Back to fundamentals.
The Fed did the equivalent of throwing an asteroid at the stock market, especially with tech stocks. The central bank may be raising interest rates earlier than anticipated.
The result was a major decline both for the Dow and the NASDAQ. While some people are looking to scoop up bargains today, it is by no means clear that we’ve hit bottom.
Bitcoin is also in what seems like a full scale crash. Other cryptocurrencies are following suit.
The reason is simple – if the Fed is moving aggressively to control inflation, cryptocurrency loses some of its value as a hedge.
The Great Resignation is also underway – 4.5 million Americans quit their jobs in November.
It puts the economic situation into perspective – there are more available jobs than there are unemployed people.
All this may seem chaotic (and just wait until you hear about what’s happening in Central Asia, as Mr. X explains). Yet this is an opportunity.
Fortunes are not made when the market is simply rising.
They are made after a major crash, when new opportunities arise.
It is important now to stay liquid at all costs.
The pace is only going to accelerate.
Another great episode packed full of critical information for options traders of all levels. This week Chris discusses the prediction of the Santa Rally and how the market was telling us to get ready for some time. He keys in on the power market analysis using the put-call ratio, futures, and $TICK charts to determine likely reversal points. According to Chris this is a critical time to make money as things will get more difficult as the year progresses. In his words, “making money isn’t difficult, but keeping it is.”
WORD ON THE STREET
Crash, Crash, Crash As The Fed Slams On The Gas
Fed Nukes Stock Market – Investors were just told to take one for the team by central bankers. The Dow and NASDAQ composite lost over 392 points and 522 points as the Fed signaled interest rate hikes could be coming sooner than expected. The Biden Administration faces a tough choice – take on inflation or keep supporting the stock market.
Tense Atmosphere In DC – Senator Joe Manchin signaled that he is largely in agreement with major parts of Build Back Better bill, but he and the president have made no progress and may not even be negotiating. The divides within the Democrats pale between the gap that is growing between Republicans and their Democrat rivals one year after the January 6 riot at Congress. An investigation of former president Donald Trump is continuing, but so far ’45 is suffering less in the polls than President Joe Biden. If you’re expecting united action by this Congress…
#BitcoinCrash – The currency of the future or a bubble from the past? Almost the entire cryptocurrency sector declined significantly, with Bitcoin threatening to fall below $42,000. It actually held up better than many other cryptocurrencies. If the Fed is coming for inflation, crypto is no longer much of a hedge.
Yet More Boosters – The CDC has urged Americans aged 12-15 to receive the COVID-19 booster from Pfizer and BioNTech. The shot should be given at least five months after the second dose of the initial vaccine. COVID-19 cases continue to increase, with states like Michigan and Florida being especially hard hit as hospitals are pushed to the brink.
HOT SPOTS: What’s Going on in Geopolitics
Revolution In Kazakhstan – Violent protests against the authoritarian government of Kazakhstan have begun, with residents especially infuriated by soaring energy costs. Russia will reportedly be sending peacekeepers to support the government, though the situation remains fluid. It is reminiscent of when Russia backed the government of Belarus – an intervention that was ultimately successful. Well, at least so far.
Tensions Still High Over Ukraine – Germany and the United States have warned Russia against trying any military invasion of Ukraine. Secretary of State Antony Blinken said no progress has been made with Russia and no progress will be made “with a gun pointed at Ukraine’s head.”
Taiwan Trolls China With Rum – Lithuania let Taiwan open something akin to an embassy – which greatly angered the People’s Republic of China. China retaliated against Lithuania by blocking a shipment of 20,000 bottles of rum. So Taiwan bought the entire shipment instead, and the current government is sharing tips about cocktails and cooking. If only all international disputes ended this way.
CUTTING EDGE: What‘s Happening In Tech
Nike Calls A Competitor A Copycat – Nike sued Lululemon Athletica for patent infringement. Lululemon bought Mirror in 2020 to help create high-tech fitness products that allow athletes to craft custom workouts. Nike is claiming that the Mirror Home Gym and related products are ripoffs of its own products.
Behold Flurona – A co-infection of the flu and COVID-19, dubbed “flurona,” has been identified in Los Angeles County. Though it is the first widely publicized case, the LA Department of Public Health said there are likely far more.
Apps Will Report Transactions To IRS – PayPal, Cash App, Venmo, and other apps will be complying with new IRS regulations that require any transactions over $600 to be reported to the government. In theory, small businesses have always had to report such transactions. In practice, few small businesses kept records – but now the IRS will have the goods on all of us.
FOR YOUR CONSIDERATION
Everything is connected.”
As a post-Soviet state teeters on the brink of revolution, the consequences will be felt on Wall Street and Main Street. Mr. X explains what’s happening in Kazakhstan and why it matters to Bitcoin and energy. He also highlights a uranium play (first identified by Dr. Kent Moors) that defied the market decline yesterday… and might just be getting started.
Scheme of All Time?