Monday, March 13, 2023

👇How Secondary Consequences Could Upend Attempts to Bring Down Inflation

Good morning. Markets have been reacting sharply to the idea that interest rates will continue to...
It's the monthly jobs numbers today and they're not going to be pretty and will be possibly the tip of the iceberg as we head into May.

Good morning. Markets have been reacting sharply to the idea that interest rates will continue to rise – and that the Fed may start increasing interest rates at a faster pace, even after getting down to quarter-point moves. However, rising rates will mean a higher cost to borrow. And that could spell trouble for the economy thanks to today's high level of government debt.

That's because most government debt is issued at short-term durations, from 30 days to two years. As rates rise, much of that debt will roll over at a much faster rate. As that happens, it's likely that the political pressure for the Fed to stop tightening monetary policy will heat up. But that likely won't happen until a crisis gets hit.

This past week's market moves are a sign that traders need to remain cautious – and even look for downside trades in the months ahead.

Now here's the rest of the news:

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MARKETS
DOW 31,909.64 -1.07%
S&P 3,861.59 -1.45%
NASDAQ 11,138.89 -1.76%
*As of market close
Markets sank again on Friday, as the FDIC shut down the largest bank since the financial crisis.
Oil jumped 1.1 percent, last going for $76.52 per barrel.
Gold rose 2.0 percent, ending at $1,872 per ounce.
Cryptocurrencies trended lower, with bitcoin at $19,991 at the stock market close.

Today's TOP TIPS
Investors Focused on the Long Term Should Continue to Focus on Earnings
There are many things that companies can control. But they can't control how the market will react to one of their quarterly earnings reports. A company may have great earnings, but see shares sell off on a lower outlook, or because revenues are off.

However, a company isn't just one quarterly report. And a company that can continue to improve its earnings over time will see its share prices rise, even if that process takes time to play out.

» FULL STORY

Insider Trading Report: First Solar (FSLR)
Norman Wright, a director at First Solar (FSLR), recently bought 465 shares. The buy increased his holdings by 40 percent, and came to a total cost just over $99,900.

The buy marks the first insider purchase since last August, when two officers picked up just over $1 million in shares. Otherwise, company insiders have generally been selling shares of stock, including both directors and officers.

» FULL STORY

Unusual Options Activity: 3M Company (MMM)
Industrial and manufacturing conglomerate 3M Company (MMM), has seen shares lose nearly a quarter of their value over the past year. One trader sees a further decline in the weeks ahead.

That's based on the March 31 $30 puts. With 18 days until expiration, 7,134 contracts traded compared to a prior open interest of 112, for a 64-fold rise in volume on the trade. The buyer of the puts paid $2.60 to make the bearish bet.

» FULL STORY

IN OTHER NEWS
Biden Unveils Budget Proposal

President Biden unveiled a $6.9 trillion budget, which would look to increase taxes on the wealthy and big businesses in order to strengthen social programs. Part of the plan could include as much as a 25 percent tax on wealth over a certain level. The budget would be for fiscal 2024, which starts on October 1, 2023. However, it's unlikely that the budget in its current form will pass congress.
Russia's Banking System Hit by Sanctions

Sberbank, the largest bank in Russia, saw its profits drop nearly 80 percent over the past year as sanctions by Western countries have had an impact on the economy. However, many banks in Russia have turned towards the Russian government to obtain defense-spending-related business.
Ex-Banker Gets 10 Years in Prison Over Corruption Case

Roger Ng, a former banker at Goldman Sachs (GS) has been sentenced to 10 years in prison for his role in lotting billions of dollars from Malaysia's sovereign wealth fund, 1MDB. In total, $4.5 billion of a $6.5 billion bond investment was embezzled, with some of the funds going towards jewelry, artwork, and producing the film "The Wolf of Wall Street."
Silicon Valley Bank Collapses Following Unveiling of their Recapitalization Plan

Silicon Valley Bank (SIVB) saw shares drop over 60 percent last week, as news leaked out about the bank's plans to shore up its balance sheet by issuing more shares and issue more debt. However, markets reacted poorly, as the news came on the heels of the decision of cryptocurrency lender Silvergate Capital (SI) to wind down operations. The FDIC shut down the bank on Friday.
Elon Musk Plans Town in Texas

Billionaire Elon Musk and executives at some of his affiliated companies have been buying land near SpaceX facilities outside of Austin. Between 3,500 and 6,000 acres have been bought, and plans are in place to build homes and other facilities, with a town reportedly named Snailbrook.

S&P 500 MOVERS
TOP
INTC  3.423%
TCOM  3.212%
JPM  2.624%
CI 2.033%
NTES  1.953%
BOTTOM
SBNY 22.532%
FRC 15.498%
SCHW 10.005%
ARE 8.24%
LUMN 6.976%

Quote of the Day
The real issue is what kind of threshold would the Fed need to really stop the rate hiking cycle or stop from going 50 basis points. You really need to get to below 100,000 [jobs created] to think 25 basis points is okay. They need to see signs of a major chill.
- Diane Swonk, KMPG Chief Economist, on why the Fed will likely continue to tighten monetary conditions until fewer than 100,000 jobs are created on a monthly basis.

Sponsored Content
Secret behind reclusive millionaire's 8-year win streak revealed
Over the last 8 years, 97% of the trades he's used THIS strategy on have closed out as winners. Most people have never heard of Jim Fink. But behind his humble demeanor and insistence on personal privacy... is a big secret.

A maverick options trading strategy that has not taken a single loss this year. In fact, it has a 97% accuracy at hitting winners over the past 8 years! That's a crazy statistic considering that 80% of option traders lose money.

So how on earth does he do it? (Especially in THIS market).

Jim has agreed to reveal his personal options technique in a rare, one-on-one interview.

In it, he shares the details of the strategy that enabled him to...Quit the working world and retire early as a multi-millionaire. Turn potentially losing trades into winners, giving him one of the top track records I've ever seen (both on and off Wall Street). Works equally well in both bear and bull markets.

You can access this rare, eye-opening interview here.


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