Sir…About Those Bonds…And Twitter Chaos?

Tensions are high. Someone threw a beer can at Ted Cruz yesterday.

Twitter tensions are very high as well. It is very stressful being a Twitter user because you get drawn into the drama from every angle.

I follow investors and venture capitalists so it is impossible to ignore the Twitter saga.

My friend Ted tells me the two people covering it best are Casey Newton and engineer Gergely Orosz.


I have become somewhat of a Bond Boy as you know. Last week I was buying one year T-bills at 4.8 percent and now I have been getting quotes on some corporate bonds. It is all rather sad.

I am trying to get my head clear (higher cash, short term interest bearing assets) and get a handle on what the markets will look like a few years out if rates stay elevated.

Yesterday, this chart got in my head:

I have no idea what happens this time, but I have no interest in learning the ins and outs of the oil sector in my late 50’s.

Of course all this goes back to why as I get older I am indexing more and more of my stock market allocations.

The biggest market news of the year is of course the FED raising rates like gangsters.

Back in January 2020, when rates had not quite gone negative yet around the world and COVID had not shut us down, investor Sam Altman posed this question about interest rates…

What we missed and are about to see is a massive amount of screaming, panic and likely lawsuits filed against your friendly advisors at Schwab and Fidelity for all the 60/40 portfolios and chasing of yield that has investors bludgeoned this year.

I have friends that work at Schwab and I am told the complaints and screaming and crying is off the charts.

There is much pain in this trade.

Momentum Monday – If You Like Industrials…And Hate Clouds…This Market Might Be For You

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Good morning…

It was a nasty week for the software people (like me). It was an OK week if you like industrial stocks.

The FED is in control of the markets right now and they continue to say that more rate increases are coming.

One year T-bill rates are at 4.9 percent so I am hiding out there, but most of the stocks remaining in my personal portfolio are down over 50 percent. I have done a terrible job hiding my remaining stock portfolio from the FED.

As always, Ivanhoff and I tour the markets looking for momentum and you can watch/listen right here. I have embedded it below for people that want to watch on the blog:

Here are Ivanhoff’s thoughts…

Last week, it became clear that the Fed is not pivoting anytime soon. The price action in commodities and the latest payroll report confirmed Fed’s fears. Inflation is sticky and the Fed will have to remain on its current course of raising interest rates and reducing its balance sheet. When the Fed removes liquidity from the market, most stocks are likely to get a lower valuation.

Despite the selloff in the indexes, where tech stocks were hit the hardest, we remain in a market of stocks environment. There are good opportunities on both the long and the short side. Lately, more and better opportunities are on the short side, which is natural – most stocks follow the general direction of the market.

The main indexes continue to make lower highs but they haven’t a new lower low yet. The main factor that saved the market from dropping last Friday was the decline in the US Dollar which has been highly negatively correlated to stocks this year. The message is clear. No rally in equities can sustain without the US Dollar falling. Can the latter really happen when the Fed is a lot more strict than other central banks with it comes to raising interest rates? Probably not, at least not for too long.

There are still quite a few companies left to report earnings. One of the clear trends this earnings season is the decimation of software stocks. In fact, the cloud ETF, WCLD dropped almost 6% on Friday making new 52-week lows. In the meantime, crude oil was up 5%, and industrial metals ETF, XME was up 7%. This is a typical reflation move. We will know more next week, but if the moves from Friday follow through, the market is certainly not worrying about recession just yet.

Don’t forget that midterm elections in the US are on November 8th and stocks tend to be extra volatility around in the days before and after them.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For full disclosures, click here.

Sunday Reads and Listens…Jerry Seinfeld, Apple, Facebook, The Cloud and NFT’s

Good morning.

Ellen bought us tickets to see Jerry Seinfeld last night in Phoenix.

He missed lines, yelled at the audience, and used a lot of old material.

I kid (although I am sure someone on Twitter said this).

He was great. He is still at the top of his game on the stage. It was fun to see a legend.

Jerry makes it seem as if anyone could do comedy, which is of course the gift, because it is impossible to do what Jerry does as he weaves words and tones together with his stories and observations.

As for stuff I read that you might enjoy…

I own some Meta stock and it has been a bloodbath. I thought I was buying a tobacco stock but it tuns out I just bought a terrible technology stock.

