“I want to make a difference…” Do you really? Because there are 3 levels of effort: insufficient, sufficient, and going above-and-beyond. (a) Insufficient effort creates work that’s completely wasted. (b) Sufficient effort captures the most value with the least amount of work. It uses components that barely outlast the warranty. And then there is (c) going above-and-beyond. This is where you find: elegance in design, attention to detail, and follow-through in customer service. Going above-and-beyond takes time, but is our best chance to do work that truly matters. That’s where we make a difference.
“I’m bored – play something I know.” Over and over again, this was audience’s initial reaction to Led Zepplin’s: Stairway to Heaven. That’s right, potentially the greatest rock song of all time – constantly bombed. But audiences never want something new. Every new idea bombs, because it’s unfamiliar and not-wanted – until it is. To quote Steve Jobs: "People don't know what they want" - until they do.
“Just so you know … this may not work.” I’ve said that a lot in my life. The normal path is to: take good notes, make small changes, and incrementally move down a very predictable path – testing and measuring along the way. The other path is: doing things that may not work, going past the edges, and trying to figure out why things are the way they are. You fail a lot. My world is a test kitchen, not a Michelin restaurant. When stuff hits the fan, 99% of the world takes the ‘normal’ path. Per SG: ‘Real innovation comes from the science of: This may not work.’
The Market:
“Knock knock – Who’s there? – Recession – Recession whaaat? After all, rising employment and wage growth indicate that the U.S. is recovering from the worst of the pandemic – Yes? Despite the good data, many academics think that the U.S. is in a recession. After all, the average Nasdaq stock fell 30% this year, and over 20% of Nasdaq stocks took a 50% haircut. Consumer confidence is down month-over-month, year-over-year, and has declined for 3 consecutive months. According to researchers, “The continued downward movement in consumer expectations suggests the U.S. economy is entering a recession.”
“Power to the People:” When is the last time the worker had this much leverage? If workers hold all the cards, what will that mean to corporate earnings and to markets? Despite technological efficiency, when you combine labor and supply shortages with global decentralization – there’s a huge shift coming. Watch for an event that rocks the corporate hierarchy. Stock markets never like vertical change while at all-time-highs.
“What if: earnings growth caught up to these high valuations?” Maybe stocks aren’t as expensive as we all thought. Crypto is on fire, and becoming more accepted every week. Bitcoin just passed $60k - again. Ethereum is on its way to $10k – now that it’s cleared $4k. No one really knows how to value them, and that’s a good quality to have when there’s plenty of risk appetite and liquidity. As a result, most crypto-related stocks such as: RIOT, COIN, HUT, BLOK, and MSTR are rising to the occasion. Tech stocks report earnings over the next 3 weeks, and if they don’t disappoint – expect to see new all-time highs in the indexes.
InfoBits:
- Chinese Q3 GDP missed the target… due to constant rolling power crisis, supply chain disruptions, and their tech sector crackdown.
- Companies like Coinbase, Lyft and Stripe… are offering 1-year vesting equity grants to new hires instead of the traditional 4-years.
- Squid Game will generate almost $1B in “impact value” for Netflix… but Squid Game isn’t just good, it’s also cost-efficient. Each episode cost $2.4m to make, and the entire series cost a total of $21.4m. Over 1.4B hours of Squid Game have been watched worldwide.
- Used cars keep going up in price… with the average transaction price for a 7+ year-old vehicle being 38% higher YoY.
- Supply-chain shortages are causing so many delivery delays… that gift cards are expected to make up 40% of total gift purchases this holiday season.
- JNJ shifted their cancer-related baby powder lawsuits… into a new business entity, which then declared bankruptcy. The move is called the: “Texas two-step.”
- College enrollments plunged in 2020… to their lowest level since 2007. School enrollments dropped by 2.9m from 2019 to 2020.
- Domino’s is the world’s largest pizza company… but its U.S. same-store sales fell for the first time in a decade. Labor and driver shortages forced Dom's to reduce hours. Dom’s competition == Grubhub, DoorDash, and Uber Eats.
- Dutch Bros (BROS) is up 99%... since going public one month ago.
- Netflix is also adding… games, podcasts, and merch to its branding. In September, they acquired their first game studio = Night School Studio. They also rolled out a merch collaboration with Walmart along with a Netflix store.
- Paul Tudor Jones says… inflation could be worse than feared, and it is the biggest threat to markets and society.
- PayPal is exploring a $45B acquisition of Pinterest… in what could be the biggest tech deal of the year. It would move the payments company closer to becoming a “super app.”
