When will we acknowledge… that 10% of our population produces 90% of our goods ‘n services. Yes, Elon whiffed on TWTR. Which means that he’s only hit 4 out of 5 grand-slams. Twitter CEO Parag Agrawal said that he’s ‘willing to go to war’ to make the Elon Musk deal happen – good luck with that. I’m betting the TWTR board – adds the $1B break-up fee to their bottom-line – causing profits and the stock to go up – allowing even more insiders to sell (and quit), and once again everyone lives happily ever after in the TWTR-verse. And YES – the rules are different in MUSK-land.
It’s all about claiming Responsibility: It’s remarkable to me the number of people demanding freedom and independence. It’s doubly remarkable how few of those people are willing to claim any responsibility for anything along the way. “I’ve got this” – goes a long way in our society.
Why didn’t I think of that? If your idea doesn’t involve any significant hurdles in moving forward, it’s probably not worth all that much. If it were easy, everyone would do it. The tactic is to seek a path where you see and understand the significant hurdles that have kept others away – and learn how to dance with them. If the hurdles are no longer a problem – then they become features. When someone admires what you’ve done, they need to say: ‘Hey, why didn’t I think of that?’
The Jobs Report… said that 372,000 jobs were created in June. The unemployment rate remained at 3.6%, and average hourly wages gained 0.3%. But in reality, the report was a lot stranger. We actually LOST -152,000 full-time workers. We also LOST -326,000 part-time workers. The main segment that increased were those holding MULTIPLE JOBS which rose by +239k. The labor force shrank by 350,000 people, which is not great since the number of job openings still outnumber our available workforce by almost 2 to 1. So, there are fewer people willing to work and a ton of open jobs – wage inflation is here to stay. Without any significant price declines, that means our FED will likely keep its foot-down in its battle against inflation – even with the risk of a recession.
The rising high-yield credit spread… has often preceded previous market meltdowns. Per HL: this signal along with an inverted Yield Curve, tells me that markets are just faking the ‘all-clear’ signal, and are ready to drop the 2nd shoe!
Investment in US startups is down 23%... over the past 3 months. The largest drop since 2019.
- The following are Recession Bound… USA, Europe, UK, Japan, South Korea, Australia and Canada – according to Nomura research.
- The following are NOT Recession Bound… Russia, China & the Middle East. So, we sanctioned Russia and WE GOT the recession.
- The U.S. Dollar is approaching parity with the Euro… as the global flight to safety continues.
- The Bank of England informed lenders to… “brace for an economic storm.”
- Republicans from nearly 2-dozen states have sued… to use federal COVID aid to cut taxes. What were those 24 states using to fight COVID = Nothing?
- EV maker Rivian… reported second-quarter deliveries and production in alignment with company expectations.
- GameStop announced a 4:1 stock split… as they continue to financially engineer their way to survival.
- The ISM Non-Manufacturing PMI… which is used to gauge the U.S. Service Sector growth - FELL to a 20-month low.
- Walmart added grocery delivery to Walmart+... for an optional $7/mo. or $40/yr. upgrade.
- Amazon Prime’s 200m members can now access… a free year of Grubhub+ (valued at $10/mo.), including free delivery and member-only discounts. I can barely wait to receive my $26 rice bowl for $22.50.
- Toyota sold its 200,000th EV last quarter… which triggers a phaseout of the $7.5k tax credit for EV-Toyota buyers. Congrats… I think?
- Tech financing has gone cold… especially for late-stage companies. More mature startups are laying-off to extend their existence, while younger ones are finding that product / sales results are required before raising funds.
- Tesla sets a new internal record… for China-made vehicles.
- Chinese EV automaker BYD… surpassed Tesla in EV sales.
- Argo AI, the autonomous vehicle tech group backed by Ford and VW... has laid off 150 people – making it yet another casualty of the soon-to-be recession.
- Oracle’s August job cuts… could be in the thousands in order to save $1B.
