Winning characteristics for new grads include:
- Do what you Love – Love what you Do.
- Differentiate yourself through Knowledge.
- Know your Strengths and your Wants.
- Make Decisions Quickly – with rationale and solution.
- Value the Relationship – not the Name on the building.
- Always be with Whom you will Learn the most.
Stop ‘SHOULDING’ all over yourself:
- OUR MUSTS (must haves) are priceless, and are often left unsaid: trust, integrity, health, hard-work, passion… etc.
- OUR SHOULDS are choices that we often squander because we leave them up to someone else or an existing system. I should lose weight. I should eat better.
1. Planning is required to turn SHOULDS into MUSTS.
2. SHOULDS are only accomplished by making them MUSTS.
3. When SHOULDS turn into MUSTS – things always get better.
Here are some small things (per SG) – that could change the world:
- Allow public transportation to be free.
- Make our public toilets safe, beautiful, and consistently maintained.
- Tax our landlords quarterly – and MORE for empty buildings.
It’s surprising how quickly and inexpensively things could change – if we wanted them to.
The Market:
Recession expectations have risen to their highest level in history. Over 43% of professional money managers are not optimistic about the economy. Often this widespread of recession anticipation leads to either a mild downturn or none at all – because people are already mitigating risk in anticipation of things worsening. But pricing a soft landing into everyone’s thinking - doesn’t make it more likely!
The Purge (per FW): You could see it coming a year ago in tech. It was not just valuations that had gotten out of whack, but so had compensation, benefits, and cultures. Everything was moving too quickly, and we all lost track of what made sense. We were reacting rather than questioning, driven by FOMO and a belief that success was more a function of quantity – than quality. This PURGE is likely to continue for most of 2023, but when it’s over – the pool of available talent is substantial, and has had the taste of a winning season. All startup cycles end differently, but those companies that make it through to the other side will be rewarded for: getting back to basics, building, and shipping.
InfoBits:
- More large companies (20) have filed for bankruptcy this month… than in any January since 2010.
- Apple missed estimates… and posted its first YoY sales decline since 2019. Google, Ford, and Starbucks all missed revenues and earnings. Amazon already lowered Q1 guidance. Even w/ Yellen buying stocks, I’m betting on a hard landing.
- “I see elevated services inflation… being a symptom of an overheated economy. The labor market will have to be brought into better balance for the overall inflation rate to return to 2%" … Dallas FED President.
- Skinamarink is an experimental horror movie with a $15,000 budget… that earned $1.7m in two weekends. Horror movies could boost the movie industry, that is still far from pre-pandemic levels.
- In 2022, 80% of the 160k laid-off tech workers… found a new gig with a 30% pay raise within 3 months. But that was last year.
- Ford follows Tesla… by slashing EV car prices.
- Intel’s CEO and management team… are taking 25% and 15% base salary cuts respectively.
- “Growth at all cost” comes at a cost… that many are no-longer willing to pay. Focus has shifted from growth to profitability = ‘Survival of the Fittest’.
- FedEx is laying off more than 10% of its Officer / Director team.
- Rivian cut 6% of its workforce, and DraftKings cut 140 jobs.
- Meta’s stock has doubled over the past 3 months… as the tech giant recently released better-than-expected results.
- Microsoft’s Bing search engine… is poised to incorporate OpenAI’s GPT-4 into its product in the coming weeks. OpenAI will launch a mobile ChatGPT app, and add a video creation feature to Dall-E.
- OpenAI+ is a $20/month subscription plan… that includes faster response times, and priority access to new features and improvements.
- The Bank of England raised rates by 50bps to 4%... pushing gold to an all-time-high in GBP.
Crypto-Bytes:
- SBF has been prevented from contacting anyone… past, present or future with ties to any part of FTX. Prosecutors argued that his past contacts were attempts to influence / intimidate potential witnesses.
- Elon Musk & Twitter plan to introduce payments… first fiat, then crypto.
- Binance is partnering with Mastercard… on a Brazilian prepaid crypto card.
