“Just Eat the damn cookie”… Lately, I find myself ratcheting up my risk tolerance. I’m wearing pants that have small holes in them. I’m letting my dog run free. Before every tough decision, I’m saying to myself: “Life is too short, eat the damn cookie.” Heck, I can’t see the future. In 2022, I’m going to be less accepting of the status quo. I’m going to: buy stocks before the uptick and sell before the downtick, buy different crypto alt-coins, try newer ideas, and most importantly – “Eat more damn cookies”.
“Being on-the-hook – IS the place to be.” If you’re asking someone to work for you, being specific about what success looks like is an obvious way to get better results. If everyone agrees on what success looks like, you’re more likely to achieve it. And yet the majority of entrepreneurs will say: “I’ll know it when I see it.” They’re vague about what they want because being specific means that they’re on-the-hook when it doesn’t work out. Vagueness allows them to hide and/or move the goalposts. Q: If you don’t know what you want NOW, why do you think you’ll know it later? A: Continue to put yourself “on-the-hook” – becausethat is the majority of achieving success.
“When do you call it a day?” If your time is the measure of the work you do, then your work is over when the shift ends – clock-in ‘n clock-out. If your output is the measure, then your work is over when your inbox is empty – when you’ve made the last pizza. More and more our time and the list of things we do is intentionally endless. Just one more sales call could land the big one. One more cycle could get that innovation you’ve been looking for. In a competitive marketplace, it’s almost impossible to self-regulate the length of your shift. It’s on each of us to decide what ‘enough’ looks like. Remember, the only currency that you can’t duplicate – is time.
The Market:
Entrepreneurs – ever say this to yourself: “I need a proven partner who is trustworthy, skilled, cheap, works the way I do, and can scale down to a small company’s operation.” So tell me, why would that other superstar want to help build your company? Being a superstar comes with being able to choose what to do. Often those choices are obvious and larger than what a small company can offer. But you’re too busy ‘getting it done’ to wait for someone to magically walk through that door. The person you’re looking for is most likely - you. So, learn to DIY yet again, or GO to where would you go to find – YOU.
The easy-money part is over… and now comes the hangover. In our economy’s case, the cure for the hangover is rate hikes. Our FED’s easy-money policies helped the economy rebound by encouraging bank loans and consumer spending. Unfortunately, as prices rebound those policies are making it harder for people to pay for essentials like food, housing, and heat. Retail sales slowed in November – a real sign that rising prices are curtailing our spending.
How is it that… acute angles, rough edges, and imperfect matches of diversity actually make human things work better?
InfoBits:
- Wholesale prices jumped 9.6% YoY in November... the fastest pace of wholesale inflation - EVER.
- Amazon will expand an Instacart-like grocery-delivery service… that it launched in the U.K. last year.
- Reef, a nationwide ghost-kitchen startup… that operates out of trailers in parking lots – is backed by $1.5B in venture money.
- CEOs like Musk, Bezos, and Zuck… have sold $69B of stock since Dec 1st.
- Pfizer acquired Arena Pharma for $6.7B… mostly for the company’s research & IP on inflammatory conditions affecting the stomach and intestine.
- Kroger is nixing some COVID benefits for un-vaxxed employees… and adding a $50/mo. surcharge to health plans for un-vaxxed non-union workers.
- Over 17m Americans get paid to create online content. The Creator Economy has 450% YoY job growth, and 33% of all kids ‘want to be a YouTuber’ when they grow up.
- Google has told employees that they will lose pay… and will eventually be fired – for failure to comply with the company’s COVID vaccination policy.
- 286 founders across 521 unicorn companies… have doctoral degrees.
- Gift card purchases are up 43% this year.
- Reddit has filed paperwork toward its IPO.
- Homeland Security will pay outside ‘vetted’ hackers… to find vulnerabilities in computer systems.
- Gopuff, an instant grocery company… is raising $1.5B in funding at a $40B valuation ahead of a likely 2022 IPO.
- Oracle is buying electronic-medical-records company Cerner for $30B… pushing the enterprise-software giant further into healthcare.
- In 2021, 82 big business stakeholders sold more than 3B shares… of their own companies – valued at over $162B.
- Lay’s owner Pepsi is celebrating with a new Lay’s Chips Vodka… distilled from Lay’s proprietary potatoes.
- Born to Run… to the bank. Bruce “The Boss” Springsteen sold the rights to all his music to Sony for $500m – the largest music-rights deal ever.
- McDonald’s settled a lawsuit… with disgraced former CEO Steve Easterbrook, forcing him to repay his severance of $105m.
