When you’re trying to master something – remember:
- It’s not a function of genius or talent, but rather of time and intense focus.
- Your brain will become altered by years of practice and active experimentation.
- As time goes on, you will become younger in mind and spirit.
I can say, with absolute certainty that… 98% is not the same as 100%. Leaving yourself a few points of wiggle room will help to build trust with the client. But at the same time, if there is no need for wiggle room – then say so with a smile.
When do you know that it’s right? When you’re building a business there will be unforeseen speed bumps, missed connections, and bad luck. A lesson to be learned from the rock-n-roll groups of all time is that their final sound ended far away from where they started. They persisted, adjusted, and changed – until they created what their customers wanted. Change too often and you stand for nothing. Refuse to change and you will be overlooked. Professionals serve their customers by collaboratively leading them – where everyone needs to go.
The Market:
Adidas (and many others) have cut ties with Kanye West… for his public anti-Semitic rant; thereby, ending Ye’s billionaire status. Since launching in 2013, the Adidas-Yeezy partnership produced $2B in annual sales (10% of Adidas’ total revenue).
Just the facts:
- The Fed’s preferred inflation measure (PCE) rose 0.5% MoM and 5.1% YoY.
- Personal income increased by 0.4%; however, it’s flat after adjusting for inflation.
- Personal savings fell to 3.1%, as consumers use more of their savings to maintain their standard of living.
- Consumer confidence fell due to inflation and recession concerns.
- The Richmond FED reported a decline in manufacturing activity.
- The U.S. has just 25 days (lowest level since 2008) of diesel fuel supply.
- Mortgage demand fell to 1997 levels, with home sales dropping 11% MoM and 31% YoY.
InfoBits:
- “The bird is freed”… as Elon Musk closed his $44B deal to buy Twitter and take it private (Nov 8th). Musk immediately ‘freed’ Twitter’s CEO, CFO, and general counsel of their jobs. And just as immediately: (a) the EU warned Musk that he’d have to ‘fly by their rules’, (b) India let it be known that they have ‘veto power’ over any social media platform, and (c) GM suspended their advertising until further notice.
- ‘What about TWTR’s severance?’ Twitter's fired CEO and CFO are likely to collect over $100m in severance – mostly in accelerated, vested equity.
- Binance’s CEO confirmed… that they invested $500m in Elon’s TWTR acquisition.
- Uber launched in-app journey ads… as data is an untapped profit area for companies that have historically sold only products and services.
- U.S. students' math-test scores plummeted this year… possibly a result of remote learning.
- Google’s quarterly sales growth slowed… as ad spending sagged and YouTube faced fierce competition from TikTok.
- $1.25m is needed for retirement… but the average person has less than $100,000 saved. How do we close that gap for the majority of Americans?
- Taylor Swift's "Midnights"… hauled in 1m album sales in 3 days. It broke her own 2017 "Reputation" sales record.
- Tesla is under criminal investigation in the U.S… over claims that the company’s EVs are self-driving. They’re not.
- It may be time to move back in with Mom… as surging rents are pushing apartment demand to its lowest level in 13 years.
- The SEC will force public companies… that make accounting errors on financial statements to revoke their execs’ bonuses and other incentives.
- Google has acquired Alter… an artificial intelligence (AI) avatar startup that helps creators and brands express their virtual identity.
- Shares of Meta plunged 24.5% on earnings day… closing at its lowest price since 2016.
- Mortgage rates are above 7% for the first time since 2002… more than doubling since the beginning of the year.
Crypto-Bytes:
- Bloomberg's Matt Levine just wrote an entire issue… centered on everything you would want to know about crypto. If you’re only going to read 40,000 words on crypto – make them THESE 40,000 words.
- Rishi Sunak is the UK’s next prime minister: He previously shepherded the U.K.’s new crypto regulations during his time as finance minister.
- Apple will not exempt NFTs from the App Store’s 30% fee.
- Stability and crypto… are two words normally not associated with each other. Bitcoin and Ether seem to have found firm’ish levels – despite concerns over inflation, interest rates, and the strong dollar.
- Being a true crypto believer isn’t cheap… but institutional players like a16z insist they're in it for the long haul. Chris Dixon is talking up the 9 crypto-startup deals that they did in Q3.
- Sam Bankman-Fried said that FTX… will launch a stablecoin in the near future.
- According to Ben Hunt of Epsilon Theory… the real money is not in buying low and selling high, but rather in controlling the money flow. Market makers make the big bucks standing on each side of the transaction - taking a small piece. The blockchain is designed to break this flow.
TW3 (That Was - The Week - That Was):
Monday: This is one of those bizarre periods where the market continues to climb the wall of worry. There's no reason for the market to be up like this. Nobody cried pivot or cut rates. In fact, our Army's 101st Airborne Division is now deployed to Europe for the first time since WWII. They are the closest U.S. forces to the fight in Ukraine. The chance of anyone using a tactical nuke / dirty bomb just rose exponentially. If/when the first report of a nuke hits the wires, global markets go limit down. We could easily see a 2,500-point haircut. I also think the entire globe will scream for peace talks, and we would get those points back in no time. It’s dangerous out in marketland.
Tuesday: The PMI data has new orders falling to their lowest reading since May, 2020. Prices paid also slid to their lowest reading since November, 2020.
