Smart ones trade… A baker makes loaves of bread more easily and efficiently than the blacksmith. A blacksmith would ruin their productivity if they stopped making rakes and horseshoes in order to bake a loaf of bread. If someone else can do their thing efficiently, and you can trade your stuff for their thing – then everyone comes out ahead. Often ‘freelancers’ have trouble trading, and think that they should do every job themselves. Not only is that non-productive, it reduces the magic that they have left for the work that only they can do.
What’s your Savings Account earning you? SoFi just raised its annual savings account yield (APY) to 3.75%. E-Trade offers 3.5%, Robinhood offers 4% if you pay a $60/yr. subscription, but in terms of the highest yield with no fees, no time limits, and no deposit maximums – SoFi’s 3.75% is in elite territory.
The Market:
The latest FED minutes: FED officials were not pleased by the surge in stocks ahead of their most recent meeting – as was reflected in their transcribed minutes: "The unwarranted easing in financial conditions is complicating this Committee's effort to restore price stability."
- Slowing rate hikes do not mean pivoting: "We are strongly committed to returning inflation to the Committee's 2% objective. A slowing in the pace of rate increases was not an indication of any weakening of the Committee's resolve to achieve its price-stability goal or a judgment that inflation was already on a persistent downward path."
- There are ‘few’ signs of a wage-price spiral: “The pace of increase for prices of core services excluding shelter (which represents the largest component of core PCE price inflation) was high. This component of inflation has tended to be closely linked to nominal wage growth. Bringing down this component of inflation would require some softening in the growth of labor demand to bring the labor market back into better balance."
- FOMC forecasts: "Core goods inflation is anticipated to slow further, while core non-housing services inflation is forecast to move down as wage growth eases. Risks are skewed to the upside for inflation but to the downside for growth."
InfoBits:
- Bed, Bath & Beyond believes that it will not have the cash… and expects to file bankruptcy in the coming weeks. BBBY shares plummeted another 30% to their lowest level since 1993.
- Analysts expect that BBBY’s bankruptcy… won’t be the last in 2023.
- The US national debt is $31T, and US GDP is $26T... giving the world’s largest economy a debt-to-GDP ratio of 125% = 3rd-World status.
- Amazon laid off 18,000 … the highest 2022 reduction by a major tech company – and largest in Amazon’s ~ 30-year history.
- The FTC is forcing companies to drop non-compete restrictions.
- Veteran VC Theresia Gouw thinks… this recession will be like 2000 vs 2008.
- Salesforce is laying off 10% (7,000) … and reducing its office space.
- DoorDash needs another revenue source… it’ll now return packages.
- ADP’s private payrolls report showed… a 7.3% YoY upward pressure on wages.
- OpenAI, the lab behind ChatGPT… will sell shares at a $29B valuation.
- New York City public schools will ban ChatGPT… as it could make it easier for students to cheat on assignments.
Crypto-Bytes:
- BTC's 7-day volatility… hit its lowest point since July 20, 2020, and that’s a good sign moving forward.
- Everyone sees a fight coming between the U.S. and the Bahamas… for the $3.5B in FTX assets.
- Analysts proclaimed Binance as solvent, liquid and stable.
- Genesis Trading is laying off 30% of its workforce.
- Celsius Networks owns its crypto deposits… says the judge. So, most of its 600k customers will be last in line for a bankruptcy repayment.
- Silvergate’s crypto problems continue… as its shares fell 43% after the $8.1B run on the bank forced it to sell assets at a $718m loss.
- President Trump’s NFT trading cards… are trading for ~ $1 – losing 98% of their value since mid-December.
- Five 2023 crypto storylines:
o De-risking crypto portfolios is a thing and will continue.
o Crypto tech will see more highly anticipated updates.
o Stablecoin regulation is on the agenda in the U.S.
o Africa will lead emerging markets in Bitcoin adoption.
o Countries will test / implement Central Bank Digital Currencies.
TW3 (That Was - The Week - That Was):
Thursday: ADP just revised the way they gather their jobs reports information, and they just said that last month we added 235K jobs. Almost immediately the market sold off, so what to do here? GDX and GDXJ (a collection of metal miners) have traded sideways in a channel. Both indexes broke out yesterday. This is big, as they've had a lot of time to consolidate. If this is the real deal, there could be a lot of upside. Take GDXJ over $37.95, and GDX over $30.45.
Friday: Retail traders unloaded $3.1B in assets two weeks ago, making it the third worst week of net selling in history. So, while the retail guy was trying to get out, "someone" was buying all the dips. Gee, who could that be (cough-cough: FED or J. Yellen == both)? Heck, they managed to keep the S&P above 3800. At 10 we got the ISM non-manufacturing PMI and it came in at 49.6 versus a 56.5 reading last month. The market loved it – hoping that less production will give our FED reason to pause. Yes, the market is surging on a lousy economic number. It's very twisted.
