Thursday, June 16th, 2022 – Volume 2 – Issue 243
Sell the Rip… This seems to be the new strategy as every big relief rally is met with a massive day of selling.
The Dow fell below 30,000 today as investors worried that the Fed’s more aggressive approach to inflation would actually bring about a recession. The Nasdaq hit its lowest level since September 2020 — almost 2 years ago.
These went down, those went up… Tech stocks, travel stocks, and companies linked to the economic cycle — like Home Depot, Walgreens, 3M, and American Express — took a hit today. On the other hand, staples with steady cash flows traded in (or at least near) the green. Proctor & Gamble jumped as much as 1.69% today.
Crypto: Things are volatile in the crypto market as BTC and ETH took another dip today. A number of U.S. states are opening an investigation into Celsius Network following the account freeze.
Now, for the top news stories of the day…
Source: Heat Map & Sector Performance — Finviz.com
Millennials Are Buying Stocks Twice as Fast
A CNBC survey showed that compared with older wealthy investors, millennial millionaires are more optimistic and have a completely different strategy for investing in today’s market.
The survey of millennial millionaires found that:
Nearly two-thirds believe the economy will end the year stronger.
Millennials are three times more likely to cut back on big purchases: 48% said they postponed purchasing a new car, 44% delayed buying a home, and 62% gave less to charity.
90% have a financial advisor, while only 70% of all millionaires surveyed have one.
Inflation Worries: Millionaires in all age categories said that inflation “is their No. 1 threat- both to the stock market, the economy, and their personal wealth,” according to CNBC’s Robert Frank. But, most millennial millionaires believe inflation will last just six months to a year, and nearly 90% are “confident” or “somewhat confident” in the Fed’s ability to manage inflation.
Built Different: Younger millionaires are more likely to buy assets and less likely to have high amounts of cash.
Millennials are “buying more stock at twice the rate of baby boomers,” said CNBC’s wealth editor Robert Frank. “The millennial millionaires have become not just different kinds of investors, but an entirely different species of investor.”
2022 expectations differ wildly. 58% of millennial millionaires said asset markets would end the year up at least 5%, and 39% expect double-digit gains. Meanwhile, 44% of millionaire boomers expect the market to fall by double digits.
Tether Gets Hit With Another Wave of Redemptions
Crypto investors are on edge right now, and for good reason… ETH trading at $1,100!? It was on its way to $5K just a few months ago.
But it looks like we’re officially in a “winter” phase, with big crypto companies like Gemini and Coinbase laying off employees and even ‘maximalist’ investors preparing for the worst.
Mark Cuban says that this market reminds him of a Warren Buffett quote — “When the tide goes out, you get to see who’s swimming naked.” Thanks for that, Mark…
The nervousness in the market is hitting Tether as well. In fact, the world’s largest stablecoin just went through another round of redemptions for USDT — to the tune of $1.6 billion in just 48 hours.
USDT’s market cap is now down to $70.8 billion, its lowest level since October 2021.
Analyst Comments: “Confidence in cryptos remains depressed, and some traders are worried that Tether could suffer a similar fate as Terra’s UST stablecoin,” Edward Moya, senior market analyst at Oanda, said. “Too many institutional crypto investors are down massively, and they are worried that if this part of the crypto ecosystem collapses, Tether will crash.”
As investors weigh the risk of Celsius going bankrupt and Three Arrows Capital being insolvent, they are worried that Tether has exposure to these firms.
But Tether says it was able to liquidate its Celsius position without a loss, and that it has no exposure to Three Arrows.
Going Safer: Many crypto investors like using stablecoins, but are instead putting their funds into USD coin (USDC), the second-largest stablecoin created by crypto company Circle.
Circle also just launched euro-backed stablecoin EUROC as it looks to expand into other markets.
These Prices are Deflating Amid Inflation
Sporting Events: According to the Consumer Price Index, sporting event tickets are down 11% YOY.
Tech Gadgets: TVs are 10% cheaper than last year, and smartphones are 20% cheaper! If you’re a student, you can get a sick calculator at a 13% discount, YAY!
Lumber: At one point, one of the hottest commodities, has fallen 28% YOY as DIY projects and home building slow.
Chains: That gold rapper chain and or engagement ring you’ve been looking for is slightly cheaper, down 1.2% YOY.
Clothing: Although we don’t have the specific numbers for it, clothing and apparel prices are set to fall as retailers overstocked following shortages. With consumer spending weakening, expect sales this summer.
Used Vehicles: In the last 30 days, used car prices fell 0.08%. Although slight and a small timeframe, this is a big shift from the 14% YOY gains, with the last 90 days only seeing a 1.23% increase, and the chart appears to be plateauing.
Stocks & Crypto: Just a joke… :,)
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Elon Musk SUED For Dogecoin 'Pyramid Scheme'
Yep, Elon Musk is getting sued… for canceling Twitter’s annual employee trip to Disneyland!
