RF's Financial News

RF's Financial News

Sunday, March 13, 2022

This Week in Barrons: March 13th, 2022

“Nobody wants to work these days” … Kim Kardashian


‘If I were a rich man, I’d…”

-        Record an album and make it onto Billboard’s Top 40,

-        Make a commercial and play it on network television, 

-        Build a website that attracts prospects, and turns them into customers, and/or

-        Enhance my social media presence so I could attract 1m followers.

In the past it was customary for all of those elements to cost $1m.  Today you can do them all from your bedroom.  Marketeers (most likely) will breathe a sigh of relief without realizing that tech just removed their last excuse for poor: production, promotion, price, and lack of partnerships.  Oh well, I guess it’s back to talent and hard work being your competitive advantage.  Long live Whack-A-Mole – where every over-correction creates a new scarcity.  Except for talent & hard-work – which never seem to go out of style.  To quote Kim Kardashian to women entrepreneurs: “Get your f---ing ass up and work.  It seems like nobody wants to work these days.”


“Let’s wait until the last minute to…”

·       Waiting Until the Last Minute makes sense if things are: far off, unlikely to happen, cheap to fix, and NOT sensitive to advance planning.

·       Planning Ahead makes sense if: your budget-decisionmaker-timeframe are all certain, and the cost will be higher the longer you wait.

FYI == if you’re not going to do the math – then do NOT wait until the last minute.  


The universities that produced the most Forbes listed CEO’s are:

1.   Harvard (Boston, USA),

2.   École Centrale Paris (Châtenay-Malabry, France),

3.   Penn (Univ. of Penna.) (Philadelphia, USA),

4.   Stanford (Stanford, USA),

5.   UCLA (Los Angeles, USA),

6.   Columbia (New York City, USA),

7.   Northwestern (Evanston, USA),

8.   INSEAD Business School (Fontainebleau, France),

9.   Seoul National University (Seoul, South Korea), and

10.   NYU (New York City, USA).



The Market:  



   Per Howard L: “Massive money printing held off a recession in 2020, a recession is coming in 2022.  There has never been a time when oil rose 50%, and we did not get a recession.”  The last time wheat prices reached these levels, a recession followed.   The warning signs of a potential recession are growing louder.  Our FED is set to raise interest rates, and total inflation is going past 15% YoY.  The surge in commodity prices over the past year has been astounding: heating oil +102%, wheat +92%, oil +81%, natural gas +79%, aluminum +75%, corn +38%, cotton +33%, and lumber +31%.  Here comes stagflation – you can smell it coming.


   If I had to give an award to one commodity for getting market attention it would be: NICKEL.  The price of nickel DOUBLED last week, which traders have attributed to a Russia-sized hole in the metals market – along with a short-squeeze.  That price action prompted the world’s largest metals market – the LME (London Metals Exchange) to suspend trading.  The LME really stopped trading because they are owned by the Hong Kong Exchanges – which needed to protect a large Chinese investor who was short nickel.  Tsingshan Holding Co., the large Chinese investor, had a paper loss due to shorts in excess of $8B.  This smells a lot like GameStop all over again.  The LME even cancelled all of the nickel trades which took place over an 8-hour period.  Then the LME took that opportunity to clear their books of “substantial short positions in order to return stability to the market.”  Just like Robinhood, those long nickel were unable to sell, while those shorting the metal were rescued.  LME has deferred physical delivery of metals and has also indicated that “it would temporarily stop publishing official and closing nickel prices.”  Tsingshan is ‘mouthing’ its commitment to not reducing its short position.  It will continue to ‘try to be right’ because of: secured credit promises from banks like JPM and China Construction.  The Chinese government also directed domestic banks to offer Tsingshan a life raft in case of margin calls.  

   And here I thought naked shorting was the only illegal thing JPM was good at.



InfoBits:



-       Visa & Mastercard suspend operations in Russia...   But honestly, how are people going to pay for anything in Russia now?  Russia will turn to China’s UnionPay to issue new cards.


-       Moody’s downgraded Russia’s credit rating to Ca…   its second lowest rating, citing “capital controls that are likely to restrict payments on the country’s foreign debt and lead to default.”


-       Energy Independence…   Europe depends on Russia for 41% of its gas supply. EU renewables cover less than 20% of their energy needs.  Lest we forget, 60% of the globe still runs on fossil fuels.


