Wednesday, February 23rd, 2021 – Volume 2 – Issue 162

Dow Jones: 33,131 (-1.38%)

S&P 500: 4,225 (-1.84%)

Nasdaq: 13,037 (-2.57%)

Russell 2000: 1,944 (-1.80%)

Bitcoin: $37,675 (-0.89%)

Ethereum: $2,621 (+0.12%)


RIP to the markets… Yesterday, the S&P 500 officially fell into correction territory and today, the Dow hit its lowest level of 2022 so far. The major averages closed below their intraday lows that we saw earlier in January.

Leading the charge downward were stocks in the travel space and technology, with Amazon (-3.5%), Apple (-2.5%), and Tesla (-7%) dragging the Nasdaq down for the day.

Geopolitical tensions: Russia and Ukraine still dominated headlines today as reports show that Ukraine’s government suffered cyberattacks and warned any Ukrainian citizens to leave Russia. Russia also told diplomats in Ukraine to leave the country.

New sanctions: The Biden Admin announced sanctions on Nord Stream 2 pipeline, and the VanEck Russia ETF dropped another 10% today.

Crypto: Bitcoin remained relatively flat over the last 24 hours after getting rejected on its way back up to the $40k level. But altcoins like Ethereum, Terra, and Avalanche are outperforming.

Source: Heat Map & Sector Performance —

These Altcoins are Outperforming the Market

Even though Bitcoin has been trading relatively flat (and frankly, lulling a lot of action-oriented crypto traders to sleep), altcoins are performing in the crypto markets with some recent positive news flow.

Polygon (MATIC) is up 4.63%, Cosmos (ATOM) is up 6.35%, and even Shiba Inu is making a decent move to the upside over the past 24 hours (+4.50%).

But stealing the show in the Top 25 cryptocurrencies by market cap is none other than Terra (LUNA). LUNA is up 12.15% over the past 24 hours and 6.24% over the past 7 days, surging on news that the Luna Foundation Guard is creating a new layer of security for Terra’s UST stablecoin.

  • The Luna Foundation Guard announced that it raised $1 billion through the sale of private tokens to build a bitcoin-denominated reserve.
  • The BTC reserve should mitigate some risks associated with other algorithmic stablecoins on the market.
  • Investors in the $1 billion fundraising round will be locking up the tokens in a four-year vesting period.

Matthew Dibb of Stack Funds said, “Ideally, LFG would take steps to keep the reserve 100% on-chain for transparency rather than through centralized means, however, the price action of Luna since the announcement has been largely promising in restoring confidence to the Terra ecosystem.”

But regardless, it seems like confidence in Terra is very high… This deal seems very important for LUNA’s value capture (as well as trust in the UST stablecoin). And that can’t be said for every player in the stablecoin space — many people are still skeptical about using USDT, or Tether, because of the company’s history and debt structures.

Terra’s Performance:

  • Over the past year, Terra (LUNA) has essentially 10X’d from $6.70 to $60.52 and now trades at a $23 billion market cap.
  • UST’s market cap has grown from $300 million to over $12 billion in just one year, making it the fourth-largest stablecoin worldwide.

This Could Be the Next $1 Trillion Market

We all know that the best investments come not only in individual stocks that have great upside potential, but in markets that are actively growing at a very quick rate. That way as your companies grow, so does their earnings potential…

And one of those fast-growing markets right now is that of hydrogen generation. According to Goldman Sachs, the total addressable market of hydrogen generation could hit $1 trillion by 2050 (compared to the $125 billion today).

“If we want to go to net-zero we can’t do it just through renewable power,” said Michele DellaVigna, Goldman’s commodity equity business unit leader.

  • According to DellaVigna, hydrogen is “a very powerful molecule. We can use it for heavy transport, we can use it for heating, and we can use it for heavy industry.”
  • It also has the chance of taking today’s role of natural gas as the world attempts to move to “net-zero” emissions.

