Towards min(Risk/Reward) – SeekingAlpha August Bear Market Update

Featured Photo by Nick Chong on Unsplash

Towards min(Risk/Reward)

Let’s look at the latest SA market update as of Sun, Aug 21, 2022.

Cryptocurrency Digest:

Cryptocurrency Daily Digest as of Aug 21, 2022 08:00 ET
  • Investing In The Metaverse, Not Just For Individual Investors

As NFTs are increasingly recognised as assets, they also present a conundrum for the investment community.

  • Litecoin: Still A Valuable Coin

LTC has a robust and growing ecosystem.

However, it is under pressure from competitors and regulators.

I estimate LTC could be worth over $150.

  • Bitcoin: Black Swans Are Lurking

Bitcoin’s blow-off top at $25k on August 14th signifies the end of a reflexive rally, representing the “return to normal” stage of a bubble.

We anticipate Bitcoin is entering “phase 2” of its first-ever bear market, which can decrease BTC by another 60% to 80%.

Tech Daily:

  • Intel Corporation Yields Over 4%, Now’s The Time To Buy
  • Oracle: The Dividend Growth Stock Your Portfolio Needs
  • Apple: Upside Catalyst Watch – Is The VR/AR Headset Coming Next Month?
  • Twilio: Earnings Beat, Rapid Growth And Undervalued

Market Outlook:

Stocks have been living in the land of make-believe for the past 4 weeks.

Futures, bond, and currency markets have a message that cannot be ignored.

There will be no dovish pivot, and the Fed is going to raise rates much higher and keep them there for some time.

  • Weekly Commentary: Inaugural Squeeze

Risk off had attained powerful momentum globally back in July. De-risking/deleveraging dynamics were increasingly fomenting illiquidity, contagion and instability across global markets.

The S&P500 ended the session with a year-to-date loss of 20%. The Nasdaq100 was down 28%, while the Banks ended the session with a 2022 loss of 25%.

These days, bullish markets, luxuriating in newfound liquidity abundance, face an unfamiliar policy backdrop. Rather than a dovish pivot, the Fed is poised to plow ahead with its first real tightening cycle in 28 years.

  • The Week On Wall Street – A Very Complex Situation

Earnings season winds down after producing the best S&P performance since 2009.

The recently passed tax and spend green energy bill does not contain a scintilla of “growth”. That means any recovery remains rocky at best.

China’s zero COVID policy continues to take its toll on its economy, adding more fuel to the global recession talk.

Economic data continues to come in weak and isn’t aligned with the “no recession” commentary.

Economy:

  • Any discussions about the Federal Reserve and the stock market seem to include concern over the radical uncertainty that exists in the world today.
  • What About That Recession?

The yield curve is inverted from the 6-month T-bill to the 10-year Treasury note, which would suggest that the bond market’s message is “recession ahead, batten down the hatches”.

Relatively tight risk spreads suggest that nobody is thinking too seriously about the potential for corporate defaults, which of course tend to be higher during a recession.

Those consecutive negative GDP reports notwithstanding, our economy is neither currently in nor close to being in the kind of conditions normally associated with a recession.

Real Estate:

SA Morning Briefing:

Alibaba: Fortunes Will Be Made
Ford: Lightning Charge To $20s – Get, Set, Go!

Exxon Mobil Has An Ace Up Its Sleeve

Home Sales Are Crashing Faster Than The Bursting Of The 2005 Housing Bubble

Wall Street Breakfast: Housing Crunch

Wall Street Breakfast

  • The stock market’s four-week winning streak came to an end, in reaction to an overbought market that was due for a pullback. After Wall Street’s impressive recent rally and with central bank tightening in the pipeline, traders saw an opportunity to trim back positions.
  • Alex King spent over three decades on the buy-side. Among his recent picks are stocks such as Fortinet (+110%), HubSpot (+127%) and CrowdStrike (+63%).
  • And recently, ProShares UltraPro QQQ (TQQQ) was +27% in just two weeks, and Microsoft (MSFT) was +10% in three days.
  • Growth stocks were among the favorites for hedge fund whales in the second quarter. Monday was the deadline for hedge funds with more than $100M in assets under management, as well as other institutional investors and endowments, to report certain stock holdings through 13F filings. The 13F season gives investors a glimpse into where the big players are betting, albeit with dated information.
  • A number of hedge funds and money managers looked to pick up beaten-down growth stocks, such as tech, in Q2. From April to June, the Nasdaq 100 (NDX) (QQQ) fell more than 22%, while the S&P 500 (SP500) (SPY) was down about 16.5%.
  • Among the big-name disclosures, Warren Buffett’s Berkshire-Hathaway (BRK.A) (BRK.B) boosted its stake in Activision (ATVI) to ~68.4M shares from 64.3M. It also exited its stake in Verizon (VZ).
  • Retail resilience? While housing is struggling there were also signs for some optimism. Results from Home Depot (HD) and Lowe’s (LOW) showed that the home improvement consumer is “holding up quite well,” according to Oppenheimer analyst Brian Nagel.
  • Apple (AAPL) is reportedly looking at holding its annual fall product event, including the announcement of its iPhone 14 product line, on Sept. 7.

ETF & Portfolio Strategy

SPY: Targeting $428 For The Last Dance

BUZZ Investing: Meme-Stocks Make A Comeback

VIG: Put This Solid Dividend ETF On Your Radar

Global Investing

Glencore: Deeply Undervalued Dividend Gem

Centerra Gold: The Most Extreme Discount In A Mid-Tier Gold Producer That I’ve Ever Seen

Dividend Ideas

Blackstone Is Buying REITs Hand Over Fist

Lincoln National Is A No-Brainer Buy, Here’s Why

Stock Ideas

Occidental Petroleum: Is Warren Buffett Taking Over?

Cleveland-Cliffs: We Simply Can’t Remember A Stock Like This

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