$BK $STT $JPM $CL $WLY $PM $PFE $PG $DE $SWBI $SPY

As an investor, one of the most critical skills to possess is adaptability. The world of finance and investing is constantly evolving, and being able to adapt to changing circumstances can make the

difference between success and failure.

One of the most significant changes investors have faced recently is the shift from a low-interest and low-inflation environment to a high-interest and inflation environment. For decades, interest rates and inflation remained relatively stable, with central banks around the world keeping rates low in an effort to spur economic growth. However, over the past few years, interest rates have started to rise, and inflation has picked up the pace, leading many investors to wonder how to navigate this new environment.

The first step to adapting as an investor in this new environment is to understand the changes that are happening. In a high-interest and inflation environment, the cost of borrowing money goes up, making it more expensive for businesses to borrow and invest in growth. This can lead to slower economic growth, lower corporate profits, and lower stock prices. Additionally, as inflation rises, the value of money declines, making it more difficult to maintain purchasing power over time.

Given these challenges, it's crucial for investors to adjust their investment strategies accordingly. For example, in a high-interest environment, investors may want to focus on bonds and other fixed-income investments that can provide a steady stream of income. However, they will also need to be aware of the risks associated with these investments, such as interest rate risk and credit risk, and ensure they are adequately diversified. Just look at what happened to the regional banks in the US. At the same time, investors may want to consider investing in commodities such as gold or oil, as these tend to perform well in inflationary environments. Additionally, they may want to look at sectors such as real estate, which can be a hedge against inflation due to the potential for rental income and appreciation in property values.

Another important consideration for investors is the impact of high-interest rates on debt. Higher interest rates can make it more difficult for individuals and businesses to service their debt, which can lead to defaults and bankruptcies. As such, investors should be cautious when investing in companies with high levels of debt, as they may be more vulnerable in a high-interest environment.

As an equity investor, you need to change what you look for, as growth does not have the same value as one year ago. If a company grows 10% and inflation is 10%, the real growth is actually 0%. Therefore it is more important to look at the margins in this kind of economy, and as mentioned above, the financial net and debt position are probably the most important to keep an eye on in a company’s financials. Growth, market share, and the total addressable market are not as important as one year ago. Of course, it is still important for a company long term.

Investors need to shift their focus when it comes to equity investment in a high-inflation environment. A company's growth, market share, and total addressable market are no longer as important as they used to be, as the real growth could be zero when the inflation rate is high. Instead, investors should pay closer attention to gross and profit margins, free cash flow, and net debt position. With rising inflation, gross margins are under

pressure due to the increased cost of materials, while higher salaries, external services, and financing costs affect profit margins. Therefore, focusing on profits is essential instead of EBITDA and EBIT.

Although profits and earnings can be manipulated for a period through accounting, cash flow provides a more accurate picture of the company's financial situation. Determining if the company needs more funding is

crucial, especially in the current environment, where investors are no longer investing in long-term growth stories is crucial.

Lastly, investors should check if the company has a net cash or net debt position, with the former being preferable in a high-interest environment. It's also essential to consider the interest coverage ratio and net debt to EBITDA, particularly if the interest rate is fixed or variable. Investors should be cautious of bonds that need refinancing in the near future as interest payments may increase significantly, affecting the interest coverage ratio. Therefore, past interest coverage ratios may not be a reliable predictor of future coverage ratios.

Returning to the topic of growth, it's essential to examine the factors driving it. If growth is solely driven by price increases without any corresponding growth in volumes, it's considered low-quality growth. The situation worsens if the volumes are declining, and price increases merely compensate for the lost volume, constituting the entire growth.Therefore, it's crucial to remember that all growth is not of the same quality.

In conclusion, adapting as an investor in a high-interest and inflation environment requires a willingness to adjust investment strategies to reflect changing market conditions. This means being aware of the risks and opportunities associated with different asset classes, maintaining a diversified portfolio, and being prepared to make changes as needed. By doing so, investors can confidently navigate this new environment and achieve their long-term financial goals.

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We all dream of becoming financially free one day and being able to live life the way we design it. Unfortunately, though, we don't necessarily believe that it's truly possible for us, no matter how much we try to do all of the right things. Something that often lacks from financial literacy is the notion that people have to actively work to deprogram themselves from the poverty consciousness that they’ve inherited first, as a means to accept a wealth consciousness, which will positively impact every aspect of their life.

Having a poverty consciousness can show up in anyone, no matter what their income level is, and it reveals itself as a feeling that you never have enough, but more importantly, that you never are enough.

In thinking about my own journey, I’ve been on a quest to unknowingly overcome a poverty consciousness, which is defined as:

Most people are operating from a place of lack, and it has negative ramifications; mostly being that there’s no sense of peace in one’s life, and there’s this constant striving for more. It doesn't help that when you turn on the news all you see is doom & gloom, and when you go on social media all you see are people flexing to make you feel lesser than them. What you focus on is what expands, and more isn’t going to solve the sense of unease that you have within—only through tuning in and becoming aware of your own programming can you actually take the steps toward changing it for more advantageous programming such as an abundance consciousness.

