successes: Kim K & Kylie's beauty companies = $1B+, Jessica Alba’s Honest Co just IPO’d, and Jay-Z's Tidal was snatched by Square.
- Virgin Galactic plans to charge $450,000… for a seat on its space flights.
- Canopy Growth reported a quarterly profit… thanks to increased marijuana demand and cost reductions.
- Travel is making a comeback… which is leaving airlines short-staffed. The TSA has already screened more than double the passenger throughput of 2020.
Crypto-Bytes:
- Square mentioned Bitcoin a lot in its latest earnings report… because Square’s Cash App has become a place to buy and sell crypto to the tune of $2.72B of BTC in Q2 2021 - $55m in profit – and a 300% increase YoY.
- HSBC is blocking U.K. customers… from using credit cards to make payments to crypto exchange Binance.
- NCR is moving into the bitcoin business… as it has agreed to acquire cryptocurrency software provider and ATM-network firm LibertyX. It has plans to integrate and make crypto available to banks, retailers and restaurants through its digital wallet and mobile applications.
- SEC Chairman Gary Gensler said… “the Wild West of crypto will be regulated to the maximum extent possible.”
- Spain has introduced a bill… that would allow for the payment of mortgages with cryptocurrencies and the real estate sector would be able to use crypto to invest in mortgage pools.
- Circle, the company behind USDC… partnered with blockchain domain supplier Unstoppable Domains to offer the ability to send the USDC stablecoin to simple wallet addresses using their own Twitter or Instagram handles. Payments could be as easy as sending an email.
- Ethereum’s latest hard fork upgrade was officially activated this week. It aims to improve the Ethereum network’s user experience and value proposition. It’s most feature is its new burn mechanism that has been touted as a way to deflate the amount of ETH in circulation.
- JPMorgan Chase is pitching Private Bank clients… on a passive bitcoin fund. Jamie, so bitcoin is no longer a fraud?
- The CFTC Commissioner said that… the SEC does not have jurisdiction over “pure commodities or their trading venues, including crypto assets.”
- There is a new cryptocurrency tax-reporting section in the infrastructure bill. The fact that anything crypto-related has become the linchpin of such a key piece of legislation is a huge turning point – especially given crypto-technology is only a decade old.
- Binance.US CEO resigned via tweet… wishing his colleagues success despite “differences over strategic direction.” It only took 3 months, for the CEO to put the world’s 2nd largest cryptocurrency exchange in the tank. That must be some sort of record – yes?
- Coinbase is acquiring Zabo… a Dallas-based cryptocurrency startup that provides data integration services with major crypto exchanges and wallets – including Coinbase’s rival Kraken.
Last Week:
Monday: This is an awfully strong start to August. Looking around I see: WISH over $10.70, AMAT over $145.25 could set it flying, and RVLV is doing good things and over $72.50 it could be tempting.
Tuesday: This is one of the most Teflon / non-stick markets ever. Nothing matters: not supply chain problems, not sky-high P/E's, not COVID, not anything. If MU gets over its 50-day simple moving average, it could run. NOTE: I am getting reports of disabled ships off the coast of UAE, then reports that a ship has been hijacked.
Wednesday: Today, the vice-chair of America’s central bank indicated that interest rates might rise as early as 2023, paving the road to cut bond sales later this year. Investors didn’t take that news very well because both stocks and bonds have been propped up by the Federal Reserve’s current monetary policy.
Thursday: The trade deficit came in at $75.7B – the single largest number ever recorded. If we still manufactured things here in the US, all that demand and money would circulate within our borders – boosting the overall economy by a factor of 4. Watch TELL. TELL got waffled yesterday on a secondary, but it carries some pretty rich options, so someone thinks it might be worth something. I like it over $3.15.
Friday: The JOBS number said that 943k jobs were created. Even though the birth/death model added 224K jobs, 943k is still a robust number. Roughly 2 out of 3 of those jobs were in bars and restaurants, one of the pandemic’s most battered industries. Unemployment in hospitality & leisure remains at 9%. The only sector that lost jobs was retail that lost 6,000 jobs. The report also showed an increase in hourly wages, up 4% YoY. I have to think that if the next jobs report before the September FED meeting is as strong as this one – our FED will change to a much more ‘hawkish’ verbiage. One stock that looks promising is EXPR. It's desperately trying to get over that $5.50 level, and if it does – I’ll take a shot.
TWIC (This Week in Crypto):
Ethereum (ETH) got an upgrade, Bitcoin (BTC) passed $40K, and the whole crypto market is almost $2T again. ETH (the second-largest cryptocurrency by market cap) continues to outperform BTC, and could be primed for a 35% rally after this hard fork as its next level of resistance is not until $3,356. Some experts like Dan Morehead, CEO of Pantera Capital, are so bullish on ETH that they believe it could soon surpass Bitcoin. BTC vs ETH is a battle for the AGES – just grab your seats and some popcorn.
More TWIC:
- Per WC: we could see another of $37.5 in BTC, but not in the short-term.
- Next resistance for BTC is its 200-day moving average = $45,000
- Following that, $50,000 BTC is a key structural technical level where overhead supply begins to warrant distribution.
- Finally, BTC making it to $53,000 would signal a long-term buy signal.
Even More TWIC: Why did the Chicken cross the road?
- DONALD TRUMP: I've been told by my many sources, good sources, very good sources – that the chicken crossed the road, a good road – a beautiful road.
- JOE BIDEN: Why did the chicken do what? To get it done – you know the rest.
- SARAH PALIN: Because, gosh-darn it, he's a maverick.
- BARACK OBAMA: Let me be perfectly clear, no chicken will be required to surrender her eggs after crossing the road. Period.
