This Week inward Barrons: Cinco de Mayo, 2019:
“No amount of money ever bought i minute of time.” … Howard Stark (Avengers Endgame)
- Electric Cars: Electric cars are gaining traction. If you're thinking of buying an expensive gasoline automobile – lease it because the value is nearly to drop. People say that they don't desire driverless cars – but they said that nearly laptops, cellphones, as well as streaming services equally well.
- 5G Smartphones: People volition purchase the side past times side circular of smartphones when in that location is 5G service everywhere. The smartphone is similar a Swiss Army knife. You create value via software – non past times constantly buying to a greater extent than of them.
- Renewable Energy: The U.S. is coming upwards on a milestone. For the 1sttime, the renewable unloosen energy sector (hydro, air current as well as solar) is generating to a greater extent than electrical powerfulness than coal. This is because investments receive got made renewable unloosen energy technologies cheaper, as well as there's to a greater extent than demand for cleaner unloosen energy because of concerns nearly climate change.
- Presentations 102: New information is telling us that the LESS y'all say – the to a greater extent than valuable your presentation becomes. The next ‘new’ format forces y'all to speak to a greater extent than concisely as well as clearly past times allowing precisely xx slides as well as precisely xx seconds to introduce each slide. This technique forces a novel agency of thinking that eliminates the excess as well as leads to shorter, to a greater extent than creative as well as highly polished presentations. The five Rules are:
1. 20 slides: For each slide, inquire yourself, “What volition the audience larn from this slide? What questions mightiness they ask? Is this relevant to my principal objective?” If y'all can’t answer those questions easily & correctly – don’t include it.
2. 20 seconds per slide: You don’t receive got to speak for all xx seconds. To cutting downwardly the script, endeavour describing your slide inward a unmarried judgement – as well as so inward seven words.
3. Exchange Words for Visual: People’s brains think a total of: seven numbers, 12 phrases as well as 1,200 pictures. Choose words that evoke images. When your audience SEES what you’re maxim – y'all volition appear absolutely brilliant.
4. Forget Bullet Points: Limit yourself to seven words per slide. Give every prototype or graphic a discernible “holy mackerel”point that’s piece of cake to digest. Use words as well as visuals that complement (not mirror) each other.
5. Practice, Practice & Practice: Practice getting to your betoken inward xx seconds. Practice inward front end of ‘friends as well as family’ as well as inquire them what they learned.
- “Everyone fails at who they’re supposed to be. The mensurate of a individual is how good they succeed at existence who they are.” … Thor (Avengers Endgame)
The Market:
“Some people displace on… Not us.” … Captain America (Avengers Endgame)
Last week, fifty-fifty the FED reminded us that they are NOT moving on. They announced no charge per unit of measurement cut, no charge per unit of measurement hike, but rather lowered the involvement charge per unit of measurement they pay on reserves. [FYI: The FED pays banks to maintain reserves with them. But because banks are keeping many of their reserves with the FED, they're non lending equally much equally they should. So on Wednesday, the FED lowered the involvement charge per unit of measurement they are paying on those reserves – inward hopes that it volition strength banks to lend-out to a greater extent than of those reserves at higher rates.] The FED also talked nearly a dip inward inflation that mightiness live on “transitory” (temporary) – as well as so all heck broke loose. Why? The marketplace was looking for the FED to beak nearly reduced inflation leading to a charge per unit of measurement cut. By suggesting that the interruption inward inflation was temporary, that took a charge per unit of measurement cutting off the table.
The marketplace is flirting with all-time highs. It's struggling with its ain manipulative tactics. If y'all were going past times truthful fundamentals, GAAP accounting, as well as the agency nosotros used to mensurate unemployment as well as inflation – this marketplace would receive got the DOW at 12,000 non 26,000. So there’s a existent state of war going on, as well as our banksters demand to select betwixt ii alternatives: (1) maintain printing as well as allowing inverted yield curves as well as lower involvement rates, or (2) allow things start to normalize as well as picket the marketplace collapse. For the past times 10 years, our FED has chosen Door #1. Powell said in conclusion calendar week that “some equities” appear to live on overvalued. Powell, are y'all kidding me? Companies receive got used so much fuzzy math that their remainder sheets human face similar Chia pets. Corporations receive got gotten quite accustomed to: pro-forma accounting, null draw of piece of work concern expansion, as well as stock buybacks for their execs. If that deportment stops – this marketplace crashes. The FED knows that in that location is no agency out – it’s impress or crash.
InfoBits:
- The Unhappy Meal: Burger King finally decided to answer McDonald’s “Happy Meals” with “Unhappy Meals” – because “No i is happy ALL the time.” Yes – this is real, as well as NO – I’m non kidding. While it is an maiden to promote mental wellness – they’re also trying to sell to a greater extent than burgers. So companies are forthwith using a generation’s growing depression to sell materials – as well as it’s working.
