Welcome to The Wolf Den! This is where I share the news, my ideas about the market, technical analysis, education and my random musings. The newsletter is released every weekday and is completely FREE. Subscribe!
Today’s Newsletter is Sponsored by iTrust Capital!
Unlock new possibilities for your investments with iTrust Capital! If you currently hold a Traditional, Roth, Inherited, Simple, or SEP IRA at a traditional firm like Fidelity, Schwab, or Etrade, you can seamlessly transition to iTrust Capital. Enjoy tax-efficient investing in cryptocurrencies or precious metals without any hassle.
iTrust Capital is a trusted and secure company in operation since July 2019 which boasts over 200,000 accounts created. Take advantage of this chance to roll over your old 401k, 403b, or 457 from a previous employer into a Traditional IRA or SEP IRA with no taxable events. Your financial future awaits – make the switch with confidence.
In This Issue:
The META Comeback Nobody Saw Coming
Bitcoin Thoughts And Analysis
Legacy Markets
Coinbase Is Optimistic
President Nayib Bukele Wins a Second Term
The Beginning of the End for Craig Wright Has Arrived
MSTR Releases Earnings Today
Massive China Dump, Big Tech Rally & When To Expect Rate Cuts? | Macro Monday
The META Comeback Nobody Saw Coming
What a comeback.
Following setbacks inflicted by COVID and substantial losses in 2022, META has orchestrated one of the most remarkable stock rebounds in recent history.
On November 4th, 2022, both informed and uninformed investors examining Meta's stock would likely conclude that the demise of the social media giant was imminent. Plunging from a peak of nearly $400 to around $90, the outlook seemed grim. TikTok's ascendancy, Elon Musk's acquisition of Twitter, dwindling ad spending, and Mark Zuckerberg's full commitment to the metaverse dangled both believers and critics over the edge.
Meanwhile, Wall Street was fully on board to discard its once-adored social media superstar, along with all the untapped potential it held. Investors holding tight were staring straight into the eyes of a tech giant facing a 77% decrease.
A brief Google search yielded a plethora of quotes that vividly depict the Meta landscape in late 2022. I failed to find a crumb of praise.
Meta is on shaky legs when it comes to the current state of its business.
To return to stronger growth, Meta needs to turn its business around. It would benefit from less priority on the metaverse and more on fixing its core business.
#Meta today is a far cry from #Facebook just one year ago.
Judging by Meta’s recent stock market run, investors aren’t yet convinced that Zuckerberg's latest idea really has legs.
With Meta stock down almost 70% since the start of 2022, few investment managers say they see potential in Mark Zuckerberg’s firm.
We do not see an investment in the current period yielding strong upside.
An estimated $100bn-plus investment in an unknown future is super-sized and terrifying.
People are confused by what the metaverse even means. The company should cap its metaverse investments to no more than $5bn per year.
Essentially the market is saying that Meta has to start all over to rebuild its business.
In the face of widespread criticism, Zuckerberg stood firm: “Over time, these are going to end up being very important investments for the future of our business. This is some of the most historic work we’re doing. People are going to look back on [this] decades from now and talk about the importance of the work that was done here. While we face near-term challenges on revenue, the fundamentals are there for a return to stronger revenue growth.”
After falling out of the world’s 20 largest companies, Meta has surged back to claim the #7 position, prompting investors to ponder if now is the ideal moment to capitalize on profits with the stock reaching its all-time high. However, the positive developments for Meta don't end here.
Last Friday, Meta made a significant announcement after crushing earnings expectations. The company revealed its intention to introduce a quarterly dividend, starting at $0.50 per share, scheduled for distribution on March 26. Additionally, Meta plans to enhance its stock buyback authorization by $50 billion. In response to this news, META experienced a remarkable surge of almost $100, marking the largest single-day market value gain in history for a single company and recording an impressive $197 billion market cap increase.
META wasn't the only sole victor on Friday. Following the news, Mark Zuckerberg's 350 million shares are poised to yield him $700 million annually at the current dividend pace and 28 billion more reasons not to give a F*** about the haters who doubted him. (Zuckerberg’s net worth soared $28 billion in a matter of hours.)
Despite the positive developments, skeptics remain unconvinced that Meta is in the clear. The quarterly report revealed a notable setback in the Reality Labs unit, which reported an operating loss of $4.65 billion - exceeding expectations set at $4.26 billion. This brings the cumulative loss for the division to $42 billion since the end of 2020.
