Monday, February 1, 2021

A brief reflection on my weekend report that was 24-pages long) and the accompanying idea/play list was (14-pages)


Most new-investors / traders are more interested in getting rich-quick (taking on high levels of risk) rather than preserving their wealth through prudent investments / trades. This is why they almost never sell their stocks (ideas) no matter how many unrealized gains they have or losses.  As I have repeatedly stated in my writings these past several months, I am of the sincere belief that stocks are in an “classic mega bubble”. Still most investors will ignore the obvious warning since greed dominates their emotions. During the past 50 years we have seen 5 vicious nasty bear-market corrections in the Dow of between 40% and 55%. But even with these bear-market corrections, the Dow is today almost 39-times higher than in was 1970, due to massive rebalancing (out with the dogs, in with the new-high-fliers) manipulation...

As an example the DOW is not the same DOW as it was in 2007-2008, and it should NOT be analyzed or reported as such by the cheerleading media, as any ass-clown manipulator can push out the dogs and bring in the higher beta darlings, that were under-owned by index players (also more significantly priced additions) so as to influence the cap weightings and make the index soar.... The DOW is not as it was 11 years ago, its highly manipulated as are the other indexes are worse yet is how they manipulated the Russell-2000 as its far-far worse...the weightings in the DOW and NDX are crazy as well as a hand full of stocks account for the majority of the weighting and as such the moves! 

  • In August 2020  Amgen, Honeywell, and Salesforce replaced ExxonMobil, Pfizer, and Raytheon
  • In April 2020        Raytheon Technologies replaced United Technologies. Raytheon is the name of combination of United Technologies and the Raytheon Company, which merged as of April 3, 2020. The newly combined conglomerate does not include previous subsidiaries Carrier Global or Otis Worldwide
  • In April 2019         Dow Inc. replaced DowDuPont. Dow, Inc. is a spin-off of DowDuPont, itself a merger of Dow Chemical Company and DuPont
  • In June 2018          General Electric was replaced by Walgreens Boots Alliance
  • In March 2015      AT&T was replaced by Apple.
  • In Sept 2013       Alcoa, Bank of America, and Hewlett-Packard were replaced by Goldman Sachs, Nike, and Visa
  • In Sept 2012          Kraft Foods Inc. was replaced by UnitedHealth.
  • In June 2009         Citigroup and General Motors were replaced by Cisco Systems and Travelers.
  • In Sept 2008          American International was replaced by Kraft Foods Inc.
  • In Feb. 2008          Altria Group and Honeywell were replaced by Bank of America and Chevron.
  • In April 8 2005     AT&T, Eastman Kodak, and International Paper were replaced by American International, Pfizer, and Verizon

Please remember from the aforementioned examples that all the stock incessantly hyped indexes do not even remotely display the truth. Unsuccessful or failed firms are continuously taken out of the index and the most successful firms are added.


As I have written about several times recently, I believe we are now embroiled in an “classic mega bubble” that is about to implode in the next few months. With the financial world fast approaching economic paralysis it is difficult to see how this can end well. Instead, what now looms ahead of us can only end terribly and most probably extremely badly. As I have stated since 09/2019, the current problems started at that inflection point with major pressures within the global financial system and the centrals bankers led by our FED ran to the rescue through massive money printing...then about 5-months later by February 2020, global central bankers were extremely pleased that the Covid-19 pandemic allowed them (tin-hat conspiracy theory suggests they may have had a hand in the distribution) to attribute the Covid-19 panic as the ultimate excuse for the panic situation they were embroiled in.

So, in essence Covid-19 was an extremely well times justification for the world’s great catastrophic economic situation... a horrible down-draft economic catalyst that will guarantee that the mega and I mean mega global bubble will have a devastating conclusion. The Covid debacle/crisis enabled central banks to create a Tsunami wave of cheap-cyber money and debt, pouring down chaotically into various sectors of the real economy (massive buoy). They were able to do this without having to explain to the world that the financial system was already imploding before the Covid-19 crisis hit.

As investors continue to digest last week’s wild rollercoaster ride in some of the heavily shorted hard to borrow names propelled by Robinhood & Reddit traders who in turn fueled volatility, they will also look this week to the regular cadence of quarterly earnings reports and economic data to be released to confirm their assumptions.

