RF's Financial News

RF's Financial News

Sunday, April 18, 2021

This Week in Barrons: April 18th, 2021

“It remains Day 1.” …   Jeff Bezos’ – final Amazon address


   What were Jeff Bezos’ most important take-aways from building Amazon?  In his final address he emphasized: creativity, customer-centric ideals, employee health, eco-friendly business practices, and the importance of individuality.  The letter ends with a quote: “To all of you: be kind, be original, create more than you consume, and never, never, never let the universe smooth you into your surroundings.  It remains Day 1.”   

   Entrepreneurs in many ways are friendly elephants.  We often do things we don’t mean.  We always see the glass as ‘half-full’; and, we never forget.  COVID has caused a lot of us to think more entrepreneurially - at minimum differently than before.  COVID has emphasized (for many) the idea of a work-life balance.  To the non-entrepreneur, the concept assumes you’re doing one or the other.  The entrepreneur joins those two elements through passion, hence: “Do what you Love, and Love what you Do.”  

   I easily see Jeff Bezos: dressing differently than everyone else, walking at a different pace, and being that guy that takes 4 times as long to ask a question.  There’s nothing wrong with standing out from the crowd.  The problem comes when you refuse to see the crowd, and ignore what isn’t matching up.  In order to transform the path – you need to recognize the path.  History doesn’t always repeat, but it definitely rhymes.

   Jeff, started a company called Amazon that sold books online.  With a great team, he changed the world – proving that leadership and vision matter.  A couple nights ago, I noticed that the N.Y. Knicks (a basketball team) were on a 4-game winning streak.  I also noticed that their record is twice as good as last year, but with exactly the same players.  So, what changed?  The coach, Tom Thibodeau changed.  He came in and instilled a different approach and culture.  The Knicks now have the best defense, and allow the fewest points per game in the league.  Coach constantly communicates his strategy, sets high expectations, and makes sure the players that don’t put in the effort – don’t play, no matter who they are.  His expectations and accountabilities are well understood.  I’ve seen this in corporations.  The same team, with the same products, in the same markets – can be completely transformed by a new leader.  Leadership matters – a lot.  Amazon will miss Jeff as their leader.

   Jeff, please don’t be a stranger!  What a great philosophy: “It remains Day 1.”

The Market: “You’re not that good … Yet!”

In Entrepreneurship:

1.   When you begin, you’re not that good.  It’s just a fact.  The breakthrough for anyone on an e-journey is adding the word ‘yet’.  You’re not that good … yet!’  Don’t pretend to have it figured out before you actually have.  It’s a waste of time to adopt a brittle attitude in the face of criticism.  In fact, during the “You’re not that good” phase: listen to your critics because they will include an idea for your improvement.

2.   Always build your skill sets, along with something of value.  Some people will still believe that you’re: not that good – and that’s your clue that they’re not your customer. You need to be able to say: NO.  Go offer your product / service to someone else who is in pain, gets what you’re doing, and needs your solution.  The smallest viable audience isn’t a compromise – it’s a path forward.  Own the niche.  There’s danger in hearing rejection and believing that you’ve accomplished nothing – versus believing that you’re just talking to the wrong audience.

3.   And then comes … “Yet”.  You’ve listened, and embraced the truth.  You’ve practiced, and found enough empathy.  You understand the genre, and figured out how to contribute.  Getting to the ‘Yet’ is always worth it in the end.


-       U.S. retail sales (x-auto and gasoline) increased…   26% in March YoY, and online sales grew 57% - according to Mastercard Spending Pulse.  Apparel sales rose 60.6% YoY.  At the same time, grocery sales went negative YoY.

-       Microsoft is buying a speech rec. company Nuance Communications….  for $19B.  It’s the latest sign MSFT is hunting for growth via acquisition.

-       The Honest Company, co-founded by Jessica Alba…   will be going public.

-       Impossible Foods, the plant-based burger maker…   is preparing for a public listing with a $10B valuation.

-       Apple is building an Apple TV box…   with a Home Pod speaker & a camera for video conferencing.

