Operating at the Intersection of Technology and the Capital Markets
Tag: equities
Natural Gas is historically cheap. Demand is not going to zero. Therefore, it makes sense to consider owning some in your portfolio. You run the risk that Natural Gas prices may go sideways for a while. However, there is certainly more upside reward than downside risk. I can't say the same for equities, even for … Continue reading Natural Gas Is Historically Cheap
Investors are crazy if they don't believe there is more air to come out of the Everything Bubble. With Infrastructure Software companies like SNOW trading at 22x forward Revenue.. With Analytics Services companies like PLTR trading at 8x forward Revenue and 34x Adj. EBITDA.. With companies like COIN trading at 5x trailing Revenue (who knows … Continue reading The Bubble Still Floats
Regardless of where CPI lands tomorrow, my view is that the Fed will hold rates higher for longer than the market believes. Higher interest rates combined with a shrinking money supply (QT), translates to: tighter monetary conditions, a higher cost of capital, less revenue visibility for companies, more employee layoffs and a deeper recession. The … Continue reading Tomorrow’s CPI = Noise
The market has felt speculative since year-end. Increases in equity options volume supports this view. Animal spirits have not been sufficiently stomped out by the Fed. December 2022 saw 797 billion in equity options volume. That metric increased to 851 billion in January 2023 as investors juiced positions with options trades (see chart below). It … Continue reading Options Volume On The Rise
Back to the office, equities will sell off. We expect that equities will trade off when investors return to the office in January in anticipation of soft earnings. Technology stocks will be hit the hardest. Another leg down on EPS reports. When earnings are reported in January and early February, there will be another leg … Continue reading Equities Over The Next 2-3 Months
There will be more equity market fallout. Historically, equity markets haven't found a bottom while the Fed is in a tightening cycle. I see the NASDAQ index falling to 9,000 during Q1 2023 as: 1.) the Fed tightens further; 2.) weak 2023 earnings guidance is provided on Q4 EPS calls; and 3.) global recession combine … Continue reading Equities Have A Tough 2023 Ahead
Equity indices have rallied today as reported Headline and Core CPI increased by "only" 7.7% and 6.3% Y-O-Y respectively. Many Technology names are up double-digit percentages today on this macro news despite the fact that many companies are cutting heads (it's not just CRM, LYFT, META, MSFT, NFLX, RDFN and SHOP), given the weak economic … Continue reading Sell This Rally
Given higher interest rates some Private Equity deals have been executed with 100% equity. This means Private Equity firms will become more valuation sensitive in order to generate higher returns. In months and years past PE firms would use minimal equity (subscription loans were popular), when executing transactions. Minimizing the equity component would goose PE … Continue reading Further Downward Pressure On Equities
Once the equity market finds a bottom in the first half of 2023 it is doubtful the market will roar back for a sustained rally. We believe the market will trade sideways for 3-5 years. Our theory is based on three assumptions: First: the Fed maintains its Fed Funds Rate in a range of 3-5%. … Continue reading A Market Bottom Followed By A Sideways Sawtooth Pattern
The Fed will continue to hike interest rates for the foreseeable future. Macroeconomic and geopolitical risks are increasing. Therefore, yields can only move in one direction (Up), but this story won't have a happy ending like the Pixar movie of the same name. That is good news for high yield investors, good news for savers … Continue reading Yields Will March Higher
You must be logged in to post a comment.