Show me your work… There’s an aura around people with famous resumes. You know the ones who have worked for brands we’ve heard of and on projects that were successful. We give the benefit of the doubt to someone who: ‘was an app developer at Slack’, or ‘did sales at Google’, or ‘graduated CS at CMU’. Unfortunately, all this generally means is that they were patient, and pretty good at going to meetings. For me it’s: (a) show me your code, (b) show me your difficult presentations, and (c) show me the work you did – when NOBODY asked you to do it. Was that work ever shipped? Of course everybody loves the team player, but I’ve grown to particularly admire those who have mastered their toolkit and know how to ship work.
Learn to appreciate continuous, incremental improvement: Who invented the smartphone? Certainly, Alexander Graham Bell, Antonio Meucci, Thomas Edison, and Tesla had something to do with it. Not to mention the people at: Fairchild, Palm, Cisco, and General Magic. If we waited to share an innovation until it was done, we would end up walking away from arguably its most important component – the incremental inspiration that it gives others along the way. Learn to appreciate the journey.
Predictability vs Chaos: Companies love process ‘n predictability. They smooth out supply chains, improve efficiency, and make marketing more comfortable. Tomorrow becomes yesterday – only a little faster ‘n cheaper. But breakthroughs, creativity, and innovation do NOT come from predictability – but rather from unknown interactions, ideas, and voices. Breakthroughs come from chaos. ALL big ideas come out of left field. And, if you watch left field, they will come out of right field. Chaos creates possibilities, but it is uncomfortable. Chaos requires the right people, concentrating for periods of time – with a sense of urgency and passion. But that does explain why people are most creative: (a) in the shower, (b) exercising, and (c) on the toilet.
The Market:
We are witnessing: Weaponized Finance: Countries have piled unprecedented financial sanctions on Russia, and the Russian fallout has been: a plunging stock market, a crashing currency, and financial panic. I was surprised that:
1. We kicked some Russian banks out of SWIFT – the key global banking network for international transactions. That limited Russia’s ability to trade and convert rubles into other currencies – dramatically limiting imports.
2. Then we froze the Russian Central Bank’s access to its foreign currency held at American banks (approx. $640B in reserves). Normally, Russia’s Central Bank would buy rubles to stabilize and prevent their currency from falling. Unfortunately, it needs foreign currency to do that.
These sanctions have caused:
- A soaring interest rate: To prop up its currency, Russia's Central Bank raised its key interest rate to a record 20%.
- A run on the banks: Russians lined up at banks and ATMs to withdraw cash, desperately trying to spend or convert their savings before they lost even more value.
We are in uncharted territory. The West’s latest sanctions have made it hard for Russia to tap into its rainy-day fund of foreign currency, and to stabilize their own plunging currency. Moscow has spent years trying to ‘sanction-proof’ its economy. These sanctions block Russia from a big part of the global economy, and the damage is showing. All markets are hurting. In the U.S. in February, the S&P 500 declined -3.15%, the Dow dropped -3.57% and the Nasdaq fell -3.43%.
InfoBits:
- How would you like your employees = poached? It seems that in a red-hot job market – employees with ‘underwater’ options are particularly susceptible to being poached.
- General Motors sold its shares in Lordstown Motors… an electric vehicle startup that has struggled to get its first vehicle into production.
- Jack Sweeney, the 19-year-old who tracked Elon Musk’s jet… is now tracking the jets of Russian tycoons.
- BP dumped its 20% stake in a Russia-related energy biz… and Shell ditched its Russian oil ventures, including its stake in the Nord Stream 2 pipeline.
- Uber is selling its $800m stake in Russian ride-hailer Yandex… and Apple has stopped selling all of its products in Russia.
- Nike’s D2C push is about control of its brand image: Nike can’t pitch Jordans as luxury items if they’re available in Foot Locker’s clearance bin.
- Peabody Energy, the US’s largest coal producer… is forming a joint venture to generate solar energy on land near decommissioned coal mines.
- Grocery prices will spike… because Russia is a major supplier of the fertilizer used to produce many snack-aisle staples.
- The midterms are coming… and despite the Republicans redrawing the district maps – it appears that the Democrats are favored.
- Best Buy built a retail empire selling TVs and laptops… but is now pivoting into at-home gyms, e-bikes, and outdoor grills.
