When’s the last time you heard a GOAT utter those 3 words… as words to live by? Back in the day, there were 2 dominate players: Mickey Mantle in the American League and Willie Mays in the National. Depending upon where you lived – one or the other was your GOAT. Mickey played for the N.Y. Yankees, and was a wild card that could strike out as easily as he would hit a game winning blast. Willie played in San Francisco, and was more down-to-earth. He didn't need to find a spotlight because he was good enough that the spotlight followed him.
I saw Mickey when the Yankees would play the Orioles in Baltimore. And I saw Willie Mays when the Giants would play the Phillies in Philadelphia. I only heard about The Catch from my dad years after it occurred in 1954. Mays had tracked down Cleveland’s Vic Wertz’s deep ball, on a dead run, reaching blindly outward – in front of him, and then immediately threw the ball back to the infield so that the runners would not advance. I grew up with The Catch in my vocabulary. That was a time when the middle class was larger (no billionaires). That was a time when we needed more information – instead of having too much. A time when our heroes had no idea how much they meant to us. It was written that Willie used to play 2 hours of stick ball with the kids in the street, on gameday – before heading to the ballpark for his afternoon game. Willie played with a: smile, grace and humility. All of my friends (myself included) wanted to be Willie Mays. We all just wanted to: ‘Play Ball’. R.I.P. Willie Mays – you truly made-a-difference.
It’s all Perspective… Per Seth G: The person you’re working with won’t know what you know or see what you see. It’s tempting to teach them your ways and starting point. It’s more useful to let them teach you their ways, and begin where they are.
The Market:
Investor & Entrepreneurial Greed… Fisker (FSRN) filed for bankruptcy this week. It was just another example of Investor & Entrepreneurial Greed not allowing a young company the time to grow up and mature. Everyone was fixated on building out a product at the expense of the people and the services required to run the operation. Currently, (a) sub-contractor Magna has stopped production of Fisker’s main vehicle. (b) The engineering firm that was co-developing Fisker’s sub-$30,000 Pear EV and their Alaska pickup is suing Fisker – calling these projects into question. And (c) Fisker (via press release) put itself up for sale while in Chapter 11. There have been 3 other EV startups that recently filed for bankruptcy: Lordstown Motors, Arrival, and Electric Last Mile Solutions. However, the fate of Fisker won’t change the fundamental problems associated with Investor & Entrepreneurial Greed – taking a young company public (via SPAC), before it is ready to grapple with big-company issues – such as bringing a not-ready-for-prime-time product to market.
In a nutshell… We can’t take too much from last week’s action due to the huge amount of rebalancing that was going on throughout the entire marketplace. We had the largest options expiration ever on Friday ($5.5T), and we need to see next week – how risk is repositioned.
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InfoBits:
- Retail sales came in light for May… the headline showed a rise of 0.1% but x-auto's were negative by 0.1% – and that’s in inflated dollars not units.
- Mortgage refinancing rates are +7% for landlords… all while office space values are falling ~37% over the past 2 years. [Not a great look for small ‘n mid-sized banks.]
- The U.S. Surgeon General is asking Congress for a new warning label… “Social Media carries significant mental health risks for adolescents.”
- Snowflake’s hackers… are demanding ransoms ranging from $300,000 to $5m per client company.
- The DOJ is suing Adobe for concealing termination fees… and making it difficult for subscribers to cancel their subscriptions.
- A year ago, over 7% of US adults said they had used crypto… which is a constituency large enough to decide this year’s Presidential Election.
- Meta will split its business and research unit into 2 parts… Metaverse and Wearables – resulting in more layoffs.
- The FTC has referred a case involving TikTok… to the DOJ for potential violations of the Children’s Online Privacy Act.
- Apple says good-bye to… Buy Now – Pay Later.
Crypto-Bytes:
- “Today we’re happy to announce a major win… for Ethereum developers, technology providers, and industry participants. The SEC will no longer be bringing charges alleging that sales of ETH are securities transactions.” This notice from regulators confirms that the SEC (like the CFTC) will classify Ethereum as a commodity moving forward. That will allow ETH’s ETFs to be approved as soon as July 2nd.
- David Hirsch, the SEC’s top crypto enforcer for ~9 years… has thrown in the towel and announced his immediate departure.
- Tether launched aUSDT… the first decentralized stablecoin backed by gold (XAUT). It’s more sustainable than ETH-backed stablecoins, as gold’s price is more consistent and its depositors do not expect massive yields.
- “Crypt-NO” said Biden to last month’s bipartisan crypto bill… that would have made it easier for banks to custody customers’ crypto.
- Bitcoin's volatility is hitting all-time lows… signaling a new level of market maturity. In contrast to the wild swings of previous years, BTC’s 60-day volatility remains under 50%.
- A large part of the crypto universe is in oversold territory… aka registering an RSI value of less than 30. Altcoins have received significant haircuts, but spikes like these often coincide with previous market lows.