-       Sotheby's is hosting a private SNEAKER sale…   for Kanye West's Nike Air Yeezy 1 prototype from 2008. The shoes are expected to go for more than $1m.

-       Chick-fil-A announced its partnership with Kiwibot…   a robotics company that has robots delivering chicken sandwiches and nuggets.  They are also fine-tuning Segway delivering technologies via Shopify.

-       Max out your core competency...   Microsoft is an enterprise software beast.  But when their ‘voice assistant’ Cortana fell behind all of the others, they pivoted to focus on business.  With their Nuance acquisition, they’re investing in their core competency – the enterprise. That boosts their competitive edge.

-       In March, debit and credit card spending jumped…   the most for plane tickets (+40%) and second = clothing (+20%).

-       “Differentiation is Survival”:   is the theme of Jeff Bezos’ final letter to Amazon shareholders before stepping down as CEO.

-       Walmart invested in GM's self-driving car company, Cruise…   which just raised a $2.8B funding round.

-       It's not just crypto that’s going crazy…   lumber has vaulted higher by 1,000 points since the March 2020 low. 

-       NASA selected SpaceX…   to build the spacecraft that (for $2.9B) will land astronauts on the moon for the first time since the last Apollo mission.

-       Uber doesn’t have drivers and Airbnb doesn’t have hosts:  These shortfalls will cost both companies a lot of money.

-       Facebook is testing a standalone dating app called Sparked…  it’s: Video speed dating for kind people.  Gee, what could possibly go wrong?

-       JPM's investment banking revenue increased over 300%...    while Goldman’s soared over 70%.  Corporate and investment banking made up nearly half of JPM's revenue last quarter, and most of Goldman's.

-       Gary Gensler was confirmed to lead the SEC…  putting in place a "battle-tested Wall Street watchdog at a moment when Democrats are looking to rein in financial market risk."

-       The Singapore-based Grab (a ride hailing company) …   is going public via SPAC with a $40B valuation.  It’s the largest SPAC merger in history.


-       Dogecoin is on a tear:  Following publication of an article outlining Slim Jim’s dedicated DOGE strategy, the crypto rallied to all-time highs.  A 400% weekly price surge, brought Dogecoin’s market cap. close to $50B – or almost the size of Barclays Bank.  It also disrupted services on Robinhood’s trading platform.

-       Binance is offering a Robinhood-like trading feature for fractionalized ownership…   but on a blockchain.  Users can purchase as little as one-hundredth of a tokenized company – with everything settling in Binance USD.

-       The SEC is reviewing WisdomTree’s Bitcoin ETF application:  This is the 2nd BTC exchange-traded fund that the SEC is formally reviewing – along with 6 other crypto ETF filed applications.

-       China became the first major economy to launch an e-currency…   the digital yuan (#digi-yuan).  Unlike crypto, the digi-yuan is state-backed.  Unlike cash, it's fully traceable.  The wildest part: Beijing is testing digi-yuan expiration dates to encourage people to spend, and could use it to automatically fine people for rule-breaking.  The digi-yuan threatens the global dominance of the US dollar.

-       Coinbase’s (COIN) direct listing…   is why we are still at the beginning of crypto and decentralized finance.  Per HL, if it was the end of crypto, COIN could not charge the high commissions they do.  And if it was the end of crypto, Grayscale could not charge the fees they charge for a Bitcoin proxy.

-       BTC options traders are still loading up on bullish contracts…   looking at an $80k strike price.  And Rothschild just purchased over 250k shares of ETHE. 

-       Former Citigroup Chairman Dick Parsons…   has joined blockchain payments startup Celo’s BOD.  

-       Galaxy Digital named former Goldman Sachs executive Michael Daffey…   as its chairman.  Mike Novogratz will remain as CEO.

-       The 5 largest regulated US digital asset managers hold almost $50B in digital assets:

o   Grayscale Investments … over $40B in assets under management (AUM)

o   Pantera Capital Management … over $4B in AUM

o   Bitwise Asset Management … over $1B in AUM

o   Galaxy Digital … just under $1B in AUM

o   Wave Financial … just under $1B in AUM

-       Former Google exec Surojit Chatterjee joined Coinbase…   15 months ago as its chief product officer.  The move is paying off as his current stake is worth over $181m.  Over the next 5 years, his options will earn him another $465m.