Green hydrogen: If hydrogen is generated using renewable energy sources like wind and solar, DellaVigna says that it can become at least 15% of the global energy markets — meaning at least a $1 trillion opportunity per year.

So, how could you invest? DellaVigna says that there’s two ways:

  1. Pure play electrolyzer companies that have pure exposure to hydrogen.
  2. Conglomerates like energy service companies, industrial gas companies, and oil and gas firms.

Here are some specific ‘green hydrogen’ names that could benefit from the space in the long-term: Plug Power (PLUG), Bloom Energy (BE), Next Hydrogen Solutions (NXHSF), Fusion Fuel Green (HTOO), Nel (NLLSF), ITM Power (ITMPF).

Mortgage Applications Fall to Pre-Pandemic Levels…

Higher rates generally keep people away from loading up on a ton of new real estate, especially when prices don’t seem to be coming down in the same line.

Over the last week, mortgage applications fell 13.1% — its lowest level since December 2019 (before the pandemic). Here are some other interesting developments from the housing market:

  • Refinance applications dropped 15% week-over-week (56% lower than one year ago). Seems like everyone who wanted to take advantage of historically low rates have already done so…
  • The average interest rate for 30-year mortgages is now 4.06%.

Looking back at 2021… On Tuesday, the S&P CoreLogic Case-Shiller Home Price Index came out and showed that 2021 saw the highest calendar-year increase in 34 years.

  • Home prices: Up 18.8% nationally in 2021 vs. 10.4% in 2020.

The sky-high pricing + increasing rates equation is likely keeping some buyers out of the market moving forward — and as we know from last week, supply in the market is still very low… 

That means this combo of lower supply and lower demand could actually keep these prices elevated for some time, although price growth could start slowing down throughout the year.

The S&P 500 is Officially in a Correction

The bad news is that the S&P 500 is down about 11% since the start of 2022. But the good news is that we know exactly how Graham Stephan’s stock portfolio is doing without having to do any more research…

It’s the little things that matter in life, right?

Maybe. But let’s get back to the stock market:

  • The S&P 500 index is down 12.3% from its recent 52-week high of 4,818, but we’re not yet in ‘bear market’ territory — that would require a further 8.7% drop.
  • Markets are now hitting lows that we saw earlier in January.

Investors are ditching bonds? Investors have taken $148 billion out of money market funds and ETFs since January 1st, and bond funds saw a monthly outflow in January for the first time since March 2020.

    • Before the pandemic, investors hadn’t taken money out of bond funds in any month since 2018.
    • But why is it happening now? When interest rates go up, bond prices go down. The Fed is expected to raise rates in March, so it seems like investors are trying not to lose their shirts in bonds when there are way more fun ways to lose money — especially since inflation is likely eating away most of their gains anyway.

A little less of this, a lot less of that… You may think that all of these funds have gone from bonds right into those good ‘ole US equities — but you’d be wrong. Investors withdrew a net $20 billion from U.S. equity funds in January, according to Morningstar.

    • Compare that to the average $12.5 billion average net inflows per month in 2021.
    • But international funds are popping off: Investors put a net $26.6 billion to work in international stock funds in January.

Cathie Wood Sold the Dip?…

Cathie Wood Just Sold the dip! Cathie said “peace out” to Palantir over the past 5 trading days, dumping over 99% of ARKK’s position in the stock at lightning speed.

Here were the big trades:

  • 2/17 Sell: 3.837 million shares (fund weight: 0.36%)
  • 2/18 Sell: 10.895 million shares (fund weight: 1.03%)
  • 2/22 Sell: 9.402 million shares (fund weight: 0.89%)

These moves are in stark contrast to how she’s previously engaged with PLTR — Wood has been building a big position in Palantir since February 18, 2021 when the stock was trading for about $29 per share…

  • As of February 16th (last Wednesday), ARKK held 24 million shares of PLTR at an average price of nearly $22 per share.