Wednesday: Boeing’s earnings missed by a mile. Even with Boeing, MSFT, and GOOGL all flunking earnings, this market still wants to move higher. None of the world’s ills seem to matter right now. Traders believe our FED will pivot, and only after next week’s FED meeting and the mid-term elections – will the market gain a conscience. I’m watching NEM that’s fighting with the $45 level, and AG that’s having trouble breaking over $9. People are calling for S&P 4000 before the bounce is over.
Thursday: The 3-Month T-Bill is paying the same as the 30-Year. Is it normal to have the same risk of investing for 3 months as you do for 30 years? No. It just shows how weird things have gotten. GDP came in at +2.6% growth. Durable goods rose 0.4%, and Personal Consumption (PCE inflation) rose 4.5%. With a positive GDP and a high PCE, our FED has the license to go forward with all of its 75bps moves.
Friday: The Dow is on track for its best monthly return since 1987 (+11.5%). Blackrock is suggesting that our FED is going to inject "pivot" language in their meeting next week. There's no doubt that our FED is behind the big move down in yields, but it can’t go on forever. Blackrock also thinks that after the midterms – the market will begin to fade a bit. Ya think?
AMA (Ask Me Anything…)
‘Welcome to hell, Elon‘ said NP: “At the bottom of every social network is content moderation, and everyone hates the content moderators. Content moderation defines the user experience. Everyone incentivizes good stuff, disincentivizes bad stuff, and deletes the really bad stuff. YouTube videos are 8 to 10 minutes long because that length requires an additional ad slot in the middle. YouTube wants a certain kind of video, and it’s created incentives to get it. Elon, that’s the business you’re in. The longer you fight or pretend that you can sell something else, the more Twitter will drag you into the deepest possible muck of defending free speech. And if you accept that growth requires aggressive content moderation and pushing back against ‘free speech’ – then your fan base will dwindle. You’re caught between…”
Next Week: A Pivotal FED moment for Markets:
We broke outside the volatility box… and this coming week we have a pivotal FED meeting. The Vol. Box had a 3800 boundary on the upside, and we’re quickly headed for the 3931 level.
S&P levels you need to know: If we break thru 3931, it’s a straight shot to 4211. Therefore, Tip #1: when we top 3931 – buy an inexpensive November SPX / SPY Call Spread centered around 4211 / 421.
We had a tech earnings slaughterhouse: I continue to be amazed by this rally, because it’s taking place without mega-cap tech. They’re doing it on the backs of financials and energy.
$100B reasons to be concerned about mega-cap tech: $100B is roughly how much money The Zuck has lost – just this year. Meta (Facebook) is down over 70% YTD, over 50% over the last 5-years, and back down to 2016 levels.
Will our FED ‘dove it out’? We have a FED announcement this coming Wednesday surrounding interest rate hikes. Tip #2: If our FED only raises 50bps on Wednesday, buy an inexpensive November SPX / SPY Call Spread centered around 4211 / 421.
GDP was sandbagged by our Government… ordering a lot of airplanes. Durable goods orders were a disaster, and our FED’s inflation indicator (PCE) came in hot. Markets are hoping that our FED will begin to review their rate stance – after they raise rates 75bps for the fourth consecutive time.
If you wish to short something… since we’ve rallied +400 S&P points in the last 2.5 weeks: Tip # 3, 4 and 5:
- SOLD: an SPX 4660 Feb. 2023 CALL for $12.75,
- BOT: a GS +$342.50 / -$340 Nov 2022 PUT Spread, and
- SOLD: a JPM Nov. CALL Unbalanced B-Fly – a 1 by 3 by 2 trade.
SPX Expected Move (EM): Yes, we are rallying back, but we breached the Expected Move 7 out of the last 10 weeks. Our markets have become completely inefficient and are just reacting to macro-economic news. Market volatility has NOT declined.
- Last Week’s EM = $114 and we moved over $160 to the upside.
- Next Week’s EM = $119. We moved $93 just on Friday. This tells me NOT to sell short-dated options. We have explosive gamma risk to the upside, and are on course to hit 3931 and 4211 the week of the mid-term elections.
Tips:
HODL’s: (Hold On for Dear Life)
- PHYSICAL COMMODITIES = Gold @ $1,648 /oz. & Silver @ $19.20 /oz.
- AGG – BOT some bonds (AGG = $93.13 / in at $93)
- **BitFarm (BITF = $1.05 / in at $4.12)
o Selling CCs for income,
- **Bitcoin (BTC = $20,800 / in at $4,310)
- **Ethereum (ETH = $1,600 / in at $310)
- GME – DRS’d and HODL
- GS (Downside PUTS):
o BOT Nov 18 / +$342.50 / -$340 GS PUT Spread
- **Grayscale Ethereum (ETHE = $10.44 / in @ $13.44)
- Innerscope (INND = $0.013 / in at $0.0052)
- RIG ($3.62 / in at $3.47)
- SPY (Downside PUTS):
o BOT Oct 31 / +$350 / - $340 SPY PUT Spread
o BOT Dec / $285 DIA PUT
- XLU (Upside CALLS):
o BOT Nov 18 / -1X $63 / + 2X 67 Back-Ratio CALL Spread
* * Denotes a crypto-relationship
Trading Tips:
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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