Look on the bright side… We learn more from failure than we ever do from success. I always wonder why people are (generally) slow to announce failure – preferring to push it off into the future. Postponing does NOT turn failure into success. Postponing simply allows you to continue pouring resources into a low probability solution. Postponing simply makes the inevitable more painful. Make choices sooner. Make choices: when you can, and not: when you have to.
Accuracy vs Precision: Accuracy points you in the right direction, gets you aiming at the correct target, and focuses you on attaining the goal. Precision (on the other hand) is a measurement. Without accuracy – precision doesn’t matter. Aka: Who cares if you’re driving at exactly 54.7 miles / hour – if you’re going in the wrong direction? Most organizations spend their time improving their precision, instead of making sure that they’re accurate in their objectives.
Most of us do NOT HAVE the Right Stuff… Most of us walk around with a mediocre toolkit – from which we try our darndest to create great work. And to make allowance for the ‘meh’ toolkit – people encourage us to have a positive attitude and a problem-solving approach to road blocks. But let’s do some math. Great coders are 100X more productive than good coders, and great coders only cost 2X more than good coders. So, why wouldn’t you upgrade a great coder’s toolkit in order to maximize their productivity – given they produce 90% of your code?
The Market:
FW, thanks for explaining last Friday’s Jobs Report to me. You see – the jobs report is composed of 2 surveys: one of employers and the other of households. The employer survey, which determines the payroll and wage figures, showed hiring slowing – including an inability to hire workers across the board. The household survey, which determines the jobless and participation rates, showed employment surging by 1.14m with many coming off the sidelines. So, employers are reporting sluggish job growth, but households are reporting a huge surge in the newly employed. The theory is that more people are going to work for themselves and other small businesses that are not part of the employer survey. U.S. Census data on new business formation shows the above chart. What was an upward trend toward small business for the last decade has become an explosion during the pandemic. Maybe we are not witnessing: The Great Resignation, but rather: The Great Formation / Entrepreneurial Resurgence.
InfoBits:
- Moderna made $7.3B and Pfizer $36B in profit… on its COVID vaccine sales during the first 9 months of this year.
- Coal prices have hit a 10-year high: China needs it and is paying the price.
- $360,000 is our new, record high median home price.
- Being single in the US is more expensive than joined… as housing, healthcare, taxes, and Social Security all play a role.
- The SEC is probing two SPAC deals… one involves former President Trump and the other is Lucid Motors.
- Jack in the Box just announced its $575m deal to acquire Del Taco… the U.S.’s second-largest Mexican fast food chain.
- Toyota plans to build a 1.3B battery plant in North Carolina.
- AMC Offers NFTs to Shareholders. Following the positive public response to a movie-themed NFT – AMC will now provide a 2nd NFT to any/all AMC Investor Connect members.
- In May, $2.1T worth of Chinese companies were on U.S. exchanges: Now, that value is closer to $1T. Last week, the SEC started forcibly delisting foreign companies that don't follow auditing requirements.
- Online grocery sales more than doubled last year… inspiring a wave of startups focused on fast urban delivery. This year 15 quick-delivery companies have raised nearly $8B. GoPuff, which launched in 2013, is now worth $15B.
- Elon Musk criticized federal efforts meant to spur electric-vehicle adoption… and expand the nation’s network of EV charging stations. “Do we need support for gas stations? We don’t. Get rid of all subsidies."
- Twitter acquired Quill… a business-focused messaging service meant to compete with Slack. TWTR is trying to cut its dependence on ad revenue.
- Intel will take Mobileye (it’s self-driving car unit) public: The move (in mid-2022) could value Mobileye around $50B.
- Volkswagen is still exploring a possible Porsche IPO… as a way to fund its shift towards software and electric vehicles.
- There’s a new EV player in town: Con Edison, Duke Energy, the TVA, and 50 other electric utilities are launching a coast-to-coast network of fast-charging EV stations along major US highways – completed by 2023.
