“If Only…” those pesky constraints were lifted. But if the constraints go away – they go away for your competition as well. Constraints are often the gift that keeps on giving – as they can be (a) a barrier to entry, and (b) the motivation and focus of your entire company. Instead of cursing those constraints – embrace and celebrate them.
“If your brand is so good – why don’t you spin it off… into an IPO (Initial Porsche Offering). Porsche is speeding toward becoming a public company (via IPO) despite a bumpy market. Volkswagen (Porsche’s parent) said that it plans to take the luxe-car brand public within weeks, in what could be Europe’s biggest IPO since 1999. VW could itself raise $10B in the listing, and plans to use the cash to boost EV production. Porsche is proving that IPOs aren’t gone – they’re just changing. Companies that are buzzy, fast growing and never profitable are being tossed aside for corporations that continue to spin off profitable brands to boost value. This IPO should be fun to watch!
The Market:
Do NOT TRUST this rally. After 3 weeks of taking heavy losses, this market became stupidly oversold, and gave us a wicked, rip your face off rally in return. Naturally this weekend’s talking heads were asked: “Do you think that the bottom is in, and the downside risk is finally over?” And depending upon the fund manager answering the question they either lied and said: “Sure, dive in – the water’s fine”, or were honest and said: “This is just a bear market bounce. There’s more downside risk ahead.” After all, what’s changed? (a) Has Ukraine been solved? (b) What about the Taiwan situation? (c) Has the U.S. emerged from bankruptcy? (d) Has inflation been contained? Personally, I use local farm markets for meat, seafood, and vegetables - but I use Walmart delivered grocery for many other things. For the longest time a particular salad dressing that I buy was always $1 at WMT. On my last online order, I noticed that it had gone up to $2.48. Wow. It’s my opinion that prices on food and energy are going to remain ‘contained’ for the next 40’ish days – until the election. But post-election, I believe we revisit $135/barrel for oil, and rampant food shortages. Therefore, continue to hedge your financial risk – in order to win on both sides of the ball.
InfoBits:
- Citi will begin to issue credit cards to people without credit scores: They’re joining JPM and Wells Fargo in a government-sponsored program to expand credit access. Does anyone NOT know how this movie ends?
- Turkey’s inflation rate hit 80% YoY… a 24-year high.
- Deal funding in August… hit its lowest level in 2 years.
- Serena Williams’ final match averaged 4.8m viewers… making it ESPN’s most-watched tennis match – every!
- Rated ‘E’ for EVeryone… as GM’s going all in on affordable electric vehicles with the launch of the Chevy Equinox EV. The Tron-esque SUV will go on sale in the US next fall, with the cheapest model starting at $30K.
- Are Lyft’s days as an independent public company numbered… because shares of the ride-hailing firm jumped 17% Friday on chatter that GM may be thinking about taking another run at acquiring them.
- Benz and Rivian are teaming up… to build different EV commercial vans on a shared assembly line to cut costs.
- Smith & Wesson shares fell to a two-year low… after reporting that the demand for guns has returned to pre-pandemic levels.
- The European energy solution could look something like this:
o Customers pay crazy high energy bills,
o Energy firms rake in massive profits,
o Governments take the excess profits, and
o Give the money back to customers to help them pay crazy energy bills.
- A national rail strike could hit the U.S. starting next week… as the union could walk off the job on Sept. 16. The economic impact of a national strike would be over $2B /day, and would further exacerbate global supply shortages.
Crypto-Bytes:
- Iran will allow the use of cryptocurrencies… for cross-border payments.
- Russia announced that they must: “intensively develop digital assets which can guarantee uninterrupted payment for deliveries of goods from abroad and for export”. i.e. Russia is legalizing the use of crypto in international trade.
- BDO (Revolut’s auditor)… was said to have taken an "inadequate" approach to revenue recognition which created "unacceptably high risk”.
- The Nigerian Export Authority is in discussions with Binance… to create a virtual free zone focused on blockchain development – similar to Dubai's crypto hub built with Binance last year.
- Binance will stop supporting USDC stablecoin on Sept. 29…. converting them into its own stablecoin (BUSD) after that date.
- Netflix is banning all crypto commercials… on its ad-based service.
- The final countdown to The Merge has officially begun: as the Bellatrix upgrade on Ethereum was activated on Monday. That’s one of the final steps prior to switching from proof-of-work (PoW) to proof-of-stake on Sept. 13.
- Former SEC Commission Chairman Jay Clayton… recently joined venture firm Electric Capita. It’s part of a growing wave of ex-regulators flocking to the crypto space as the industry faces increasing scrutiny.
- Vermont Regulator says Celsius resembled a Ponzi Scheme… as Celsius misled investors about its financial health. It used its own CEL token to bolster its balance sheet and at times used new investor funds to repay old investors.
- Israel granted its first, permanent crypto license… to a private company – Hybrid Bridge Holdings, Ltd.
- Taiwan approved 24 crypto platforms… for anti-money laundering compliance.
- Cleaning up your act can get messy: The White House called out energy-intensive crypto (like proof-of-work bitcoin) – saying that it should collaborate with environmental and energy regulators to develop clean standards.
- FTX Ventures has agreed to buy 30% of SkyBridge Capital… a hedge fund founded by Anthony Scaramucci. Anthony will use some of the funds to buy $40m in cryptocurrencies to hold on its balance sheet as a long-term investment.