- The U.S. Bankruptcy Court in New York said that Celsius… misled investors and operated like a Ponzi scheme.
- 2 record-setting years of crypto crime… suggest that DeFi still has work to do. DeFi's transparency means investigators can follow crypto across blockchains – allowing looters to run but not hide.
- An almost whistle-blower from Celsius wrote: “We had a bad business model and we lied about it. I messaged my boss and said: ‘Our business is very Ponzi-like. We're using customer funds to buy worthless coins so our founder can cash out.’” Honestly, before writing this down get yourself: a lawyer, a whistler-blower deal, and a book/movie deal – in that order.
TW3 (That Was - The Week - That Was):
Monday: This is the busiest earnings reporting week, then we get the FOMC, and then the Jobs Report. I think Powell sticks to his guns on the "higher for longer" mantra, and if I'm right – this market should not like it. This market has no business going higher without major help from rate cuts, and I don't think they get them.
Tuesday: On Monday, nearly all S&P 500 sectors ended red with energy and tech being the weakest. This week’s catalysts include: 1) FOMC and BOE/ECB Central Bank meetings on Wed. & Thursday; 2) META, and AAPL, AMZN, & GOOG earnings on Wed. & Thursday; and 3) the U.S. Jobs Report on Friday.
Wednesday: The market is convinced that Chair Powell will be dovish, as evidenced by yesterday's low volume zoom for +300 points. Our FED has repeatedly said that moving from 50bps to 25bps hikes, does not mean they're about to pause. Okay, so our FED hiked rates 25bps, but left in the line about ‘on going rate increases where appropriate’. In the Q&A, reporters asked Powell time and time again about doing a pause, but he was having none of it. Markets / Tech are ignoring what Powell is saying, and rallying hard on the backs of: NVDA, TSLA, AAPL, AMZN, MSFT, GOOGL and META. The financials (XLF) and energy (XLE) are NOT participating in this rally, and I’ll be selling into it as well.
Thursday: After the bell today, we get earnings from AAPL, AMZN and GOOGL. This market is ‘off to the races’ all on Powell saying “disinflation”. This will end poorly at some point. The NASDAQ has run way too much / too soon. Liquidity is being injected into the market, and price discovery has gone out-the-window.
Friday: Today is Jobs Friday and WHAT? We created 517,000 jobs in January and unemployment hit 3.4% - a cycle low. That’s insane. Powell has repeatedly said that he wants unemployment to rise, in order to slow spending and inflation. The market is lower on the backs of the Dollar and Bonds breaking. Within the session: (a) the Dollar ($DXY) jumped 2% higher, (b) the 10-Year (/ZN) moved 1% lower, and (c) the 10-Year Rate moved 4% higher from 3.32 to almost 3.8%.
AMA (Ask Me Anything…)
What’s going on in YTD markets?
- We’re presently in a bear market rally. Our FED is saying: (a) “We will continue on-going rate increases where appropriate.” (b) They are talking about at least a couple more rate increases. They fear (c) not doing enough to curb inflation rather than doing too much.
- In early January, financials and energy were leading the markets. This past week the only sector driving these markets higher was mega-cap tech: NVDA, TSLA, MSFT, AAPL, AMZN, GOOGL and META.
- The FED’s balancing act has shifted from goods and energy – back to Labor and the associated Wage Inflation. Wage inflation is a much bigger and stickier issue because politicians lose votes if people lose jobs. Wage inflation is entrenched, remains hot, and is keeping core inflation high. Companies with pre-negotiated union contracts are seeing demands for larger wage increases in order to recoup 2021 & 2022 raises that were well below inflation. I’m expecting strikes and corresponding wage jumps going forward.
Non-discussed DATA points from last week:
- The ADP payroll number showed that the economy added 106,000 new workers, well below the 190,000 expected. Sector strength continued, with hospitality responsible for roughly 90% of those new jobs.