- Berkshire Hathaway – Pt1: “I’ve been an idiot for non buying,”is what Warren Buffet told CNBC inward regards to Amazon – when it was revealed that Berkshire Hathaway forthwith has a stake inward the meshwork giant.
- Serial Convertible Bonds: is what Tesla offered this calendar week to investors. PH reminded me that of the next previous series convertible bond issuers: SunEdison*, Chesapeake Energy, Molycorp*, Lehman Brothers*, iStar Financial*, Calpine*, Fannie & Freddie MAC*, Enron*, Tyco*, Adelphia*, Six Flags*, eToys*, Avaya*, as well as Worldcom* – ALL of the ones marked with an * went bankrupt.
- Loyalty programs acquire VIP treatment: Starbucks rose on discussion that membership inward its rewards program topped 17m. Domino’s sales rose 4% equally its calorie society surpassed 20m members. And Chipotle boasted that its loyalty computer program already has 3M burrito faithful.
- Beyond Markets: Beyond Meat (the maker of plant-based meat substitutes) IPOd in conclusion week, as well as had the best-performing IPO inward almost xx years. With Friday’s unopen of over $70, they’ve almost tripled their IPO toll of $25.
- Worst calendar week of the twelvemonth for the Pig: Last calendar week the Shanghai stock index dropped 6% fifty-fifty though the country's gross domestic product growth vanquish economists' expectations. One large worry: their economical growth is increasingly driven past times government-supported existent estate development. That can't travel on forever.
- WeWork is going public. The We Company (formerly known equally WeWork) has filed for an IPO. They were most lately valued at $47B. They doubled their revenue in conclusion year, but also doubled their losses.
- Another EV study: As PKD correctly pointed out, the latest Volkswagen (VW) study compares a diesel-powered Golf TDI with an all-electric e-Golf. They establish that the Golf TDI diesel fuel emitted 140g CO2/km over its entire life cycle, spell the e-Golf released only 119g CO2/km. VW came upwards with these results past times considering: (a) their e-Golf would work a mixture of powerfulness coming from natural resources along with renewable unloosen energy sources. And (b) they considered their battery life to non halt afterwards 150,000km but rather live on available all the agency until the halt of the battery warranty as well as so live on available for recycling.
- Berkshire Hathaway Pt2: Charlie Munger (vice chairman of Berkshire Hathaway) lately told their 2019 shareholders meeting: “I was lately invited to a happy hr past times Bitcoin people. I e'er wanted to know what they did inward their happy hours. I establish out that they celebrate the life as well as travel of Judas Iscariot – y'all know the apostle that betrayed Jesus.” In the past times Munger has claimed that Bitcoin as well as cryptocurrencies are: “anti-social, stupid, as well as immoral.” And most lately claimed: “Trading Bitcoin is similar dementia. It’s similar somebody else is trading turds as well as y'all create upwards one's brain that y'all can’t live on left out.” Mr. Munger – are y'all maxim that an investment that has gone from $1 to $6,000 inward five years is a bad investment? If so, has Berkshire produced similar returns? I didn’t think so.
Crypto-Bytes:
- BTC vs Gold: Gold is on the defensive, as well as downwardly 6% since mid-February. Bitcoin (on the other hand) is on the rise. The 90-day correlation coefficient betwixt Bitcoin as well as gilt is currently at -0.71 – its lowest grade since March 20. Of course, correlation is non causation, yet gold’s near-term bearish outlook may live on a sign of positive things to come upwards for Bitcoin’s value.
- The Price is Right: Bitcoin has hitting fresh almost 6-month highs – currently higher upwards $5,700. As a result, a rally to $6,000 could live on seen inward the side past times side week. Bitcoin volition encounter resistance at $5,780 as well as $5,890 equally it heads into that level.
- Squares’ makin’ $’s with Bitcoin: The payments companionship Square has disclosed $65.5m inward bitcoin revenue came inward during Q1 of 2019. Bitcoin’s costs are listed at $64.7m – for a bitcoin turn a profit of roughly $832k. Those figures are all-time highs for Square.
- A Central Bank 1st: Those words don’t commonly travel together. The Central Banks of Canada as well as Singapore receive got concluded a case of cross-border payments using blockchain technology scientific discipline as well as key depository fiscal establishment digital currencies. The Bank of Canada (BoC) as well as the Monetary Authority of Singapore (MAS) jointly said that the successful case – the commencement of its variety betwixt ii key banks – showed “great potential to increment efficiencies as well as trim risks for cross-border payments.”
- Crypto is ‘Exploding’: The U.S. Commodity Futures Trading Commission (CFTC) expects to consider to a greater extent than companies apply to travel federally-regulated clearinghouses equally a consequence of growing involvement inward cryptocurrencies. Chairman J. Christopher Giancarlo, testifying on “the province of the CFTC”before the U.S. House Agriculture Committee on Wednesday, said, “The Commission anticipates novel applications for clearinghouse registration resulting from the explosion of involvement inward cryptocurrencies.”