-       SEC Commissioner Hester Peirce…    has updated her proposal allowing crypto startups to sell tokens to fund their development efforts without falling foul of U.S. securities laws. The proposal gives startups a three-year grace period to develop a genuinely decentralized network, and the update places greater requirements on companies to report their progress to the SEC.

-       Employees at Coinbase will share…    in the stock windfall.  Aside from stock options, all 1,700 staff will get a 100-share gift worth about $30,000 each. 

Last Week:

-       Initial jobless claims fell to 550K:  Yes, it’s horrendous, but better than it was.

-       MP Materials (MP): has traded sideways for 3 weeks.  It looks like they've got a run in them, so I'd be okay taking them over $35.

-       Caterpillar (CAT) is a big industrial, and it is starting to look interesting. With earnings at the end of April, we might get a run here. I'd try them over $234.

-       DRD Gold (DRD): The gold and silver miners are on the move.  DRD is currently up against resistance.  If it gets over $10.14 I'd give it a shot.


Marijuana’s Coming… and Everyone Knows It!

-       Uber CEO says his company could get into cannabis delivery…   pending federal approval to transport legal cannabis.  Uber, since when has getting legal approval stopped you?

-       New Mexico’s governor signed the adult-use cannabis legalization bill into law…  legalizing New Mexico’s $425m adult-use cannabis market.

-       As April 20th approaches…   70% of registered U.S. voters back legalization.

-       The largest MJ growth over the next 12 months…   will be in large-market states:

o   California could see its market nearly double from $4.4B to over $7B.

o   Michigan could more than double its market size from $500m to $1.4B.

o   Massachusetts could experience similar growth.

o   Illinois’ projections should be in the neighborhood of $2B.

-       Employees of Curaleaf voted in favor of joining the Union…  “The workers wanted to address issues related to the pandemic, low pay and unfair discipline.”

-       White Claw is rolling out a ‘harder’ seltzer called ‘Surge’…   with 8% ABV.

-       Michigan’s MJ markets continue to post record monthly numbers…   with sales reaching $115m in March – over 100% growth YoY.

-       Women are the fastest-growing demographic…   among cannabis consumers

Next Week:  Markets = Goldilocks or a Wrecking Ball of Risk?

Market Update:

-       Bullish Grind Continues: It’s one of the most linear moves higher that I’ve ever seen = an extremely consistent Gamma squeeze to the upside.  It’s almost like the market making machines are in the driver’s seat.

-       Options & Futures Volumes have Declined: Up until this past month, option volume was around 42m contracts.  This past couple of weeks we’ve dropped down to between 33 and 36m (a 15% decline), and even our average (SPX) contract size is off 25%.  

-       SPX hits Upper Edge of its Expected Move (EM):  For the SPX to go up 400 points (from 3,800 to 4,200), you need a decent amount of activity behind the move.  Unfortunately, the move was accomplished on steadily declining volume, and we tagged our weekly Expected Move to the penny.

-       EM Trading Strategy for Indices:  With markets hitting their weekly expected moves so regularly, buying an inexpensive butterfly centered around the upper and lower EM’s – has been a lucrative trade as of late.  

-       The S&P over-performance last week…   was at the hands of one stock =  Tesla (TSLA).  All of the other big-tech (FAANGs) under-performed.  

Bonds are Behaving Badly:  Our FED has created (by holding interest rates low) a Goldilocks market.  Unfortunately, Goldilocks marketplaces create huge, unexpected risk whenever things change – like rates going higher.  

-       Bonds Implied Volatility and IV Rank:  This past week, 10-year notes dropped back down into the 1.57% range.  However, financials didn’t take it on the chin but rather moved higher across the board.  

-       NOTICE:  Bonds (/ZB) are trading almost in lock-step with the NASDAQ.