-       The Great Wait is over…   as Meta, Wells Fargo, and Cisco are reopening their offices this month.  Google’s is starting in-office, 3-days per week, and most companies expect to be back-in-the-saddle by summer.


-       Google is buying cybersecurity firm Mandiant for $5.4B…   which will bolster Google’s cloud computing business.


-       Intel filed paperwork to take its Mobileye self-driving car unit public.   It’s trying to spark investor enthusiasm in its own shares, and capitalize on the growing demand for autonomous driving.


-       Robinhood is planning to roll out a ‘new cash card’.   This ‘free’ card will include rewards for spending, cashback, and the ability to ‘roundup’ payments to the nearest dollar and invest them into the market.


-       Bed Bath & Waaaay Beyond’s shares…   soared on word that GameStop’s Ryan Cohen owned a big stake.  Cohen told BB&B to: hone its focus, pay execs in stock, spin off its Buy Buy Baby biz, and sell to a private-equity buyer. 


-       Disney’s aiming for a cheaper subscription plan Disney-…   or something under $8/month – with commercials. 


-       The War in Ukraine has an estimated 200 ships stuck in the Black Sea.  This is the highest number of stranded cargo ships at sea since WWII and will be the biggest shock to global grain supply since the OPEC oil cuts in 1970.


-       Apple introduced a new entry level phone…   which could make up 10% of Apple’s sales.  By offering more affordable iPhones, Apple can court the 80% of the world’s smartphone users who don’t have one.


-       The Zon’s first stock split in 23 years…   came after its stock price fell 26% from its November high.  So NOW the Zon is worried about the ‘average Joe’ buying their $2,000 stock. It’s just coincidence that Congress accused the Zon of ‘lying under oath’ in their anti-trust investigation.


-       Android users, rejoice…   Google’s Message app can now handle Apple’s iMessage emojis.  But Android texts will still be green on iPhones.


-       Singer-turned-fashion-entrepreneur Rihanna…   is working with banks, including GS and MS, on an IPO that could value her Savage X Fenty lingerie company at $3B.


-       4 of Chobani’s top-level execs are leaving due to its delayed IPO.  Chobani planned to go public last fall for $10B, and then said that it would go to market in January.  When that didn’t happen, it all started to unravel.


-       Medical debt in the United States is out of control.  Despite 90% of Americans having healthcare insurance, we owe $195B in medical debt.  With a recession and inflation, these debts will become impossible to manage.



Crypto-Bytes:



-       Binance, the largest cryptocurrency exchange…   set up its own fiat-to-crypto payments provider, Bifinity, to help businesses become ‘crypto-ready’. Merchants will also be able to use Bifinity's APIs to get their own businesses ready to accept payments in crypto.


-       Coinbase, the cryptocurrency exchange…    has blocked more than 25,000 Russian addresses that it believed to be engaging in illicit activity.


-       Ethereum’s long-awaited, proof-of-stake upgrade is coming this summer.  


-       Ukraine’s Minister of Digital Transformation has…   solicited crypto donations on Twitter, set up multiple wallets accommodating various currencies, and now announced an NFT collection with proceeds supporting the country’s military.


-       U.S. President Joe Biden signed an executive order on cryptocurrencies.  It lays out 6 crypto goals: 1. protect investors; 2. keep markets stable; 3. curb crime; 4. stay globally competitive; 5. boost inclusion; and 6. innovate responsibly.  Biden asked the Fed, Treasury Department, and other agencies to study and report on their crypto plans by year’s end (after mid-term elections). 


-       Binance is planning to buy more companies in non-crypto industries…   to make the crypto industry larger.


-       Aiming to be a major player globally in digital assets…   Dubai’s ruler announced the creation of a regulatory and licensing authority that is nearing the issuance of a regulatory framework for digital assets.


-       Crypto is too big to ignore…   12% (40m) Americans have invested in crypto.  50% of Americans have invested in stocks.  So, 25% of all investors like crypto.


-       The U.K.’s FCA has ordered all crypto ATMs to shut down...   because none of the crypto ATMs are licensed or compliant with money laundering regulations.  They can register with the FCA to reopen.


