RF's Financial News

RF's Financial News

Sunday, January 14, 2024

This Week in Barrons: January 14th, 2024


Things they don’t tell you in Entrepreneurship class…

-       It’s much easier to be wrong than right.

-       You can’t relax unless you’re asleep.

-       You always wake up wondering if you’re doing the right thing.

-       You only remember your losses.


In my wife’s garden… per Seth G:

-       My wife doesn’t grow plants – the plants grow themselves.  

-       My wife creates the conditions for the plants to grow that include: soil, water, light, weeds, etc.

-       But all of that doesn’t matter, if the plants don’t do their part.

-       Leadership is creating the conditions for others to succeed – and yes – that’s the hardest part!


Opportunity is where: ‘Want’ but ‘Can’t Afford’ intersect:

-       Everyone wants to be connected, but nobody wants to connect – for free.

-       Everyone wants to be respected, but nobody wants to earn their respect.

-       Everyone wants to be trusted, but nobody wants to trust – for free.

-       Opportunities remain in connection, respect, and trust.



The Market:


“I think the biggest long-term impact of a spot bitcoin ETF…  is that people who invest in bitcoin are no longer seen as being unusual.  The second impact is that it opens up bitcoin to trillions of dollars of potential investment from institutions, family offices, pension plans, and financial advisors.  And to answer the question: 

-       When will bitcoin go mainstream?  

-       The answer is: Right about now!”  … Matt Hougan CIO of Bitwise.


The spot Bitcoin ETFs will… Per Anthony P:

-       Receive at least $5B in AUM within their first month of trading,

-       Be promoted with over $100m in ads, and +1 Super Bowl commercial,

-       Gain an allocation of ~3% of all client assets,

-       Enhance the speculation around an Ethereum spot ETF,

-       Reduce Bitcoin’s volatility over the next 3 years, and 

-       Soften Bitcoin’s annual growth rate to 20% per yr. within 5 years.



InfoBits:


-       Jobs-B-Gone (due to AI or Mis-Management):

o   Duolingo cut 10% of its contractor workforce,

o   Unity Software (videogames) is cutting 1,800 jobs,

o   Pitch (collaborative presentation software) is sacking its CEO and laying off two-thirds of the company,

o   Flexe (a warehouse and logistics company valued at $1B) is laying off ~40% of its employees,

o   Amazon’s Twitch is laying off 35% of its staff,

o   The NFL is offering buyouts to ~20% of its employees,

o   Audacity filed for bankruptcy protection citing declining ad sales,

o   Pixar is laying off 20%, and

o   Discord is laying off 17% of its workforce.


-       Companies-B-Gone:

o   J & J is acquiring cancer drug developer Ambrx Biopharma for $2B,

o   Merck is buying Harpoon Therapeutics for ~$700m, and

o   Boston Scientific bought medical device maker Axonics for $3.7B.


-       Revenue-B-Gone:

o   CNBC is selling investing courses for $99/100 minutes, and

o   X / Twitter will launch P2P payments because nobody’s buyin’ their ads.


-       Streaming has become the old cable.  


-       Waymo will begin testing its driverless vehicles…  on higher speed Phoenix freeways – using their own employees as guinea-pigs.


-       ~20% of all major city office space is vacant…  the most in +40 yrs.


-       January Consumer confidence…  remained in negative territory for the 29th straight month. 


-       After a 3-year hiatus…  ~40% of student loans are not being repaid.  Uncle Joe, free money comes with consequences.


-       Hertz is replacing 30,000 of their 100,000 Tesla’s…  with gas guzzlers.


-       Credit card delinquency is at its highest level in over a decade.



Crypto-Bytes:


-       Ahead of the spot bitcoin ETF decision…  the SEC Chair issued a word of caution for crypto investors due to the asset’s risk, volatility, and fraud.


-       On Wednesday, the SEC officially approved all Spot Bitcoin ETFs to: VanEck,Bitwise, FidelityFranklin, Valkyrie, Hashdex, Ark Invest, Grayscale, BlackRock, WisdomTree, and Invesco Galaxy.


-       ETH is catching a bid after the BTC ETFs were approved…  because ETH investors can be heard saying: ‘We’re next!’


