Newsletter - 9/10/2023
A special thankyou to all of you for your patience during my recent absence. I have finally sorted out the health issues. Thank you to Vamp for keeping things going in my absence also.
Enough with the touchy-feely; let's get to work.
Changes, Changes, Changes:
With my forced downtime, I was left with plenty of time to think. TBH, I have been unhappy with how this MRNA has been working lately, or not working.
When I started this, it was to educate, inform and provide a forum for the free exchange of ideas. However, imo, it has become less of the first two items and more of the last item. I intend to change that with my first change being this newsletter.
I no longer will comment on positions or provide charts etc. That's why, previous to the last couple of weeks, I am in live chat. I will also provide specific position updates via email. If there is no new comment than there is nothing new I have to offer.
Instead, I will provide opinions and thoughts on relevant topics, research and trends. Frankly, it's what got me here..
I started this on Reddit. I would post comments and articles to inform and correct gross misrepresentations. I really didn't get much notice, which was fine by me, until I did the post on the VIX and Oil being manipulated. That garnered over 1.5 million views and lot's of responses. Explaining HOW the game is rigged and empowering you to use that knowledge to your benefit is my passion.
This is not a reduction of trade ideas or anything like that, it is more of a written contract with you that I will refocus my energies on educating and informing.
Some specific changes:
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Along with changes previously mentioned, I will be refocusing the newsletter on education and information, along with my frank opinion of course. If you have a topic you want me to consider, send it to me.
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VIPs: I will start teaching you about more advanced trade structures such as spreads, diagonals and condors. I also will be teaching you how to read an IV chart relative to premium, as well as how to test probability.
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Free Members: You will retain access to the Newsletter, Blog posts and much of the website.
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Trade Alerts: I will no longer be sending out trade alerts - it takes me too long to do each one. Instead, I will be posting the trade alerts in the Discord alert channel in expanded form as well as on Twitter - hopefully Spero will be helping me with this.
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Bulletin Board: This is a new paid members only part of the website that I will be launching this week. This will be a page where I post my thoughts during the week about news or information that I think is useful. It will be searchable by topic and eventually will be segmented into different sections - I commit to having that done this week also.
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Discord Chat: I will be moving to a live market commentary format. The chat will still be open but I will be live in the Boardroom every morning for at least the first two hours of the market, most of the time more of course. That means as that grows, I will post less in chat.
Understand that all of these changes are focused on delivering more value to you. I need to up my game so to speak if I want to accomplish my mission: teach you how to make money and all the pitfalls that the "industry" has structured to make sure you don't. If you have any other suggestions, please let me know.
SPY Commentary
On the weekly chart above, it is easy to see the reversal to the upside. The BIG QUESTION is will there be a blow off top or not? I still believe there will be and it could come with some "softer" commentary from the next Fed meeting. Understand that the Fed is between a rock and a hard place - something I have discussed at length already.
See my comments below regarding what I am watching as "tells" for either a blow off top or a big fall.
One thing to note particularly is that the SPY has be trading BELOW the MEAN (light blue line above) for some time now. A blow off top would take the SPY well above the mean for at least a FULL WEEK, perhaps longer.
Until trend changes on the weekly, the SPY is BULLISH.
MRNA WEEKLY FOCUS: KRE
Every week in this section I will discuss a topic, a stock, etc. in detail.
Regional banks are still holding up and that might be a bit confounding. But understand something: MACRO ISSUES TAKE TIME TO WORK THEIR WAY INTO THE MARKETS. Regional banks are setup for a big fall, perhaps not as big as 2008, perhaps bigger depending on how events unfold.
Here are some relevant data points:
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Rising interest rates cause bond prices to drop. Current estimates are that regional bank are carrying at least $700 billion in unrealized losses just from the drop in their Treasuries. That DOES NOT INCLUDE COMMERCIAL REAL ESTATE. This is one of the major reasons why the Fed does not/cannot raise interest rates. They could cause a collapse of regionals banks.
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As further evidence that the Fed is supporting the banking system, AGAIN, one only need to look at the Bank Term Funding Program, or the BTFD. And no, its not the "Buy the F'ing Dip" in this case.
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Now, let's add the variable of Commercial Real Estate to the KRE picture. Regional banks generally are those banks with $100b or less in assets.
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Adding more fuel to the eventual fire, CMBS delinquencies are RISING. Uh-oh.
