Free eLetters

March 2021

Things in the Stimulus Bill: Free Health Care, Pension Fund Bailouts, and UBI for Kids

March 12, 2021John Banks

The American Rescue Plan Act of 2021 — or American Rescue Plan for short — has been signed into law. You can read the text of the legislation here. The American Rescue Plan (we’ll call it ARP) is far more than just a $1.9 trillion stimulus bill. It is a transitional moment, and quite possibly a paradigm shift — a structural change in the model — for Americans’ relationship with their government. Thanks to ARP, President Joseph R. Biden could

Read now

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

Read now

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

Read now

The Pain for Tech Stocks is Only Just Beginning

March 9, 2021John Banks

The bursting of the tech bubble has taken down the Nasdaq, but left the Dow intact. This has created the greatest divergence between the Dow and the Nasdaq since 1993. March 8 was “the first time since 1993 that the Dow rose and closed within 1% of a record,” Bloomberg reports, “while the tech-heavy gauge was down more than 10% from its high.” As we’ve explained at length in these pages, silly-season tech valuations were a byproduct of the implied

Read now

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

Read now

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

Read now

The Portnoy-Endorsed Social Media ETF is a Laughably Bad Idea

March 4, 2021TradeSmith Research Team

You can’t make this stuff up. On Feb. 23, TradeSmith Daily said the following: As we have explained repeatedly in these pages, the case for Buzz Lightyear valuations — “To infinity and beyond!” — is predicated on perpetually low interest rates. If you change that equation, the valuations are no longer sustainable. Fast forward a week or two, and what do we see: Tech stocks with nonsense valuations getting hammered by the bond market, as spiking long-end yields blow up

Read now

The Digital Dollar is High on the Fed-and-Treasury Priority List

March 3, 2021John Banks

The digital dollar — a USD version of central bank digital currency — is now a “high-priority project.” That was the phrase used by Jay Powell, Chairman of the Federal Reserve, in a U.S. Senate hearing on Feb. 23. “We are looking carefully, very carefully, at the question of whether we should issue a digital dollar,” Powell said. With each passing day, the digital dollar project is making progress behind the scenes. Just as importantly, political momentum strongly favors a

Read now

A Warning From Warren Buffett: We’re a Long Way From 1981

March 2, 2021John Banks

The Berkshire Hathaway annual letter — penned, as always, by CEO Warren Buffett, now 90 years old — came out this past weekend. If you haven’t read it yet, you can do so here. Reading the Berkshire letter, and hunting for easter eggs of Buffett bon mots and insights, has become a kind of annual tradition for much of the financial world. Analysts, money managers, journalists, and investors of all stripes tend to read it the weekend it comes out,

Read now

The New York AG Issues Tether a Speeding Ticket

March 1, 2021John Banks

On Feb. 5 we asked the following question: “Has Bitcoin (and the Entire Crypto Space) Been Boobytrapped by Tether?” Our answer was “no,” and you can read why here. The short version is that Tether, a popular U.S. dollar stablecoin, is probably not a systemic risk. An elegant analysis from someone named “Crypto Anonymous” had argued otherwise, claiming that Tether was essentially a giant counterfeiting scheme that could blow up at any moment. The “Crypto Anonymous” view naturally generated significant

Read now

February 2021

Crash Risk Rising: Here’s What Could Cause a ‘Market Structure’ Meltdown Event

February 26, 2021John Banks

The sell-off at the long end of the U.S. bond market is turning into a global bond market rout. Yields are rising in countries around the world; in places where nominal long-end yields were negative, like Germany and Japan, they are flipping positive. To put it more simply, as U.S. Treasury 10-year notes and 30-year bonds plummet in value, their nominal yields spike higher. That spike is contagious, causing long-end yields everywhere to rise. There is serious danger here. The

Read now

Inflation Alarmists are Panicking Far Too Early

February 25, 2021John Banks

Investors are starting to worry about inflation. Some are even sounding alarms of potential hyperinflation, throwing around references to Weimar Germany and Zimbabwe. This is quite a shift in stance. For quite a long time, Wall Street behaved as if inflation had been banished forever. Now there are fears, implied if not spoken aloud, that inflation is just around the corner. The latest burst of inflation fear has to do with a sell-off in global bond markets. Rates are quickly

Read now