“So, gimme the answer…” Who cares? Why are we always standing on one foot, waiting for a quick-n-easy shortcut? Perhaps the reason we’re struggling is that we consistently, refuse to ask the right question. Honestly, answers are easy – it’s figuring out the right question that’s worth its weight in gold / bitcoin.
“Social Media depends upon… negative, sensationalism to draw a crowd and generate profits.” Its default behavior includes being: selfish, short-sighted, and mean – at scale. A company’s stock price should not influence whether we are rational, kind and gentle. Prioritizing volume over content means that you ARE part of the problem, and NOT the solution. Try introducing conflict, by saying ‘NO’ with rationale and solution to various situations. It will produce a different (more thoughtful) result.
There are 2 kinds of help… #1 is when someone helps you with advice or labor to accomplish what you’ve already set out to do. #2 is rarer, more useful, and is when someone helps you take your plan to an entirely new level. It’s never been easier to learn what we need to learn, and more urgent that we do so.
The Market: “A day of reckoning is coming…”… Papa John
Market Update:
- S&P 500 lost 8.8% in April, closed negative every week of the month, and is down 13.3% for the year.
- Nasdaq fell 13% in April, and is down 21% for the year – its worst YTD showing ever.
- Amazon fell 14% on Friday – its largest one-day drop since 2006. It is down 26% YTD, at 2-year lows, and recorded its first quarterly loss in 7 years.
5 Rules = If you feel compelled to buy the dip (BTFD):
- 1) Spread the wealth = Don’t fixate on one, single equity,
- 2) Trade small = Because you’re likely to be early and wrong,
- 3) Look for longer duration trades = Because it’s tough to scalp when markets are in distress,
- 4) Write calls against your long stock = Because it allows you to hold the position profitably a little longer, and
- 5) Know the asset’s Expected Move = Because that will dictate your profitable and timely exit.
Retirement Account Stats:
- 33% of U.S. do not have a retirement account at all,
- 52% are behind on their retirement savings, and
- 51% have taken an early withdrawal from their savings.
- The Average Retiree’s 401(k) balance is:
o 45 to 54 yrs. old: $161,079 (avg.); $56,722 (median)
o 55 to 64 yrs. old: $232,379 (avg.); $84,714 (median)
o +65 yrs. old: $255,151 (avg.); $82,297 (median)
- Bitcoin + 401k plans: “Later this year, the 23,000 companies that use Fidelity to administer their retirement plans will have the option to put bitcoin on the menu.”
InfoBits: “Markets are smart in-the-moment…”
- U.S. GDP Declined 1.4% in Q1 2022… and 2 consecutive quarters of decline == Recession. Stagflation is a contracting economy with record high levels of inflation. Our FED is choosing to battle inflation, but if they’re not careful they may get to battle both Inflation + Recession.
- Average home prices jumped almost 20% YoY in February… Hey, homeowners in: Phoenix, Tampa and Miami saw prices rise over 30%!
- Cash is King… as Rising inflation, a stalled IPO market and ongoing geopolitical instability have injected new caution into startup investing. Everyone is clamping down on spending and conserving cash.
- Elon wants to be at the center of issues that interest him… 1st it was accelerating the green transition with Tesla. 2nd it is colonizing other planets with SpaceX. 3rd is solving traffic congestion with The Boring Company, and 4th is saving free speech via Twitter.
- SpaceX’s satellite biz, Starlink… will offer free Wi-Fi on next year’s Hawaiian Airlines flights. It’s the company's first collab with a major airline as it looks to become a household name.
- Pedal to the Metal… as Ford is set to become the first mainstream carmaker to sell a full-size EV pickup, and is boosting production from 40k to 150k trucks. Ford’s success will pose some serious competition to both Rivian and GMC.
- Keep on swiping…. as Visa and Mastercard are seeing a splurge of new outfits and dining out going-on. Last quarter, both saw 25% increases, Lucky the consumer is still strong – because higher rates = higher payments.
- Let the layoffs begin:
o Robinhood is laying off 9% of staff that may become 40% of staff.
o Rocket Mortgage is parting ways with 2,500 employees.
o Meta (FB) posted its slowest revenue growth since going public.
o Netflix subscribers are declining.
o Google reported slowing sales growth and profits.
o Snap disappointed on earnings as ads face increasing pressure.
