TradeSmith Daily

March 2021

The Federal Reserve Can’t Help Investors Now

March 5, 2021John Banks

Thursday (March 4) was a pleasantly bullish day with plenty of green on the tape — if you were long energy stocks, that is. The crude oil price shot higher, with West Texas Intermediate in the $64 range, after a surprise decision from the Saudis to maintain their million-barrel-per-day production cut. This was excellent news for oil and gas-related names, which were already at 52-week highs. For most of the market, however, Thursday was a sea of red. For overinflated

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It Begins: Why We’re Seeing a Paradigm Shift Toward Sustained Inflation

March 8, 2021John Banks

Our view of inflation is complicated, but not too complicated. In TradeSmith Decoder, we have large-sized bullish U.S. dollar forex positions as of this writing, and short precious metals positions, because the near-term mantra is “growth first, inflation later.” These positions are doing quite well. A little bit of history may help clarify our stance. While the 1970s were a spectacular decade for gold, the middle-going was quite rough. In an interim period spanning most of 1974 to 1976, the

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The US Dollar Will Rip and Run in 2021

March 10, 2021John Banks

In 2020, arguably the single best asset to own in size was Bitcoin. For the coming year, that could easily hold true once again, with BTC having a reasonable shot at it before the year is out. Apart from Bitcoin — which is practically its own asset class — one of the assets we are most bullish on is the U.S. dollar as a currency, relative to all other fiat currencies. The U.S. dollar looks set to romp and stomp

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The ‘Bitcoin is Bad for the Environment’ Argument is an Intellectually Dishonest Red Herring

March 11, 2021John Banks

Whereas a cat has nine lives, Bitcoin appears to have 400-plus and counting. 99Bitcoins, a crypto site, has a “Bitcoin Obituaries” page that tracks media declarations of Bitcoin’s death. There have been 403 “Bitcoin is dead” instances as of this writing — 10 of them in 2021 alone — with the oldest dating to Dec. 15, 2010. And yet, for the second time in less than a month, Bitcoin has surpassed $1 trillion in market cap. To benchmark Bitcoin against

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Imagining Bitcoin as a FANG Stock

March 18, 2021John Banks

In the TradeSmith Daily for Oct. 12, 2020, we wrote: If you haven’t bought Bitcoin for the first time yet, the odds are good that you will. The question is whether you will do it sooner — and be glad that you did — or do it later and wish you had acted much earlier. Bitcoin as priced in U.S. dollars (BTC/USD) closed at $11,563 the day those words were broadcast. As we write today on March 18, 2021 —

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Breaking Down the ‘Big Market Delusion’ in EV Stocks

March 19, 2021John Banks

Wild and weird developments continue to unfold in the electric vehicle (EV) space. For instance, Elon Musk gave himself a new official title this week: “Technoking of Tesla.” Zach Kirkhorn, the Chief Financial Officer of Tesla, was also given a new title: “Master of Coin.” It sounds like a joke, but it isn’t. Or rather, Musk’s actions might be a joke — played on his own shareholders — but the titles were actually filed with the Securities and Exchange Commission

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ARK’s Latest Tesla Target is Completely Nuts (With Zero Incentive to Be Rational)

March 23, 2021John Banks

Tesla’s share price — which closed 24% off its highs yesterday — saw a nice little bounce (though still down 24%) after ARK Investment management released its latest Tesla price targets for 2025. The targets are not just unrealistic, they are laugh-out-loud unrealistic, almost to the point of being nonsensical. They offer three levels: “Bear case”: TSLA reaches $1,500 by 2025 (123% gain from the March 22 close). “Expected value”: TSLA reaches $3,000 by 2025 (348% gain from March 22

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The Saudis are Underestimating U.S. Shale — For the Second Time in Less Than a Decade

March 25, 2021John Banks

In early December 2020, TradeSmith Decoder turned aggressively bullish on energy stocks. We bought a sizable basket of fossil-fuel-related energy names at that time — eight in all — anticipating a recovery-fueled share price surge as a result of resurgent oil demand. That overall basket did quite well, providing multiple instances of either triple-digit gains or close to triple-digit gains, in the space of less than three months. But we recently took partial profits across the board on that energy

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