TW3 (That Was - The Week - That Was):
Tuesday: The futures are up sharply, but it’s not on good news: (a) Russia says it has absolutely no plans to resume Nord Stream until the West collectively agrees to lift economic sanctions. (b) Europe’s largest steel producer has stopped operations over energy, and winter is coming. And (c) OPEC has decided to CUT production, stating that the increase they gave Biden, was just for ONE month! Today it's the gyration in the 10-Year that has everyone excited. It's not so much the level, but rather the speed with which it's bouncing around. Keep an eye on SHOP. They had a tremendous earnings report and over $30.25 – I’d give them a shot.
Wednesday: Rising treasury yields, looming interest rate hikes, and recession fears continue to weigh on market sentiment. The 2-Year gained 10-bps to 3.499% and the 10-Year gained nearly 15-bps to 3.339% - the largest one-day gains in a month. Charles Nenner (a market cycle guy) believes that: “stocks, bonds, even real estate have further to fall from here. Global destruction is in full swing, and from my perspective, Europe's going to fall first – then China and Asia – and finally the U.S.”
AMA (Ask Me Anything…)
Energy (even non-nuclear) is a powerful weapon. By controlling Europe’s gas supply, Russia is attacking its economic heart. A winter shortage could tip Europe’s ailing economy into a full recession, and cause a collapse in energy trading. Europe’s gas-storage levels have surged ahead of targets, which could help it avoid having to ration – but consumers and the economy could take a major hit from record prices.
Lower Prices always win. Sales of eco-friendly brands like Beyond Meat have wilted as demand for pricey meat alternatives continue to fall. But Ugly Grocers have a distinct price advantage over their competition and are winning over cost-conscious shoppers – regardless of sustainability.
Crypto should embrace self-regulation: The Biden administration supports crypto collaborating with other industries – which suggests that crypto could come out to the upside. The Merge will demonstrate that Ethereum can change without regulation, and thereby serve as a natural roadmap for the rest of crypto.
Next Week: This Rally makes No Sense...
- #1 = These Bonds are NOT stable… Just because we’re moving to the upside, does not mean: “Mortimer, we’re back.” It just means that market makers are maintaining their neutral position, and in low volume arrangements – they often move markets unintentionally (wink-wink). This week we saw sell-side activity inside of the bonds, and that naturally increases interest rates. Tip #1: If Bonds (/ZB) break thru 130, tech will drop like a stone thru the 11,000 level.
- #2 = The Dollar is meandering lower like a coiled spring… as it’s only 1 day away from exploding thru the 111 level. Tip #2: If we explode thru the 111 level on the DXY – this market is ‘fully baked’. The Dollar (currently at 109) would have to fall to 105 for me to buy into the idea that we’re going to rally. The Dollar along with the Bonds are compounding the risk in this marketplace.
- #3 = Oil (/CL) is poised for a rebound: Even though oil has had a strong move to the downside, globally people are talking about an energy crisis. Some are talking demand destruction, but all the while OPEC and others are cutting production. Tip #3: Oil could have turned on Friday, and with the Brussels energy meetings over the weekend – watch for a move higher.
- #4 = Everything is Highly Correlated… within the S&P 100. Due to this level of high correlation, individual stocks no longer matter. The indices will tell you all that you need to know.
- #5 = Volatility is yawning: Even though we’re just 3 days away from 3931 on the SPX, the volatility index (VIX) has fallen asleep and is down to the 22 level. Manic moves under complacent volatility are everywhere – and that scares me. Tip #4: Markets are doing a ridiculously poor job of handicapping short-term risk.
- #6 = The SPX’s Expected Move is statistically insane… 6 out of the last 8 weeks we’ve had breaches of the Expected Move on the SPX – and none of thos breaches have been small. Tip #5: It’s time to hedge and REDUCE RISK.
- SPX’s Expected Move (EM):
o Last Week - $94EM (4-day week) – but we moved $140.
o Next Week - $97EM. Do not trust this marketplace, and do not trust this latest rally.
Tips:
HODL’s: (Hold On for Dear Life)
- CASH = Nexo @ 8% on USDC – waiting for The Merge dust to clear.
- PHYSICAL COMMODITIES = Gold @ $1,728 /oz. & Silver @ $18.79 /oz.
- **BitFarm (BITF = $1.41 / in at $4.12)
o Selling more CCs for income,
- **Bitcoin (BTC = $21,500 / in at $4,310)
- **Ethereum (ETH = $1,725 / in at $310)
- GME – DRS’d and HODL
- **Grayscale Ethereum (ETHE = $13.01 / in @ $13.44)
- Innerscope (INND = $0.018 / in at $0.0052)
- SPY:
o BOT Oct 21 / +$377 / - $367 Put Spread
o BOT Oct 7 / +380 / - $370 Put Spread
- Walmart (WMT):
o BOT Oct 21 / + / - Put Spread
* * Denotes a crypto-relationship
Trading Tips: In the DIA, SPY and QQQ:
o Note the high during the first 30 minutes of a trading session,
o If the index exceeds that high later in the session – take some and sell for a profit before the close (bail if it goes negative).
o Does it always work? Nope, but it’s the 80/20 rule.
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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