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When good news is bad news

Jul 14, 2022

Good morning!

‍The markets have now tacked on four solid up days in a row which means a bit of reflex selling and profit taking would not be unexpected.

I’ll be doing some of both.

Here’s my playbook.

Jobs: when good news is bad news

The jobs data came in hot showing that payrolls increased +372,000 which is “more than expected” even though household data suggests -315,000 employed persons as pointed out a few minutes ago by my friend and colleague Stephen “the Sarge” Guilfoyle.

The markets, naturally, have dropped because traders interpret a strong jobs report as a sign that the Fed will remain hawkish and raise rates more/faster/sooner.

I’ll be using that to my advantage and taking short-term profits this morning on SPY puts I purchased yesterday shortly after I tweeted that “If there's going to be a roll/fade today ... now's a pretty good time to get set up $SPY $SPX”.

Hope you are too if you took advantage of the situation.

I’m also planning to turn over a few rocks and add shares in some of my core positions if the markets hand me that opportunity.

Why JIT will become MINI shortly

The pandemic changed our world in many ways but none more graphically than supply chain management. I’ll be talking with the incomparable and super brilliant Ray Wang about this and other disruptive tech later today.


GME cleaning house

GameStop has fired CEO Mike Recupero and announced layoffs as part of an aggressive turnaround plan. (Read) There’s also a 4:1 stock split that’s been ‘ok’d but via a dividend, which is a unique wrinkle. Popular YouTuber Matt Kohrs breaks the situation down very nicely and succinctly. (Watch)

Hopes are running high that this’ll do the trick, but I have my doubts. Wall Street has it out for so-called memers, and that’s a dangerous mix.

The company hasn’t taken questions on strategy in more than a year’s worth of earnings calls. Nor has it released key details related to what is being called a “digital future.”

No surprise shares are down hard this morning.

En garde!

Twitter could get the bird

The rumour mill is in overdrive. Sources say that Musk may pull out of the Twitter acquisition because the company is apparently unable or unwilling to verify that less than 5% of Twitter users are automated spam accounts as publicly stated. (Read)

I see three things happening if he walks.

A massive legal battle between Twitter and Musk that he’s broken the deal while he’ll argue material details were misrepresented or false from the get-go.

The SEC could also elect to pursue Twitter if Musk’s assertions about fake accounts have merit because Twitter execs have repeatedly posted numbers as part of the reporting process that, for lack of a better term, may be completely fabricated. There is no doubt they’re watching intently.

This is a longer shot – as in a Hail Mary pass long shot - but the technorati could rejoice and, in doing so, spark a rally as unthinkable as that is. I’ve got a few speculative shares on hand just in case.

I almost never buy overnight but last night I made an exception

I normally shy away from overnight markets, but last night I made an exception. I’ll share my thinking and spill the beans later this morning in this week's One Bar Ahead™ AMAs.

You’ll want to own it.

Bottom Line

The sun will come up tomorrow.

Trade like it will.

Invest accordingly.

Now, let’s finish the week strong!


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