Welcome to your new Monday Market update! This weekly special edition covers the “Big Picture” factors at play in this week’s headline — so you can stay ahead of the trends with ease!
Your 5-Minute Weekly Update on the World’s Biggest Trends and Opportunities
- The biggest traffic jam in history.
Right now, there are so many cargo ships in the Pacific that you could walk from Tokyo to Beijing without getting your feet wet.
And I’m only halfway kidding…
Live Map from Marine Traffic. This picture shows 20% of all the world’s cargo ships.
We talked about China’s protracted lockdown in last week’s update, and now we’re starting to see the economic consequences of their draconian containment policies. It’s estimated that some 1,800 container ships are crowding Chinese ports in the picture above.
Once China eases back their lockdown, it will still take three to six months for this fleet of hungry cargo vessels to be loaded, piloted across the vast Pacific Ocean, then unloaded on American shores.
So, regardless of what policy comes out of the Federal Reserve in the meantime, the die is cast.
2. Ted’s favorite shipping ETF is steadily gaining as costs rise.
Back in November of last year, Ted penned an editorial about how blockchain technology could help expedite the complicated process of loading, shipping and unloading cargo across continents and time zones.
While this kind of technology isn’t ready just yet, he recommended the SonicShares Global Shipping ETF (NYSE: BOAT) as a solid play for today’s uncertain climate.
Since his recommendation, this exchange-traded fund (ETF) is already up over 17%, while the S&P 500 is down 6%.
Now might be a good time to bet on rising shipping costs…
3. Elon will probably buy Twitter today.
This is as late-breaking (and about as distressful) as it gets.
But according to a recent alert from Bloomberg, Elon Musk’s offer to buy Twitter at $54.20 billion may be accepted by the social media firm’s management later today.
When you offered $43 billion as a joke and they accepted it.
Suffice it to say that this is probably the biggest news in the history of the platform. And I’m not sure how to convey that without going over 140 (or 280 characters).
Musk could certainly shake up the social media world with some of his radical opinions. Whether he can make it a more profitable venture remains to be seen.
4. Reddit killed Melvin.
Most investors are familiar with last year’s GameStop (NYSE: GME) drama — where 12 million self-proclaimed degenerates from Reddit’s WallStreetBets forum decided to take on actual Wall Street hedge funds.
Melvin Capital is one of the funds that ended up in the spotlight during this conflict, thanks in no small part to their own massive shorts on the dying video game retailer. Reddit’s army set to work buying up every share of GME in sight, which created a “short squeeze” that cost Melvin upwards of $6.8 billion.
At one point, Melvin was losing up to a billion a day. They closed the year down almost 40%, compared to the S&P 500’s 28.7% return.
And now, it’s all but official — Reddit killed Melvin.
Announced just last week, the firm’s management plans to unwind Melvin Capital by June. They want to move on and start a whole new fund focused exclusively on short selling.
You know, because the short selling worked out so well for them before.
5. Growth stocks have been swimming naked?
Warren Buffett has some amazing quotes. One of his finest is that “only when the tide runs out do you realize who’s been swimming naked.”
It’s an analogy for how bull markets can hide flaws and imperfections — for both investors and the companies they choose. Combine a bull market with near-zero interest rates, and you’ve got the recipe for sky-high valuations backed by an endless supply of easy money.
But once the Fed starts to take away that punch bowl (or at least imply they’re taking it away), then valuations adapt to account for the new credit risk and valuations start to tank:
As rates rise, debt-heavy tech stocks sink.
For some stocks — and some investors — the bear market is already here.
Some of these stocks are no doubt poised for a rebound into serious long-term gains. Just think of how low Amazon’s shares dipped when the tech bubble burst in 2000. But others just aren’t equipped to survive in an environment without massive amounts of easily accessible debt.
How can you know the difference? Click HERE for a special report on what we believe to be one of the market’s hottest tech stocks for 2022 and beyond…
Have any feedback on the new format? Let us know what you think, or what you’d like to see, by emailing BigPictureBigProfits@BanyanHill.com.