The big R word

Good morning!

We’ve been having a debate in our office about the R word.

The boffins say 2023 but I say it’s already here.

What say you?

Is it imminent, inevitable, or simply a WTFruitloops moment?

Click on your choice to vote:

Imminent
Inevitable
WTFruitloops?!

Meanwhile, this week’s Ask Me Anythings will be out shortly so keep an eye on your email if you’re a member of the One Bar Ahead™ Family!

1 – Why I don’t give a hill of beans about the CPI

The report came it at 8.6%, a “hotter-than-expected” number.

Hotter than who expected … the Fed … BLS economists playing with broken models … Yellen’s treasury department … academics?!?!

Everybody in the real world knew it was going to be a scorcher.

This isn’t rocket science.

The situation is Keynesian beauty contest.

That’s a term used by economist John Maynard Keynes to explain a contest where judges are rewarded for selecting the most popular contestants by selecting amongst the other judges rather than the contestants they may find most attractive.

The only thing that matters is how the market reacts to what it thinks the Fed will do next based on this report and that’s abundantly clear as I type.

It’s not too late to hedge: Many investors have no idea how simple, easy and effective this is to do. Wall Street’s not helping either … so I wrote Your 5 Minute Guide to Hedging recently. I’ve given you plenty of chances to order over the past couple of weeks so hopefully you’re on board!

Be a nonconformist: Great companies are being put on sale; you know what to do!

2 – The medical version of “it’s transitory”

A story on CNBC caught my attention this morning … “Diseases suppressed during Covid are coming back in new and peculiar ways.” (Read)

No.

Things like monkeypox, influenza, respiratory syncytial virus, adenovirus, and tuberculosis are not coming back because they want to. They’re breaking out because they’re mutating.

The reason scientists can’t bring themselves to say the obvious is because, like economists, they’re still trying to explain the world based on what they thought they knew. Not what’s actually happening.

This is the medical version of “it’s transitory.”

I will bet dimes to dollars that 1) scientists will “discover” in the months ahead that each of these viruses has adapted based on mutations related to transmissibility and 2) that, when combined with diminishing herd immunity to orthopox virus species could easily hit epidemic proposals.

The real danger is a “frankenvirus” with increased lethality and transmissibility that results from the collision of one or more of these viruses (including Covid) which, BTW, I noted at the very onset of the pandemic.

How to invest: The big medical companies and their tech counterparts are where you want to be. Covid vaccines are, unfortunately, just the beginning. Billions will be spent fending off the next generation of nastiness.

3 – Goldman clients: thanks for nothing - NFLX

News is out this morning that Goldman Sachs has downgraded Netflix to a sell citing rising competition and recession as a threat. (Read)

The stock has lost 2/3rds of its value and now they say “sell”??

NFLX is trading at $192.77, down 72.5% from the 52-week high of $700.99

Yeesh.

4 – DIS: woken or broken?

There’s a war on inside Disney. Corporate Affairs Chief Geoff Morrell departed in April and now Disney’s General Entertainment Chairman Peter Rice as been given the boot. He’ll be replaced by Dana Walden who CEO Bob Chapek is championing as a “dynamic, collaborative leader and cultural force.” (Read)

Stock’s down more than 30% this year.

I won’t touch it and, evidently, neither will millions of other investors.

5 - Citadel entering crypto is like inviting Darth Vader to a psychic convention

Citadel – yeah, those guys - is reportedly joining forces with Fidelity and Schwab to build a cryptocurrency trading platform by the end of the year. (Read)

Crypto enthusiasts think this is a sign of more acceptance and deeper game.

Not on your life.

The only reason Citadel want to embrace crypto is because they see an entirely new crop of investors to fleece just like they did when meme-stock mania raged. Gensler’s reforms probably kicked this into gear.

What to do: Stick to Bitcoin and Ethereum only and in tiny amounts you can afford to lose entirely if it blows up. Citadel’s interest is like inviting Darth Vader to a psychic convention.

Bottom Line

Sharks feed when there's blood in the water.

It's no accident they've been around millions of years.

Let’s finish the week strong!

You got this – I promise.

Keith