- Celsius (the crypto lender) laid off 150 employees… as it faces possible insolvency.
- Bitcoin slid almost 38% in June… to its second-biggest monthly loss since its debut in 2009.
- Argentines are buying crypto in droves… looking to hedge against a potential devaluation of the Argentine peso.
- LVMH and Prada launched Aura, the first luxury-focused blockchain… that creates digi-certificates for millions of items to ensure authenticity. Mercedes-Benz and Hennessy also joined the club.
- Nexo (a crypto lender) signed a term sheet to acquire Vauld… a Singapore-based lender – that would accelerate the Nexo brand in Asia.
- Bitcoin miner Core Scientific sold 7,202 BTC... to pay for ASIC servers, capital investments, and debt repayments.
- The Bank of England is calling for… “enhanced regulation” of the crypto asset market to mitigate against potential risks.
- Trading platform eToro's planned public listing via SPAC… has been terminated.
- Crypto lender Voyager Digital filed for bankruptcy protection… as they had over 100,000 creditors, their loan book was over 50% of their assets, and 60% of their loans had the name: 3 Arrows Capital next to it.
- The FDIC is looking into claims by Voyager Digital… that its customer accounts were protected by the FDIC in the event of a corporate collapse.
- Hackers stole $9m from DeFi protocol Crema Finance… and returned all but $1.7m of it. The $1.7m was a publicized ‘white-hat bounty’ – a non-criminal reward for finding a security flaw. It’s pretty clear that they found one.
- It's getting harder to clean dirty crypto... because blockchain analytics companies like Chainalysis are getting better at tracking stolen funds, making it difficult for hackers to launder and anonymously cash out.
- Blockchain.com stands to lose $270m… from lending to 3 Arrows Capital.
- KeyFi, a former asset manager for Celsius… has sued the troubled crypto lending firm for alleged crypto market manipulation and failure to put in place basic accounting controls to protect customer deposits.
TW3 (That Was - The Week - That Was):
Thursday: It stinks that layoffs rose 58% YoY. We’re in a strong bear market bounce that should run a lot more in order to scare the shorts, but watch for the plunge when they’re gone. This bounce is on NO volume.
Friday: FED speakers Bullard and Waller called for a rate hike of another 75-bps at their July meeting, and another 50-bps in the meeting after that. What’s going on with GOLD? The answer is twofold. (a) The dollar has been very strong lately. Gold is priced in dollars, so when the dollar rises – gold falls. (b) Secondly, the market is trying to figure out the truth and the logistics of the news out of Uganda. The African country announced the discovery of a deposit of 31 million tonnes of gold ore, with extractable pure gold estimated to gross 320,000 tonnes. This is a game changing amount of gold as far as supply and demand go. The question is: “Is it real?” It’s one thing to say you’ve discovered that much – quite another to get to it, mine it, and refine it. So, the gold market is on edge as of late.
AMA (Ask Me Anything…)
Is crypto safe? A market indicator is signaling an end to the crypto-market decline and a revival straight ahead. Wait for market confirmation – you will have time to get in.
Is Jeff Bezos sailing? Jeff Bezos’ 400-foot superyacht won’t be sailing through Rotterdam because the city refused to dismantle a historic bridge to accommodate the vessel’s masts. The current yacht may never leave the Netherlands.
Will Celsius come back? Well, this week the Celsius Network reclaimed about $440m of collateral after it fully paid off a loan on Maker. The move means a big liquidity boost for the beleaguered crypto lender's finances.
Should I save a little bit more for my space-walk? Well, getting into space only costs 80% more than last year = $450,000. Yes, space-flation is a thing. I remember when a ticket to space only cost $250,000. Those were the days!
Next Week: Will Summer Trade Reduce Volatility?
Review: Right out of the gate on Tuesday, we touched the lower end of the SPX’s expected move, and on Friday we touched the upper boundary of it. It was a volatile week to say the least, but the VIX (the volatility index) continued to drift lower. The marketplace is doing a bad job of handicapping actual forward risk.