- Epic Games is buying Bandcamp… the music platform popular among indie fans. Bandcamp is known for letting artists set the price for their own music – a rarity in the streaming world.
- 2.5m US women (vs 1.8m men) dropped out of the labor force… between Feb. 2020 and Jan. 2021. Women bore the brunt of childcare when schools closed. Women are also over-represented in jobs with some of the highest burnout rates including: healthcare and education.
- MOST of the venture-backed companies that went public last year… have created little value beyond the capital invested in them.
- Indonesia Energy Corp (INDO) surged 240% last week… raising its YTD performance to +1,353%.
- Friday’s Jobs Report showed… that payrolls rose by 678,000 jobs and the unemployment rate fell to 3.8%. The largest gains were in: leisure & hospitality (+179k), professional & business services (+95k), healthcare (+74k), and construction (+60k).
- Tesla got approval to start EV production in Germany. The company’s Gigafactory outside Berlin is now set to start producing vehicles
- Elon Musk came out in favor of increasing oil and gas production… "We need to increase oil & gas output immediately. This would negatively affect Tesla, but sustainable energy solutions simply cannot react instantaneously to make up for Russian oil & gas exports."
Crypto-Bytes:
- Volunteer hackers have been joining Ukraine's fight against Russia… and appeared today to take down websites for the Russian Foreign Ministry, along with the country’s largest stock exchange and a key state-owned bank.
- Ukraine is expanding its cryptocurrency fundraising efforts… by opening a Polkadot (DOT) wallet after Gavin Wood (the network’s founder) promised a $5m donation.
- Russians are running toward crypto... because other currencies aren’t safe since they could get frozen through western sanctions.
- Russians are willing to move their wealth into crypto… but will likely settle into U.S-denominated stablecoins such as: USDT, USDC, DAI, BTC and/or ETH.
- A Ukrainian crypto crowdfunding effort has now reached +$55m.
- Venezuela announced that the country’s minimum wage… would now be 50% pegged to the national petro cryptocurrency (PTR). The new monthly minimum wage of $28 (an 18X increase) will now partially track to the price of the state-backed cryptocurrency.
- Schwab Asset Management is preparing to offer its 33m clients… its first in-house crypto ETF: the “Schwab Crypto Economy”.
- Despite an official request from Ukraine… Coinbase said that it would not ban or suspend Russian users. For ordinary Russians, crypto is a lifeline since their country’s currency has collapsed.
TW3 (That Was - The Week - That Was):
Monday: I have a feeling the Fed is pumping money like crazed lunatics into our markets. Can I trust taking SLB over $39? NVDA over $246 looks interesting, and BHP over $68 looks strong. I’ve been watching HES for 2 weeks – as it was range bound. Today, I forgot about it and it gained $3. Darn.
Tuesday: This week Powell addresses Congress. If he mellows on the rate hikes due to the Ukraine situation – that would give the market a big boost. I imagine today will be just as lumpy and bumpy as the past 5 sessions. News flow will lead every short-term market direction. Watch BHP, BTU, RIG and SLB this morning. If Powell folds on rates, TSLA, GOOGL, SHOP, & UPST will do well.
Wednesday: Today we get Powell at 10am. All eyes are going to be on him to see if he softens his stance of combatting inflation via rate hikes. If Powell stands firm, we will see more red. Watch SWN if it gets over $5.30.
Friday: The Jobs Report said that 678k jobs were created in Feb, and unemployment fell to 3.8%.
AMA (Ask Me Anything…) – an aggregation of e-mail questions
The war in Ukraine has boosted demand for crypto on both sides of the fight – thrusting decentralized finance (DeFi) into a major military conflict.
- Crypto has Helped to crowdfund the resistance… as Ukraine has raised over $55m in crypto to finance its ops.
- Crypto has Helped to blunt the damage of sanctions… since crypto transactions are harder to block. But crypto markets are too small relative to what Russia and/or its oligarchs would need.
Crypto could reshape war, and war could reshape crypto. Digital currencies may change how wars are fought and financed by providing a new way to move money quickly and securely. But those very same decentralized tokens, could cause U.S. lawmakers to accelerate their plans to crackdown and further clarify their crypto rules later this year.