- The Ethereum / Bitcoin ratio shows us that… ETH is beginning to outperform BTC. It’s NOT an uptrend until we see the ratio make a higher high, but it could suggest that altcoins are setting up to outperform Bitcoin.
- Standard Chartered is diving headfirst into crypto… with a new spot trading desk for BTC and ETH. Standard Chartered is one of the first global banks to offer direct trading for cryptocurrencies.
TW3 (That Was - The Week - That Was):
Tuesday: Tip #1: Buy RKLB over $4.90. The economy is creaking and groaning, and the market is happy about that, because it means that we are closer to FED rate cuts. Today, the Retail Sales report came in after a monumental plunge in consumer sentiment that produced the lowest reading in over 7 months. It showed that rising prices, and higher rates are exhausting people's personal savings. The headline number came in with a rise of 0.1%, and without autos it FELL 0.1%. But retail sales are reported on gross numbers, not unit sales. In other words, while sales totals may show that people are spending slightly more – the actual increase is due to price increases and not increases in the actual number of units that went out the door – they have declined. This ripples down the supply chain: with less units being sold you need less employees, truck drivers, and warehouse workers. And as inventories climb, you will stop suppliers from sending product.
Friday:
- Tip #2: Buy SIRI over that $2.93… just buy the stock.
- Tip #3: Buy GE above its 50-day… buy the Dec. ‘24 $170 Calls.
Morgan’s Moments…
- Top Line… LinkedIn is rapidly becoming the professional social media. To circulate new and engaging LNKD posts – try:
o Signing up to Taplio for free
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- Bottom Line… the economy is contracting much faster than the official numbers tell us. That is why politicians are so desperate to keep the market moving higher. So, job one at the FED & the White House, is to keep this market up at all costs. Ignore the Leading Economic Indicators – that fall every month. Forget falling consumer confidence, retail sales, fading home sales, and all the other ugly reports. All that matters is the illusionthat the economy is doing well. Can they keep up the charade all the way into the election? Yes, it's very possible. All our FED / Treasury need to do is: (a) print a lot more money to (b) continue buying our debt in order to (c) drop our Treasury yields, so that (d) investment dollars continue to flow into equities.
Next Week: “We had $5.5T in options Expire”
Bkg: Friday was the largest options expiration ever – when $5.5T worth of derivatives expired. Massive positions (and risk) came off the books. That amount of risk expiration ($5.5T) is bigger than Japan, France, and all but 2 world economies.
Massive positions came off the books… because many of the June 21 settlements had been on the books for over a year. Nvidia (for example) had 100,000+ options (Puts + Calls) on hundreds of strike prices – expire both due to rebalancing and risk relief. The gamma squeeze in NVDA had almost become self-fulfilling – and last Friday’s expiration broke that momentum. Tip #4: Watch early this week for any increased volatility resulting from last Friday’s options expiration.
That Capital moved from NVDA & META… directly into AMZN, GOOGL, and MSFT. The tech sector remained virtually unchanged – just the names have been slightly modified. Capital also rotated into Energy (XLE) and into the Financials (XLF). One way to see if this move continues is to watch the Advance / Decline line. Tip #5: If a move away from NVDA is going to stick, we should see +80% correlation across the A/D line early next week.
Opportunities in Gold (GLD) and Treasuries (TLT)…
- With our dollar showing incredible strength: Tip #6: BUY the GLD: +$125 / -$127.5 Call Spread, July 26 expiration.
- Lately, the direction of TLT has been to the upside: I believe that bonds will resume their downward slide (rates will move higher): therefore: Tip #7: BUY a TLT: At-the-Money PUT Spread, July 26 expiration.
SPX Expected Move (EM):
- Last Week’s EM: $65 and we finished +$40
- Next Week’s EM: $62 even with GDP, PCE, and Jobless Claims data being released. Also, look for Volatility (VIX) to pick-up in the trading week.
TIPS:
HODL’s: (Hold On for Dear Life)
- 13 to 17-Week Treasuries @ 5.44%
- Physical Commodities = Gold @ $2,334/oz. & Silver @ $29.5/oz.
- **Bitcoin (BTC = $64,350 / in at $4,310)
- **Ethereum (ETH = 3,500 / in at $310)
- **ChainLink (LINK = $13.6 / in at $7.78)
- HROW – Harrow Health == $21 / in at $12
- INDA – India ETF ($54.6 / in at $50) / BOT Nov, +$53 / -$55 Call Sp.
- **IBIT – Blackrock’s Spot Bitcoin ETF ($36.5 / in at $24)
- **MARA – Marathon Digital = ($19.2 / in at $12) / Sold Sept $30 Cov-Calls
- **RIOT – Riot Bitcoin Mining ($9.5 / in at $12.5) / Sold Sept $16 Cov-Calls
- TGB – Gold Miner == $2.5 / in at $2.7
** Crypto-Currency aware
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Please be safe out there!
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