-       Bonds are a Premium Sale:  Because TLT’s implied volatility is elevated, a successful trade has been to sell premium within the bonds themselves.  It was only a month ago that the bonds selling off caused some fairly tumultuous activity inside of the NASDAQ; therefore, the bonds will define the next move in the marketplace.

Financials Smoked Earnings, but just flopped around:  This has caused the market to ‘under-price’ the impact of tech earnings.  There is not nearly the implied volatility / pricing differential surrounding ‘tech earnings’ as normal.  Tech earnings could be a ‘sleepy’ event.  

Dichotomy of Market Opinions:

-       Cathie Wood Buys $350m COIN:  Be prepared for more retail trading to move to crypto and Tesla, with our institutions moving toward bonds.  This will create a barbell effect in the middle with financials, tech, and small-caps sloshing around doing a lot of nothing. 

-       Crypto goes Mainstream…  with more and more sovereignties supporting a completely digital currency.

VVIX continues its move higher:  The volatility of the volatility index (VVIX) is climbing higher – which tells us that a lot of people are buying Call options on the VIX itself.  That says the smart people are getting a little scared and are hedging their bets. 

-       Bond IV higher and VVIX near 110:  With bond volatility being elevated, and the VVIX being around the 110 (‘duck-n-cover’) level – it’s beginning to explain why crypto is my best performing asset class of 2021.

-       Watch the Metals…   specifically gold and silver.  There is a rumor that China is preparing to back its digi-yuan with GOLD.

SPX Expected Move (EM):  Last Week’s EM = $58, and Next Week’s EM = $54


It’s rocky out there.  We get these big spurt higher days now and then, but then the market fades sideways for days – trying to catch its breath.  It feels tired and heavy. But the cure for that is Yellen or Powell saying they’re all in, and announcing a new ‘Twist’ program with Yield Curve Control.  That has worked for years, but right now the market is so tired, even that’s not doing any heavy lifting.  Could we be looking at a buy the rumor, sell the news sort of overall situation here?  In other words, is it possible they ran us up and into earnings season, only to use the actual results as the “sell the news” event – and send us into a decent correction?  It’s generally forecasting suicide to suggest we might see a substantial pullback, but that’s how it feels right now.

HODL’s: (Hold On for Dear Life)

-       Bitcoin (BTC = $55,500 / in at $4,310) & buying more

-       Bitcoin Cash (BCH = $850 / in at $170) & buying more

-       CTI BioPharma (CTIC = $2.46)

o   Looking for Covered Calls

-       DRD Gold (DRD = $10.49)

o   Looking for Covered Calls

-       Electramericcanica Vehs (SOLO = $4.20)

o   Looking for Covered Calls

-       Express Inc (EXPR = $3.17)

o   Sold May $4 CCs for income.

-       Ethereum (ETH = $2,150 / in at $310) & buying more

-       Grayscale Ethereum (ETHE = $23.70 / in @ $13.44)

-       Grayscale Bitcoin Trust (GBTC = $51.37 / in @ $9.41) & buying more

-       Grayscale Trust (GDLC = $48.20 / in @ $37.09) & buying more

-       Hyliion (HYLN = $8.86 / in @ $0.32)

-       Infinity Pharma (INFI = $2.98)

o   Looking for Covered Calls

-       Inovio Pharma (INO = $8.74)

o   Sold May $10 CCs for income.

-       Iridex Corp (IRIX = $7.71)

o   Sold May $10 CCs for income.

-       Kopin Corp (KOPN = $8.24)

o   Looking for Covered Calls

-       Litecoin (LTC = $250 / in @ $191)

-       Oncocyte Corp. (OCX = $4.80)

o   Sold May $5 CCs for income.

-       Opko Health (OPK = $4.34)

o   Sold May $4 CCs for income.

-       Sandstorm Gold (SAND = $7.68)

o   Sold June $8 CCs for income.

-       SOS Limited (SOS = $4.35)

o   Sold May $5 CCs for income.

-       VisLink Tech (VISL = $2.23)

o   Looking for Covered Calls

-       VivoPower (VVPR = $8.50)

o   Sold the August $12.50 CCs for income,


   Follow me on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm.

Please be safe out there!


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/>. 


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