How to make FedEx deliver for you
Sep 22, 2021Good morning!
Markets are trying to make an upside comeback on news that Evergrande has reportedly renegotiated a debt payment. Then, there’s the Fed later today.
Here’s my playbook.
1 – Evergrande IS as serious as it gets
The worldwide markets are breathing a sigh of relief as I type but I think that’s misplaced for a few reasons: 1) Evergrande’s renegotiated debt payment of $85 million is just 0.003% of total outstanding $300 billion in debt; 2) Evergrande’s debt accounts for roughly 11% of all Asian high yield paper; 3) there are 128 banks and 121 non-financial institutions at risk of cross-default including foreign bondholders.
The risks of contagion are very, very real.
Buy a few SPY puts or inverse funds (if you haven’t already) to hedge. Tighten trailing stops. There will be a time to buy but now’s the time to be cautious.
Watch my take with Maria Bartiromo earlier today
2 – The Fed: danged if it does, danged if it doesn’t
JPMorgan CEO Jamie Dimon is known for calling it like he sees it and we are in total agreement when it comes to the Fed. Team Powell may be forced to make a super sharp move next year even though it doesn’t want to taper this year. We’re also in agreement that US policy makers may be forced to concede that at least part of inflation is here to stay … ergo, to a point I’ve made repeatedly and often over the past 12 months, it’s NOT transitory.
3 – FedEx missed earnings, drops 6% in overnight markets
People yell and scream that stocks are too expensive only to cower in fear when they’re actually put on sale. FedEx missed on earnings citing labour woes, supply chain problems and more.
I’ll be looking to sell a few more cash secured puts today in an effort to capitalize on the chaos. I thought buying at $220 a share could be good but getting shares at $200 could be even better if the markets want to juice premiums enough. A few well placed LowBall orders could work nicely too if you’d prefer not to use options.
4 - Insider trading doesn’t work when everything is tracked
Nate Chastain resigned from OpenSea after allegedly being caught with a secret Ethereum wallet he used to make purchases related to pending front-page NFT releases on the company’s website. Translation … he got busted for reportedly using insider information for personal gain.
What strikes me about this is singularly important.
Everybody is on a level playing field with blockchain and that means stuff like this is trackable even though the wallet-holder is ostensibly anonymous. Apparently, as the story goes, a few Twitter sleuths used a combination of web archives and more to pin down art pieces then brought the matter to public attention.
Now, if only certain House Speakers would be held accountable for similar actions. And a slew of other government big wigs, too!
5 – Avoid this company’s SPAC like the plague
Didn’t think I’d live to see the day, frankly.
WeWork is apparently going public via SPAC later this year with a $9 billion valuation, rather than the $47 billion they originally proposed a couple of years ago. Make no mistake, this is simply disaster control for the shareholders and investment bankers who are trying to recoup as much as they can by suckering in retail investors.
Don’t touch it. In fact, avoid it like the plague, unless you’re prepared for the possibility of losing it all.
Bottom Line
And … this just in so we can all finish with a laugh today …
Make it a GREAT day!
I will be with you every step of the way.
You got this – I promise!
Keith :-)