- Let the foreclosures begin… as filings show a 39% increase over Q4 2021, and a 132% increase YoY.
- Deutsche Bank was FIRST to forecast a mild US recession... now it’s warning of a MAJOR recession as our Fed tackles inflation.
- Apple’s going DIY on us… as it opened an online store selling iPhone self-repair kits to customers.
- Intel CEO thinks the chip shortage will last into 2024… due to the lack of equipment for manufacturing the chips themselves.
- Tropicana unveiled a cereal meant to be eaten with OJ instead of milk... huh – call the breakfast police as some things just shouldn’t be messed with.
- Carvana’s car-vending machines are running out of cash… as the lure of used-cars wears off. Rival Vroom lost 90% of its post-IPO gains, and CarMax says shaky consumer confidence is keeping buyers away.
- As crime rises in Chicago, wealthy neighborhoods are hiring private police… as citizens with financial means are going around local governments and taking elements into their own hands.
Crypto-Bytes: “Markets are not good forecasters…”
- Central African Republic is adopting bitcoin as legal tender.
- Kraken received permission from the Abu Dhabi Global Market… to operate as a regulated crypto exchange in the United Arab Emirates. Kraken’s 8m global users will be able to facilitate investing, trading, withdrawals and the deposit of BTC and ETH directly into the local currency.
- Panama has approved a bill… seeking to regulate and to “give legal stability to crypto assets in Panama,” while it tries to “attract more investment and generate more employment.”
- Morgan Stanley reported that legacy financial institutions… missed $5B in crypto revenue generated last year, in part due to the lack of clear, crypto regulatory framework.
- The Brazilian Senate passed a bill… regulating crypto transactions and preventing the country's securities watchdog from overseeing the crypto market, except for initial coin offerings.
- Cuba will soon begin registering… digital asset service providers, offering one-year licenses.
- Buenos Aires will allow residents to pay their taxes in crypto.
- Dragonfly Capital has closed its third funding round… with $650m in capital, pushing the firm’s assets to nearly $3B. The fund(s) will look to invest in crypto companies creating “new digital economies.”
- Texas is morphing into a full-fledged crypto hub… as Fort Worth is on track to be the first US city to mine bitcoin itself. The gov’t will set up mining rigs in city hall as part of a pilot program.
- Goldman Sachs is following other investment giants… and allowing a borrower to use bitcoin as collateral for a loan.
TW3 (That Was - The Week - That Was):
Monday: Friday’s NYSE gave us 20 new 52-week highs, and 420 new 52-week lows. On the NASDAQ there were 44 new 52-week highs, and 646 new-yearly lows. And the highs were all grouped around acquisitions. The IMF (International Monetary Fund) just came out with this message (I couldn’t make this stuff up): "We printed too much money and didn't think of the unintended consequences" - IMF Director Kristalina Georgieva.
Tuesday: Last night Russia's foreign minister said that there was serious danger of nuclear conflict. Right now, you can't trust anything. I'll wait.
Wednesday: I will be the first to say that "I have no clue" what happens today. Volatility and news flow, will again rule the roost. The number of once high flyers that are now down +70% is stunning. There's been some real carnage out there. I have no desire to try and jump into anything here – it’s simply too fluid.
Thursday: The Nasdaq enters today’s trading down -20% YTD, and -12% for April. Semiconductors are down -26% YTD and -15.5% in April. We just found out that our GDP declined 1.4% in Q1 2022. Look out below.
Friday: This is a war between traders and the PPT (Plunge Protection Team). Everybody knows that the March lows are a line in the sand, and the PPT wants to keep things above that line at all costs. But, horrible economic news and the reality that things truly do economically suck – has investors on edge. What good is a half percent increase in hourly wages, when inflation is running ten times higher than that?
AMA (Ask Me Anything…)
In one of the largest tech acquisitions, Elon Musk agreed to purchase Twitter for $44B / $54.20 per share. Some ideas that Elon has in mind for TWTR include:
- Dogecoin payments on Twitter… as Elon wants to see Twitter Blue, the company’s subscription service, come with the choice for users to pay in DOGE.
