Who ya gonna trust? “Inflation is under control, and Interest Rates will fall.”
Who ya gonna Trust? NOT Goldman’s Wealth Management Chief: Sharmin Mossavar-Rahmani – after she published a ‘crypto smear piece’ in the WSJ. To paraphrase for the sake of brevity:
- 1. Sharmin: “We do not think crypto is an investment asset class.” Tough position to take on a $2.5T crypto-market currently seeing inflows of $B’s per day from sophisticated institutional investors.
- 2. Sharmin: “It is impossible to value cryptocurrencies, which don’t produce earnings, cash flow or dividends.” Bitcoin produces earnings via block subsidies and transaction fees – captured by decentralized network participants at a rate of $21B/yr. RF: It’s a shame when people stop doing their homework.
- 3. Sharmin: “Cryptocurrencies help to facilitate crimes.” Illegal transactions are less than 0.5% of all crypto transactions, and dwarf the U.S. Dollar when it comes to illegal popularity. RF: Law enforcement favors crypto because the blockchain’s public ledger component makes it very easy to track the criminal activity.
- 4. Sharmin: “Bitcoin is too volatile to become a medium-of-exchange.” Bitcoin volatility is being judged by those holding U.S. Dollars. Since 2020, the U.S. Dollar has lost 25% of its purchasing power, and bitcoin has gained +800%. RF: It doesn’t take a rocket scientist to figure out which is the better investment.
- 5. RF: “Sharmin, leading your clients away from crypto for the last 15 years just reminds me how quickly retirement sneaks up on us. Don’t worry, many highly accomplished individuals finished their careers on the wrong side of history.”
The Market:
“Don’t ever give up…” Jimmy V.
"There are 3 things we all should do every day... #1 is laugh. #2 is think. And #3, you should have your emotions moved to tears. Think about it: if you laugh, you think, and you cry – that’s a full day. That's a heck of a day. If you do that 7 days a week – you’re going to have something special." … Jim Valvano
When we can use a resource more efficiently… we use MORE of it – not LESS. Per Seth G.: As cars got better gas mileage, we drove more. As AI learns to write better computer code, the demand for programmers will increase because we will want to capture more business efficiencies - faster. When things are easier and more efficient, we raise our standards. I believe that AI will produce MORE opportunities than it destroys.
Boyle’s Law… There’s no such thing as a Work-Life Balance – it’s just called LIFE. In engineering, Boyle’s Law relates pressure to the size of the container that holds it. For example, as we decrease the size of the container that holds the same amount of oxygen – that increases the pressure on the oxygen. One way to decrease your Work Pressure is to expand the size of your work container – making it a larger part of your life. If you’ve found a way to Make-a-Living, the challenge in Making-a-Life is to properly size your work container. That’s not easy, and success is not guaranteed. But they don’t call it: Boyle’s Good Idea.
InfoBits:
- Gold is outperforming the S&P 500 this year… not only because traders expect rate cuts, but also because they’re front-running large central bank purchases. Gold pushed to all-time highs last week, while silver and copper played catch-up. If you would like a good place to buy physical silver or gold, I recommend: cornerstonebullion.com.
- Global VC deal activity is down ~-21% YoY… stressing sustainability and customers – over a good plan + demo. Pitchbook believes that U.S. VCs could raise the least amount of capital since 2013.
- U.S. hurricane season could see 25 named storms… form in the Atlantic this year – well above the usual 14. This hurricane season will start earlier and last longer.
- Tesla’s Q1 deliveries fell 8.5% while BYD’s grew 13% YoY… signaling Tesla’s first annual decline since 2020’s pandemic disruptions.
- DoorDash added Lowe’s to its list of delivery partners… that include Sephora, Best Buy, Target, Petco, Victoria’s Secret, and CVS.
- Elon Musk is boosting compensation for its AI engineers… to combat aggressive recruiting and massive offers from OpenAI, calling it the “craziest talent war” he has ever seen.