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Let's add some more fuel: rising and sustained vacancies in the primary asset: commercial real estate.
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Now, the final nail in the coffin: the largest portion of CMBS loans MUST BE REFINANCED in 2024 and 2025. Recall that these loans were originally done when interest rates were much lower. Do you think that these loans can perform with high vacancies AND at much higher rates?
DO YOU SEE NOW WHY I AM SHORT THE KRE?????
I honestly do not see a way that this avoided without a bailout of some sort, which is really just transferring your money to private businesses.
but the major quesiton is WHEN???
WHEN will they go down?
WHEN will I make money on my short?
WHEN will I be able to eat popcorn and watch the talking heads explode on TV??
See below.
OK, BUT WHEN WILL THE SHIT HIT THE FAN??:
Well, that's all well and good but WHEN DO WE MAKE MONEY ON IT??
That really is the question. I mean personally, I don't have any of my personal money in a regional bank. If I did, I wouldn't move it because in the event of a bank failure, the FDIC will step in. HOWEVER. . . .
The Fed is playing a dangerous game of KICK THE CAN. That's why they need to keep yapping about the economy NOT being in a recession. By the way, we already are in one:
3 to 6 months. That's how long I think before regionals enter into a feedback loop that cannot be stopped. How bad? That depends. I have NO faith in our government except that they will do everything they can to prevent the wheels coming off and their incompetence becoming clear even to the average person.
Do you understand now why they need to prop up the stock market? What happens if the entire market dives, which it will, taking bank stocks down with it? Kick the can won't work anymore and I unfortunately know of only one way that this could be kicked further down the road: WAR. Not the proxy war going on in Ukraine, which Ukraine is losing badly by the way. I mean a war with US troops involved. Where? Africa, Taiwan, or Russia. But that's for another discussion.
The bottom-line for me is that it is inevitable that KRE will go down. The question is if the market takes KRE down or KRE takes the market down.
IN CASE YOU MISSED IT:
But If you think that the recent BRICs conference, meant to dethrone the dollar as the global currency (it's going to happen and the US will lose its most useful weapon of war - good!) or the Saudi's pushing oil up (which I predicted btw) is the worst of it, then take a look at this - it's how much selling Saudi Arablia has been doing with US Treasuries. You remember those from above? Selling pressure on an asset causes prices of that asset to go down. And in this case, the asset prices are already going down due to rising interest rates. The Fed is so stupid. But I digress:
POSSIBLE SPARKS TO LIGHT THE FIRE:
There are too many possible flashpoints that could cause the banks or the entire stock market to dive. Here's a few that I am keeping my eye on:
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UAW strike: could happen this week. This would cause economic contagion down the supply chain to dealerships. 50/50 odds.
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Lockdowns return. 60/40 since recent attempts have been turned back and the public seems to be saying no - unless a "New more deadly variant" appears. Watch what the MSM are saying and you will be able to tell if this is where we are headed.
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China invades Taiwan in 2023: less than 10%. First, China has its own problems AND they don't need to do shit to beat on the US since the US is already suffering from self inflicted wounds.
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Stock Market Collapse by end of 2023: 70/30
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Stock Market Collapse by June of 2024: 90/10
Finally, the Black Swan that worries me the most but apparently the US is doing everything it can to make happen:
A DIRECT SHOOTING WAR WITH RUSSIA.
Odds of that are 50/50.
100% GOING TO HAPPEN:
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Unemployment will spike to double digits. Across all sectors of the economy.
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People will lose their homes. Not as bad as 2008.
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Inflation will rise to double digits.
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The stock market will crash. Down at least 20-30%.
When? 3 to 9 months. The pressure is building. All it will take is one push.
ENVX:
I will be doing a blog post about ENVX this week.
CLOSING COMMENTS:
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If there are any stocks or investments you want me to look at, send the to me at info@MrNotAdvice.com. I will answer them in next week's newsletter.
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Don't forget the Discord live chat is STILL FREE but it will be closing to new members soon. In the meantime, come and join us - its the best community out there: Discord.
Thankyou Family!
theBoss
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Nothing above is investment advice nor should it be construed as investment advice. It is offerred for entertainment purposes only. Always consult your advisors before investing any money. Do not "follow" or "mirror" any trade ideas provided. Mr.NotAdvice is not a licensed or registered investment advisor. Do your own research.