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That 70’s show + Ukraine = volatility

Jan 24, 2022

Good morning!

The markets are down yet again after what had been a green start in overnight markets.

Here’s my playbook.

1 – Reminds me of the 1970s

Many market participants either don’t remember their history or simply didn’t live through the 1970s like the fabulous Stuart Varney and I did. Here’s my take on what to buy, when and why … now. (Watch)

2 – Ukraine: How far will the West go?

We know how far Putin will go in Ukraine, but the real question is how far will the West go in response. Russia now has >100,000 troops on the border while the US State Department has encouraged all US citizens to leave the country immediately as more Russian military assets arrive. Meanwhile, the US, Britain and Germany are divided over what to do and how.

My POV – Biden is weak, and Putin knows it. Simple as that.

Investors would be wise to hedge if they haven’t already; I think there’s a better than average chance the shooting starts. And that, in turn, will cause a knee jerk reaction in the markets. Puts, inverse funds, trailing stops … chances are they’ll ALL come into play in the weeks ahead.

To paraphrase my friend and colleague, the super-smart Jason Katz of UBS, now’s the time to cut your weeks, not your flowers.

3 – Crypto clobbered

Bitcoin and Ether have both been clobbered as $130 billion gets vaporized in 24 hours. The former is down 40% from November highs of $69,000 to $33,899 while the latter is off 53% to $2254.73. There are various reasons including crackdowns in both China and Russia but I suspect the real selloff is coming from nervous crypto traders who are simply bailing. (Read)

Too early to tell when the selling stops but, interestingly and critically, not a single institution I am aware of is reversing course on crypto … GS CEO Lloyd Blankfein notably points out that “crypto is happening” despite the plunge and I agree. (Read)

4 – Big earnings this week may not matter

Apple, Microsoft and Tesla are all slated to report but, for the first time in as long as I can remember, may not matter whatsoever. They could – and probably will – turn in multi-billion growth numbers yet the markets will continue to sell off in the short-term. Longer-term, the business case remains super strong and I hope I’m smart enough to buy more! (Read)

5 – Spillover

I cautioned against “spillover” in the 2021 Annual Outlook and earlier as the pandemic broke. That’s what scientists call the possibility of animal to human virus transmission. There have already been several cases including mink in Northern Europe, hamsters in Hong Kong, lions and pumas in South Africa and snow leopards here in the United States. Some 625 Covid cases in 17 species and 37 countries. (Read)

This is THE reason you want to own Pfizer IMHO.