AMA (Ask Me Anything…)
“It’s GOLD b*tch”… This is a market where you DO NOT WANT to be market cap weighted. This is a sector-pickers market – which was proven because asset managers (vs the Indexes) had one of their best years in 2022. Technically, the last of the sovereign bonds with a negative yield has disappeared. There are currents out there saying:
- If Bitcoin can get above $20k – it would be a breakout to the upside and need to be bought.
- MSTR and MU are both low probability and high risk-reward investments.
- Look at XLV – the healthcare ETF because it has just broken-out and the world does NOT revolve around large-cap tech. Simply fish where the fish are biting!
BUT the biggest proclamation is GOLD – which was flat last year even when T-bills were getting killed. In 2022, gold (GLD) started as a ‘flight to quality’ vehicle, but it could very well end up rising over 30% this year alone. Silver is the leveraged way to play Gold. In terms of specific suggestions: try Alamos Gold (AGI) above $9.60, First Majestic Gold, GDX over $30.45, and GDXJ over $37.95.
Next Week: More Bull or Prep for ‘da Bear?
- Trading is sketchy = fast & broken: This week we ended within the Expected Move on the SPX, and within a stone’s throw of 3931.
- Jobs and Durable Goods numbers: Friday’s Jobs Number was a darn good number, but the Durable Goods numbers were really bad – and the market hopped on bad numbers as being ‘good’ for the FED and higher we went. This just highlights the fact that every economic release could be a catalyst for a rally or a fall – so be careful.
- Rates / Financials: The movement (fall) in the 10-Year note on Friday was amazing, and on the back of that move – the financials rallied. We have the steepest Yield Curve in 38 years. Meaning, that the difference between the 2-Year (4.25%) and 10-Year (3.5%) yields are the most anyone has seen for the past +3 decades. This is bad news for those who want to avoid a recession, and it’s not too healthy for the financials as they kick-off earnings next week.
- Binary range is back == 3,800 / 3,900: Nothing screams Volatility Box as what we’ve been in for the past month. When a channel is this tight and we continue to accumulate open interest – we’re either going to explode higher or lower and next week’s earnings could be the catalyst.
- Careful with your allocations – it’s a coin flip: We are trapped in an SPX 100-point range with the VIX over 20; therefore, be careful with your directional bias.
- Trades:
o TIP #1: BOT a Catapult in TGT:
§ BOT Mar: +$145 / -$135 PUT Spread
o TIP #2: BOT a Vertical PUT Spread on the SPY:
§ BOT Feb: +$355 / -$365 PUT Spread
o TIP #3: BOT more GLD and the Miners:
§ BOT some GDX and GDXJ
o TIP #4: BOT more, short-dated T-Bills
- SPX Expected Move (EM)
o Last Week = $84 for a 4-day week. For the 2nd consecutive week, we did not touch the upper or lower edges of the EM.
o Next Week = $98 for a 5-day week. Put on your big-boy pants, and try not to get too directional. Last week gave us a short squeeze, but if we can get above 3931 – we have a different situation on our hands.
Tips:
HODL’s: (Hold On for Dear Life)
- PHYSICAL COMMODITIES = Gold @ $1,871 & Silver @ $24 /oz.
- AGG – iShares Bond Fund: (AGG = $99 / in at $93)
- BIV – Vanguard Bond Fund (BIV = $75.90 / in at $74.54)
- 90-Day Treasuries @ 4.6%
- **Bitcoin (BTC = $16,950 / in at $4,310)
- **Ethereum (ETH = $1,265 / in at $310)
- CAT (Downside PUTS):
o BOT Feb: +$200 / -$190 PUT Spread
- GDX – Metals Miners ETF: (GDX = $31.56 / in at $30)
- GDXJ – Metals Jr. Miners ETF: (GDXJ = $39.48 / in at $37.50)
- GME – DRS’d and HODL
- GS (Downside PUTS):
o BOT Jan: +$340 / -$330 PUT Spread
- IBM (Downside PUTS):
o BOT Jan: +$130 / -$120 PUT Spread
- Innerscope (INND = $0.006 / in at $0.0052)
- SBUX (Downside PUTS):
o BOT Jan: +$85 / -$75 PUT Spread
- SPY (Downside PUTS):
o BOT Feb: +$355 / -$365 PUT Spread
- XLF (Downside PUTS):
o BOT Feb: +$32 / -$30 PUT Spread
o BOT Feb: +37 PUT
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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