- October job openings jumped to about 11m… with the leisure and hospitality industries seeing the biggest increase.
- Starbucks in Buffalo, NY voted to unionize: It’s a first for the coffee chain, but a sign of things to come. If unionization is successful, the domino effect would be good for employees but bad for its stock price.
- Google execs have axed any companywide, inflation-based pay raise.
- Activision Blizzard employees announced a union drive and a strike: They hope to initiate a labor change in the gaming industry.
- Google’s top trending searches for 2021 are… “Squid Game,” “Cottagecore,” “How to pronounce Dogecoin,” and “Bernie Sanders’ mittens.”
- Elon Musk, Mark Zuckerberg and others are selling stock at historic rates as the market soars and tax changes loom. This marks the most sales by insiders in decades – resembling waves of sales during the dot-com finale.
- Ford is doing such a good job in the EV truck game… that they had to stop taking reservations. Ford CEO said “We are completely over-subscribed with our battery F-150 Lightning. We stopped at 200,000, and those are hard orders.”
- The Better Corp. announced that CEO Vishal Garg… will be taking time off after an email surfaced that called an investor: “an old private equity Neanderthal, who should be taken to the shitter of his rocket ship.” Vishal sent the email to +70 investors in an effort to humiliate him.
Crypto-Bytes:
- Given banks will soon not rule the payments landscape... why are we giving them control over stablecoins? This question is being asked of our Congress.
- Just months after the U.K. told Binance to ‘get out’… the world’s largest crypto exchange said it has hired staff and plans to file for regulatory approval.
- U.S.-based crypto exchange Gemini… plans to allow users in Colombia to trade crypto through a partnership with its largest private bank, Bancolombia.
- Crypto lender Nexo will partner with Fidelity Digital Assets… to provide products and infrastructure for institutional investors.
- Payments giant Visa has formed a global crypto advisory practice… to help financial institutions develop crypto-business lines.
- Eric Schmidt (x-Google CEO)… has joined Chainlink Labs as a strategic advisor.
- Only 27% of U.S. VC dollars have gone to Bay Area startups… with Los Angeles attracting the MOST VC money in 2021.
- Coinbase is planning to integrate with Ledger hardware wallets… bringing users more options for self-custody of their crypto.
- Mastercard is teaming up with 5 startups including… smart-contracts = Ava Labs, AI-focused mobile banking = Envel, peer-to-peer savings = Kash, Bitcoin Banking = LVL, and Crypto Rewards = NiftyKey.
- MicroStrategy bought 1,434 BTC between 11/29 and 12/8.
- Coinbase is opening up DeFi to customers who want a slice of high yields earned from lending and borrowing crypto assets… starting with an integration with lending platform Compound.
- Binance is in talks with the Bank of Central Asia… about a crypto-venture in Indonesia.
- A ConsenSys-backed virtual gaming company… has launched a poker game where you can’t lose. The game is called: Play-to-Earn.
Last Week:
Monday: The big question is: "Was all the volatility and the dramatic 2,500-point DOW loss over the last three weeks – the bottom?" I'm still on the fence with that one. I tend to believe that Powell going forward with taper and interest rate hikes, is going to prove to be an Achilles heel for this market. As we get into next week, I think markets will be hoping that our FED slows their taper plans. If our FED backs down a bit, then we’ll make new highs by mid-January. But if they don't, we’re in for more volatility.
Tuesday: There's no excuse for Monday, other than to say the market just felt like it had fallen far enough for 3 weeks. Maybe someone learned that Powell will take a tamer approach about tapering. But as you may imagine, I don't see anything that hasn't already run up a lot today. I'm sitting on my hands for the rest of the day.
Thursday: Looking around, PENN and BBBY could be in play today. If a gap fill is a thing, then DOCU has a monumental 80-point gap to fill. In bottom fishing, OCGN looks like it might be curling up off of a sustained bottom. BBBY has a target entry over $20.12 and PENN over $52.95. QCOM is working on a big double top. It closed Nov. 18th at $185.62. At some point, I think I'll nibble on some of that, and see if we don't get a NASDAQ rebound and a QCOM push higher tomorrow.