Just kidding… But Twitter did cancel that trip to the Happiest Place on Earth, citing cost-cutting measures — and Elon is getting sued. Just separately.
The Reason: Elon, SpaceX, and Tesla were sued in tandem for $258 billion over claims that they are part of a racketeering scheme to back the infamous Dogecoin cryptocurrency.
Now, you may be asking, is this some sort of joke? The answer is a resounding “no.” Keith Johnson, “an American citizen who was defrauded out of money by defendants’ Dogecoin Crypto Pyramid Scheme,” sued Musk and his companies, claiming that they are all part of an illegal racketeering enterprise to inflate the price of Doge.
“Defendants falsely and deceptively claim that Dogecoin is a legitimate investment when it has no value at all,” said Johnson in his complaint — which he filed in a Manhattan federal court today.
Man of ‘the People’: Johnson is seeking $86 billion in damages, plus triple damages of $172 billion as he tries to represent those who have lost money trading Dogecoin since 2019. He also wants an order blocking Musk and his companies from promoting Dogecoin or speaking about it in any way.
Of course, Elon hasn’t responded to the suit yet… But knowing him, he probably will (on Twitter). Funny enough, the announcement of the lawsuit briefly sent DOGE’s price surging a few percentage points before giving up those gains.
Here’s the Question: Does this lawsuit actually have any merit, or is Mr. Johnson just mad that his Dogecoin bet didn’t pan out as well as he hoped? We’ll just have to wait and see…
Kevin O'Leary's Warning to Scared Investors
Many people fear the recession is already among us, but Shark Tank’s Mr. Wonderful is not one of them. During an interview on CNBC’s “Squawk Box Asia,” O’Leary had this to say.
- O’Leary says there is “no evidence” of an imminent economic slowdown or recession.
- ″I’m not saying we won’t get one, but everybody that’s saying it’s coming around the corner next week is just wrong.”
- “There’s no data, there’s no evidence, there’s no numbers, there’s no inclination on the consumer to slow down yet.”
O’Leary has a wide portfolio of companies he can rely on for economic information. “I see their tear sheets each week. We don’t see slowdown yet,” he said about his company’s operational documentation. “I think I’ll be one of the first to see it. I’m sort of a canary in the coal mine in that respect.”
Smoke Screen: O’Leary says there are two reasons it’s difficult to predict a recession right now. First, the Fed dropped $4.5 trillion across the economic landscape to consumers and businesses. Second, technology is boosting productivity and increasing business efficiency.
The Fed: While many believe the Fed has lost control of the situation, O’Leary believes JPowells got this and is in “pretty good shape.” He believes that even if there is a slowdown, stocks already have it priced in. O’Leary believes the economy will slow down eventually, but he hasn’t seen it yet. “I trust numbers, not talking heads,” he said.
“Those that are really saying we’re going to get a massive recession could be wrong and be missing returns as this market slowly claws its way back,” he said.
Redbox Ent. (RDBX): +6.66% – Redbox continues to defy the markets and reality as it’s become the newest addition to the meme stock club.
Barrick Gold (GOLD): +2.35% – Gold prices continue to show strength in the midst of economic uncertainty.
Walmart (WMT): +1.04% – Walmart continues to be one of the most relentless stocks in the market amid inflation and economic downturn concerns.
Carnival Corp (CCL): -11.08% – Travel stocks are getting hammered as growing signs of a recession derail summer travel plans.
Unity Software (U): -9.22% – Benchmark initiated coverage of Unity Software with a sell rating due to a decline in video game user growth.
Tesla (TSLA): -8.54% – Tesla is dealing with negative momentum due to raising car prices amid economic uncertainty.
Boeing (BA): Citi upgraded Boeing from neutral to buy seeing several positive catalysts ahead. “We believe 787 deliveries will resume shortly. Similarly, last year, the Chinese authorities agreed what modifications and training are required to return the 737MAX to commercial service.”
Alphabet (GOOGL): UBS reiterated Alphabet as a buy, but cut its price target from $3,600 to $2,650. “We see Alphabet relatively well positioned this year given it’s skew to performance advertising, insulation from privacy headwinds, a continuing travel ad recovery…”
Warner Bro. Discovery (WBD): JPMorgan downgraded WBD shares from overweight to neutral over international scalability. “We believe skepticism in WBD’s global DTC ambitions is reflected in the current share price, but we await details on the company’s new (combined) go-to-market DTC strategy in the coming months as we expect subs to fall as the AT&T HBO subs are reconciled, and DISCA+ subs integrated into HBO next year.
Quote of the day: “Patience is not the ability to wait, but the ability to keep a good attitude while waiting.” – Unknown
Fun Facts: In 2007, almost 1.3 million people lost their homes. Banks tried to resell the homes, but often had to lower the price or let the home sit on the market for many months. Home values in many parts of the country had risen quickly during the early part of the 21st During the recession, home values went down.