- Here they come upwards – yeah! U.S. stock broker E*Trade is laid to launch Bitcoin as well as Ether Trading. They volition initially add together trading back upwards for Bitcoin (BTC) as well as ether (ETH), with to a greater extent than cryptocurrencies existence added inward the future. And in conclusion week, TD Ameritrade, was testing Bitcoin (BTC) as well as Litecoin (LTC) trading on its platform.
- 11% of Americans ain Bitcoin: Analysts await the Crypto markets to maintain surging despite Bitcoin’s electrical flow stability. Bitcoin’s transaction book is showing existent signs of a bull market as the quarterly tendency reverses, as well as to a greater extent than people travel comfortable with the digital assets.
Last Week:
“Part of the journeying … is the end.” … Tony Stark (Avengers Endgame)
Avengers Endgame was the in conclusion inward a series of extremely successful Avenger movies. Unfortunately nosotros couldn’t say the same nearly in conclusion week’s marketplace action. I receive got to continuously remind myself of roughly basic facts: (a) car sales are at seven twelvemonth lows, (b) high-end housing is seeing it's biggest drib inward 8 years, as well as (c) global industrial production is inward a synchronized slow down. If I don’t remind myself of those elements – I get to hear to the ‘white noise’ that’s telling me things like: “Stocks should to live on higher because they deserve higher multiples.”
Last Fri (jobs day) was a perfect representative inward point. The number nosotros were fed was that inward April, the U.S. economic scheme created 263,000 jobs, as well as the unemployment charge per unit of measurement had come upwards downwardly to 3.6%. But I notwithstanding receive got roughly basic questions:
- How is that number so high when the services index is at xx calendar month lows, as well as services work is crumbling?
- How is that number fifty-fifty truthful when: manufacturing is down, average incomes are down, workweek hours are reduced, the household survey work number (real jobs) is down, full-time jobs are down, as well as the project participation charge per unit of measurement is down?
- And so in that location is the Birth/Death model. It’s the beautifully fictitious number that is added to each month’s jobs study to reverberate meshwork novel draw of piece of work concern hires. It’s a mistaken number – with no footing inward fact – as well as inward Apr they said that entrepreneurs created +281,000 jobs. Again, there's no proof that these jobs exist, no revenue enhancement receipts – merely an equation that suggests that they could live on there.
But ah-hah, if nosotros subtract the fictitious jobs (281k) from the total jobs that they said were created (263k) – nosotros acquire the existent answer that the U.S. economic scheme LOST 18,000 jobs inward the calendar month of April. Now of a abrupt all of the other downward facts listed higher upwards construct sense. Wow, they’re pulling out all the stops to maintain this marketplace alive.
Weed:
Warren Buffett loves Coca-Cola to the melody of drinking five cans per day. His companionship (Berkshire Hathaway) is the largest Coke shareholder – owning roughly 10% ($19.5B) worth. So let's precisely say, when Warren talks – Coca-Cola’s management squad listens. Let’s assume when Coke was inward talks with Aurora Cannabis to hit CBD-infused beverages – Warren said something similar to his CNBC interview on Friday: “It would live on a error for Coca-Cola to acquire into the marijuana – cannabis business. They receive got a wholesome prototype as well as that would live on detrimental to it.” Unfortunately, Constellation Brands as well as Molson Coors receive got already announced their ain investments inward the industry. And inward the dorsum of every Coca-Cola executive’s brain must live on the fact that they’re missing out on a huge chance if they hear Buffett's advice. The burgeoning CBD marketplace inward the U.S. lonely is exploding from $1B inward 2019 to $16B past times 2025. Given that potential, Coca-Cola may receive got to ignore Warren Buffett to receive got wages of an chance the companionship can't afford to miss.
In 2019 alone, Canopy Growth Corp (CGC) shares receive got gained 73% - making it the largest cannabis stock past times marketplace cap. Their electrical flow bargain with U.S. based Acreage Holdings could force their stock's value much higher. Right forthwith the bargain has no precise appointment laid for the marriage ceremony – because only when the U.S. authorities legalizes marijuana volition this matrimony genuinely live on consummated. The contingency bargain is necessary because nether Canadian regulations, companies listed on the Toronto Stock Exchange cannot ain assets inward locations where marijuana isn't legal. It’s interesting to depository fiscal establishment annotation that everyone is speaking inward damage of ‘WHEN’ rather than ‘IF’ the U.S. authorities formally recognizes the state-by-state displace toward the legalization of marijuana. Canopy Growth chairman as well as CEO Bruce Linton said it best: “Our right to acquire Acreage Holdings secures our entrance strategy into the United States equally presently equally a federally-permissible pathway exists. When the right is exercised, having access to Canopy Growth’s deep resources volition enable us to innovate, prepare as well as distribute lineament cannabis brands across the U.S. as well as maintain expanding our U.S. footprint.” With the Acreage deal, Canopy volition live on active inward xx states, inward markets valued upwards of $17B.
