RF's Financial News

RF's Financial News

Sunday, February 26, 2023

This Week in Barrons: Feb. 26th, 2023

The top 4 reasons that 233 eventual millionaires quit their jobs were:

-       They were bored / under-utilized.

-       They disliked their bosses.

-       They dreaded the office culture.

-       They had a draining commute.


Imagine your public side…   being even more rumor-driven than it is now.  Per SG: the ease with which someone can invent and spread lies is going to take most of us by surprise.  It will require an entirely new posture for understanding the world and to separate fact from fiction.  Here’s hoping that we: ‘Won’t get Fooled Again’.


In the last 40 years, the amount of promotion has gone up astronomically, but the success rates have not increased.  The answer = do NOT focus on the promotion – simply create something that users will want to tell others about.  Let your users do your promotion, because when they do it – it’s called:  passion, generosity, and caring.  Being Better always beats Being Louder.



The Market:


In June, Hong Kong will legalize crypto buying, selling, and trading.  It will be legal for its citizens and for all mainland China’s institutions.  A fully crypto-open Hong Kong gives the Chinese a way around their digital asset ban.  I’m expecting some interesting times over the next 3 months.


Currently you can purchase a 1-Year T-Bill and earn 5%.  That’s the highest, no-risk interest rate since 2007.  It’s a great way to sleep at night for those of us over 60 that really don’t want to put up with the near-term market volatility.


Thursday is the new Friday?  The results of the 4-day workweek UK trial are in:  

1.    +90% of the studied companies said that they will continue with the 4-day week after seeing productivity hold steady, and major reductions in turnover / absenteeism.

2.    Most workers slept better, were less stressed, and had more time to care for their loved ones (childcare / elderly).

3.    It’s spreading to pilots in the U.S., Canada, Australia, Spain and Brazil.  

4.    At minimum, a 4-day week could become a new perk, and a new way to attract and retain talent.



InfoBits:


-       Google went before the U.S. Supreme Court this week…  to defend Section 230 of the 1996 Communications Decency Act.  Section 230 gives internet platforms legal immunity over almost all 3rd-party content hosted on their sites.


-       VC Fundraising hit a 9-year low in Q4…  falling 65% YoY.


-       Food inflation accelerated from Dec. to Jan…  and will jump another +7% this year.


-       Uber and Lyft are seeing their ad businesses boom (think an Expedia ad en route to JFK).


-       Remote work is costing Manhattan $12B+ a year…   as residents cut back on weekly happy hours and $25 salads.


-       There’s been a 46% drop in investor home purchases YoY…  the largest decline on record.


-       Home Depot’s transaction volume was down 6% YoY…  offset by their average ticket size rising 6% YoY.


-       US home sales fell for the 12th consecutive month…  down 37% YoY – to their lowest level in 28 years.  U.S. homeowners have lost $2.3T in value since the June peak in home prices.


-       McKinsey & Co. is eliminating 2,000 jobs,…  Ericson is cutting 8,500, and Intel cut its dividend by 66% - to its lowest level in 16 years.


-       Retirees lost 23% of their 401(k) savings in 2022.


-       Artwork produced using AI tools…  cannot be copyrighted.


-       Per HL: WeWork (WE) is currently worth $1B…  proving you can easily turn $22B raised from investors into $1B – in less than 2 years!


-       Personal incomes rose 0.6% MoM in January…  while personal spending rose 1.8%.


-       Goldman Sachs expects potential legal losses of +$2.3B…  as its gender bias female payment lawsuits begin to be settled – not in their favor. 



Crypto-Bytes:


-       FTX’s former head of engineering is nearing a plea deal…  and it would make him the 3rd senior exec. to cooperate with authorities over the exchange’s collapse.  


-       Coinbase is in talks with the IEX stock exchange…  to create a new, federally approved digital asset marketplace.


-       FTX Japan resumed withdrawals of crypto and fiat on Tuesday.


-       Binance.US’s plan to buy Voyager Digital’s assets…  looks like it will proceed. 


-       SBF (crypto’s greatest villain) …  was hit with 4 additional criminal charges including bank fraud, operating an unlicensed money transmitter, and conspiracy to make unlawful political contributions. That’s 12 charges total.


-       NFTs could be serious ‘fun-and-games’ says the SEC.  A ruling saying that Top Shot Moments (NFTs) are securities could pressure some crypto businesses to register their NFTs with the SEC and shake up the entire nonfungible industry.



TW3 (That Was - The Week - That Was): 


Tuesday:  This week we get a glimpse of our FED’s favorite inflation gauge – the PCE Price Index comes out on Friday and the last FOMC Minutes on Wednesday.  Ideas of our FED pivoting have evaporated as 2 FED officials supported a larger rate increase at the February meeting.


Wednesday:  Yesterday was rough as Wall Street posted its worst performance of the year with the S&Ps and Nasdaq dropping for the 3rd session in a row.  The decline in the DOW wiped out its gains for 2023.  The Global Purchasing Manufacturer's Index returned to expansion for the first time in 8 months – painting a picture of a robust economy that continues to perform.  “Higher for longer” remains the mantra pertaining to interest rates by the FED as Treasury yields and the dollar climb.  The SPX closed at 3997. The 50-day is at 3978.  The 200-day is at 3941.  The FOMC minutes were not dovish so the market went from being up – to going red.  NVDA’s earnings are after the bell, and they will move techland tomorrow.


