Bitcoin is doing its predictable slides last, where are people moving their money to?
Our tools see money leaving Bitcoin and going into Value stocks, including European Value.
Have a look at the BTC vs. Europe Value Factor Charts:
the outflows of funds from BTC into cheap European stocks (Energy, Banks, Telecoms)
What we have right now 75bps FFR – is still very stimulative and pro-inflationary.If the Fed was genuine in its efforts to arrest the inflation, they would have raised 100bps, then 75bps, then 50bps and then 25bps….all last year
Amazingly, both of these mega-giants employ battalions of Data Scientists and millions of Data servers.The reality of a consumer who bought an extra pair of dumbbells and large computer screens to work out and work from home in lockdowns will not buy any of these for another 5-7 years!
Yet, both WalMart and Target failed to see a profound change in trend: they were still ordering more in-home merchandise as people wanted to break out and enjoy We call it a mean reversion – one of the most profound realities of life…WalMart and Target – I think you can do better!!
profit revisions tend to recur!It is a cockroach theory…
The rule of thumb – you need to see at least 3-4 negative profit revisions before the negative wave peters out, and, occasionally, it might take a couple of fiscal years!Fortunately, since Target is such an old business – we have data since 1992 on their earnings.Have a look at the Chart for earnings for Target:historically, negative earning revisions (downward pointing arrows) clustered in bunches of 5-6!
Therefore, revisit the profit guide-downs from the last quarter – we will see more of them.
the mighty Microsoft just issued weak forward guidance.
Have a look how much MSFT benefitted from the Covid lockdowns and stimulus.
Microsoft’s earnings have doubled in 2 years!
Insane!
For all economic and fundamental reasons we should expect its earnings to drop at least 25-30% now to get back in trend.
We will have a lot of these earnings guide downs in the next few months.
They beat and raised! – Sweet
but, at the same time they cautioned about “more measured pace of hiring going forward”.
That stands in strong contrast to the pattern of the behavior of their outgoing celebrity CEO, who is always “pedal to the metal”.
Again, our simple take is consistent with the broad trend in Technology is, unfortunately, down…
Wish I was wrong though!
The incomplete list of major drags on stock market is extraordinary heavy:
Besides these, you have nothing to worry about!
Just the fact that a relatively small SNAP was able to knock off 1.5% from Technology and 2.6% from Discretionary stocks tells us how early we are in the market selling process.
Remember, that the market never makes bottom on good news, it makes a bottom, when the last seller is gone.
Unfortunately, we are still very, very far away from that….
I.e. what would be a bet-a-farm kinda bargain?
Two ways to frame this – fundamentally and technically:
1) FUNDAMENTALLY:
The dominant player among cryptocurrencies would have to a dominant blockchain protocol.
Yet, we’ve seen the dominant player in crypto yet.
Today’s landgrab is highly reminiscent of the dotcom bubble and the subsequent collapse of the early 2000s.
We can simplistically compare investing in Bitcoin to investing in Yahoo back then – at the height of the internet bubble.
Just like an early entrant Yahoo was overtaken later by a far more sophisticated engine Google, now the chances of Bitcoin being overtaken by other more advanced blockchains protocols are very, very, very high….
One thing we know for sure, Bitcoin blockchain protocol is no longer the best, not even close
2) TECHNICALLY:
Historical charts of Bitcoin are hard to interpret.
Naively, previous strong support levels emerge at the 7,500 – 10,500 levels.
But nobody wants to hear that.
This is a big deal. It is one thing when a young Peloton (having grossly miscalculated the size of the market) is shutting down its plants, but it is a whole different story when the mighty Amazon (that employs tons of Data Scientists and even economists to forecast) fails to do that.
1) Is the economy slowing down too fast?or,
2) Were their long-term expansion plans so off the mark?Neither answer bodes well for Amazon and its stock…