Canopy Growth’s acquisition of Acreage Holding is non their only connecter to the U.S. economy. But alongside Acreage’s high-profile board of directors is one-time Canadian prime number government minister Brian Mulroney. Many receive got interpreted Mulroney’s seat on Acreage's board (which also includes one-time speaker of the U.S. House of Representatives John Boehner) equally a sign that legalization inward the U.S. is a bankable event. For those investors keeping count, Canopy has done other deals recently:
- A $4B bargain with Constellation Brands (STZ), the U.S. based international beer as well as vino producer behind brands such equally Corona as well as Robert Mondavi.
- The acquisition of U.S. hemp producer AgriNextUSA – which calls for Canopy to invest betwixt $100m as well as $150m inward AgriNextUSA’s NY hemp operations.
- A multi-year understanding with British Columbia-based HollyWeed – a procedure used to dry out cannabis producing high-quality crude oil as well as resin. This volition assist Canopy improve run into the oncoming demand for novel CDB-infused edible products.
- And an extension of its partnership with OG deoxyribonucleic acid Genetics – a globally recognized cannabis construct that brings genetic technologies to Europe.
You tin almost odour the excitement inward the air – or perhaps that’s cannabis?
Next Week:
The skillful tidings is – I’m non lonely inward distrusting our authorities / FED. The bond marketplace is also non believing whatever of what they’re selling. The bond marketplace doesn’t believe our FED volition heighten rates whatever fourth dimension soon, as well as inward fact (from the nautical chart above) thinks that there’s null peril for a charge per unit of measurement increase, as well as a 50/50 peril of a charge per unit of measurement ‘decrease’ past times the EOY.
This calendar week it was the financials that rocketed higher – allowing the S&Ps to stay level. After all, the unloosen energy sector took it on the chin, spell the Nasdaq (and specifically the FAANGs) crested into all-time high territory. IPO fever is inward play right now, as well as side past times side calendar week should live on Uber’s coming-out party.
This resembles the making of a topping blueprint with: bonds existence up, gilt existence up, as well as unloosen energy breaking down. A duet plays to consider going forward:
- Cisco (CSCO) = Buy the June 21st$60 PUT. It’s a bearish position, because Cisco basically sat out in conclusion week’s rally inward tech. Their earnings are mid-May – so equally the stock runs into earnings I would initiate the position.
- Citigroup (C) = I’m looking at the same type of seat inward Citigroup – purchasing an in-the-money, June 21stPUT choice – with the belief that it’s fourth dimension to receive got roughly ‘off the table’ with the financials.
- As the nautical chart below displays – I’m also looking at taking the exact opposite seat inward New Beverage (NBEV) as well as Aphria (APHA) – ii cannabis stocks right afterwards earnings side past times side calendar week because people volition e'er pay-up for growth.
I'm for sure non the only individual that knows this marketplace is rigged, but nobody knows when the wheels volition autumn off. My approximate has been that nosotros top the highs, run for roughly other curt leg higher, as well as so nosotros consider them force the carpet out from nether us. I notwithstanding similar that thinking, but y'all tin feel their desperation. It's getting harder to manufacture happy tidings when the fundamentals are creaking as well as groaning. Don’t struggle the tape. The ‘powers-that-be’ desire this marketplace higher, as well as so far they've been successful inward making it happen. Until that stops, y'all receive got to lean into this.
Tips:
Top Equity Recommendations:
HODL’s:
- Aurora (ACB = $8.90 / inward @ $3.07), Earnings on May 7th
- Canntrust Holdings (CTST = $6.05 / inward @ $3.12),
- Canopy Growth Corp (CGC = $49.08 / inward @ $22.17),
- HEXO (HEXO = $7.73 / inward @ $6.37),
- Nova Vax (NVAX = $0.47 / inward @ $1.59), Earnings on May 2nd
Crypto:
- Bitcoin (BTC = $5,865)
- Ethereum (ETH = $165)
- Bitcoin Cash (BCH = $292)
Options:
- CGC (49.08): Buy May 17, 47.5 / 50 / 55 Call BFly for $0.03 CR
- SPY (294.03): Buy May 17, (-1) 268 / (+3) 258 / (-1) 256 Put BFly for $0.44 DB
Follow me on StockTwits.com to acquire my daily thoughts as well as trades – my remove hold is: taylorpamm.
Please live on condom out there!
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Until side past times side calendar week – live on safe.
R.F. Culbertson
Until side past times side calendar week – live on safe.
R.F. Culbertson
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