Thursday:  NVDA’s earnings were a disaster if you look YoY.  NVDA’s Q4 revenue was down 21% YoY, and GAAP earnings were down 52% YoY – but up 111% from the previous quarter.  For fiscal 2023, revenue was $26.97B = flat YoY, and earnings were down 55% YoY.  But NVDA beat their earnings estimates so it’s up $17 a share.  Is NVDA now expensive – you bet.  Is business booming – not really.  As the 10-Year continues to rise, the market continues to be a jumbled mess.


Friday:  This morning is not looking good.  The DOW is off 214 and the S&P is down 29 – because the 6-Month treasury is over 5%.  Why buy stocks, when you can make 5% risk-free in six months?  The PCE (our FED’s favorite inflation measure) came in HOT.  This gives the FED the green light to go 50bps at their next meeting.  The 200-Day moving average on the S&P is at 3939.  So, it’s conceivable that they put in a bounce next week, simply because we've fallen almost 300 points in a month.  But that said, our FED has free reign to continue hiking rates, and they will.  At some point the effects of the existing rate hikes come into play, and along with the current ones – will further collapse this market.  Over time, I think we retest the most recent lows.



AMA (Ask Me Anything…)


Why is Saudi is building a crypto HQ in Dubai?  Recently Saudi Arabia has shown interest in joining the BRICS (Brazil, Russia, India, China, and South Africa), and has said that they’d be open to trading oil in currencies other than the U.S. Dollar.  Most economists expect a large portion of the world to abandon the U.S. Dollar, and as a result – cause a tsunami of inflation.  With more inflation, our FED’s interest rates will continue to rise – and a collapse in asset prices will soon follow.  That will be followed by the Great Reset – with central bank digital currencies (CBDCs) being ushered in.  All it would take would be for Saudi Arabia to stand up and declare: “We’re going to consider accepting other currencies for oil.”  At that point, all of the countries that had to hold U.S. Dollars for the last 50 years, would no longer have interest in holding them – and the inflation would begin upon their sale.  Asset prices would then collapse, and in comes Bitcoin along with the CBDCs.  THAT’s the reason Saudi is building a crypto hub in Dubai, and THAT should be everyone’s reason to hold crypto.



Next Week:  The Bears R Back-in-Town…


The Bulls fold under the reality of inflation…  and that started on Tuesday and continued the downside action thru the end of the week – being down a total of 110 S&P points.  Honestly, the Bears aren’t back in town – they never left.  At this point we’re on track to face some very key levels.


SPX 3931 … it’s back!  Right now we’re trading about 3970 – so we’re close to the 3931 gravity point.  If/when we lose the 3931 level, we should see an immediate increase in volatility (VIX). 


It’s the Financials:  We’re seeing some very interesting sector rotations.  The key to a broader selloff in the S&P 500 – is the financials (XLF).  The financials were slaughtered earlier in the week, but at the end came back to the lower edge of their expected move – lifting the S&Ps out of eminent danger. 


It’s Interest Rates:  The 10-Year note has risen from 3.35% to 4% inside the month of February.  If/when the financials sell off due interest rates being too high, we will get a rotation out of stocks and into the bonds (/ZB).  And once investors start to buy bonds, the financials will be the sector that immediately suffers.


It’s the Dollar:  There’s no question that interest rates are rising and investors are using the U.S. Dollar as a flight-to-quality protection mechanism.  The only question is whether it’s sustainable.  The Dollar closed at YTD highs, but the S&P is not at YTD lows – so that’s worrisome.  


Trades:

-       SOLD: 45 to 60 day out-of-the-money Premium Sales in /ES, SPY and QQQ.

-       TIP #1 = BOT: JPM PUT Spread = 31 MAR 23: +142 PUT / -140 PUT


SPX Expected Move (EM):

-       Last Week = $73 EM for a 4-day week, and we moved over $110.

-       Next Week = $76 EM for a 5-day week – it’s impossible.  In an inefficient market: 

-       TIP #2: SELL = long-dated, out-of-the-money premium, and 

-       TIP #3: BUY = some 5% yield.



Tips:  


HODL’s: (Hold On for Dear Life)

-       PHYSICAL COMMODITIES = Gold @ $1,818 & Silver @ $20.9/oz.

-       30, 60, & 90-Day Treasuries @ 4.6 to 5.1%

-       **Bitcoin (BTC = $23,200 / in at $4,310)

-       **Ethereum (ETH = $1,600 / in at $310)

-       DNN – Denison Mines ($1.20 / in at $1.32)

o   SOLD the April $1.50 CALLS

-       GME – DRS’d and HODL

-       Innerscope (INND = $0.0044 / in at $0.0052)

-       MESO – Mesoblast Ltd. ($3.22 / in at $3.60)

o   SOLD July $5 CALLS for $0.85

-       NFGC – Newfound Gold ($3.34 / in at $3.75)

o   SOLD the April $5.00 CALLS


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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