The big problem is Mark Zuckerberg getting schooled in how ‘pipes’ work by Apple. The other big problem is the META spending on the METAverse.

Anyhoo, Ben Thompson sheds a little light on the METAmyths floating around.

This podcast from Joe and Tracey at Bloomberg does a great job explaining the ass kicking Apple has delivered to Facebook and the ad industry. Have a listen.

The cloud is where I have most of my small remaining stock portfolio these days and it has been a horrifying place to be. I have been bludgeoned as rates rise and money flows out. Battery is out with their yearly ‘State of the OpenCloud’ so you may enjoy reading it.

Lastly, my new favorite topic is NFT’s. I am building my next company on the blockchain and I have been down the NFT rabbit hole because of the benefits I believe it will offer my users/members/customers. One of those benefits is creator royalties which have come under siege of late. Fred explains it better than I could.

I look at the royalties as a way to help new companies (like the one I am building) that build using NFT’s to profit from ‘churn’ the bane of existence of every web 1 and 2 business.

One thing about building for ‘web 3’ is the art of ‘not rushing’. We just got through a ‘web 2’ era of go fast, break things, winner take all, launch and fix so one of the big mistakes I notice about web 3 companies is the rush to launch and the assumption that web 3 business and growth tactics will be the same as web 1 and 2 tactics.

Maybe one day, but not just yet.

If you have not listened to my podcast with Sami and Maggied discussing this slow move to blockchains and the importance of compute, you should do that. You can listen right here.

Have a great Sunday.

The Fed Hates Me….And Cathie Wood Hates All Of Us

The Fed has raised another 75 basis points.

‘You should not fight the fed’ is really all I can say and do so I keep backtracking on stocks and buying one year t-bills now 4.8 percent.

This morning the market is rallying even though the jobs number is still great. The FED is raising rates to slow down the economy so the rising jobs number is really not what the bulls need.

Very little makes sense to me right now so I will share this chart of the S&P which is troubling. I stretched out the rolling moving averages to show just how rare this type of sell-off is and how technically dangerous a position the markets seem to be in.

What I read here is stocks need to stage a very strong rally right about now for these long term moving averages to turn quickly. The last two times these long term moving averages crossed over, a lot of price pain took place.

On a wierder note…Cathie Wood has teamed up with the Titan app (backed by all kinds of big VC money including A16z) to launch her VC Fund to retail investors with 4 percent annual fees. The same Cathie who was a media darling and now down 75 percent in her flagship fund.

I got the ‘pitch’ which I tweeted about as distasteful and a sign that we can’t bottom in tech stocks with this kind of product being sold to the public. Here is the cold email:

You can read the comments in my Twitter thread here.

I want to be optimistic, but the FED is against me and the bad products keep coming as if there are endless suckers. If there are endless buyers of a Cathie Wood product, the FED has no reason to stop.

Sami Issa and Maggie Love, the Founders of W3BCLOUD Powering Web3 With Compute Infrastructure…May A Thousand Blockchains Bloom

Your Attention Please…

The ‘attention economy‘ has been around now for a few years.  

I really liked this tweet from Amjad Masad that got me thinking about ‘attention’:

We have seen this the most over the years with politicians and fundraising, but now we are starting to see it more with content creators on the web.

I wrote a few weeks ago that Apple killed growth and caused inflation. The inflation I was talking about was customer acquisition which goes to Amjad’s point that it has become much harder to just raise capital and turn it into attention.

The attention/capital equation is something I think about more each day as I invest in early stage companies.

Twitter Should Be Paying Me/Us

Gooood morning…

I have been having a few laughs on Twitter since Elon became ‘Chief Twit’.

I have been ‘Chief Twit’ at Stocktwits for 14 years so I hear his joy and pain.

I really have no idea if Elon can make this more valuable than the $44 billion he paid, but I am very confident if he makes it about free speech the value will continue to degrade.

He takes over a company whose stock was up just 20 percent over the NINE years since it’s IPO. The management and board are obviously to blame, but the real problem is the business model. The advertising business was a complete fail for Twitter and its shareholders.

There are two areas of Twitter that matter…sports and finance. Both have markets around them – gambling and investing – that would drive enough revenue and margins to create a business for Twitter wirth $50 billion plus.