- Tesla reported record profits for the third consecutive quarter… after delivering 73% more vehicles YoY. Tesla even saw an uptick in sales of vehicles made in China – now home to Tesla’s largest auto plant.
- It’s getting Messi: A breakup between Electronic Arts (EA) and FIFA could be in the works. They have released a new FIFA game together for 28 years, but after next year FIFA would like double the yearly licensing fee, and the freedom to roam into gaming tourneys and NFTs.
- WeWork shares jumped on their 1st day of trading… 2 years after their botched IPO.
- Unemployment benefit applications declined last week… to pre-pandemic levels. Maybe our FED will raise rates sooner in 2022 to cool inflation.
- The volatility index closed… at its lowest level since Feb. 2020.
- Apple's increased privacy policy removed $142B… from Snap, Facebook, and other online ad giants.
- A new whistleblower has emerged from Facebook… with allegations that echo many of those made by Frances Haugen.
- Google takes between 22% and 42% of all ad spending… as a fee for the ability to use its systems.
Crypto-Bytes:
- ProShares launched a Bitcoin futures ETF… ticker == BITO. Because it tracks futures, its performance could differ slightly from BTC.
- Grayscale has plans to convert its BTC trust… the world’s largest investible crypto vehicle, into a spot-based ETF.
- What everyone ultimately wants… are funds that invest directly in crypto. So far, the SEC has shot all of them down.
- The U.S. Treasury thinks that cryptocurrencies… are undermining the effectiveness of U.S. sanctions.
- Australia has the third highest rate of crypto adoption in the world… and is more crypto-bullish than most other countries.
- DraftKings steps further into crypto… with their Tom Brady Autograph NFT release. They’re going all-in with an Ethereum partnership – making it one of the blockchain’s largest governors.
- France’s central bank has executed a series of bond transactions… leveraging the blockchain and using its own digital currency.
- Multicoin Capital is raising $250m for its 3rd crypto-focused venture fund. This comes less than 6 months after they raised $100m for their 2nd crypto-focused venture fund.
- Investor Peter Thiel praised cryptocurrencies… and slammed central banks. “I feel like I’ve been underinvested in crypto. The secret was already known by everyone. I think the answer is still to go long Bitcoin.”
- Bitcoin ETF (BITO) hit $1.1B in assets under management… after its 2nd day of trading. That means it’s the fastest ETF to get to $1B – breaking an 18-year-old record set previously by the first gold ETF.
- Walmart announced plans to allow customers to buy Bitcoin… from Coinstar kiosks in some of its U.S. stores.
- The Houston Firefighters Pension Fund… is officially the first pension fund in the U.S. to purchase, and directly hold, Bitcoin in their portfolio.
Last Week:
Monday: Is the market still heading higher, or do we do a bit of backfilling here? All the indexes got up and over their 50-day moving averages, so it won't be unusual for them to slide back a bit and "test" those levels. Goldman is pushing the idea that we're about to see a monster run into year end. The idea is that there's umpteen billions in buybacks slated to be executed in 2021, and November 1st opens the window for the bulk of them to do it. So, the question has to be are they trying to suck everyone in with this bullish talk, while they (Goldman) sell into the FED taper? Remember, NOTHING is normal. I’m watching FCEL, and it looks to be ready for a generous move. BEKE has flirted with $22.20 for a couple months now. I like FCEL > $8.75 and BEKE > $22.21.
Tuesday: My one stock to watch this morning is NLS. It has spent October bottoming, and I think it could make a move higher. CEI also looks like it may have some fun over $1.62, and then again over $1.77.
Wednesday: Maybe today becomes a pause day. We've certainly seen some impressive gains over the past 4 days, and maybe it’s time to digest. I’m watching WISH that looks to have bottomed. I mentioned BEKE yesterday, and it’s popping higher. If markets hold, some charts that look good are: VNET, IQ, BZUN and QFIN.
Thursday: WISH put in a nice day yesterday, and I’ll be interested again if it gets over its 50-day at $6.32. This just in: “Digital World Acquisition Corp. (DWAC) jumped 44% after announcing a plan to merge with Trump Media Technology Group (TMTG). They will launch a social-media platform backed by former President Trump. The transaction values TMTG at $875m. Truth Social (their brand) is aiming for a beta launch in November, and planning to launch "non-woke" entertainment programming, and news after that.” So, Trump is launching his own social media platform. This could be huge. After all, the right leaning Trumpians will flock there, but so will all of the leftist haters – just to argue.
