“Nobody wants to work these days” … Kim Kardashian
‘If I were a rich man, I’d…”
- Record an album and make it onto Billboard’s Top 40,
- Make a commercial and play it on network television,
- Build a website that attracts prospects, and turns them into customers, and/or
- Enhance my social media presence so I could attract 1m followers.
In the past it was customary for all of those elements to cost $1m. Today you can do them all from your bedroom. Marketeers (most likely) will breathe a sigh of relief without realizing that tech just removed their last excuse for poor: production, promotion, price, and lack of partnerships. Oh well, I guess it’s back to talent and hard work being your competitive advantage. Long live Whack-A-Mole – where every over-correction creates a new scarcity. Except for talent & hard-work – which never seem to go out of style. To quote Kim Kardashian to women entrepreneurs: “Get your f---ing ass up and work. It seems like nobody wants to work these days.”
“Let’s wait until the last minute to…”
· Waiting Until the Last Minute makes sense if things are: far off, unlikely to happen, cheap to fix, and NOT sensitive to advance planning.
· Planning Ahead makes sense if: your budget-decisionmaker-timeframe are all certain, and the cost will be higher the longer you wait.
FYI == if you’re not going to do the math – then do NOT wait until the last minute.
The universities that produced the most Forbes listed CEO’s are:
1. Harvard (Boston, USA),
2. École Centrale Paris (Châtenay-Malabry, France),
3. Penn (Univ. of Penna.) (Philadelphia, USA),
4. Stanford (Stanford, USA),
5. UCLA (Los Angeles, USA),
6. Columbia (New York City, USA),
7. Northwestern (Evanston, USA),
8. INSEAD Business School (Fontainebleau, France),
9. Seoul National University (Seoul, South Korea), and
10. NYU (New York City, USA).
The Market:
Per Howard L: “Massive money printing held off a recession in 2020, a recession is coming in 2022. There has never been a time when oil rose 50%, and we did not get a recession.” The last time wheat prices reached these levels, a recession followed. The warning signs of a potential recession are growing louder. Our FED is set to raise interest rates, and total inflation is going past 15% YoY. The surge in commodity prices over the past year has been astounding: heating oil +102%, wheat +92%, oil +81%, natural gas +79%, aluminum +75%, corn +38%, cotton +33%, and lumber +31%. Here comes stagflation – you can smell it coming.
If I had to give an award to one commodity for getting market attention it would be: NICKEL. The price of nickel DOUBLED last week, which traders have attributed to a Russia-sized hole in the metals market – along with a short-squeeze. That price action prompted the world’s largest metals market – the LME (London Metals Exchange) to suspend trading. The LME really stopped trading because they are owned by the Hong Kong Exchanges – which needed to protect a large Chinese investor who was short nickel. Tsingshan Holding Co., the large Chinese investor, had a paper loss due to shorts in excess of $8B. This smells a lot like GameStop all over again. The LME even cancelled all of the nickel trades which took place over an 8-hour period. Then the LME took that opportunity to clear their books of “substantial short positions in order to return stability to the market.” Just like Robinhood, those long nickel were unable to sell, while those shorting the metal were rescued. LME has deferred physical delivery of metals and has also indicated that “it would temporarily stop publishing official and closing nickel prices.” Tsingshan is ‘mouthing’ its commitment to not reducing its short position. It will continue to ‘try to be right’ because of: secured credit promises from banks like JPM and China Construction. The Chinese government also directed domestic banks to offer Tsingshan a life raft in case of margin calls.
And here I thought naked shorting was the only illegal thing JPM was good at.
InfoBits:
- Visa & Mastercard suspend operations in Russia... But honestly, how are people going to pay for anything in Russia now? Russia will turn to China’s UnionPay to issue new cards.
- Moody’s downgraded Russia’s credit rating to Ca… its second lowest rating, citing “capital controls that are likely to restrict payments on the country’s foreign debt and lead to default.”
- Energy Independence… Europe depends on Russia for 41% of its gas supply. EU renewables cover less than 20% of their energy needs. Lest we forget, 60% of the globe still runs on fossil fuels.