- AOC: Chickens should not be forced to lay eggs! That’s corporate greed. Eggs should be able to lay themselves.
- GEORGE W. BUSH: Is the chicken on our side of the road or not. There is no middle ground here. The chicken is either with us or again’ us.
- DR. PHIL: The problem is that chickens need to realize that they first must deal with the problems on their side of the road before they move to the other side.
- COLONEL SANDERS: A chicken crosses the road … because I missed one.
Next Week: Bonds WILL Redefine the Markets
Market Update:
- The range that has defined the S&P’s is between 4370 and 4420. Yes, we’re making incrementally new, all-time highs – but on incredibly low volume. We’re at a point where every incremental step higher will cause yet another Gamma-Squeeze / move higher. For 2 weeks, we’ve moved strictly within a 50’ish S&P point range. When this happens, volume dries up – because nobody wants to allocate capital when the direction of the markets is unclear.
- Due to the range-bound nature of the market for the past month, risk has grown and accumulated and is looking for the slightest hint at market direction. We’re right on the cusp of another Gamma-Squeeze higher, but ‘we ain’t home yet’. The volume last week was anemic at best. We did less than 1 million contracts on Thursday and Friday of last week – which resembles Christmas Eve and/or New Year’s Eve volume. Tip #1: Watch trading Volume as it will be a definitive ‘tell’ of a break-out over the next 7 to 10-days.
- The employment situation did NOT have the effect on markets that most people had anticipated. The JOBS number beat expectations by a substantial amount, but markets were confused and ended the day mixed.
- However, bonds were NOT confused by the JOBS report: they TANKED – while interest rates & financials exploded higher. The Financial ETF (XLF) has been stagnant since the beginning of June, but there have been very discernable movers within XLF (such as Goldman and Discover Financial) that continue to move the S&Ps slightly higher. But make no mistake, interest rates had a monster move on Thursday & Friday of last week. Tip #2: Watch interest rates (TNX), and if they continue to move higher – financials (and markets) will move along with them. Bonds are driving these markets and NOT the other way around.
Bond Dynamics 102:
- Bonds WILL redefine our other markets because that’s where the volatility lies. The TLT (a blend of the 10-year and 30-year bonds) is showing 16% volatility over the next 6 days – in comparison to the 10% volatility of the S&Ps. BONDS are 60% more volatile than the market itself.
- The Bonds are Mr. Toad’s Wild Ride right now, and the IWM (small cap ETF) is the only product with a higher volatility rating than bonds. Tip #3: Watch the CPI (consumer price inflation) as it’s released on Wednesday of this coming week. When the CPI comes out – watch the bond reaction. If the bonds selloff, so will tech – because technology dislikes higher interest rates. However, on a bond selloff, financials (XLF) and energy (XLE) appreciate higher rates and will move accordingly.
Financials are Running Amok:
- Goldman Sachs (GS) has been basically dormant for the past 15 years; however, it has DOUBLED in the past 10 months. GS is the #1 stock within the DOW, and the DOW takes its cue on direction – straight from the bonds. Discover Financial (DFS) is another financial that awoke in April of 2020 moving from $25 to currently around $130. On Friday, Morgan Stanley (MS) crested past its 2007 all-time high on a continuation of its 18-month climb. Tip #4: Watch GS, MS and DFS to get an early read on the XLF next week.
SPX Expected Move:
- Last Week the EM was $65, and this coming week it’s $48.34. One thing to take note of is that for months now, Tip #5: WATCH the S&Ps when they’re 170 to 200 points over their 50-day. The S&Ps behaved this very same way on: March 4th, March 25th, May 12th, June 18th, and July 19th – and were smacked down. Now we’re only 130 points over it, so we’ve got another 40 – 50 S&P points to go before the clock resets. But if this holds, watch the Financials.
Tips:
HODL’s: (Hold On for Dear Life)
- AMC – Holding
- Bitcoin (BTC = $44,100 / in at $4,310)
- Bitcoin Cash (BCH = $575 / in at $170)
- Peabody Energy (BTU = $12.35)
o Sold Aug $10 CCs for income
- Electramericcanica Veh (SOLO = $3.39)
o Sold Sept $4 and $5 CCs for income
- Express Inc (EXPR = $5.50)
o Sold August $5 CCs for income,
- Ethereum (ETH = $3,100 / in at $310)
- Franks International (FI = $2.82)
o Sold Oct $5 CCs for income,
- GME – Holding
- Grayscale Ethereum (ETHE = $27.54 / in @ $13.44)
- Grayscale Bitcoin Trust (GBTC = $36.01 / in @ $9.41)
- Grayscale Trust (GDLC = $38.55 / in @ $22.75) & buying
- Hyliion (HYLN = $9.73 / in @ $0.32)
o Sold Aug $9 and $9.50 CCs for income
o Sold Aug $11 CCs for income
- Infinity Pharma (INFI = $2.98)
o Sold Aug $3 CCs for income
- Kinross Gold (KGC = $6.20)
o Waiting to sell CCs for income
- Litecoin (LTC = $150 / in @ $191)
- Tellurian (TELL = $3.00)
o Sold Oct $5.5 CCs for income.
- Yamana Gold (AUY = $4.44)
o Waiting to sell CCs for income
Thoughts: My favorite three gold miners are: AUY, KGC and BTG. These have more value than even some of the bigtime names. AUY is well rounded, KGC has tons and tons of metals, provable metals in the ground, and BTG is probably one of the most mispriced miners out there. With some luck, the sector will warm up and we can get some decent premium for selling calls on them. I’m also watching: GSAT, ASXC, TTI, SENS, ATOS, and SESN.
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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