Friday: U.S. stocks appear to be on pace for a solid weekly gain, but things could get dicey after the monthly CPI report at 8:30am, where economists are expecting a headline inflation rate of 6.7% YoY. This would accelerate firmly past the October reading of 6.2%, and mark the fastest rate of inflation since the early 1980s. Recent comments by our FED indicate a faster pace of bond purchase tapering from the central bank next week, as well as earlier-than-expected rate hikes later this summer. Both of those can only get quicker with a “hotter than expected” reading this morning. I found the following, pretty interesting: Across the S&P 500, corporate insiders have sold a record $63.5 billion in shares through November, a 50% increase from all of 2020. So far this year, 48 top executives have collected more than $200 million each from stock sales. That's an awful lot of selling. Any idea why so many are desperate to dump their own company shares? Okay the numbers are out. The CPI came in + 0.8% in November. YoY inflation is raging at 6.8%, the biggest number since 1982. Heading into the CPI release, the DOW was up 41. Three minutes after the release the DOW is up 117. So, they're okay with the hottest inflation number in 40 years? That's a lot of bravado. So, these numbers absolutely force Powell to taper and hike. Right now, the market thinks that's no problem. At some point the reality is going to hit. Maybe they play their charade until the first actions actually take place, but when the debt market yields start spiking higher, it's going to be quite a show. I mentioned yesterday that at some point I was going to take some QCOM and see if we get a bounce in the morning. So, I did. Just 4 mins into the close, I took some at $182.49. Right now, they're trading $184.40 in the premarket = fingers crossed.
TW3 (That Was - The Week - That Was):
J.P. Morgan Chase is predicting… that 2022 will be the year things sort of: Return to Normal. A couple of J.P. Morgan Chase’s predictions are:
- COVID: 2022 will be the year the world will achieve population immunity with the help of new therapeutics that are expected to be broadly available next year. Only 57% of the world's population has received a shot, and just 7.5% of Africa's population is fully vaxxed.
- GDP: By the end of 2022, 66 out of 77 key economic metrics (representing 96% of global GDP) are expected to be at or above pre-pandemic output.
- Global Unemployment… in 2022, will remain above pre-COVID levels.
- Stocks… have rebounded higher than their March 2020 pandemic plunge, with the S&P index more than doubling. Chase sees the markets trending higher, but at a much slower growth rate.
- Inflation… has risen worldwide, and the U.S. had one of the largest increases in its history – with consumer prices hitting a 30-year high. Inflation will continue longer than everyone expects.
- Global Supply-chain issues… will last well into 2023.
How ‘bout inflation at a 39-year high… Friday’s CPI data showed 6.8% YoY inflation – the hottest it’s been since 1982. But you know the numbers are fake – right? Since 1982 they have been changing the way they measure inflation – always trying to hide it. They’ve used both substitutions and hedonic comparisons to do so. With substitutions, if steak (for example) was soaring in price – they would simply reference a different meat that was moving less (maybe hamburger) and move on. The hedonic measures are a little more creative. If this year’s lowest grade computer you can buy is 15% faster and more efficient than last year’s – even though it costs 12% more and you’ll never use this new-found efficiency – they will say that it went down in price. Yep, only our government can tell us something is cheaper – when it actually costs us more money. Recently the BLS announced that starting in January, they are going to use consumer expenditure data from 2019 for calculating CPI weighting. So, we’re now going to weight today’s purchases based upon pre-pandemic life. Wow. FYI: Shadowstats still calculates inflation the old-fashioned way, and it’s running NORTH OF 16%.
Next Week: Q: Should you Fight the FED? A: NO!
- Next week features a FED meeting… and the press conference following will be led by our new FED Chair: Jerome Powell. J. Powell has accepted the role of FED Chairperson for the next 5 years, and will introduce a major FED policy shift.
