Dow Jones: 33,794 (-0.29%)
S&P 500: 4,363 (-0.53%)
Nasdaq: 13,537 (-1.56%)
Russell 2000: 2,032 (-1.29%)
Bitcoin: $41,994 (-4.20%)
Ethereum: $2,805 (-4.76%)
Embracing the chop… That’s about all we can do in this type of market as volatility keeps on keeping on.
Tech led the market lower today as defensive stocks in health care and utility outperformed. Walmart (WMT) gained more than 2% on the day.
Sharp reversals in prices day-to-day have been a norm of the last few weeks as the conflict in Ukraine continues — sending oil prices to multi-year highs and leaving investors a bit confused on what to do…
Economy: Jobless claims for last week came in at 215,000, lower than the 225,000 expected by Dow economists. (For tomorrow, get ready for the highly-anticipated jobs report!)
Crypto: Bitcoin and Ethereum retreated today, but analysts are saying that they expect bearish sentiment to fade due to how many crypto investors are being conditioned into the long-term HODL mindset. Traders see strong resistance at $46,000 and support between $37K and $40K.
Now, for the top stories of the day…
Source: Heat Map & Sector Performance — Finviz.com
Introducing the Official Ukraine NFT
Crypto has proven to be incredibly useful to Ukrainians during this tough time, allowing individuals and organizations to donate directly to the Ukrainian government without the need for any financial or charitable intermediary.
- This means that every dollar you send goes right to the cause — instead of with charitable organizations, which despite their good intentions, often have expenses and salaries to pay.
Since Ukraine started accepting donations in crypto, over $40 million has been donated to the country’s crypto wallets in bitcoin, ethereum, USDT, polkadot, and even dogecoin.
Giving back to those giving back… In the crypto-spirit of giving back to those who participate in a certain project or community, Ukraine initially planned to do a token airdrop in order to reward those who donated.
Airdrops have become a popular way to reward users of a particular service or community, or even to attract new users to a new crypto community. But plans for Ukraine quickly changed when a fake account created 7 billion “Peace World Tokens,” attempting to make it seem like it was the official Ukrainian airdrop.
Going Non-Fungible: Mykhailo Federov, the Vice Prime Minister of Ukraine, announced today that all plans for fungible tokens were off. Instead, Ukraine will be issuing non-fungible tokens — or as the cool kids call them, NFTs.
- Some people in the crypto community were a bit upset, since nearly $7 million in donations came in after the airdrop plans were announced. However, others found humor in the situation.
- @Cobie on Twitter said, “This is the best rug ever.”
Of course, the situation in Ukraine is highly volatile. And because it’s so fast-moving, it’s difficult to actually be mad about not receiving something in return for donating, right?
But for those who did, you can expect to hear more news about the coming NFT drop soon — at this time, there is little information about it, but you can follow @FederovMykhailo on Twitter for any immediate updates.
This Investor Says Stagflation is a Real Risk — Here’s Why
The split between market bears and bulls is deeper than it has been in recent times. Many see this as a great buying opportunity for stocks, while others are warning of economic decline and disaster. Bill Gross, co-founder of Pimco and the so-called “Bond King” is taking the side of the bears warning of an impending economic disaster, stagflation.
Like many others, Gross is concerned that the Fed will push too many rate hikes in an attempt to tame inflation, which could cause downward pressure on asset prices and add further turmoil to the financial markets.
He states that the lower interest rate environment that the market’s been enjoying has driven the stock market up anywhere from 30% to 40%.
- “And to the extent that you now raise them even by 50, to 100 to 150 basis points … there’s a significant impact on financial assets, stocks especially, because the interest rate discount, the forward stream of earnings. So I think they have to be very careful,” Gross said.
Handcuffed Jerome: Gross thinks that the Fed is kind of “handcuffed” in this situation with inflation so high. Raising rates too much would be a detrimental shock to stocks, but not doing enough could actually lead to a stagflationary environment. In other words, Jerome Powell is stuck between a rock and a hard place.
- Stagflation is when inflation persists during an economic slowdown. Not good for anyone…
Right now, the market is fully pricing in a rate hike at the March 15-16 Fed meeting, but expectations for the rest of the year have come down since the Russian invasion of Ukraine. Traders are currently pricing in 5 quarter-point hikes that would bring the benchmark fed funds rate to the 1.25%-1.5% range.
How to play it: In this type of market, Gross says that he chooses to be a cautious stock-picker. “I wouldn’t be a buyer of stocks here. I’d simply be a cautious investor.” He also points out that he holds interests in oil pipelines.
- For another take, Goldman Sachs says that weathering the storm through dividend stocks could help investors mitigate inflation risks. Some of the strong ones are IBM, Intel, Ford, Verizon, and Lumen Technologies, according to the firm.
Chamath Getting Double-Sued with Richard Branson… SPCE Crashes
As if the SPAC-suits reported earlier this week weren’t enough to dump Chamath’s personal brand stock, Virgin Galactic shareholders are now taking their shot at the billionaire investor.
Chamath Palihapitiya and Richard Branson are being sued for allegedly covering up flaws in Virgin Galactic’s spacecrafts and dumping their shares on the market while SPCE’s price was artificially inflated, making millions of dollars in the process.
The investor lawsuit was filed on Feb. 21, and claims that Chamath took advantage of his role as chairman to sell 10 million shares for $315 million using “inside information.”
- Billionaire and Virgin Galactic founder Sir Richard Branson sold 16 million shares of stock for $458 million as well, before the stock plummeted.
Grounds for legal action… The lawsuit alleges that the prototypes marketed by SPCE were “severely flawed and nowhere near flightworthy.” In fact, it says that the prototypes weren’t ever meant to be taken into air.
