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Oct 04, 2022

Good morning!

‍The markets appear ready to build on yesterday’s rally which makes all sorts of sense.

There are so many people set up short that the big money’s going to try to burn ‘em. Then create an irresistible FOMO rally. It’s a trading pattern we’ve seen so many times this year that it’d be amusing if it weren’t so disturbing.

We know better, though.

The stock markets are a long-term game that destroys short-term participants who think they know better.

Here’s my playbook.

Credit Suisse could still become Debit Suisse

Credit Suisse could become Debit Suisse. The risks of doing business with the beleaguered bank are going up at the worse possible moment; Credit Suisse needs as much as $4B to restructure. I cannot help but be reminded of the Global Financial Crisis when credit default swaps blew up under similar circumstances.

Impact on US Banks. None for now but fears of a global contagion are very real and, just like last time, being totally understated. Which almost guarantees they’re not.

My take with the fantastic Maria Bartiromo and Dennis Gartman earlier this morning. (Watch)

Surprising reason yesterday’s rally could continue

Stocks entered yesterday’s session at stupid oversold levels and, not surprisingly, they took off as rates dropped.

This morning we could have a repeat. There are enough people set up “net short” – that traders probably can’t resist taking ‘em higher to ignite a “short burn” or simply flambe the trailing stops.

Don’t expect it to last much longer than a few days, though.

My thoughts, what to buy and a lot more with the fabulous team at CNBC Asia on Street Signs. (Watch)

The hidden danger if Vodafone links up with Three UK

What’s happening. Vodafone has confirmed merger talks with Three UK in a no-cash deal that’ll help both scale up 5G in a merger that’ll impact 27 million users. (Read)

What nobody’s talking about. Three is owned by CK Hutchinson of Hong Kong which means that the Chinese could gain access to the undersea cables. This is potentially a big stink because Vodafone has interests in major global flashpoints including the Persian Gulf, West Africa and the so-called Europe-Persian Gateway which links Oman to Frankfurt via Tehran. Got all that??!!

The real rub here is that this is yet another case where technology has run so far out ahead of regulators and the global legal system that it cannot be taken for granted. China, of course, knows this and is playing the West like a $2 fiddle.

Investing in telecom stocks is a lost cause. You’d be better served farther up in the proverbial food chain as a result.

Deepfake tech could be the next “Gold Rush”

Mention deepfake and most people think of film clips inserting one person’s likeness for another in recorded video. The targets are usually well-known Hollywood movie types or other popular people inserted into YouTube videos. (Read)

Actor Bruce Willis reportedly sold his likeness for future films as a way to compensate for aphasia, a brain disorder that has forced him to withdraw from acting. His rep claims the story is false but that’s a story for another time. (Read)

The idea sets a precedent for an entirely new generation of film, fantasy and even gaming. Actors will no longer have to be “in the room” to star in a production as the quality goes up and the data improves. I can envision medical applications like voice replacement, for example. It could give people who have suffered catastrophic injury or who are born with specific medical conditions a new way to approach life, particularly if integrated with wearable technology that’s a generation away at most.

Or, just star in your own James Bond film.

Another dictator playing with his toys

As if things couldn’t get more complicated. North Korea launched a ballistic missile directly over Japan. And in response, the US and South Korea held joint bombing drills. The UN considers testing ballistic and nuclear weapons to be illegal, but Kim doesn’t give a rip. (Read)

Investing Impact: Choices like US defense contractors, particularly those that focus on counter-battery or missile defenses are logical. This builds upon risks Putin has already brought to the table.

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