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Anybody on the sidelines may regret it big time

Dec 01, 2022

Good morning!

I’ve been a lone voice in the wilderness for months, saying that the markets will “take off like a rocket” when the Fed even hints at a pause or a slowdown in the pace at which it’s hiking rates.

Yesterday, that happened.

The S&P 500 jumped 3.1% while the Dow and the Nasdaq tacked on 2.2% and 4.4%, respectively.

What's next?

Here’s my playbook.

What's next: There are 2 possibilities

Big market moves used to be momentum driven back in the day, but now they’re a function of computers trading so fast that humans can’t keep up.

What happens next:

Digestion—meaning some sideways/upside drift would be normal. We’ll see this if there’s still money on the sidelines and the 10-year remains stable.
Profit taking—The shorts got scorched yesterday, so there’s probably not a lot of positional profit taking up for grabs today. The more likely action is computers rebalancing and re-arbitraging risk if it happens. Again the 10-year is key; if rates jump a skosh, then the selling resumes. If they’re stable, upside drift continues.

What to do. I suggest sitting still. The last place you want to be is on the menu when clearly being at the table is the priority. If you’ve been following along—and I hope you have—you’ve already got some nice choices (stocks) on your plate.

Zuckerberg whines about Apple

El Zucko says Apple’s app store policies are not sustainable. (Read)

That’s rich.

Let’s get real. The only reason he is griping is because he is no longer in the driver’s seat, and Apple’s CEO Tim Cook is. Apple’s privacy changes put a multi-billion dent in Meta’s business that’s only going to get worse. Google may well get caught in the crossfire too.

MyPOV: I still think Meta’s done for and may drop as low as $50 a share. Apple, on the other hand, is going to return to $200 a share a lot sooner than most people think.

Robocop just got real

What’s happening. San Francisco’s Board of Supervisors just voted to let the police use robots that can kill. The SFPD does not operate lethal robots yet, but that’s probably not long away.

I don’t know whether to be terrified or thrilled. I understand both sides of the argument intimately, having served as a reserve officer in my younger days. The knowledge that I may have to take a life or have mine taken every day I went to work was daunting.

Investing implications. The world is only going to get more digital, not less. That speaks to more chips, more AI, and better data security, especially when it comes to potentially lethal law enforcement. All three are themes we’re already tracking in One Bar Ahead®. Upgrade to paid

Mobius says bitcoin could crash to $10,000

Dr. Mark Mobius told CNBC that Bitcoin could crash to $10,000, even though he expects it to hover around $17,000.

I agree.

Why you should listen even if you don’t own Bitcoin. Dr. Mobius is one of the foremost global investors and an expert when it comes to identifying broad sweeping moves that can make or break your portfolio. He’s also a mentor, so I know from personal experience that he doesn’t make comments like this lightly.

If Bitcoin does crash, that’ll bring speculative energy back to gold and other commodities. My question is how much of that remains after the FTX debacle. My guess is not a lot, considering more than $1.3 trillion has gotten vaporized in recent weeks.

Still, might make sense to buy a little gold.

Is inflation slowing down at last?

The core personal consumption expenditures price index, a key Fed measure excluding food and energy, rose 0.2% for the month, which is less than the 0.3% expected.

Has inflation peaked? That’s what the markets are hoping for and why the prospect of a sharp rally is far more real than most people understand.

Be in to win or you won’t… win!

Oh, and keep in mind that inflation is still running at 5%+ a year. 🤦‍♂️