Not only will I not pay $20-$200 to be verified, I won’t pay Twitter for anything that does not drive value for me in sports and finance. I can guarantee if Elon rips up all the data contracts and or waits until they expire and slows down the stream by 60 seconds, billions in data revenue from Bloomberg, Goldman, the financial industry as a whole and sports media etc would flow in the door. No ads, no user experience interruptions and thousands of employee reductions from the ad business would take care of the margins and efficiency.
My friend Ramp Capital long ago write why Twitter should pay us.

This morning Elon has changed his Twitter handle to ‘Twitter Complaint Hotline Operator’. I have been there Elon.

As for Elon getting any source of religion…Matt Levine doubts it. Great read.

Momentum Monday…My Kingdom For a Rally

As a reminder, Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show. All the charts you have been seeing in the videos and will continue to see are from Marketsmith. They are offering my readers a three week trial for $19.95. Click this link if you would like to try it out.

Happy Monday.

As always, Ivanhoff and I tour the markets to look at what is working. You can watch the video here and I have embedded it below:

I have a hunch the combination of time of year and the fact that financials are rising on ok numbers and most of small amd midcap tech trying to stop going down on bad numbers will help the new leadership – drugs, defense, food, large cap biotech ($amgn and $vrtx) get the S&P back to and over the 200-day moving average.

Here is what Ivanhoff has to say:

Amazon, Meta, Google, and Microsoft missed their estimates and/or gave very weak guidance. They sold off and the main indexes didn’t even blink. The Nasdaq 100 and the S&P 500 still finished the week deep in the green. People wanted a “market of stocks” environment. This is what we are having right now. While some of the mega-caps are struggling, there are plenty of stocks from various sectors that are breaking out after earnings and following through. I don’t know if this is just a short squeeze before another rug pull, but last week certainly provided good opportunities to make money on both the long and the short side, if you were nimble enough.

FOMC is this Wednesday. One can make the argument that the market is currently betting that the Fed is going to somehow pivot. Other central banks (ECB, Canada, Australia) have already said that they plan to slow down with their rate increases. The Bank of Japan is already doing more QE. Can the Fed also blink and fold? I would not bet on it, so I would expect further volatility next week. If the market really wants to continue to rally, it doesn’t matter what the Fed is going to do or say next Wednesday. News is always explained based on the price action:

The Fed raises 75bps and stocks go down – “What did you expect? They said they will keep raising”.

The Fed raises 75bps and stocks go up – “The worst has already been priced in”.

See. It is easy to come up with a viable explanation after any price move.

The real question here is how do you make money or at least, how do you make sure that you don’t lose too much of it? For me personally, earnings plays have been working well on the day of earnings and as a follow-through the next day or a few days later. Some recent examples include NFLX, ISRG, SHOP, DXCM, WING, ENPH, etc. The earnings season is still young. There are plenty of companies left to report. Fresh news leads to big short-term moves and sometimes, to big longer-term moves. In the meantime, I am keeping an eye on volatility and correlations. If two of the main three indexes (SPY, QQQ, IWM) close below their 20-day EMA, this bounce can be considered over and I’d focus on the bearish setups.

Here is the Stocktwits momentum 25 lists.

Have a great week.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For full disclosures, click here.

Sunday Reads and Listens – Trend Following, Apple Eats Facebook, China Chip Ban… And Introducing The Lindashians

Happy Sunday and Halloween everyone.

Last night, Ellen and I went to a Halloween party dressed up as Travis Barker and Kourtney Kardashian. We called ourselves the Lindashians…

I am excited for Season 2 of White Lotus tonight.

I spent a lot of time reading and writing on planes this week first at Money 2020 in Vegas and then all the way cross country to Grand Cayman and back. It feels good to catch up a bit.

As for some reads I enjoyed …

Ben Thompson has a deep dive update on the ‘Chips and China‘ and the Biden Chip Ban. I do not own semiconductor stocks (other than owning Apple), but the sector is so important and now the center of our growing ‘war’ with China.

I get invited to ‘family office wealth conferences all the time’ and zi have never attended. This story of fraud by a con man Anthony Ritossa running one of these is a wild read.

Apple has almost too easily mutilated Facebook’s Advertising business because it is big enough to move the needle for Apple. Turner takes a look at ‘Apple’s Sleeping Ad Business

As for a Sunday listen…try this trend following podcast with Meb Faber talking with trend following greats Salem Abraham and Jerry Parker.