TW3 (That Was - The Week - That Was):
The first bitcoin-linked ETF made its debut this week. The much-anticipated ETF from ProShares (BITO) tracks the bitcoin futures market. Bitcoin-specific ETFs give investors a new way to invest in the crypto market. BTC futures reduce risk, provide investors with greater exposure, and offer some tax benefits. BITO will track bitcoin futures traded on the Chicago Mercantile Exchange. The futures ETF strategy emerged as an olive branch because the SEC isn’t quite ready for a regular crypto ETF.
Just when you thought you saw it all, in SPAC acquisitions – the Trump Media & Technology Group (TMTG) has decided to merge with Digital World Acquisition Corp. (DWAC). The DWAC stock exploded going from $10 to over $45 in its first day. Trading was halted several times due to volatility – very much like a GameStop-level price explosion. The SPAC’s sponsors commented: “Trump Media & Technology Group’s growth plans initially will be funded by DWAC’s cash in trust of $293m.” On Friday, Trump Media’s (DWAC’s) price per share was $94.20 and > $5B valuation. Truth Social (the brand) intends on challenging Facebook, Twitter, Amazon, and Netflix.
Next Week: Good Earnings… Going Bad?
Market Update:
- It was a rough start to tech earnings. SNAP’s ad revenue was down substantially due to Apple’s changes, and that pushed big tech lower. SNAP dropped from $75 to $55, and this trickled down to a 5% drop in FB, a 3% drop in GOOGL along with a lower INTC and TWTR.
- Inflation is causing retail to warn that earnings will miss the mark. We heard it this week from Beyond Meat (BYND). Watch for additional retail warnings due to stockouts and inflationary pressures taking their toll.
- Are markets beginning to accept higher rates? The 10-year Treasury (TNX) is still exploding higher. At some point, higher rates are going to collapse big tech. In March, a rate of 1.765% collapsed tech fairly dramatically. We’re currently at 1.65% and continuing to rise. Watch the dollar ($DXY) as it’s another sign of increased risk and higher rates – if it reverses course and moves higher.
Volatility Contango:
- Watch out for Volatility. Currently the VIX is at 15+, but the Volatility futures (25 days out) are at 19+. That’s would be a 30% increase in volatility over the next 4 weeks. Those two numbers (15+ and the 19+) will need to converge, and if 15 moves to 19 – we will see a massive downturn in technology.
- The market is telling us to BUY short-term volatility (because it’s cheap), and sell long-term volatility because it’s expensive. Tip #1: In the December VIX: SELL the $18 / $14 Put Spread, and BUY the $25 / $35 Call spread – OR – Tip #2: just by a November’ish VIX Call spread as a hedge.
- Tip #3: In the January SPY: Sell the $355 to $350 Put Spread (100 points / 3 standard deviations out of the money == virtually no risk) for real money.
SPX Expected Move (EM):
- Last week’s EM was $61.50, and we moved $64. Even though we moved more than expected, next week’s EM contracted to $54 (go figure). Either way: Do NOT SELL short-term volatility. In the current environment, you need to BUY short-term VOL, and SELL long-term VOL.
Tips:
HODL’s: (Hold On for Dear Life)
- Algorand (ALGO = $1.89 / in at $1.75)
- AMC – Holding
- Cosmos (ATOM = $35.75 / in at $33.18)
- Bitcoin (BTC = $61,300 / in at $4,310)
- Englobal (ENG = $2.26)
o Sold Nov. & Dec. $2 and $2.50 Calls for income,
- Ethereum (ETH = $4,100 / in at $310)
- Express (EXPR = $4.14)
o Sold Oct $5’s and Nov $5’s
- GME – Holding
- Grayscale Ethereum (ETHE = $37.52 / in @ $13.44)
- Grayscale Bitcoin Trust (GBTC = $48.75 / in @ $9.41)
- Hyliion (HYLN = $7.68 / in @ $0.32)
o Sold Nov. $9 CCs for income,
- Infinity Pharma (INFI = $2.59)
o Sold Oct $3 and Nov $3 Calls for income,
- Solana (SOL = $196 / in @ $141)
- Transocean (RIG = $3.90)
o Sold Nov. $4 Calls for income,
- Uranium Royalty (UROY = $5.60)
o Sold Nov and Jan $5 Calls for income,
- Exela Tech (XELA = $1.55)
o Sold Oct $2 and Nov $2 Calls for income,
- Yamana Gold (AUY = $4.31 / in at $4.53)
o Waiting to sell CCs for income.
Thoughts:
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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