King-Trump assured the markets that only he could levitate them indefinitely, was he right? The post Biden run up to this latest tiny “so far” correction has seen “impressive” price action in most assets has been steadily bullish forcing most to join the trend chasing momentum plays, from chasing bitcoin, TSLA and other reopening plays, small caps & micro-caps and now lately the Reddit / Robinhood large-short interest plays creating an interesting collective psychology of the masses, all based on the same principles of greed and fear. Wherein newbies have joined the trading space (due to generous stimuli checks, enhanced unemployment and massive loan forbearance-type of plans) there are more than 50 million so called traders across the various trading apps and that number has probably increased again.

Ø  The FOMO aspect of trading has never been stronger. The new normal 😊 as crazy as it sounds is the need to experience 30%,50%,60%, even 100% returns in days and weeks.

Earnings better exceed expectations.   We will get several more Big-technology names to release their earnings that will likely punctuate the flow of quarterly results, with GOOG, AMZN, set to report on Tuesday afterhours! We saw that FB’s results last week offered a perplexing mixed picture of the internet advertising landscape against the ongoing Covid-19 crisis. We saw that their 4th quarter advertising revenue easily topped estimates, though the firm noted “significant uncertainty” remained over the trajectory of their ad business heading into 2021 (the massive King-Trump & Uncle Joe Biden election shroud has closed). While Facebook’s social media advertising business is not a picture-perfect comparison to GOOG’s search-driven advertising business, the results suggested a strained environment for online advertisers with the Covid-19 virus still inflicting massive disruptions across various of their business customers. Analysts are looking for GOOG to report accelerating revenue growth in their fiscal 4th quarter versus the 3rd quarter, as improving operating conditions for their advertising customers should have boosted results at the end of the year.  Analysts are looking for sales, excluding traffic acquisition costs, to grow 18% to $44.16 billion, versus the 15% growth posted in the third quarter.

Meanwhile, e-commerce behemoth “the business killer” AMZN is likely to report another blockbuster quarter amid the accelerating shift to online shopping during the Covid-19 pandemic. The firm will likely post its first-ever quarter doing more than $100 billion in revenue (please remember that sales do not equate to profits) which would bring full-year 2020 revenue to a staggering $380+/- billion. While retail sales across the U.S. scaled back across most consumer categories in the final months of the year, sales at online retailers remained robust. Data showed that in December, U.S. non-store retailers “e-commerce platforms” grew sales almost 20% over the same month in 2019...can this continue after the reopening! Data points point to consumers becoming increasingly comfortable purchasing online every day as opposed to every now and then! Such data points to the following near to long-term potential implications for AMZN as they should see upside to GMV [gross merchandise value] estimates in 2021 and beyond due to the trend... and they could also experience moderating customer acquisition/retention costs as overall greater purchasing frequencies by customers like me reinforces their overall brand.

Into Friday’s January payroll report we could see some volatility to be released on Friday, the U.S. Labor Department’s January jobs report will likely show that the economy resumed adding back some payrolls at the start of 2021, after a dip in hiring in December if they do not look out for negative headlines to permeate the news flow.  Consensus expect to see the unemployment rate hold steady at 6.7% for a 3rd straight month and a modest rise in non-farm payrolls they anticipate non-farm payrolls rose by 58,000 in January, after declining by a net 140,000 in December as of December, employment was still ~10 million below its pre-pandemic levels seen in February of 2020, after even 7th straight months of payroll gains failed to fully recover the massive number of jobs lost at the worst levels of the pandemic. The biggest contributor to the December drop in payrolls was services sector employees, as leisure and hospitality industries shed a massive net 498,000 jobs in the final month of 2020. This phenomenon may be reflected again in January before mitigating in the coming months, as funds from the latest $900 billion fiscal stimulus package and hopeful vaccine-conferred immunity to COVID-19 percolated through the deteriorating economy.

Initial jobless claims during the survey weeks for the non-farm payrolls report suggests some downside risk to the report, however. During the survey week, or the week including the 12th of the month, first-time unemployment claims spiked above 900,000, closing back in on levels not seen since August 2020. But at the same time, continuing claims and claims for federal pandemic-era unemployment benefits also retreated, suggesting some reentrants into the workforce during the month.

Since the beginning of the January NFP [non-farm payrolls] survey period, continuing claims in regular state programs, PEUC [Pandemic Emergency Unemployment Compensation] and extended benefits have declined close to 160,000, consistent with the view that the labor market could have stabilized in January (key word = could).

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