- The Job Opening and Labor Turnover Survey showed a continued increase in job openings instead of an anticipated decline. Layoffs climbed 4.1% MoM.
- The Purchasing Manager’s Index continued moving lower (48.4 to 47.4). That represents the third straight monthly contraction in manufacturing, and sits at its lowest point since May 2020.
Friday’s surprise came inside the 2 largest markets: currency and bonds. The Dollar moved 2% higher and the 10-Year Interest Rate increased 4% = huge 1-Day moves.
Labor is the key:
- The labor market remains strong, and that’s keeping our FED aggressive in their policy decisions.
- Bulls had better hope that our FED can tame wage inflation in a hurry, or things could turn ugly – quickly.
- If the 30-Year Note (/ZB) breaks thru the 129 level, we will see a Tech pullback.
Next Week: Ridiculous Rally or New Bull Run?
Bifurcated Sectors: The Nasdaq (QQQ) is up over 15% YTD, and just this past week took over as the market leader from the financials (XLF) and energy (XLE). Last week we saw the energy sector move outside it’s expected move to the downside – kicking one leg out from under the S&Ps. The S&Ps upward action is due to 7 mega-market cap stocks: NVDA, TSLA (+76% YTD), MSFT, AAPL, AMZN, GOOGL, and META.
Jobs # is on FIRE: By creating over 500k jobs last month, we created even more volatility inside of our equity markets. This job growth will put continued upward pressure on wages, and that’s what our FED is trying to eliminate. Interesting, the firms that are doing the layoffs, are also those same firms moving the marketplace higher.
The Bonds & Dollar Reversed Course: The magnitude of the move in the U.S. Dollar on Thursday and Friday was nothing short of magnificent, and signifies a change in market attitude. When I couple that with the bond market collapse on Friday (/ZB) and corresponding interest rate rise – we could be seeing a bear market rally being put on hold. Because as interest rates climb, the first sector impacted is TECHNOLOGY – the current market leader. Tip #1: If we get below 129 on the 30-Year (/ZB), tech will begin to crack and dominos will begin to fall.
The SKEW is Up: SKEW (the ratio of out-of-the-money PUTS to out-of-the-money CALLS) has picked up considerably – which tells me that the professionals are back to hedging. Tip #2: An elevated SKEW also allows you to sell the May, SPX 3310 PUTS (800 points out-of-the-money) for $18 – and then buy them back in March for a 50% gain.
Ridiculous Rally: To convince me that this is a new Bull Market, I need to see more sectors involved to the upside. In fact, I’m currently seeing a redo of the 2021 behavior where 7 mega-market-cap tech stocks control our market. If/when interest rates move back up – fear will re-enter the marketplace and tech will be sold.
TRADES:
- I SOLD my commodities and precious metals during this big run-up. I will re-load once the interest rate fear / Dollar strength take hold.
- This 2023 market has only moved to the upside, and it’s difficult to make money in a one-sided environment. Buying a rally when it’s already 250 points higher – tells me that I missed the best portion of the rally.
- Tip #3: I prefer short-term treasuries and following J. Powell and his interest rates higher.
Tips:
HODL’s: (Hold On for Dear Life)
- PHYSICAL COMMODITIES = Gold @ $1,878 & Silver @ $22.4/oz.
- AGG – iShares Bond Fund: (AGG = $99.8 / in at $93)
- BIV – Vanguard Bond Fund (BIV = $76.6 / in at $74.5)
- 30, 60, & 90-Day Treasuries @ 4.4 to 5.1%
- **Bitcoin (BTC = $24,025 / in at $4,310)
- **Ethereum (ETH = $1,675 / in at $310)
- DNN – Denison Mines (DNN = $1.37 / in at $1.32)
o BOT shares and SOLD the April $1.50 calls against them
- GME – DRS’d and HODL
- Innerscope (INND = $0.005 / in at $0.0052)
- NFGC – Newfound Gold (NFGC = $3.83 / in at $3.75)
o BOT shares and SOLD the April $5.00 calls against them
- 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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