- The Great Wait is over… as Meta, Wells Fargo, and Cisco are reopening their offices this month. Google’s is starting in-office, 3-days per week, and most companies expect to be back-in-the-saddle by summer.
- Google is buying cybersecurity firm Mandiant for $5.4B… which will bolster Google’s cloud computing business.
- Intel filed paperwork to take its Mobileye self-driving car unit public. It’s trying to spark investor enthusiasm in its own shares, and capitalize on the growing demand for autonomous driving.
- Robinhood is planning to roll out a ‘new cash card’. This ‘free’ card will include rewards for spending, cashback, and the ability to ‘roundup’ payments to the nearest dollar and invest them into the market.
- Bed Bath & Waaaay Beyond’s shares… soared on word that GameStop’s Ryan Cohen owned a big stake. Cohen told BB&B to: hone its focus, pay execs in stock, spin off its Buy Buy Baby biz, and sell to a private-equity buyer.
- Disney’s aiming for a cheaper subscription plan Disney-… or something under $8/month – with commercials.
- The War in Ukraine has an estimated 200 ships stuck in the Black Sea. This is the highest number of stranded cargo ships at sea since WWII and will be the biggest shock to global grain supply since the OPEC oil cuts in 1970.
- Apple introduced a new entry level phone… which could make up 10% of Apple’s sales. By offering more affordable iPhones, Apple can court the 80% of the world’s smartphone users who don’t have one.
- The Zon’s first stock split in 23 years… came after its stock price fell 26% from its November high. So NOW the Zon is worried about the ‘average Joe’ buying their $2,000 stock. It’s just coincidence that Congress accused the Zon of ‘lying under oath’ in their anti-trust investigation.
- Android users, rejoice… Google’s Message app can now handle Apple’s iMessage emojis. But Android texts will still be green on iPhones.
- Singer-turned-fashion-entrepreneur Rihanna… is working with banks, including GS and MS, on an IPO that could value her Savage X Fenty lingerie company at $3B.
- 4 of Chobani’s top-level execs are leaving due to its delayed IPO. Chobani planned to go public last fall for $10B, and then said that it would go to market in January. When that didn’t happen, it all started to unravel.
- Medical debt in the United States is out of control. Despite 90% of Americans having healthcare insurance, we owe $195B in medical debt. With a recession and inflation, these debts will become impossible to manage.
Crypto-Bytes:
- Binance, the largest cryptocurrency exchange… set up its own fiat-to-crypto payments provider, Bifinity, to help businesses become ‘crypto-ready’. Merchants will also be able to use Bifinity's APIs to get their own businesses ready to accept payments in crypto.
- Coinbase, the cryptocurrency exchange… has blocked more than 25,000 Russian addresses that it believed to be engaging in illicit activity.
- Ethereum’s long-awaited, proof-of-stake upgrade is coming this summer.
- Ukraine’s Minister of Digital Transformation has… solicited crypto donations on Twitter, set up multiple wallets accommodating various currencies, and now announced an NFT collection with proceeds supporting the country’s military.
- U.S. President Joe Biden signed an executive order on cryptocurrencies. It lays out 6 crypto goals: 1. protect investors; 2. keep markets stable; 3. curb crime; 4. stay globally competitive; 5. boost inclusion; and 6. innovate responsibly. Biden asked the Fed, Treasury Department, and other agencies to study and report on their crypto plans by year’s end (after mid-term elections).
- Binance is planning to buy more companies in non-crypto industries… to make the crypto industry larger.
- Aiming to be a major player globally in digital assets… Dubai’s ruler announced the creation of a regulatory and licensing authority that is nearing the issuance of a regulatory framework for digital assets.
- Crypto is too big to ignore… 12% (40m) Americans have invested in crypto. 50% of Americans have invested in stocks. So, 25% of all investors like crypto.
- The U.K.’s FCA has ordered all crypto ATMs to shut down... because none of the crypto ATMs are licensed or compliant with money laundering regulations. They can register with the FCA to reopen.