-       Israel’s central bank has published draft guidelines…   that will open the country’s financial system to crypto companies.  Banks will be required to clarify the source of money used to purchase crypto and track the path of its movement.



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



Monday … The Dow is off over 800, Nasdaq down over 475, and the S&Ps are down over 125 = just on Monday.  I cashed in the APPL short that I recommended on last Sunday’s letter.  Let’s see if energy comes in a bit, and then re-engage. 


Tuesday:  U.S TO BAN RUSSIAN OIL WITHOUT PARTICIPATION OF EUROPEAN ALLIES.  


Wednesday: Oil has pulled off its highs along with wheat, gold, and silver.  Everyone wants to know if we've found a bottom.  I doubt it.  In 2009, trillions of dollars’ worth of natural gas and oil were discovered off the coast of Israel, Syria, and Egypt.  Europe could use that oil and gas because it would make them less dependent upon Russia.  Ukraine has the oil and gas ‘hubs’ where all that fuel comes together and then gets piped out to Europe.  So, maybe energy is at the root of this conflict?


Thursday:  Today the futures are blood red, because of a headline: “We will stop when all our demands are met.”  The CPI (inflation reading) is out and it came in +7.9% YoY, and +.8% MoM.  Including food and energy (+6.4% YoY) that’s a 15% YoY number.  Remember, cash, gold, and silver are positions.  


Friday: NFT’s == per Howard L., since November, the average selling price of an NFT has dropped more than 48%.  Since February, daily trading volumes on OpenSea, the biggest marketplace for NFTs, have plummeted 80%.  The next version of the NFT will be much more interesting, exciting and fun.  Newbies have a more disparate and 6-mile deep range of ideas and use cases for this new-found technology.



AMA (Ask Me Anything…) – an aggregation of e-mail questions 



   All roads lead back to Bitcoin…   We could be entering a dicey situation where hiking of interest rates could actually accelerate us into a recession.  This means our FED either: allows inflation to continue to ravage the financial well-being of hundreds of millions of people, or risks pushing the global financial system into a downward spiral across financial assets.  This is a lose-lose scenario with no clear off-ramp.  Zoltan Pozsar of Credit Suisse published a note last week titled Bretton Woods III:

   “We are witnessing the birth of a new world (monetary) order centered around commodity-based currencies in the East that will likely weaken the Eurodollar system and also contribute to inflationary forces in the West.  Commodities are collateral, and collateral is money.  This crisis is about the rising allure of outside money (commodities) over inside money (fiat currency).  Russia (the aggressor in the geopolitical arena) is being punished by sanctions, and sanctions-driven commodity price moves threaten the financial stability of the West.  The commodities market is much more leveraged today than it was during the 1973 OPEC supply crisis.  Today’s Russian supply crisis is much bigger, more broad-based, and more correlated.  It’s scarier.  Surging and collapsing commodity prices will feed financial instability.  The Fed and other central banks will be able to provide liquidity backstops, but those will be Band-Aid solutions. The true problem here is the Russian vs Non-Russian commodity gap – which only China will be able to close.  This crisis is not like anything we have seen since President Nixon took the U.S. dollar off gold in 1971 – the end of the era of commodity-based money.  When this crisis (and war) is over, currencies could very well be judged by their commodity backing.  From the Bretton Woods era backed by gold bullion, to Bretton Woods II backed by inside money (Treasuries), to Bretton Woods III backed by outside money (gold bullion and other commodities).  After this war is over, “money” will never be the same again…and Bitcoin will probably benefit from all of this.”

   This should start everyone thinking about how much bigger this situation could become.  My guess is that most people will start looking for a safe place to store their wealth, regardless of the outcome.  Somehow, all roads lead back to bitcoin.



Next Week:  Have we Hit Bottom yet?



Volatility did not rise in the midst of last week’s selloff:

-       We’ve been trending lower most of the week, and all the while – volatility was complacent.  When there is this much sell-side activity accompanied by complacency – that tells me that we’re not close to a bottom in the markets. 

-       Markets are tired.  This coming week we have a quadruple ‘witching’ expiration.  That means a large amount of open interest will be coming off the books – opening the door for even more volatility.  

