“Hey, you always have a choice”… and a voice. If you treat everyone as if they have that power, you will consistently earn their trust and respect. After all: “One satisfied customer gets you three. One angry customer costs you eleven.”
If you run the dishwasher… every time there’s a dish in the sink, you’ll never get anything else done. But if you wait until the sink is overflowing with dishes before you remedy the problem, you’re going to spend a lot of time living with a filthy situation. In between those two extremes is your happy place. The same goes for relationships with customers, people we work with, and just about everything else we do all day. Setting the triggers for actions is best done in advance, communicated, and regularly maintained. Waiting for a crisis is expensive, risky, and often career ending.
I’m seeing a lot of previous founders… jumping back into entrepreneurship. There’s no promise that these serial-entrepreneurs will be successful, but the more shots on goal we take – the better off we are. Startups tend to be one of our best vehicles for creating change, innovation, and commercializing solutions. It’s a joy to watch people return to: ‘doing what they love – and loving what they’re doing’.
The Market:
“Wow, look at that 10-Year move”... and you only get that kind of movement in the 10-Year Note when things are breaking. Our entire world runs on debt, and when the debt market runs dry of ‘fresh meat’ – all heck breaks loose. It's our market junkie talking. Our markets require ever increasing amounts of new debt (money printing) – just to maintain the same level of commercial activity. Reduce the money printing and our bond market goes into withdrawal. At the beginning of the week, our FED realized that bonds needed some ‘fresh meat’ so they re-started the printing presses. The market loved seeing that and combined with some FED done with rate hikes hopium – we rallied for a couple of days. FYI: Our FED now owns approximately 20% of all U.S. equities – ‘How do you say market manipulation?’ Unfortunately, our FED is NOT slowing down on hiking rates. OPEC+ joined in by cutting oil production 2m barrels/day – which translates into higher gasoline prices. We’re entering another earnings season with many companies still trading at high P/E’s. And one element that comes with a bear market is P/E contraction – especially while interest rates are rising. Get your hedges on – as we need to prepare ourselves for a very bumpy ride in market-land.
InfoBits:
- Would the real Elon Musk please stand up? This week Elon Musk woke-up from a dream and told Twitter that he's still buying them at his original offer price – because you can’t put a price on free speech.
- OPEC+ cut oil production by 2m barrels/day… kicking sand in the face of the U.S. and our continued tight monetary policy.
- Europe is on sale to Americans… as the strong Dollar continues to feed global inflation and raises the likelihood of a global financial crises.
- The cost of shipping… from Shanghai to Los Angeles fell 73% YoY. Now, cargo companies are canceling trips due to low demand.
- Retailers inventory levels have ballooned… and need to clear out the excess goods before ordering more. Can you say: ‘Pre-Christmas Clearance Sale’.
- Poshmark (a 2nd hand apparel market)… was sold to South Korea’s search giant Naver for $1.2B. That’s 50% of their value one year ago.
- Manhattan’s EV charging sites… out-number gas stations 10 to 1.
- Credit Suisse is in trouble… Their 2022 share price collapsed from $14.90 to $4+, and markets are thinking insolvency and probably bankruptcy. Is this Lehman Bros. 2.0 – with TWICE the assets under management ($1.5T).
- Ray Dalio handed over control of Bridgewater Assoc… to a new generation of investment advisors.
- The ratio of job openings to available workers… contracted in August to 1.67 to 1. Average hourly earnings rose 5.2%, but when adjusted for inflation – they fell 2.8%.
- 91% of CEOs expect a recession in the coming year… and 51% are considering cutting their workforce in anticipation.
- U.S. startup funding shrank over 50% in Q3.
- Tesla shares dropped +16% over the past week… having their worst week since March 2020.
- Tesla is set to deliver an electric semi-truck… that (in the beginning) will focus on one customer’s needs - Pepsi. Deliveries will begin: December 2022.
Crypto-Bytes:
- Kim was fined $1.25m by SEC Chair Gary Gensler… sending a warning to all crypto-influencers. Also beginning to mark his ‘regulator turf’.
- Citigroup says decentralized crypto exchanges (DEX)… are gaining market share from their centralized peers.
- Celsius’ top execs cashed out with $20m in custody accounts… before declaring bankruptcy in May, suspending withdrawals, and leaving their 1.7m customers holding their $8B bag of liabilities.
- Binance is set to train law enforcement on how to stop crypto crime.
- The U.S. Treasury warned… that cryptocurrencies could threaten the safety of the U.S. economy. WHAT? Our FED that has been doing that for decades!
- The EU confirmed that under their new Russian crypto ban… all crypto payments from Russians to European wallet providers will be forbidden.
- Binance, the world’s biggest cryptocurrency exchange… confirmed that $570m had been stolen in a hack of a blockchain that it administers.
- Huobi Global, one of the biggest crypto exchanges in Asia… has agreed to be purchased by Hong Kong-based investment company About Capital Mgmt.
- FTX, the Sam Bankman-Fried-run crypto exchange… partnered with Visa to roll out crypto debit cards across 40 countries.
