Where do markets go from here?
108: Quick round up before the weekend
Happy Friday everyone. Hope the week was tolerable and you were able to make money
Going to keep today’s post short because I had a major personal life update — my wife had our first child last night — so excuse the brevity of my Marijuana overview as I was typing at 2am in the delivery room as I waited. We’ve had some great follow ups with guys with more experience directly in the industry so it’s likely we will do an interview or additional deep dives at some point with their input and expertise.
Markets whipsawed in unprecedented fashion yesterday with a worse than expected CPI print. Truly an unbelievable reversal spurred by President Biden’s questionable comments about the severity of inflation. Sounds like the White House
We have some solid posts lined up for next week.
In case you missed it
If you’re new to Arb Letter we have two types of subs - paid and free. Paid subs get 2-3 deep dives and post per week, free get one high level overview of markets and global news per week. This past week we released:
10 antidotes for the current global crisis
Marijuana Industry Deep Dive
Next week we will do deep dives on Options Trading and post a highly anticipated written interview with digital colleague, a former Army Ranger/bodybuilder, and digital business god - BowTiedOx.
When you’re ready check it out.
Markets
Markets initially plunged yesterday hitting new bear market lows after inflation came in at but soon rebounded aggressively blowing out shorts and squeezing many bearish traders who positioned themselves for more downside movement.
Most large banks reported lower EPS but solid revenue from interest. PNC led the pack outperforming views.
U.S. inflation declined from 8.3% to 8.2% on a yearly basis in September, though this was less of a decline than expectations of 8.1% — which is the primary reason markets immediately dumped.
Bitcoin and other cryptos have been on an insane volatile run this year backed by a long painful decline from the ranges they ripped to during the pandemic and stimulus fueled bull run we saw for many months.
Remember that this isn’t that surprising.
While the drop in prices sucks — we maintain that the solid and USEFUL (key word) projects and assets will reach great levels once the macro and inflation calms the hell down.
Bitcoin, Ethereum, and other key defi assets are currently being explored by large institutions, banks, and hedge funds. These folks love to scoop up assets on the low and build the infrastructure required to control flow, size, and volume once retail and investor interest returns.
Don’t forget that and understand that blockchain, decentralization, and digital money are not going anywhere. They will define the world in the next 20 years.
The economic situation globally and within the United States still remains rather grim. Wall Street is mostly hesitant to call the rally from yesterday anything but another short lived bear rally given the lack of institutional buying and the high amount of bears that still exist.
We think these are excellent levels to start bulking up your DCA (Dollar Cost Average) buys. That doesn’t mean ape in, but it does mean maybe taking a bigger bite of names you’ve been following or ones that you’ve wanted to get into but didn’t because of the money printing/stimulus craze and elevated valuation levels.
Consumer Price Index fell by 10 basis points yesterday
Friday the US Treasury asked major banks if it should buy back US government bonds - (Reuters)
The 10-year Treasury yield surged to a 13-year high above 4% on Thursday
When he was recently asked about meme-stocks, (NFTs), and cryptocurrencies, Ken Griffin of Citadel said that the fall of these speculative assets is healthy for the US economy.
Reported world inflation is now exceeding 10% YoY for first time since records began
Research from Bank of America indicates that the traditional 60/40 portfolio strategy of stocks/bonds respectively, is having the worst year of performance in over 100 years
Beyond Meat (BYND) shares fell almost 7% today after announcements the company plans to cut 19% of its workforce amid a lack of sales. Who knew nobody wanted to eat disgusting fake meat?
TSLA shares are down over 6% on the day
You may not have checked the total in awhile but the S&P500 is down over 25% this year alone
Despite inflation coming in higher than expected yesterday — the print is the third consecutive monthly decline in U.S. inflation, following a 40-year record high reading of 9.1% in June 2022.
There’s been more chatter about CBDCs recently so we will be sure to cover any developments on that front.
Right now the expectation is a 75bps rate hike in November from most traders and experts — at a high level this is bearish but we will have to see how markets react.