- Last week gave us a rip your face-off rally… that ended just shy of all-time-highs. But once we touched the edge of the ‘expected move’ – the rally ended.
o The increase was led by the Monsters of Tech. 64% of the Nasdaq’s YTD gains have been produced by just 5 stocks: Microsoft (+57% YTD), Google (+71%), Apple (+39%), Nvidia (+130%) and Tesla (+40%).
o Look at market makers in terms of Market Cap * Market Volatility. For example, with Nvidia’s 53% implied volatility and her $750B market cap – she can move markets. But JPM’s $500B market cap and only 22% vol. – doesn’t carry nearly the same weight.
o This is a damaged market. Most stocks are in ‘bear market territory’, with many COVID impacted and SPAC stocks being completely decimated.
o The Monsters of Tech are the only group driving the indices higher.
- If you’re looking for a ‘bearish’ trade, consider: Microsoft, Google, Apple, Nvidia and/or Tesla. Their risk vs reward scenario leans toward risk.
o Apple’s week was flooded by retail traders as over 1m Call options were purchased at (or above) the ‘Asking Price’.
o The Risk vs Reward story (in tech) is in jeopardy. NVDA ($302) is near the lower end of its range, and is in ‘corrective territory’. Tip #1: If NVDA breaks under $300, TSLA < $1000, or AAPL’s parabolic momentum stops (30% in a month) – you could see sell side activity.
- Hedge NOW or FOREVER hold your peace.
o You can taste the downside potential that’s in the air. Everybody is talking ‘Buy-the-Dip’ and how the market NEVER goes down. But when you have only 5 stocks that are holding this market up, and 2 of those stocks are in jeopardy of breaking through their lower support levels – I would suggest you: Tip #2: Buy February, out-of-the-money VIX Call Spreads.
- The FED meets Untamed Inflation.
o The CPI / inflation number came in really hot this week – confirming the FED’s taper of its bond buying and raising of interest rates.
o Currently, we have a slightly inverted yield curve between the 20-yr and 30-yr notes. An inverted yield curve normally precedes a recession. Tip #3: Watch the 5-yr vs 10-yr yield … and if they invert, then purchase MORE February, out-of-the-money VIX Call Spreads.
- This week will be all about the FED announcement. Do not count out seeing significant volatility early in the trading week – because we also have options expiration on Friday.
o Q: When was the last time that our FED did NOT have your back?
o A: December, 2018 – when our FED ruined Christmas.
o Do NOT FIGHT THE FED when it talks about: (a) mopping up some liquidity, (b) tapering their bond buying at a more accelerated rate, (c) removing the term ‘transitory’ from inflation, and (d) raising interest rates.
o None of those are market friendly terms – so Do NOT FIGHT the FED.
Tips:
HODL’s: (Hold On for Dear Life)
- *BitFarms (BITF = $5.58 / in at $5.12)
o Sold Nov, Dec, Feb, May, Dec ‘22: $7.50 & $10 Calls for income,
- **Bitcoin (BTC = $49,600 / in at $4,310)
- Energy Fuels (UUUU = $7.93 / in at $11.29),
o Sold Dec $11, and Jan $11 Calls for income,
- Englobal (ENG = $1.65)
o Sold Dec. $2.50 Calls for income,
- **Ethereum (ETH = $4,050 / in at $310)
- GME – Holding
- **Grayscale Ethereum (ETHE = $36.68 / in @ $13.44)
- **Grayscale Bitcoin Trust (GBTC = $37.28 / in @ $9.41)
- Hyliion (HYLN = $6.25 / in @ $0.32)
o Sold Jan. $9 CCs for income,
- **Loopring (LRC = $2.19 / in at $2.27)
- **Solana (SOL = $195 / in @ $141)
- Uranium Royalty (UROY = $3.99 / in at $4.41)
o Sold Jan $5 Calls for income,
** Denotes a cryptocurrency
Thoughts:
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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