- Oil prices have surged to start the year… due to: (a) Middle East turmoil, (b) the Russia / Ukraine War, and (c) OPEC’s crude oil production cuts.
Crypto-Bytes:
- With ‘Halving’, BTC supply is constrained: ~20m has been mined:
o ~85% (16m BTC) is in wallets of long-term holders, that might sell as BTC continues to hit all-time-highs.
o ~3m BTC is in short-term accounts that would likely take profits in an uptrend,
o Only leaving a small amount of BTC controlled by miners, who will sell to grow operations and/or cover costs.
- “25-Years” said the Judge to Sam Bankman-Fried… and aside from the obligatory 60 Minutes prison interview, and the Michael Lewis made-for-TV movie – we may never have to hear about SBF again. SBF still believes he didn’t do anything wrong, and continues to believe that he’s the modern day Robinhood – who’s altruism should have protected him from any wrongdoing. Factually:
o SBF: cost self-directed investors hundreds of $B in capital appreciation,
o SBF: destroyed the flow of new investment capital – which stifled new tech innovation.
o SBF: single-handedly limited the products that individual investors could use to participate in the digital asset marketplace.
RF: Unfortunately, a 25-year prison sentence does not compensate for all of the progress SBF erased.
- Sovereign wealth funds are now buying Bitcoin.
- A strong U.S. Dollar… puts pressure on crypto. If the Dollar index eclipsed $105, I would be more cautious in buying cryptocurrencies over the short-term.
- Morgan Creek Capital predicts that post-halving prices… will reach $150,000 this year: “The big move happens post-halving. It starts to become more … parabolic toward the end of the year.”
TW3 (That Was - The Week - That Was):
Tuesday: Yesterday (the start of a new month / new quarter) we saw the DOW lose ~240 points. That's not normally the way a new month/quarter starts. This morning things got even more odd with the DOW being off -300, the S&Ps down -40, and the NAS off -200. The 10-Year is moving higher, and the (flight to quality) US Dollar is on a tear to the upside. What’s changed:
- 1. Rate cuts = Schmate cuts. This market is sensing that our FED isn't going to do 3 rate cuts this year.
- 2. The Tech Bubble is popping. 80% of this market’s previous gains were on the backs of the Mag-7 – a trade that is now: fully baked / overdone.
- 3. AI could be: ‘Much ado about a Little.’ “A little less talk – a little more action, please”… Elvis.
Thursday: I’m putting energy / uranium stocks back on the radar. I’m watching: CCJ, NXE, UEC, EU, DNN, and UUUU. The following news put markets in a tailspin today:
- #1: Comments by the Minneapolis Fed. Pres. Neil Crash-Kari (Kashkari) saying that zero rate cuts in 2024 are possible.
- #2: Oil spiked over $90/barrel, and the Japanese Yen spiked.
- #3: U.S. Secretary of State Blinken said: "Ukraine WILL become a member of NATO". Putin has said repeatedly that if Ukraine joins NATO – his only defense would end up being nuclear. A WWIII threat is killing this marketplace.
- #4: The UAE announced the suspension of all diplomatic ties with Israel.
- #5: Reports surfaced of an imminent attack by Iran on Israel for the recent consulate attack.
Friday: Thursday the S&Ps posted their second biggest losing day of the year, the DOW dropped for a fourth straight day, and the Nasdaq posted its biggest one day percentage drop in about a month – as Volatility jumped to its highest level since November ‘23. This morning’s Jobs Report just hit and the numbers are stronger than expected.
- They were expecting 200k jobs created, and we got 303k – with the bulk being in the part-time and second-job demographics.
- Unemployment fell to 3.8%, and Labor Force Participation rose to 62.7%.
- In reality (backing out the Birth/Death numbers and other revisions) employment actually fell by -6,000 jobs.
- In terms of tradeable actions:
TIP #1: I like energy, and if NEE gets up and over $64.05 – I’ll take some.
TIP #2: Gold and silver have been on a tear, and if NEM exceeds todays $38.80 high – I’m on it.