- “Rather, they were meant to provide a starting design point for the company to create its own commercial-grade vehicle that was safe and flightworthy — two things Eve and Unity certainly were not,” it said.
Basically, Virgin Galactic shareholders are saying that Branson and Chamath were aware, or at least were “highly reckless in not knowing” about the safety issues with the Eve and Unity spacecrafts — and failed to disclose this to the public…
The stock has been on a wild ride, trading extremely volatile through the ups and downs of the space-tourism news cycle. It now sits just above $8 after falling another 12.42% today. SPCE once traded as high as $57.51.
Cathie Wood’s “Boom or Bust” Returns Could Be Astronomical
Cathie Wood has been under fire lately as the haters continue to short her portfolio and question her legitimacy as an investor. With her flagship fund down about 50% from its high last year, many have bailed on her, but one person knows her better than most.
Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, is Woods former boss and oversaw her while the two worked at AllianceBernstein. Shalett noted that Wood was a very hard worker and would often be bogged down by “bags and bags” of research, but noted that her investment style was a roller coaster ride.
“Cathie’s a boom or bust investor because she didn’t disinvest or risk manage. This is the challenge that she has had for her entire career,” Shallett said.
“We all love a great story. She does her research; she believes what she believes. Sometimes when the market moves against her, she digs in more.”
Even amid the massive losses and growing doubt, Shallett says Wood hasn’t lost her optimism. “For compliance reasons, I’ve been asked not to give numbers, but the compound annual rate of return expectation that we have during the next five years is the largest I have ever seen in my career,” Shalett finished with.
Why Jeremy is SUPER Bullish on Stocks
While many investors are skeptical and scared of the market right now, one investor stands alone. In a video titled “Why I went all in,” Financial Education Jeremy says he;s the most heavily invested in the market he’s been since December of 2018. Let’s take a look why.
Fear – With the VIX (fear barometer) at $30, he says it’s a perfect buy opportunity, as these levels aren’t sustainable and are typically followed by a drawdown. Market sentiment is also very low with 6-month outlook bearish levels sitting at 53.7% in the latest reading. With average levels at 30.5%, sentiment is so bearish right now meaning any good news the market gets could be rewarded by a flip.
Even with all the fears causing the market selloff, including inflation, Fed interest rate hikes, Russia, GDP growth, and the exodus of many retail investors, a historic chart shows how fear dips have always been great buy the dip opportunities. Every single crash/correction has always been a massive buy opportunity.
Russell 2000 – The Russell has been absolutely devastated over the past 4 months and entered bear market territory twice now, the perfect buy opportunity Jeremy says. While most indices are down roughly 5% in the past month, the Russell is up 1.45%. The Russell usually starts the fall or starts the rally, an encouraging sign.
What Jeremys Buying
For the most part, Jeremy’s buys have been small cap stocks. Forward P/Es for S&P 600 SmallCap stocks are currently trading at 13.4, a level not seen since 2018. Historic averages are closer to 16-18 for this stat. The market can only stay unsustainable for so long but it will eventually return to normal.
As for the specific stocks he’s buying, he lists off 5 in particular that you could all probably guess: Tattooed Chef, Corsair Gaming, Oatly, Honest Company, and Planet 13. He also noted that he has bought call options on many of these positions. With many of these companies going public during the retail rush, many of these companies haven’t built out a solid shareholder base, causing many of them to fall heavily.
Best Buy (BBY) +9.14% – Best Buy jumped today after announcing a 26% increase to its quarterly dividend but underperformed in their latest earnings report.
ChargePoint (CHPT) +6.64% – ChargePoint reported mixed earnings but projected sales of $450 to $500 compared to analysts’ expectations of $418 million.
Kroger (KR) +11.61% – Kroger reported strong earnings despite inflating costs.
Snowflake (SNOW) -15.64% – Snowflake reported revenue $383.3 million vs the estimated $372.6 million expected and EPS above expectation but forecasted slowing product revenue growth.
Cloudflare (NET) -13.30% – Cloudflare stock is down today off no news following the Nasdaq on its slide.
Virgin Galactic (SPCE) -12.42% – Virgin Galactic stock has found itself in the crosshairs of the Chamath Palihapitiya lawsuit over insider sales of the stock.
Southwest Airlines (LUV) – Evercore ISI upgraded Southwest from in line to outperform financial strength. “We can check the box on our primary hope, which was leisure demand recovering vigorously as omicron panic receded. Company tone on domestic leisure recovery and stronger pricing into peaks is constructive.”
Teladoc (TDOC) – Argus upgraded shares of Teladoc from hold to buy saying the stock is on a clear path to profitability.“We are raising our rating on Teladoc Health to BUY from HOLD and setting a price target of $95. After years of operating losses despite robust revenue growth, Teladoc is now on a clear path to profitability.”
Lucid (LCID) – Morgan Stanley reiterated its underweight rating on Lucid and slashed its price target from $16 to $12. “We applaud Lucid management for resetting the bar lower for deliveries and cash flow. We think the market must still reset expectations on capital intensity and margins in the EV business. It’s time to deliver and secure more funding.”
Quote of the Day: “Good ideas are always crazy until they’re not” – Elon Musk
Fun Fact: Musk almost sold Tesla to Google for $11 billion in 2013. Tesla’s future looked bleak at the time, so Musk approached Larry Page, Google’s co-founder and CEO, for a takeover.
- Brent oil briefly touches $120/barrel
- The ING says food and energy prices are likely to surge further due to Russian sanctions
- Nike to join companies shutting down operations in Russia
- Russian Billionaires have lost over $80 billion in wealth
- Rivian rolls back price hike after customer backlash