-       Option volumes have subsided because premiums are NOT rising as fast as our markets are falling.  There is real risk to the downside in these markets, and unfortunately options premiums are not feeling that same level of fear.  It will take a considerable break in markets until volatility truly reflects these new risk levels.  Tip #1: Vertical option spreads are the preferred trading vehicle.


Next Week’s FOMC = not enough – too little – too late

-       No one cares about Wednesday’s FED meeting.  Why?  Because their quarter point rate hike is already baked into market pricing.

-       Our FED will tell us that quantitative tightening (QT) is underway.  That means they leapt from QE (Quantitative Easing) to QT within the past 6 months.  

-       Inflation is no longer transitory as the CPI came in at 7.9%.  Most economists see inflation turning into stagflation = recession-inflation.  This is a situation where the inflation rate is high, economic growth slows, and unemployment remains high.  It presents a real dilemma for our FED (and elected officials) since any actions intended to lower inflation will often raise unemployment.


Bond Markets MUST do what our FED will not == jam rates higher.

-       Bonds will fall, and Interest Rates will begin to pop higher.  We are sitting on the highest inflation readings in the last 40 years, and yet our interest rates are at multi-year lows. Tip #2: 10-year and ‘junk’ yields are going to fly higher.

-       10-year rates will move up to 2.5% (from 2%) – and then traders will reassess.

-       Junk Bonds (HYG) – yields need to fly and therefore – ‘look out below’ for junk bonds.  Junk bond yields are below 5% - not even keeping up with inflation.

-       Bonds could move higher, but only if our equity markets fall apart.


Financials (down 8% YTD) - are margin and sanction hits coming?

-       JPM has extended exposure to commodities and geopolitical risk.

-       The financials have both commodity exposure and margin risk coming.  The London Metals Exchange has been closed since last Tuesday – and won’t re-open for a couple more days. 

-       The financials will experience ‘sanction shock’ to the downside.


Mega-Market Caps (down 19% YTD) - the great unwind continues:

-       MSFT (-16% YTD), AAPL (-15% YTD), NFLX (-43% YTD), FB (-44% YTD), TSLA (-33% YTD), and NVDA (-26% YTD).

-       Tip #3: Watch 3 = GOOGL, APPL, and MSFT.  Watch for redemptions inside of mutual funds and 401k’s to begin.  Apple could easily fall another 25% just to get back to where it was a year ago today.  

-       If we see more selling in MSFT and AAPL, then volatility will increase, and that’s when we’ll see more downside pressure in the general markets.


SPX Expected Move:

-       Last Week’s EM == $148

-       Next Week’s EM == $144

-       Therefore, have we seen the bottom?  Absolutely not!



Tips:



HODL’s: (Hold On for Dear Life)


-       CASH == Nexo & Celsius == @ 8 to 12% yield

-       PHYSICAL == Gold @ $1,992 / oz. & Silver @ $26.22 / oz.


-       **BitFarm (BITF = $3.25 / in at $4.12)

o   Sold May, Dec ‘22: $5 CCs for income,

-       **Bitcoin (BTC = $38,700 / in at $4,310)

-       CPG (CPG = $7.21 / in at $6.44)

o   Sold Jul $7.50 CCs for income,

-       Energy Fuels (UUUU = $9.58 / in at $11.29),

o   Sold June $11 CCs for income, 

-       **Ethereum (ETH = $2,550 / in at $310)

-       GME – Holding

-       **Grayscale Ethereum (ETHE = $20.02 / in @ $13.44)

-       **Grayscale Bitcoin Trust (GBTC = $25.51 / in @ $9.41)

-       Hyliion (HYLN = $3.90 / in @ $6.01)

o   Sold April $4 CCs for income,

-       **Solana (SOL = $80 / in @ $141)

-       Uranium Royalty (UROY = $4.57 / in at $4.41)

o   Sold April $5 CCs for income,

-       Vertex Energy (VTNR = $9.24 / in @ 4.74)

o   Sold April $5 CCs for income.


** Denotes a crypto-relationship


Trade of the Week:  Bullish In Out Spread on 14 April 2022 USO:

-       +1 x BUY 14 APR 22 73 CALL,

-       -1 x SELL 14 APR 22 75 CALL, at

-       $0.78 LMT DEBIT == hedge for the gas pumps!


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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Sunday, March 6, 2022

This Week in Barrons: March 6th, 2022


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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