TW3 (That Was - The Week - That Was):
Monday: There was an emergency FOMC meeting because we’re coming to a point where FED officials may need to start worrying more about financial stability than inflation. There are rumors that a major international bank (Credit Suisse) is on the verge of going under. WTI crude is rising +4% as the OPEC+ alliance is considering a +2m barrel/day production cut at its Wednesday meeting.
Tuesday: Stocks got a boost yesterday on weaker manufacturing data, raising hopes that a slowing economy could lead our FED to pause their rate hike cycle. There have been several signs of slowing inflation in recent weeks including rents being down, and home prices falling 6% from their peak in June.
Wednesday: After tumbling in August and September, the S&P has rebounded 5.7% in the past two days – cutting its 2022 loss to about 20%. OPEC has confirmed that they're going to cut 2m barrels/day of production – increasing the price of gasoline. Watch: OXY over $67.75, and SLB over $41.25 for a trade.
Friday: Today is Jobs Friday. A strong jobs report is likely to raise fears of additional FED rate hikes and tightening through the end of the year. Commodities have opened Q4 in style, with prices set for their best weekly showing since March after OPEC+ cut oil output this week. Tech shares are lower, after AMD lowered its revenue outlook for the 2nd time in just 3 months. The Jobs Report told us that the U.S. created 263k jobs in August, the unemployment rate fell to 3.5%, and wages rose 0.3%. The markets are bothered by the unemployment rate falling. Our FED has more work to do.
AMA (Ask Me Anything…)
Should I buy good stocks because they’re +60% off of their all-time-highs? Tip #1: NO! (a) It can go lower and scare you out of it. Or (b) it can go sideways and wear you out of it. Per HL:
- 1. Wait for the stock or index to go back above its 20-day Exponential Moving Average (20dEMA),
- 2. Make sure that its 10dEMA is also above the 20dEMA,
- 3. Then make-your-move.
That will earn you a nice chunk of the move – at a much lower risk level.
Next Week: Are new Lows On-Deck?
- Going into the close on Friday – our markets were an absolute dumpster fire. The S&Ps were down over 3% and the Nasdaq was off over 4% for the day.
- A good jobs report – gone bad… In August, we created 263k jobs and reduced the unemployment rate from 3.7% to 3.5%. This caused markets to react badly to good news. Markets know that our FED has more rate hikes and tightening to do – before inflation will meaningfully subside.
- Probabilities are flyin’ higher… that our FED will raise interest rates by 75bps at their next meeting.
- Bonds are on the edge of an abyss… close to breaking to new lows. If bonds break, the U.S. will be in a similar situation as the Bank of England. Interest rates will explode higher, and force our FED to pivot and change their rhetoric. For example, Tip #2: if bonds (/ZB) go below 121, you will snap the back of the S&Ps and push volatility through the roof. Traders will be the most frightened they’ve been – at least since the financial crisis (2008).
- Low Beta equals high risk = XLU, VZ, and PG. Right now, utilities (XLU) have crashed 20% in the last 2 weeks, and are near YTD lows. This safe sector is being hit due to the unwinding of significantly sized portfolios (pension funds and 401k’s). When large portfolios get hit – that means the mega-market caps are also going to take a beating (AAPL).
- A new leg of Extreme Volatility is coming… Bonds are approaching new lows. Retail 401k’s and large institutional portfolios are beginning to be sold, and mega-market caps are being hit. Tip #3: Watch for volatility (VIX) to spike if/when we break thru 3571 on the S&Ps = /ES.
- Mega-Market Caps are at their lows… People are cashing in their 401k’s, and when you talk redemptions – you need to talk Apple. AAPL is the most widely held product out there, and can fall another 10 points until it makes a new 52-week low. Meta, Amazon, Google, Microsoft, and Tesla – are all looking at multi-year lows. Tip #4: If TSLA loses the $200 level, it’s all over but the cryin’ because it will take the S&Ps with it.
- Earnings are on deck… so, What can possibly go wrong? JPM, Citi, and BofA are all close to YTD lows, and their earnings are coming at the end of this week.
- SPX Expected Move (EM):
o Last Week - $121 EM… We remained within our EM, and slightly higher on the week.
o Next Week - $125 EM. The good news is that the bond market is closed on Monday. But on Friday alone, we moved $125 – so, be a little extra cautious this week.
Tips:
HODL’s: (Hold On for Dear Life)
- CASH = Nexo @ 8% on USDC – waiting for Merge dust to clear.
- PHYSICAL COMMODITIES = Gold @ $1,702 /oz. & Silver @ $20.16 /oz.
- **BitFarm (BITF = $1.02 / in at $4.12)
o Selling CCs for income,
- **Bitcoin (BTC = $19,500 / in at $4,310)
- **Ethereum (ETH = $1,325 / in at $310)
- GME – DRS’d and HODL
- **Grayscale Ethereum (ETHE = $9.04 / in @ $13.44)
- Innerscope (INND = $0.0181 / in at $0.0052)
- SPY (Downside PUTS):
o BOT Oct 21 / +$350 / - $340 PUT Spread
o BOT Oct 31 / +$350 / - $340 PUT 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!
Disclaimer:
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