-       Spot bitcoin ETFs were not approved by all brokerages…  and conservative houses like Morgan Stanley and Merrill may take months to approve them. 


-       Circlethe startup behind the USDC stablecoin…  has confidentially filed to go public.  USDC is the second largest stablecoin after Tether. 



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


Monday:  Boeing is down hard (and should be) after one of its planes fell apart in the air.  Energy is down, as the Saudi's have cut oil prices.  BLNK looks good over $3.19, SQ over $68.95, MU over $85, AMZN over $138, AMAT over $153, and AAPL over $184 – all look good.  This feels like a sticky bounce, but the volumes are meh thus far.


Thursday:  The CPI expectation was for +0.2%, but it came in hot at: +0.3%.  The YoY came in at +3.4% which is also a bit hotter than expected.  I honestly thought our gov’t would paint-this-pig’s numbers better than they did.



AMA (Ask Me Anything…)


   Crypto is alive and well – but some financial advisors hold a grudge…  Within hours of the ETFs trading, reports came in that various financial organizations were not going to offer the spot bitcoin ETFs to their clients.  Vanguard put out a statement saying: “The spot Bitcoin ETFs will not be available for purchase on the Vanguard platform.  We also have no plans to offer Vanguard Bitcoin ETFs or other crypto-related products.  These products do not align themselves with our other building blocks for a well-balanced, long-term investment portfolio.”  [Laughter] Vanguard, I can only imagine the arrogance it takes to prevent your clients from accessing the best performing asset class over the last 15 years – AND to continue promoting: (a) penny stocks, (b) leveraged inverse ETFs, (c) and fiat currencies that have actively destroyed your clients’ wealth for decades.  



Next Week:  Volatility is Knocking


Our FED’s rate cut probabilities…  are still showing that in March – we have an 80% chance of cutting rates from 5.25% to 5% - even though the inflation numbers came in hot this past week.  And to add further insult to injury, markets believe that our FED will cut rates further to 4.75% at their May meeting.  Tip #1: If any of our FED governors next week talk about ‘higher rates for longer’ or a ‘slowing of the rate cuts’, then volatility should return to our markets with a vengeance.  


Big Banks are producing questionable earnings…  with headlines like: “Citigroup is cutting 20,000 jobs as it reports its worst quarter in 15 years.”  Tip #2: There is a short setting up in the XLF – with both a looming FED rate cut and bad earnings hitting the immediate tape.


Could a dose of reality be coming to our markets?  I don’t think that earnings will be the trigger to reality hitting our marketplace, but rather believe that either consumer sentiment or FED speak will be the upcoming catalyst.  


SPX Expected Move (EM):

-       Last Week = $61 (5-day EM) … and we moved outside the upper edge of the EM due to out-sized call buying early in the week.

-       Next Week = $54 (4-day EM) 



TIPS:


   One area that's perked up nicely…   (and isn't a tech stock) is the uranium space.  Uranium prices have risen through 2023, and markets are realizing that demand will soon outstrip supply.  Watch UEC and the Sprout uranium fund.  And while this rally can go higher, right now it feels like it's running on fumes.  Don't bet the ranch on a lot more gains from here – in the short term. 


HODL’s: (Hold On for Dear Life)

-       13-Week Treasuries @ 5.2%

-       PHYSICAL COMMODITIES = Gold @ $2050/oz. & Silver @ $23.3/oz.

-       **Bitcoin (BTC = $43,400 / in at $4,310)                 

-       **Ethereum (ETH = $2,580 / in at $310)                  

-       **MARA – Marathon Digital = ($18.9 / in at $12) 

o   Sold the Feb. & March $32 Covered Calls

-       **ChainLink (LINK = $14.14 / in at $7.78)               

-       **RIOT – Riot Platforms = ($11.8 / in at $12.5)       

o   Sold the Feb. & March $22 Covered Calls

-       **COIN – Coinbase = ($132 / in at $125)                 

-       UEC – Uranium Energy Corp ($7.8 / in at $4.8)      

-       AAPL – Apple = ($185.3 / in at $181)                      


** Crypto-Currency aware


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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