Additionally, critics are now expressing concerns that Meta might be artificially inflating its stock price while inadequately managing its earnings, potentially diverting resources that could have been allocated to employees or new initiatives. Here's a hint: there's always a good reason for skepticism if you look hard enough.
If you've reached this point hoping for my opinion on the future of Meta and its stock, I'm afraid I have nothing to offer. However, what I do believe is that any company venturing to push the tech envelope forward - whether in virtual reality, augmented reality, payments, cryptocurrency, or other areas - is directionally correct. This doesn't necessarily imply that Meta is perfect or following the most optimal path, but in terms of direction, I am optimistic about their vision.
The overarching moral of this story is that doubt often serves as the gateway to success. The resurgence of META was forged by the critics, non-believers, and skeptics who inadvertently paved the path for Meta to defy expectations and prove the haters wrong. Meta found itself a pair of fresh legs, forged itself in fire and has returned with a vengeance. This is a recipe for long-term success.
While this isn't financial advice, based on my area of expertise, I anticipate similar outcomes for Bitcoin, Ethereum, Solana, Coinbase, and a few other reputable assets. I hope all of you had a great weekend; let's crush this week together!
Bitcoin Thoughts And Analysis
I have barely looked at charts for the past few days, which is a good thing - because almost nothing has changed. The market is drifting through the chop, waiting for the next big narrative to come along.
As you can see, we have a bit of a pennant after the move off of the lows at $38,600. I have alarms on the top and bottom lines of this symmetrical triangle, but honestly don’t see anything compelling at the moment for bears or bulls.
Legacy Markets
European stocks experienced a rise, largely driven by BP's positive earnings and share buyback announcement, which helped counterbalance the declines of companies like UBS and Infineon. Meanwhile, global bond markets stabilized after a significant selloff, with US equity futures showing slight gains. The ten-year Treasury yields slightly decreased, and the dollar edged down after recent gains.
In Asia, Chinese equities saw a notable surge amid speculation of more decisive actions from authorities to address market downturns, with significant gains in the Hang Seng China Enterprises Index and emerging market equities. However, investors remain cautious, seeking more substantial policy measures.
In Europe, the Stoxx 600 index modestly climbed, while S&P 500 futures also saw marginal gains. Market sentiments were also influenced by the latest ISM services data, indicating increased prices and service activities, which, along with cautious statements from Federal Reserve officials, tempered market optimism.
Corporate highlights include UBS's net loss and share buyback plans, BP's robust quarterly profit and increased share buyback commitment, Infineon's reduced revenue forecast amid semiconductor demand slump, and Novartis's acquisition of MorphoSys, signaling strategic expansion in its product pipeline.
Key events this week:
Eurozone retail sales, Tuesday
Bank of Canada Governor Tiff Macklem speaks, Tuesday
Fed’s Loretta Mester and Patrick Harker speak, Tuesday
Germany industrial production, Wednesday
Walt Disney earnings, Wednesday
Fed’s Adriana Kugler and Tom Barkin speak, Wednesday
China PPI, CPI, Thursday
US wholesale inventories, initial jobless claims, Thursday
Treasury Secretary Janet Yellen speaks at a Senate banking committee hearing on the Financial Stability Oversight Council annual report, Thursday
Pharma CEOs speak at a Senate panel on prescription drug prices, Thursday
ECB Chief Economist Philip Lane speaks, Thursday
ECB publishes economic bulletin, Thursday
US CPI revisions, Friday
Germany CPI, Friday
President Joe Biden hosts German Chancellor Olaf Scholz at the White House, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.1% as of 9:50 a.m. London time
S&P 500 futures were little changed
Nasdaq 100 futures rose 0.2%
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index rose 0.6%
The MSCI Emerging Markets Index rose 1.3%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0735
The Japanese yen was little changed at 148.65 per dollar
The offshore yuan rose 0.3% to 7.2010 per dollar
The British pound was little changed at $1.2548
Cryptocurrencies
Bitcoin rose 1.5% to $42,965.76
Ether rose 1.9% to $2,330.85
Bonds
The yield on 10-year Treasuries declined one basis point to 4.15%
Germany’s 10-year yield was little changed at 2.32%
Britain’s 10-year yield was little changed at 4.01%
Commodities
Brent crude was little changed
Spot gold was little changed
Coinbase Is Optimistic
Coinbase has published a brief report delineating various factors contributing to its bullish outlook in the short-to-medium term - many of which align with sentiments I've previously emphasized. What appeals to me about these ideas is that they aren’t longer term narratives; instead, they serve as quiet market drivers.