- Bud Light is launching a hard soda, and Pepsi a boozy Mountain Dew.
- JPMorgan Chase will pay $200m in fines… for using WhatsApp to get around federal record-keeping laws.
Crypto-Bytes:
- Binance Singapore… will stop offering services there by early next year.
- Over 90% of all bitcoin has been mined. That comes as investors resumed accumulating the cryptocurrency – a good sign for crypto prices.
- Myanmar’s shadow government… has recognized stablecoin tether (USDT) as its official currency.
- Wells Fargo and HSBC Bank will use a blockchain-based product… for settling matched foreign exchange transactions.
- Nike is plunging deeper into the world of crypto collectibles… acquiring the NFT studio RTFKT (pronounced “artifact”). RTFKT is currently behind the CloneX project – that’s seen nearly $65m in transaction volume.
- The BCB Group, a crypto payments company with $40B in 2021 volume… has acquired Sutor Bank (a 100-year-old German bank) as it expands into the European Union.
- Turkish citizens, facing high inflation and a plunging lira… have been converting more funds into USDT (stablecoin cryptocurrencies).
- Ethereum and Mastercard have launched “ConsenSys Rollups”. The scaling system promises to process 10,000 transactions per second to give it viability for CBDCs and micropayments.
- Shrina Kurani, a California Democrat… will publish 2,022 non-fungible tokens (NFT) on the Solana blockchain today as part of her election campaign.
- Binance affiliate WazirX, India’s biggest cryptocurrency exchange… increased their 2021 trading volume by 1,735% YoY.
- Justin Sun is stepping down from the Tron Foundation… the organization he founded to oversee the development of the $8B TRON blockchain
- Jay Clayton (x-SEC Chair) who was skeptical of crypto while in office… is taking heat from the crypto community after writing a Pro-Crypto op-ed. Some have called Clayton (now a Fireblocks advisor) – an ‘opportunity’.
- A Banksy NFT goes on sale. Banksy’s “Gorilla in a Pink Mask,” is becoming an NFT. The owners plan to fractionalize the $1m artwork on the blockchain, selling 10,000 copies at an estimated $750 each.
Last Week:
Monday: If you removed the 5 biggest stocks from the S&P, the entire index is RED for the year. For today I have 3 stocks on my watch list: ASML, SNOW and NIO. SNOW looks like a breakout building while ASML and NIO look like bottom reversal hopefuls. This week brings us Chair Powell, and he has NO choice but to confront Friday's insane CPI reading. We have the worst inflation numbers since the early 1980’s but the S&P is at all-time highs. To further confuse me, Ford is at highs not seen since the horse and buggy were believed to be a better option than cars. Consumer Staples hit 52-week highs last week because food and toilet paper are essential during inflation.
Tuesday: I don't know that I'd get too brave ahead of the FED, but if you have a little mad money and want to play the lotto, you could buy a put and a call against the DIAs or SPYs that expire Friday. The FED should do something to earn a couple bucks on either side – just keep it small. Japanese stocks are dropping after the government said that it may consider guidelines surrounding corporate share buybacks. A stock buyback tapering in the U.S. would lead to an instant market crash. This market is only up due to FED money and zero rates. Companies borrow money at 0%, buy back their own stock, sending their stock price higher – and enriching the C suite.
Wednesday: China saw a big miss on November retail sales. The UK saw the largest inflation reading in over 10 years. The WHO said that: "Omicron is spreading at a rate we have not seen, and the sheer number of cases could once again overwhelm an unprepared health system.” Today is Fed day and the market is probably going to say "that was baked in already so let’s buy stocks." Don't get me wrong. This market is in trouble. Take out the FANMG's from the NASDAQ and you have a flat picture. So, the FED’s latest stance is: (a) double the taper to $30B / month, and (b) no movement in rates until full employment (whatever that means). Nothing was said about decreasing their balance sheet. Powell believes inflation will be back down to 2.6% in 2022. He did nothing but punt the ball and keep the plates spinning.
Thursday: Tomorrow is options expiration. Estimates are that 62% of all QQQ options will expire this week. That's had the effect of capping the NASDAQ and the S&P. So, if they're capping the NASDAQ, we might want to fish around in that pond. I’m thinking: VM > $116.25, DOCU > $150.45, AAPL > $181.15, ZM > $185.75, TSLA > $975, AG > $10.95 and GLD > $168.05 are possibilities. But given the Nasdaq is down over 400 points right now, I’m sitting on my hands.
