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The Fed’s latest follies do NOT knock me off my game

Jun 15, 2023

Good morning! 👋

I thought maybe, just maybe, we’d get lucky and see green today if Asian markets held up after JPow’s latest nonsense.

But noooooooo.

The economic illiteracy and tone-deaf approach being taken is simply staggering—but, as I noted in yesterday’s 5 with Fitz, we knew that would be the case.

More importantly, the Fed’s latest actions/statement do NOT knock me off my game.

Don’t let ‘em knock you off yours either!

Here’s my playbook.

Tech, of course, is selling off, but not for the reasons most think

The news is already starting with headlines about how higher rates will lead inflation-sensitive companies to _____ (fill in the blank).

That sounds great, but it’s also a dead giveaway that whoever is making that statement doesn’t know jack about how today’s highly leveraged markets actually work.

Traders are selling for three reasons:

  1. They don’t want a margin call with the cost of capital to go up;
  2. Big Tech stocks are the most liquid, easily sellable; and,
  3. That’s where they likely have the biggest profits on paper.

Longer term, this never fails to amuse me.

Tech is the one area of our world that is nearly bullet proof when it comes to investing with a longer-term time horizon and a disciplined strategy.

I know what I’ll be doing.

Russia has a mercenary problem

Reports that Ukraine is striking deeper into Russia and that mercenaries are switching flags makes Putin exceptionally dangerous. (Read)

Raytheon is a logical here to rebuild our own missile supplies and defensive capacity. I’ve got two other defense choices on tap in One Bar Ahead®—and those are, of course, set to move as well.

Meanwhile, China is watching carefully.

This may be the gutsiest call all year

Post Brothers CEO Michael Pestronk says San Francisco may be a huge opportunity for real estate investors. (Read)

I think he’s spot on.

However, the fact that he dodged the question about how much money his company wants to put to work there when the super-savvy Stuart Varney asked him point blank speaks volumes to me.


China’s rich take flight: from dumplings to dollars, adios!

A new report from Henley & Partners shows China is expected to lose 13,500 millionaires this year—after already losing 10,800 millionaires in 2022—making it the country with the highest millionaire exodus in the world. The next four on the list are Russia, India, Brazil, and United Kingdom. (Read) This is particularly damaging to China because millionaire growth has been stagnant since 2017.

I find the report really intriguing because China makes it notoriously difficult to transfer assets out of the country. So, the bigger question in my mind is exactly who is leaving.

I think we will learn in the months ahead that it’s party elite and relatives of party elite, known as the “princelings” for their close ties and privileged status within communist China.

Investment Idea: I would guess that most of the Chinese assets are already placed in office towers, residential, and resort real estate around the world, so I’m not expecting a Vancouver-like boom as was the case before Hong Kong’s handover. But mark my words, there will be a few surprises ahead.

Not that I am wearing my tin-foil hat or anything this morning, but what if Chinese money partnered with big US real estate firms to go bottom fishing in… you guessed it, cities like San Francisco, Chicago, and New York. 🤦‍♂️

Amazon IoT locks man out of his house for a week

A cautionary tale about the Internet of Things (IoT), a term, in case you’re not familiar, means that your entire household (appliances, TV, heat, etc.) can be centrally controlled via app or a device like Alexa.

Apparently, an Amazon delivery driver misheard a message from the man’s Ring doorbell (the man wasn’t home) as a racial slur and informed Amazon... which proceeded to suspend the man’s account, effectively shutting him out of his own house for a whole week. (Read)

No word on how SIRI feels about Alexa’s actions.


Bottom Line

Deciding to take action is often harder than taking action.

There is no maybe.

Let’s get out there and, as always, MAKE it a great day.

You got this!


Keith 😊

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