Let’s recap what the crypto market has going for it in 2024:
Many technical factors pressuring bitcoin specifically (and crypto more broadly) are starting to be exhausted, in our view. Ie. FTX and Grayscale.
In the US, the likelihood of a soft landing seems higher than it was a few months ago with the economy ostensibly making only minimal tradeoffs between activity and inflation.
Core PCE inflation (the Federal Reserve’s preferred measure of prices) at 2.7% YoY is trending in line with their 2% long-run target, and the assortment of recent economic indicators has been fairly resilient.
The conversation on tapering its quantitative tightening (QT) program was postponed to the next meeting on March 19-20.
Ultimately, this would coincide with idiosyncratic drivers like the bitcoin halving in late April and could potentially prop up both bitcoin and other tokens in 2Q24.
Moreover, we expect the effects of more advertising from ETF issuers and the inclusion of spot bitcoin ETFs in asset managers’ model portfolios to unlock increased liquidity in this space.
Imagine what happens when an unexpected bullish narrative takes ahold a firm grip on the market with these positive background forces…
President Nayib Bukele Wins a Second Term
Bitco... I mean, President Bukele, has just secured his second term in El Salvador with a landslide victory, capturing 85% of the votes. In addition to his reelection, Bukele’s New Ideas party is anticipated to secure nearly all 60 seats in the legislative body, consolidating his influence in the country. It will be fascinating to observe what unfolds over the next five years (yes, the term is five years) to determine if this substantial level of power proves to be a force for good. I’ll refrain from making a strong early judgment, but thus far, I believe history will depict Bukele as a force for good in a country that has long been plagued by widespread corruption.
The Beginning of the End for Craig Wright Has Arrived
In the COPA v. Wright trial, the Crypto Open Patent Alliance (COPA) seeks to expose Craig Wrightfor larping as Satoshi Nakamoto. On day one, COPA presented evidence, including digital forensics, challenging Wright's credibility. The significance lies in the trial's potential impact on other lawsuits, which could jeopardize Wright's legal standing.
A successful disproof of Wright's Satoshi identity might influence open-source development, while a ruling in his favor could afford him copyright control over the Bitcoin white paper. As expert witnesses present testimonies over the next few weeks, the trial's outcome, expected in March, holds significant consequences for both Wright and the broader Bitcoin community.
MSTR Releases Earnings Today
Long-term MSTR investors should closely monitor this earnings report. I fully anticipate Michael Saylor to persist on his BTC purchasing mission this coming year. Additionally, I foresee these earnings being noteworthy due to the impressive performance of Bitcoin in Q4. As MSTR ascends, Michael Saylor gains more potential to acquire BTC.
Massive China Dump, Big Tech Rally & When To Expect Rate Cuts? | Macro Monday
Join Dave Weisberger, Mike McGlone, and James Lavish as we break down what's happening in macro and crypto!
My Recommended Platforms And Tools
Trading Alpha - My new go-to indicator site and trading community. Use my link to sign up and get 10% off. Make sure to use code “TenOFF”
OKX - Sign up for an OKX Trading Account then deposit & trade to unlock mystery box rewards of up to $60,000! Use my code HERE.
NGRAVE - ZERO is the most secure and user-friendly hardware wallet. If you aren't happy with your current crypto wallet, look no further than the ZERO.
The Daily Close - Brand New Newsletter! Institutional grade indicators and data are delivered directly to your inbox every day, at the daily close. Trade like the big boys
Nord VPN - Get an exclusive NordVPN deal - 40% discount! It’s risk-free with Nord’s 30-day money-back guarantee. Protect your privacy.
Twitter - I spend most of my time on Twitter, contributing to CryptoTownHall every weekday morning, sharing random charts, and responding to as many of you as I can.
YouTube - Home of the Wolf Of All Streets Podcast and daily livestreams. Market updates, charts, and analysis! Sit down, strap in, and get ready—we’re going deep
TheWolfOfAllStreets.io - The most comprehensive collection of everything I have going on. Plus over 100 blogs and other exclusive content.
The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.