Martha Stewart has 2 mottos… (a) “When you’re through changing – you’re through,” and (b) “Failure only happens between bounces.” Ms. Stewart’s journey of building Martha Stewart Living Omnimedia has taken her from writing over 100 books, to spending 5 months in jail, to reaching over 100m fans monthly, and now to the cover of the SI Swimsuit edition. The 81-year old swears by her mantras and was anxious to become SI’s oldest cover model in history. You Go Girl!
The best marketing advice… is to make sure your thing is something that people will want to share with others – and then make it easy for them to do so. Per SG: If you want to build a vibrant non-profit, create one where your donors do the fundraising. If you want your software to be effective, embrace the network effect so that it works better for more users, and especially well when your users bring in new users. People don’t share things because it promotes the idea – they share things because it helps them. When people listen, discuss issues, and do complimentary work – things get better.
When will WeWork die? WeWork went public in 2021, and has now lost 98% of its value as its stock = 25 cents. This week their CEO (the real estate veteran who took over 3 years ago) exited stage left. WeWork’s cash burn was $2.3B/yr. between 2020 and 2022, and is on pace to lose over $1.3B this year. In 2022, WeWork projected profits of $500m but it actually LOST $500m. SoftBank has lost +$12B on its WeWork investment and is: “one of the worst startup investments of all time.” WeWork is just one of many VC-backed companies over the past 11 years without a viable business model. Once again, cheap money makes smart people do dumb things.
The Market:
Major League Pickleball teams can now be bought… for around $5m. That’s the same price that a Major League Soccer franchise cost 25 years ago, and is now worth $500m. Pickleball participation doubled from 2021 to 2022, and is expected to quadruple by 2030. New pickleball courts are everywhere from abandoned big box-stores to the roofs of shopping malls to private backyards. Just do it!
Atlanta FED Pres. believes… that they should continue hiking interest rates, even if it means pushing the U.S. economy into a recession. “Inflation is job ONE. We’ve got to get back to our target. We’ve got to be willing to eat the cost of doing that. Inflation has been persistently high, consumers have been resilient in their spending, and labor markets have remained extremely tight. All of that suggests continued upward pressure on prices. I would like to increase rates further.”
“The laptop class is living in la-la land…” said Elon Musk. He believes that working-from-home is an affront to those who have to show up at the workplace every day. “Firing up laptops at home lowers productivity, and sends the wrong message to factory workers and others that don’t have that option.”
InfoBits:
- Tiger Global is offloading some of their private investments… onto the secondary market after the IPO window closed. Problem: How do you put a price tag on badly performing assets?
- Gold is the top pick for those seeking protection… in case Washington’s game of chicken over the debt ceiling ends in a crash.
- “I worry that the median U.S. bank has 43% of its loans… in real estate, and nobody goes into the office anymore. It’s a toxic situation." – Duquesne Capital’s Stanley Druckenmiller.
- B of A says that: Global fund managers are… the most pessimistic they’ve been all year, flocking to cash amid concerns that a recession is looming.
- Pilots, rail workers, delivery drivers, educators, and nurses… were all essential pandemic workers and are all without significant pay bumps. Look for disruptions in everything from shipping to healthcare.
- Home Depot logged its worst revenue miss in decades… and lowered its annual forecast. With the pandemic winding down, folks are cutting back on DIY projects and $400 grills.
- The U.S. only spends more on social security ($1.2T) and healthcare ($909B)… than on servicing our national debt of $813B.
- In 2022, the median pay for S&P CEOs… dropped for the first time in 10 yrs. By the end of 2022, two-thirds of executives got smaller pay packages than originally awarded.
- The return-to-office movement is stalling out… with half of U.S. office buildings still unoccupied.
- In the U.S., $5.1m… gets you into the top 1%’ers club.
- Montana banned TikTok starting in January 2024.
- Amazon is bringing ChatGPT’esque conversational abilities to Alexa… which will put it at the forefront of AI because there are over 500m Alexa gadgets out there.
- U.S. commercial real estate prices fell… for the first time in over 10 years. Banks own over 60% of the $3.6T in outstanding commercial real estate loans.
- If a debt limit deal is reached… the Treasury will need to replenish its cash buffers through a surge in T-bill sales, and that will have the same impact as a 25 bps rate hike.
- US existing home sales fell 23% in April YoY… with the median home price falling to $388,800.