We expect no pivot at the moment but the situation is becoming more and more interesting and secretary Janet Yellen mentioned Friday that attention is being paid to the consequences of economic tightening and it’s impact on economies around the world.
On top of that from a technical perspective, put buyers (options betting markets go down) are insanely high and approaching levels not seen since 2008. In my humble opinion that lends itself towards more of a rally than continued dumping.
The final two FOMC meetings of the year where we will gain further clarity into the Fed’s course of action for the next 6 months are in November and December.
Global News
The world continues to wait with wide eyes as the War in Ukraine creates new pockets of tension with neighboring countries and Western powers. OPEC all but flipped the bird to President Biden in an open statement in which they alleged that Biden approached them requesting no cuts until after mid term season.
We have stated several times that we fully expect gas prices to sky rocket in the coming months after mid terms when the US simply cannot rely on the strategic reserves to make up shortages and clam the market.
On another note…
We’d be remiss to not mention the scrutiny vaccines and boosters are coming under in recent weeks despite censorship and a lack of coverage by the mainstream media.
We understand this is a sensitive topic for many, but evidence is mounting that not only did many institutions and agencies misrepresent and lie about the capabilities of the vaccines, but side effects may be more prevalent than originally suggested.
We may do a series of deep dives on this but given the controversy on the topic, will likely wait until more evidence surfaces or public outrage grows.
Also note — legitimate sources reported on the Pfizer info about how they misled on the transmissibility of the virus and only today are the left leaning news outlets including Twitter “fact checking” these updates.
You can’t make it up, but censorship seems to be par for the course these days in all walks of life.
The European Public Prosecutor’s Office (EPPO) confirms that it has an ongoing investigation into the acquisition of COVID-19 vaccines in the European Union. (Disclose TV)
Reports have indicated that President Vladimir is planning a fresh and new full-scale offensive in Ukraine in February or March of 2023 though on the record he said recently Russia has no plans to expand military mobilisation while warning multiple times that a direct clash with NATO would lead to “global catastrophe”.
We expect Putin to take some time to formulate his next decision in Europe and with the exception of continued pestering missile strikes within Ukraine predict he will likely take the Winter off to starve out Europe of electricity and determine what the US and NATO’s next decision is going to be to counter him. The exception to this rule would be an escalatory event.
Two climate change activist freakazoids threw tomato soup at Van Gogh’s original masterpiece, “Sunflowers” recently - both were detained
We covered this earlier this week - but Paypal made a potential move to charge people $2,500 for promoting what the company deems misinformation - it appears they have already begun to shut down some accounts including the highly popular
SpaceX and Elon Musk commented that that they cannot keep paying for Ukraine to continue utilizing Starlink for key communications and power amid reports the US Department of Defense asked fo this — Starlink is now seen as vital to the country's communications infrastructure (BBC)
Satellite imagery reviewed by Norwegian fact-checking outlet Fakstik shows a growing number of nuclear-capable long-range bombers at Russia’s Olenya air base — about 100 miles from the Norwegian and Finnish borders (NY Post)
On a brief side note - there seems to be a rise in pure degenerate behavior in the United States and across the globe.
WaWa, the gas station/snack shop chain announced this week they are halting expansions because of the sheer lunacy that broke out in one of their stores recently (simply google WaWa riot).
There is wayyyy to much fucking around and not enough finding out in my opinion and an absence of consequences for people who are doing objectively doing wrong. The NY Subway had an insane incident of a bunch of fat women dressed in green alien suits who beat and robbed two women recently. We found out today that one of them was released without charges.
As society gets more tense due to haves and have nots, economic conditions, and macro factors like energy shortages, war, and more, we see lots of these people being checked by reality as people become fed up with the lawlessness and disregard for basic human courtesy.
it remains to be seen how the mid terms will shape up but we predict protests, riots, and claims of cheating to be prevalent.
See you guys next week - enjoy your weekend, turn off the non stop negative news, and do something to become healthier, richer or happier.
Andy
Being a dad is the best job in the world, you won't understand until you do it. Congratulations!
Congrats on the kid!