- Israel’s central bank has published draft guidelines… that will open the country’s financial system to crypto companies. Banks will be required to clarify the source of money used to purchase crypto and track the path of its movement.
TW3 (That Was - The Week - That Was):
Monday … The Dow is off over 800, Nasdaq down over 475, and the S&Ps are down over 125 = just on Monday. I cashed in the APPL short that I recommended on last Sunday’s letter. Let’s see if energy comes in a bit, and then re-engage.
Tuesday: U.S TO BAN RUSSIAN OIL WITHOUT PARTICIPATION OF EUROPEAN ALLIES.
Wednesday: Oil has pulled off its highs along with wheat, gold, and silver. Everyone wants to know if we've found a bottom. I doubt it. In 2009, trillions of dollars’ worth of natural gas and oil were discovered off the coast of Israel, Syria, and Egypt. Europe could use that oil and gas because it would make them less dependent upon Russia. Ukraine has the oil and gas ‘hubs’ where all that fuel comes together and then gets piped out to Europe. So, maybe energy is at the root of this conflict?
Thursday: Today the futures are blood red, because of a headline: “We will stop when all our demands are met.” The CPI (inflation reading) is out and it came in +7.9% YoY, and +.8% MoM. Including food and energy (+6.4% YoY) that’s a 15% YoY number. Remember, cash, gold, and silver are positions.
Friday: NFT’s == per Howard L., since November, the average selling price of an NFT has dropped more than 48%. Since February, daily trading volumes on OpenSea, the biggest marketplace for NFTs, have plummeted 80%. The next version of the NFT will be much more interesting, exciting and fun. Newbies have a more disparate and 6-mile deep range of ideas and use cases for this new-found technology.
AMA (Ask Me Anything…) – an aggregation of e-mail questions
All roads lead back to Bitcoin… We could be entering a dicey situation where hiking of interest rates could actually accelerate us into a recession. This means our FED either: allows inflation to continue to ravage the financial well-being of hundreds of millions of people, or risks pushing the global financial system into a downward spiral across financial assets. This is a lose-lose scenario with no clear off-ramp. Zoltan Pozsar of Credit Suisse published a note last week titled Bretton Woods III:
“We are witnessing the birth of a new world (monetary) order centered around commodity-based currencies in the East that will likely weaken the Eurodollar system and also contribute to inflationary forces in the West. Commodities are collateral, and collateral is money. This crisis is about the rising allure of outside money (commodities) over inside money (fiat currency). Russia (the aggressor in the geopolitical arena) is being punished by sanctions, and sanctions-driven commodity price moves threaten the financial stability of the West. The commodities market is much more leveraged today than it was during the 1973 OPEC supply crisis. Today’s Russian supply crisis is much bigger, more broad-based, and more correlated. It’s scarier. Surging and collapsing commodity prices will feed financial instability. The Fed and other central banks will be able to provide liquidity backstops, but those will be Band-Aid solutions. The true problem here is the Russian vs Non-Russian commodity gap – which only China will be able to close. This crisis is not like anything we have seen since President Nixon took the U.S. dollar off gold in 1971 – the end of the era of commodity-based money. When this crisis (and war) is over, currencies could very well be judged by their commodity backing. From the Bretton Woods era backed by gold bullion, to Bretton Woods II backed by inside money (Treasuries), to Bretton Woods III backed by outside money (gold bullion and other commodities). After this war is over, “money” will never be the same again…and Bitcoin will probably benefit from all of this.”
This should start everyone thinking about how much bigger this situation could become. My guess is that most people will start looking for a safe place to store their wealth, regardless of the outcome. Somehow, all roads lead back to bitcoin.
Next Week: Have we Hit Bottom yet?
Volatility did not rise in the midst of last week’s selloff:
- We’ve been trending lower most of the week, and all the while – volatility was complacent. When there is this much sell-side activity accompanied by complacency – that tells me that we’re not close to a bottom in the markets.
- Markets are tired. This coming week we have a quadruple ‘witching’ expiration. That means a large amount of open interest will be coming off the books – opening the door for even more volatility.