- ESPN will soon be offered as a standalone streaming service. The move could mean a lot more cord-cutting, since live sports are the main cable draw.
- B of A reiterated its call to sell US stocks… saying tech and AI are in a bubble and the Fed’s rate hikes are not over. To quote Stanley D., “I’m sitting here looking at the biggest and broadest asset bubble that I’ve ever studied.”
- OpenAI is bringing ChatGPT to smartphones.
Crypto-Bytes:
- Citadel sued a pair of former employees for stealing trade secrets… as they quit to start a crypto market-making firm.
- Ripple is acquiring Swiss crypto custody services firm Metaco… as the SEC pressures more firms to move overseas.
- Ledger (the leading hardware wallet maker)… announced a new recovery feature that sent crypto enthusiasts into a frenzy.
- Ripple achieved a small victory in its legal battle against the SEC… as the SEC’s attempt to seal the ‘Hinman Speech documents’ was denied. It was in these documents, William Hinman (former SEC Corporate Fin. Dir.) walked people through how and why ETH is not a security.
- Coinbase opened up its subscription service… to the U.K., Germany, and Ireland. Coinbase One charges $29.99/mo. for features such as zero trading fees, higher staking rewards, and 24/7 customer service.
- Visa is experimenting with account abstraction on Ethereum… as it intends to use smart contracts with a ‘free-fee’ goal.
- Tether will put up to 15% of its profits… into bitcoin purchases – adding to its existing $1.5B+ BTC stash.
- Think of Bitcoin as Insurance…
o It’s insurance against currency debasement.
o It’s sovereign default insurance.
o It’s insurance against undisciplined monetary and fiscal policy.
o It’s insurance against nationalization / seizure.
o And/or it’s insurance against economic censorship.
TW3 (That Was - The Week - That Was):
Tuesday: Another day where just a handful of tech stocks are keeping this market from projectile vomiting. The DOW's off 220, the S&P off 12, but the glorious NASDAQ (with mega-cap tech leading the way) is green. The market feels heavy. The DOW has only been up 2 times in 12 sessions. The S&P has been between 4109 and 4175 for 30 full sessions. Maybe this resolves to the upside, but it's going to be a struggle.
Wednesday: Target beat estimates this morning but warned about the current quarter. Target estimates that inventory shrinkage (theft) will reduce profits by $500m this year. The DOW (on the other hand) is up 400 points on Biden’s muttering that he thinks a debt ceiling deal can be done in a day or two. In any event, don't chase this one – as one day does not a trend make.
Thursday: It took no time to see that our market loves mega-cap tech again. The miners are getting killed as interest rates and the U.S. Dollar rise. I'm looking at a company that many people don't like = PayPal. PYPL has fallen a ton, and looks ready for a meaningful bounce. I'll take some over $61.80 if it gets there.
Friday: Why is this market is going higher? The market is no longer a reflection of the economy. The 4200 level on the S&Ps (that was breached this morning) is a level that stood since April of last year. Do we build a base from 4200, and push even higher? I think this market is luring everyone in, in the face of a lot of uncertainty. I don't think this market can sustain these levels in the face of 5% guaranteed, no-risk Treasuries. Even the homebuilders are making 52-week highs despite rising Treasury yields, and after Thursday’s bullish jobs data. J. Powell spoke today and he wasn’t as dovish as people had hoped – that’s why the averages rolled red into the close.
AMA (Ask Me Anything…)
U.S. lawmakers are re-introducing the Securities Clarity Act… aimed at clarifying the status of digital assets. They’ve coined a new term, “investment contract asset” to distinguish the digital asset from the security they’re often associated with. First introduced in 2020, the Act is designed to allow token projects, even those raising capital early on, to step outside the securities framework once they’re decentralized. This could prevent tokens from being constrained from their intended utility. Crypto groups are applauding the bill’s distinction between an investment contract and the underlying asset.
FTX and Alameda Research are suing x-CEO Sam Bankman-Fried… and 2 other former execs over the acquisition of Embed – a stock clearing company. The lawsuit alleges that they overpaid for Embed. While Embed's former shareholders and founder are not accused of wrongdoing, CEO Michael Giles gained $157m from the acquisition. FTX is seeking to claw back the $240m it paid – saying that former FTX insiders did no due-diligence before buying the worthless, bug-ridden, software platform.
Next Week: How’s that Gamma Squeeze?