Morgan’s Moments…
- In the last 14 Q2’s:
o Bitcoin has closed green 10 times, with an average gain of ~71%,
o And has closed negative 4 times, with an average loss of ~35%.
- In the last 13 April’s:
o Bitcoin has closed green 9 times, with an average gain of ~58%
o And has closed red 4 times, with an average loss of ~7%.
- Tip #3: To initiate a new crypto trade, I’m looking for either:
o Bitcoin breaking over $69,000, OR
o Bitcoin breaking below $50,000 – a key Fibonacci retracement level.
Next Week: “A Market Reversal Looms…”
Background: We just came through the most volatile week of the year – ending up on the lower edge of the expected-move. We learned:
- Geopolitical Risk and Higher for Longer is back on the table.
- Stock Buybacks (decreased supply) are set to rise as confidence rebounds.
- Energy and Precious Metals are breaking out and are sparingly allocated.
- Stock ownership is dramatically skewed toward the higher age brackets – which will help to explain transactional behavior patterns moving forward.
- Stocks are expensive, but commodities are cheap.
Higher Reversals & Increased 2-Sided Trading… opened up last week’s day-trading opportunities as markets continued taking the stairs higher but the elevator lower. Tip #4: This opens the door for more premium selling moving forward.
Volatility is NOT backing down… We moved 55 S&P points higher on Friday, but volatility (VIX) remained elevated. That tells me that there are inequalities and nervousness in the current marketplace that need to be resolved prior to the VIX and the VVIX settling lower.
“The Bonds are Back in Town”… and continue to breakdown – moving 2.5 standard deviations lower on high volume. This is causing interest rates to jump higher – faster (4.4% on the 10-Year).
GOLD is the ‘Real Sign’ of inflation… especially when you see Friday’s Non-Farm Payrolls Report come in as HOT as it did (+300,000 jobs created). We can all claim that OIL is moving higher due to geo-political risks, but it’s fueling inflation fears. In a week when the U.S. Dollar was flat, Gold moved ~2 standard deviations higher (+30% higher YoY – from ~$1,800 to +$2,350 / ounce). That means that our FED’s battle against inflation is NOT over, and the Bond Market could continue enforcing ‘Higher for Longer’ even if our FED cuts rates.
SPX Expected Move (EM):
- Last Week’s EM was $62, and we moved ~$54 lower.
- Next Week’s EM = $91… talk about putting on your Big Boy Pants. Either:
o Bonds need to revert higher, or interest rates will crush this marketplace.
o Volatility needs to cool off, or it will snap-the-back of the S&Ps.
o Gold and commodities need to pull back, or our FED’s hands are tied.
TIPS:
HODL’s: (Hold On for Dear Life)
- 13-Week Treasuries @ 5.3%
- PHYSICAL COMMODITIES = Gold @ $2345/oz. & Silver @ $27.6/oz.
- **Bitcoin (BTC = $69,400 / in at $4,310)
- **Ethereum (ETH = 3,350 / in at $310)
- **ChainLink (LINK = $17.7 / in at $7.78)
- **MARA – Marathon Digital = ($18.4 / in at $12)
o Sold June $40 Covered Calls
- **IBIT – Blackrock’s BTC ETF ($38.4 / in at $24)
- INDA – India ETF ($52 / 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
- **RIOT – Riot Bitcoin Mining ($10.2 / in at $12.5)
o Sold June $25 Covered Calls
- **MATIC – Polygon ($0.90 / in at $0.94)
- Various Bull Call Spreads:
o RS – Reliance Steel: Sept = BOT $350 / SOLD $370
§ Now @ $7.65 – in @ $6.20
o NUE – Nucor Steel: Jan. = BOT $220 / SOLD $240
§ Now @ $6.15 – in @ $5.35
o MARA – Marathon Digital: Jan. = BOT $25 / SOLD $50
§ Now @ $2.83 – in @ $3.50
** 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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