- Option volumes have subsided because premiums are NOT rising as fast as our markets are falling. There is real risk to the downside in these markets, and unfortunately options premiums are not feeling that same level of fear. It will take a considerable break in markets until volatility truly reflects these new risk levels. Tip #1: Vertical option spreads are the preferred trading vehicle.
Next Week’s FOMC = not enough – too little – too late
- No one cares about Wednesday’s FED meeting. Why? Because their quarter point rate hike is already baked into market pricing.
- Our FED will tell us that quantitative tightening (QT) is underway. That means they leapt from QE (Quantitative Easing) to QT within the past 6 months.
- Inflation is no longer transitory as the CPI came in at 7.9%. Most economists see inflation turning into stagflation = recession-inflation. This is a situation where the inflation rate is high, economic growth slows, and unemployment remains high. It presents a real dilemma for our FED (and elected officials) since any actions intended to lower inflation will often raise unemployment.
Bond Markets MUST do what our FED will not == jam rates higher.
- Bonds will fall, and Interest Rates will begin to pop higher. We are sitting on the highest inflation readings in the last 40 years, and yet our interest rates are at multi-year lows. Tip #2: 10-year and ‘junk’ yields are going to fly higher.
- 10-year rates will move up to 2.5% (from 2%) – and then traders will reassess.
- Junk Bonds (HYG) – yields need to fly and therefore – ‘look out below’ for junk bonds. Junk bond yields are below 5% - not even keeping up with inflation.
- Bonds could move higher, but only if our equity markets fall apart.
Financials (down 8% YTD) - are margin and sanction hits coming?
- JPM has extended exposure to commodities and geopolitical risk.
- The financials have both commodity exposure and margin risk coming. The London Metals Exchange has been closed since last Tuesday – and won’t re-open for a couple more days.
- The financials will experience ‘sanction shock’ to the downside.
Mega-Market Caps (down 19% YTD) - the great unwind continues:
- MSFT (-16% YTD), AAPL (-15% YTD), NFLX (-43% YTD), FB (-44% YTD), TSLA (-33% YTD), and NVDA (-26% YTD).
- Tip #3: Watch 3 = GOOGL, APPL, and MSFT. Watch for redemptions inside of mutual funds and 401k’s to begin. Apple could easily fall another 25% just to get back to where it was a year ago today.
- If we see more selling in MSFT and AAPL, then volatility will increase, and that’s when we’ll see more downside pressure in the general markets.
SPX Expected Move:
- Last Week’s EM == $148
- Next Week’s EM == $144
- Therefore, have we seen the bottom? Absolutely not!
Tips:
HODL’s: (Hold On for Dear Life)
- CASH == Nexo & Celsius == @ 8 to 12% yield
- PHYSICAL == Gold @ $1,992 / oz. & Silver @ $26.22 / oz.
- **BitFarm (BITF = $3.25 / in at $4.12)
o Sold May, Dec ‘22: $5 CCs for income,
- **Bitcoin (BTC = $38,700 / in at $4,310)
- CPG (CPG = $7.21 / in at $6.44)
o Sold Jul $7.50 CCs for income,
- Energy Fuels (UUUU = $9.58 / in at $11.29),
o Sold June $11 CCs for income,
- **Ethereum (ETH = $2,550 / in at $310)
- GME – Holding
- **Grayscale Ethereum (ETHE = $20.02 / in @ $13.44)
- **Grayscale Bitcoin Trust (GBTC = $25.51 / in @ $9.41)
- Hyliion (HYLN = $3.90 / in @ $6.01)
o Sold April $4 CCs for income,
- **Solana (SOL = $80 / in @ $141)
- Uranium Royalty (UROY = $4.57 / in at $4.41)
o Sold April $5 CCs for income,
- Vertex Energy (VTNR = $9.24 / in @ 4.74)
o Sold April $5 CCs for income.
** Denotes a crypto-relationship
Trade of the Week: Bullish In Out Spread on 14 April 2022 USO:
- +1 x BUY 14 APR 22 73 CALL,
- -1 x SELL 14 APR 22 75 CALL, at
- $0.78 LMT DEBIT == hedge for the gas pumps!
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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