Friday: Today is a quad witching Friday. When futures and options are expiring at the same time, tens of billions of positions must be reworked. I didn't expect them to get as bloody red as they did yesterday. A likely scenario is that we have a soggy open, and then at some point they come rushing in, creating roll out positions for the future, and up we go. But don't go and bet the farm on it. Do I still think Santa shows up next week, and we run higher into year end? I could see taking NVDA here around $287 along with AMD. I think you could pick up some MRVL here.
TW3 (That Was - The Week - That Was):
If the Fed sticks to its plan of tapering, inflation will slow in the U.S. and the economy will cool off. This may reduce some of BTC’s short-term appeal and I could seek some investors taking some crypto-risk off the table. Crypto is still driven by the sentiment and market movements of BTC. Crypto is having a strong weekend once it became clear that the inflation spike was in line with expectations.
Question, if Bitcoin was v1, and Ethereum v2 – what is crypto v3? Names like Solana and Cardano have been embraced as potential contenders for v3; however, one analyst at B of A is placing a less-conventional bet on Avalanche. AVAX claims to have “the fastest smart contracts platform in the blockchain industry.” AVAX may be a cheaper alternative to Ethereum, and is up almost 30% this week.
Next Week: Q: Bull market without the FED? A: No.
Market Update:
- Last week we saw selling begin to proliferate. Markets sold-off into the close on Friday, and even closed outside of the lower edge of their expected move. This week was all about whether the lower edge of the expected move could hold – and it could not. Once you’re outside the downside expected move, market makers begin to dynamically hedge their positions – often pushing markets lower. Last week had: (a) the advance / decline line show 10:90, (b) financials, tech, and energy all ‘get smoked’, and (c) we lost the $300 level on NVDA.
- The U.S. Dollar rallied as the world rushed to collect our currency over their own. As risk begins to hit-the-fan, look for the dollar to further accelerate to the upside.
- This holiday week could be heavy in terms of volume. Markets are closed on Friday, but next week’s 4-day expected move is more than last week’s 5-day. So, I’m not looking for this coming week to be sleepy and gentle.
- Trading firms have moved to COVID protocol = everybody’s trading from home.
Volatility:
- The QQQ has not broken lower - yet. The VIX is NOT feeling the fear. This opens the door for considerably more risk as retail traders are still ‘buying the dip’. This means that sell-side capitulation has not even begun to warm up.
- The SKEW (ratio of puts to calls) is low relative to recent moves – meaning that traders are NOT hedging. By the looks of the VVIX (still in never-never-land), a lot of options are still being purchased – just not as hedges.
Breakdown:
- Our FED no longer has your back. In a marketplace built on stimulus, low rates and bad Jobs numbers, our FED is stepping away from the punchbowl. Bad news is back to being bad news. All inflation data will disturb our markets as controlling inflation is now #1 with our FED. Therefore, Tip #1: the upside potential for risk assets could be limited. As you look over the past 3 years, market movements have been un-natural; therefore, we could be close to the Great Unwind? As of late, dip buyers are being decimated.
- Tip #2: Premium sellers be warned as risk could become extreme. Volatility shrugged its shoulders at last week’s action. In fact, as a hedge – I would suggest purchasing a February, out-of-the-money Call Spread on the VIX.
- Tip #3: If you’re a dip buyer, be warned = ‘Learn how to use option spreads or die trying.’ Markets are designed to take the maximum amount of money at any given time. Learn how to use ‘spreads’ to control your own risk.
SPX Expected Move:
- I’m looking for a bounce next week that will rope more people into long positions. Last week’s SPX expected move was $80 and we moved $92. Experts next week (a short week) are looking for an $88 expected move. Risk is eminent.
- Q: Can this bull market be sustained without our FED? A: NO.
Tips:
HODL’s: (Hold On for Dear Life)
- *BitFarms (BITF = $4.73 / in at $5.12)
o Sold Feb, May, Dec ‘22: $5, $7.50 & $10 CCs for income,
- **Bitcoin (BTC = $47,100 / in at $4,310)
- Energy Fuels (UUUU = $7.24 / in at $11.29),
o Sold Apr $11 CCs for income,
- **Ethereum (ETH = $3,900 / in at $310)
- GME – Holding
- **Grayscale Ethereum (ETHE = $33.93 / in @ $13.44)
- **Grayscale Bitcoin Trust (GBTC = $34.42 / in @ $9.41)
- Hyliion (HYLN = $6.16 / in @ $6.01)
o Sold Jan, Feb $6 and $7 CCs for income,
- **Loopring (LRC = $2.06 / in at $2.27)
- **Solana (SOL = $185 / in @ $141)
- Uranium Royalty (UROY = $3.71 / 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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