Catching heat… Cathie is getting a lot of heat in the online finance community for selling out of her Palantir position, especially since the stock is trading near an all-time low ($10.48 as of yesterday’s close).

So why did she sell at what seems like the worst possible time? Well, no one knows exactly… but when in doubt, it’s always a good idea to “follow the money.”

    • Capital allocation: On many occasions (including her 45 minute interview on CNBC last week), Wood has said that in times of market corrections, she likes to concentrate Ark’s funds into her ‘highest-conviction’ names.
    • Speaking of those stocks… Since ARKK started selling PLTR, the fund has bought more Shopify, Roblox, Zoom, UiPath, Twilio, Roku, 10X Genomics, and of course, Tesla.

Zooming out: Some traders (and believers in Palantir long-term) are certainly mad at Cathie, but at the end of the day, operating an ETF is not always a game of accumulating shares in companies — it’s also a game of allocating limited capital according to a specific strategy. 

Wood and her team at Ark likely see a better opportunity in their higher conviction names, and rather double down on those holdings instead of betting on a big turnaround in Palantir. 

Remember, we saw the same thing with her Twitter (TWTR) sales earlier this month. On CNBC, Cathie said that Twitter is probably still a “good idea,” but it doesn’t make sense for her fund to allocate to it at this point in time. Here’s a look at Cathie Wood’s portfolio! 


DraftKings (DKNG) +5.59% – Caesars Entertainment announced that it was going to cut spending on its sports betting ads, giving DraftKings an opportunity to increase market share.

Chegg (CHGG) +4% – Chegg announces new $300 million accelerated share repurchase plan. 

Virgin Galactic (SPCE) +3.45% – Virgin Galactic got a nice pop-off a smaller-than-expected fourth-quarter loss. The company says it should have a spaceship enter commercial service in the fourth quarter. 


Asana (ASAN) -23% – Asana stock was crushed by lowering its forward guidance in today’s earnings report. 

10x Genomics (TXG) -10.52% – With the Nasdaq’s fall today, 10x Genomics stock was hit hard as part of the broader speculative sell-off.

Airbnb (ABNB) -9.20% –  Airbnb shares continue to be put under pressure with the market fall and are down 15% in the past 5 trading sessions. 

Intel (INTC) – Raymond James upgraded intel from underperform to market perform on its low valuation. “Nonetheless, with the stock now down 30% since our downgrade in early 2021 (vs. a 4% rise in the SOX), and with the bar on cash flow having been reset, we’re not confident that the stock would meaningfully underperform further, particularly in an industry downturn scenario.”

Palo Alto (PANW)JPMorgan upgraded Palo Alto from underweight to neutral seeing a more balanced risk/reward.“PANW is one of the cybersecurity companies that is well-positioned to compete for the cloud-security opportunity. After the recent pullback, the risk-reward set up in the stock now appears more balanced, and so we are upgrading to a Neutral rating.”

Rocket Lab (RKLB) – Roth initiated coverage of Rocket Lab as a buy saying the company is well-positioned to be a top beneficiary of the “emerging space economy.” “According to Wall Street Research, the space economy is projected to grow from $350B today to $1.4T by 2030. We believe that RKLB is targeting an end-to-end vendor position in this emerging space-economy opportunity.”

Quote of the Day: “If you get tired, learn to rest, not to quit.” – Banksy

Fun Fact: Apple Inc’s market cap is bigger than the GDP of 25 countries in the world like Iraq, Ecuador, and Libya.

  • Warner Music Group adds play-to-earn- games with Splinterlands partnership
  • The number of U.S. cities with an average home price of $1 million tripled last year
  • Lucid stock falls after recalling Lucid Airs over safety problems
  • Twitter to sell $1 billion in bonds to help finance stock buybacks
  • U.S. ports receive $450M to help ease supply chain congestion
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