Good jobs numbers gone bad… The fact that the headline jobs number exceeded expectations, gives our FED the all-clear to raise interest rates and further reduce their balance sheet (QT). Over the coming weeks that should strike fear in markets – along with earnings misses and lowered guidance. I would also look for continuation in the selling of bonds == bad for tech. Tip #1: Watch Google for a short – post stock-split and post earnings.
Watch the U.S. Dollar in the coming weeks… as it is very close to parity with the Euro, and that hasn’t happened in 20 years.
Energy and Financials will continue to lead… on a YTD basis. The energy sector (XLE) is higher by 24% YTD. Do NOT couple the movement in the XLE with the price action in oil. The market capitalization of Energy + Financials is almost equivalent to that of mega-tech. Tip #2: The energy and financial sectors are the 2 that should lead the markets going forward – and earnings in the financials start next week.
Low VVIX, and SKEW… The VVIX (volatility of the volatility index) is almost at a 5-year low. Professional traders are NOT hedging their bets. Tip #3: Considerable downside risk remains on the horizon. The VIX is not an indicator of actual volatility – but instead try and use the U.S. Dollar and Bonds to gauge your risk / reward levels. If we do sell off, this market will take the elevator into the abyss very quickly.
SPX Expected Move (EM)
- Last Week = $94 (4-day week) where we moved $180 dollars from low to high.
- Next Week = $95 EM, and we have some big economic numbers coming out – along with earnings season beginning. Hold on to your hats.
Tip #4: Watch the Nasdaq QQQ’s above 11,660… as they are wedged right up against their 50-day moving average – while the DOW and S&P are well below their averages. If the QQQ gets up, over, and holds above 11,660 for at least 2 closes – then I think there is reward in buying the index proxies DIA, SPY, and the QQQ.
HODL’s: (Hold On for Dear Life)
- CASH == Nexo = COIN = Commercial Banks @ 8% yield on USDC
- PHYSICAL COMMODITIES == Gold @ $1,741 / oz. & Silver @ $19.24 / oz.
- **BitFarm (BITF = $1.36 / in at $4.12)
o Selling more CCs for income,
- **Bitcoin (BTC = $21,800 / in at $4,310)
- CDEV (CDEV = $5.88 / in at $7.83)
o Selling more CCs for income,
- CostCo (COST = $501)
o Bot July, +$465 / -$460 PUT Spread
- CPG (CPG = $7.07 / in at $6.44)
o Sold Jul $7.50 CCs for income,
- Energy Fuels (UUUU = $5.44 / in at $11.29),
o Sold Jul $8 CCs for income
- **Ethereum (ETH = $1,240 / in at $310)
- China Large Cap (FXI = $33.62 / in at $40.81)
o Bot 29 Jul +35 / -33 Put Spread
- GME – Holding
- **Grayscale Ethereum (ETHE = $8.74 / in @ $13.44)
- **Grayscale Bitcoin Trust (GBTC = $13.77 / in @ $9.41)
- Hudbay Minerals (HBM = $3.73 / in @ $5.04)
o Bot October 22, $7.50 CALLs,
- Silver (SLV = $17.79)
o Bot Jul +$19.50 / -$21.50 CALL Spread,
- TLT (20-year Note)
o Sold Jul +$114 / -$113 PUT Spread
- Uranium Royalty (UROY = $2.43 / in at $4.41)
o Selling more CCs for income,
** Denotes a crypto-relationship
Trade of the Week: Take a look at NuScale (SMR) – a new type of nuclear plant. It’s smaller, safer and more localized. Green energy wants nuclear to rule the roost in the future. NuScale has just moved one of their original prototype compact nuclear power stations just across the border from Ukraine. It’s all cloak and dagger stuff, but could be a major player in the next new-energy wave – potentially hitting Europe first.
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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