- It’s all about mega-cap tech. Gamma Squeezes are everywhere and that caused the SPX to touch the upper end of its range at 4211 on Friday. The world is short right now, and due to that condition – you’re going to get squeezes where indexes will often ‘break higher’ before they ‘break down’. The pros remain net short U.S. equity futures – at similar levels as towards the end of the 2000’s bear and start of 2007/08 bear market. This means U.S. equities are expensively priced vs history and vs its global peers.
- We hit SPX 4211, now what? Things get interesting if the financials continue to break higher and the energy sector continues to catch-a-bid. If we get to 4230, then the shorts will start to cover, and the call-buying rally is ‘ON’ once again.
- The Bonds, VVIX and SKEW are showing risk-on: The bonds were markedly lower over the past week, and definitely see something on the horizon that scares them. Bonds are implying that rates are going to explode higher. At what point in rates, does mega-cap tech just toss in the towel? There’s absolutely nothing fundamental going on right now. Tip #1: This does not mean we’re going lower, but it does mean that a lot of people are hedging – just in case we do.
- The market has no idea about our FED’s next move. Bonds, VVIX and SKEW are all pricing in more rate increases, but the stock market refuses to believe it.
- Will Foot Locker’s performance be contagious? FL fell 30% in a day on bad retail sales figures. I think FL is the ‘retail’ face of things to come (in so far as consumer discretionary spending is concerned). I’m looking for Nike (NKE), LuLu Lemon (LULU), and Under Armour (UA) to correct over the coming weeks. We can all say: ‘fundamentals don’t matter’ – until they do!
- Our Regional Banks still have issues: The Regional Banking crisis is far from over. The charts of the Regional Bank ETF (KRE) along with Charles Schwab (SCHW) look terrible, and still can’t get up off-the-mat.
- Trades:
o Tip #2: SELL August QQQ Call Spreads
- SPX Expected Move (EM):
o Last week – EM = $64. We ended exactly on the upper edge of the EM. That’s an efficient market place!
o Next week – EM = $63 = We are projecting into a holiday weekend, and the volatility is the same. It’s all about the 4211. We are a stones-throw away from exploding higher or crashing lower. Please, keep your hands and feet inside the vehicle!
TIPS:
HODL’s: (Hold On for Dear Life)
- PHYSICAL COMMODITIES = Gold @ $1980/oz. & Silver @ $24/oz.
- 13 Week Treasuries @ 5.1 to 5.45%
- **Bitcoin (BTC = $26,800 / in at $4,310)
- **Ethereum (ETH = $1,800 / in at $310)
- **Chainlink (LINK = $6.49 / in at $7.17)
- Big Bear Holdings (BBAI = $2.21 / in at $2.90)
o BOT Sept $4 CALLS for $0.35
- DNN – Denison Mines ($1.07 / in at $1.32)
- Innerscope (INND = $0.0021 / in at $0.0052)
- MESO – Mesoblast Ltd. ($3.79 / in at $3.60)
o SOLD July $5 CALLS for $0.85
- NFGC – Newfound Gold ($4.39 / in at $3.75)
o SOLD July & Oct $5.00 CALLS
- TPH – Tri Pointe Group ($30.32 / in at $26.50)
o BOT July $35 Call
Follow me on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, R.F. Culbertson, contributing sources and those he interviews. You can learn more and get your subscription by visiting: <http://rfcfinancialnews.blogspot.com/>.
Please write to Mr. Culbertson at: <rfc@culbertsons.com> to inform him of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference <http://rfcfinancialnews.blogspot.com/>.
If you'd like to view R.F.'s actual stock trades - and see more of his thoughts - please feel free to sign up as a StockTwits follower - "taylorpamm" is the handle.
If you'd like to see R.F. in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing:
https://www.youtube.com/watch?v=K2Z9I_6ciH0
Creativity = https://youtu.be/n2QiPSe_dKk
Investing = https://youtu.be/zIIlk6DlSOM
Marketing = https://youtu.be/p0wWGdOfYXI
Sales = https://youtu.be/blKw0zb6SZk
Startup Incinerator = https://youtu.be/ieR6vzCFldI
To unsubscribe please refer to the bottom of the email.
Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are not registered and licensed brokers. This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document. Please make sure to review important disclosures at the end of each article.
Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.
PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.
Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.
All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.
Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.
R.F. Culbertson
<http://rfcfinancialnews.blogspot.com>
