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A trade idea if you’re worried about an earnings slowdown

Oct 05, 2022

Good morning!

‍The Dow is down 200 points in the early going after a sharp, quick run for the stars over the past two days. Makes sense, 10-year yields are up and the ADP jobs report came in hotter than expected.

Here’s my playbook.

TWTR: It’s on (again)

Elon Musk reversed course on Twitter and reports say he now wants to buy it at $54.20. Twitter shares popped but are off as I type. (Read)

I think Musk sees an opportunity the street doesn’t. I suspect, as I did months ago when I said to buy Twitter after his initial overture, he’ll draw inspiration from Chinese “everything apps” – a narrative that’s finally making the rounds. Watch for an American version of WeChat.

Buckle up. Or buy a TWTR put just in case he gets cold feet again.

Random Thought: CEO Parag Agrawal may be toxic goods. Makes me want to short whatever company hires him on after this run. Same for much of the executive staff with whom Musk is reportedly extremely displeased.

Pivot schmivot: the real fireworks will start shortly

It is preposterous that people continue to fawn over Team Powell because they think he’ll fix things. The Fed’s transitory call will go down in history as one of the worst ever. It’s an academic debate at best.

The real fireworks will be here soon enough when the pre-emptive earnings announcements start landing. Companies will want to control the narrative to minimize any potential damage to their stock price.

Trade Idea: Layering in a few put options or buying inverse funds to protect against that makes all kinds of sense. So does buying low if you get the chance. Get your buy list ready!

Consider upgrading to paid if you’d like some help picking great companies

Morgan Stanley in firm command of the obvious: Ford

Wall Street analysts have an amazing ability to restate the obvious. Take Morgan Stanley for example. The firm is out with a report “upgrading” Ford to overweight from equal weight (whatever that means), citing a potential buying opportunity after the stock’s recent decline.

Will somebody please tell ‘em that’s how it usually works … buy low, sell high.

Bitcoin set to rally?

One of the many things I love about the Bitcoin community is the willingness to apply entirely new analytical methods. Like “hash rate” – the speed at which Bitcoin miners are trying to solve/mine it. (Read)

Here’s what caught my attention. The Bitcoin hash rate has jumped. Historically speaking this suggests improving mining conditions while also preceding an uptick in prices. The benefits of having at least a small allocation of both BTC and ETH outweigh the risks. 6 month and older bitcoins now make up roughly 74% of the realized market cap.

During prior bottoms, that figure stood at 70% and 77% respectively in 2019 and 2015 according to CryptoQuant and Glassnote.

Betcha there’s no like button for this

El Zucko may be as ruthless as reports suggest. 12,000 “underperforming workers” may find out the hard way that they’re slackers in his eyes. (Read)