- Make the TWTR algorithm public, add an edit button, and allow users to post longer tweets.
- Twitter to allow USDC stablecoin payments for the platform’s content creators – in partnership with payment processor Stripe.
- Twitter to allow NFT verification and BTC tips for creators using the low-fee Lightning Network that is currently available to users in the U.S. and El Salvador.
- A new CEO for TWTR… that is more in-tune with growing revenue from tweets that contain important information or go viral, and from third-party websites that want to quote or embed a tweet from verified individuals or organizations.
- AND TWTR will be cutting jobs.
Next Week: Any more selling ahead?
- We broke thru 4211 on the SPX… but could easily be headed to 3300 or 3000. We held onto last week’s lower edge of the expected move – so we still have a fairly efficient market. Tip #1: Markets do NOT crash from extreme highs, but rather from extreme lows. A rally back to 4211 is easily possible – especially with the FED meeting this week.
- The currencies are moving… we’re looking at once-in-a-decade types of moves in the currency markets. The Japanese Yen (/6J) is crashing along with the British Pound (/6B) – allowing the U.S Dollar ($DXY) to rally to its strongest level since 2002.
- S&P100 Correlation… markets are totally correlated to the downside. [aka “Nowhere to run to, Nowhere to hide.”] Tip #2: Short Strong Sectors = KO, XLU, and XLP.
- Forget about our FED… because (a) Bonds have already done what our FED has not (they moved rates higher), and (b) GDP has already sounded the alarm bell by declining -1.4% in Q1 of 2022. Talk about being stupidly LATE to a party.
- GDP Declines -1.4%, and we may have seen Inflation Peak. If inflation has NOT peaked – it will be due to supply chain constraints. It could be that our present lack of supply is unable to meet even the bare minimum of demand for things like food, shelter, chips and some materials.
- The Mega Market Cap debacle… Will markets hit the largest market cap company = Apple (AAPL) = with a sell? After all, the Nasdaq is down 22% YTD and Apple is only down 13%. Tip #3: Watch for mutual fund redemptions to hit AAPL and MSFT the hardest.
SPX Expected Move (EM):
- Last Week = $134 EM… We held right onto the edge of last week’s downside EM. Which means that all of the selling you saw last week – was orderly and predicted. Therefore, capitulation was not a word in any trader’s vocabulary.
- Next Week = $168 EM… Monday could turn into utter chaos, because the volatility futures have inverted. The options market is telling us that market volatility is far from over, and is in fact – becoming larger. Understand your risk because: “We are paddling out into some very large waves.”
Tips:
The playbook our FED is using is one of raising rates – causing markets to fall – resulting in a drop-in demand – eventually curtailing inflation. Unless something changes, our FED will raise rates like crazy. The S&P is below the 4211 and 4150 levels, and the NASDAQ is below its February 24th low. On a technical basis, this market is ugly. We may see some buying next week when our FED raises rates, but the rally will be temporary and only result in lower highs and lower lows.
HODL’s: (Hold On for Dear Life)
- CASH == Nexo & Celsius == @ 8 to 12% yield
- PHYSICAL COMMODITIES == Gold @ $1,896 / oz. & Silver @ $22.79 / oz.
- **BitFarm (BITF = $2.88 / in at $4.12)
o Sold May, Dec ‘22: $5 CCs for income,
- **Bitcoin (BTC = $38,300 / in at $4,310)
- CPG (CPG = $6.92 / in at $6.44)
o Sold Jul $7.50 CCs for income,
- Energy Fuels (UUUU = $7.51 / in at $11.29),
o Sold June $8 CCs for income,
- **Ethereum (ETH = $2,800 / in at $310)
- GME – Holding
- **Grayscale Ethereum (ETHE = $20.31 / in @ $13.44)
- **Grayscale Bitcoin Trust (GBTC = $26.38 / in @ $9.41)
- Uranium Royalty (UROY = $3.37 / in at $4.41)
o Sold July $5 CCs for income
** Denotes a crypto-relationship
Trade of the Week: Coca-Cola KO: BOT the June 3, +66 / -64 Put Spread for $0.87
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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