Next Week: Yes, we have a Volatility Situation…
Market Update:
- The S&Ps are still inside the volatility box (between 4211 and 4450) – where open-interest continues to accumulate. There has not been a lot of trading volume as of late – which tells me we’re seeing hedging activity more than any commitment to a direction. Without volume, there can be no capitulation to any of these swings within the volatility box. Of the 3 sectors currently driving the market: big tech, financials and energy – financials have temporarily taken the lead to the downside. And the only reason we aren’t crashing lower, is the break-out that’s occurring to the upside in energy – mostly due to the price of oil.
- The Volatility Index (VIX) is steadily moving higher and remains in backwardation. That means that the market is viewing risk 60 to 90 days out – as being LESS than what it is currently. It’s this volatility backwardation that will continue to keep market indices non-committal. It’s this consistent movement of the VIX to the upside that’s not giving me a warm-n-fuzzy feeling.
- Bonds, the Dollar, and Gold are all moving higher – almost to Armageddon levels. Major players are moving into all 3 as a duck-n-cover type of positioning.
- Commodity Prices are going crazy, and most of them are in backwardation. What is scary and rare is that: commodity prices are flying higher – along with the dollar. This is a triple inflationary whammy.
- Crypto is being watched by every sovereign nation because it has become an issue of national security. Crypto needs to dance very lightly, because if it were to appear as a lifeline to Russia – the national security regulators would be on it like a hawk. Tip #1: I’m BEARISH near-term on crypto.
The inverse Goldilocks == when all Good News is Bad News
- We are in an inverse Goldilocks position – which often takes a pronounced catalyst to change everyone’s view. Traders are not comfortable holding stock, because even if a cease-fire would occur – we would still have commodity prices and inflation completely out of control.
- March 10th is our next CPI (inflation) reading. Estimates are for 7.5% inflation. Tip #2: I believe we will report above 7.5%, and markets will move further downward upon hearing the news.
- Interest rates vs Bonds: Tip #3: I’ll be shorting bonds mid-week as (either way) rates will be moving higher soon.
- Continued geopolitical risk will be bearish for the markets. But, even if the geopolitical risk subsides, it simply brings inflation and high commodity prices center stage. Tip #4: Remember that CASH is a POSITION. Look at earning 8 to 10% on your USDC via Nexo and/or Celsius.
SPX Expected Move (EM):
- Last Week = $126 EM
- Next Week = $146 EM. Tip #5: If we cross thru 4211 on the SPX, we have a long way to fall before the next level of real support = 3500 / 3250.
- Market makers are nervous as next week’s EM is 16% above this week’s – due to increased market volatility. We could see the VIX touch 40 next week. Think GOLD, SILVER, and CASH.
Tips:
HODL’s: (Hold On for Dear Life)
- CASH == Nexo & Celsius == @ 8 to 12% yield
- PHYSICAL == Gold @ $1,975 / oz. & Silver @ $25.89 / oz.
- **BitFarm (BITF = $3.44 / in at $4.12)
o Sold May, Dec ‘22: $5 CCs for income,
- **Bitcoin (BTC = $39,550 / in at $4,310)
- CPG (CPG = $7.48 / in at $6.44)
o Sold Jul $7.50 CCs for income,
- Energy Fuels (UUUU = $8.19 / in at $11.29),
o Sold June $11 CCs for income,
- **Ethereum (ETH = $2,670 / in at $310)
- GME – Holding
- **Grayscale Ethereum (ETHE = $20.36 / in @ $13.44)
- **Grayscale Bitcoin Trust (GBTC = $26.13 / in @ $9.41)
- Hyliion (HYLN = $3.77 / in @ $6.01)
o Sold April $4 CCs for income,
- **Loopring (LRC = $0.77 / in at $1.94)
- **Solana (SOL = $89 / in @ $141)
- Uranium Royalty (UROY = $4.27 / in at $4.41)
o Sold April $5 CCs for income,
- Vertex Energy (VTNR = $6.52 / in @ 4.74)
o Sold April $5 CCs for income.
- **Yearn Finance (YFI = $20,280 / in @ 32,850)
** Denotes a crypto-relationship
Trade of the Week: Buy the April 8th Put Spread in APPLE for < than $1.86 Debit:
- BUY the April 8th, 2022 - $165 APPL Put, and
- SELL the April 8th, 2022 - $160 APPL 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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