Because of my own programming, even when I was doing the saving & investing, I’d reach a point where mentally I did not think that I deserved it, and I’d find a way to mess up whatever security I’d created for myself financially, because ultimately, I wasn’t secure within, and that had to be reflected back to me in the outside world.

“As above, so below, as within, so without, as the universe, so the soul…”

― Hermes Trismegistus

To keep this short—in order to truly be abundant and to attract favorable situations to oneself, you have to have adopt an abundance consciousness. Otherwise, even when you do hit it big with a great investment or really great anything, you will find some way to mess it up to align with your state of consciousness.

Doing the inner work is just as important—if not more—as doing the outer work of saving & investing. So ask yourself this question: do I feel secure within myself and feel I deserve good things to happen to me? Why or why not?

It is only in piercing through your own mental veil that you can build a life of security where your outside world reflects how you truly feel on the inside!

Made my bi-weekly contribution on Friday, so that gave me another opportunity to buy in my Roth IRA.

Ticker: $KMB

Account: Roth IRA

Qty: 1

Price: $126.74

Date: 3/20/23

$KMB is tied for highest rated at 4.5/6. Tied with $HSY and $LOW. $KMB still holds the tie breaker as most underweight.

Taking from 8.0907 to 9.0907 shares.

10.9% allocation to 12.1%.

PADI from $230.09 to $234.71.

Scorecard Score 4.5/6

S&P Rank - +1. Average Cost Basis +3.42% vs S&P

FCF Rank - +1. DIV/FCF at 90.5%. Greater than 50%.

Conviction Rank - +0.5. Medium. Minimum growth potential, but growing dividend.

Dividend Yield - +0.5. Yield of 3.69% is greater than average of 2.61%, but less than top 5% of 5.85%.

Weighting - +1. Current position size is 10.9% vs target of 20%.

P/E - +1. P/E of 21.92 is less than 25.

I have a few more weeks of buying $KMB before I hit my target weighting. Should hit this target sometime in June.

Down -1.74% for the day

Well that rally was fun while it lasted

The banking world has been a whirlwind this past few weeks

But some valuation discrepancies have occurred from this. Let's just into my top 3:

$HIFS $BAC $GBCI

$NKE Earnings Beat 👟

For its fiscal third quarter, the footwear giant reported a 14% increase in revenue year over year to $12.4B, topping the $11.48B analyst consensus.

Read the full article here ⬇️

"We're not scaremongering/This is really happening, happening/Mobiles working/Mobiles chirping/Take the money and run." - Radiohead

I have written the last couple of days and over the weekend about how I think the odds of a recession are increasing quite steadily. In fact, I have argued most of this year that the fundamentals argued a recession would happen by the end of the summer.

However, now that the mkt is anticipating the Fed backing off its hiking policy, we see riskier asset rising - tech stocks outperforming, crypto assets rising and credit spread narrowing.

Is that what really happens when a recession starts? Is it just that easy that the Fed hikes and things move lower then the Fed pivots and we move back higher. Is the Fed the only game in town?

Perhaps it seems so. In a conversation yesterday with MC, we asked ourselves when was the last time we can remember the Fed not mattering. We had to go back before the Great Fincl Crisis. For many in the mkt, that means before their careers started.

If we look at the chart today, I think history can be a guide for us. I plot the Fed Funds rate in white, and the yearly changes in SPX (blue), Bloomberg Commodity Index (green) and Barclays Agg for bonds (yellow). Recessions are highlighted in red

The first thing that stands is Fed hiking cycles, particularly robust ones, end in a recession. In life you hear fake it till you make it. At central banks it is hike it till you break it.

Then take a closer look at how each asset class performs once the recession starts and throughout. I think you might be surprised a bit.

Take stocks. Most think stocks are forward-looking and they are to an extent. The thing is, recessions don't last a month or two. Stocks have always fallen at the start of the recession. Yes, stocks begin to rally before the end of it, but they always fall when it starts.

How about bonds? Pretty much the same thing. Maybe a little more sideways and volatile action in 2001, but otherwise there is similar pattern to stocks whereby they fall in recession and rally as we exit. Remember this is an Agg & not sovereigns.

Commodities tend to rally more before the recession. This is the period of stagflation where inflation rises enough to choke off growth. Much like we saw last year. However, once the recession starts, commodities fall.

Yet looking at YTD performance, stocks are up led by tech. Credit spreads are pretty flat but the absolute level of yield on credit is lower with the Treasury rally. Only commodities are down.

So maybe the Fed says 25 bps more today and pauses to assess (my base case). Maybe it backs off entirely. Does that mean it is time for everything to rally? I am not so sure.

"We're not scaremongering/This is really happening, happening/Take the money and run."

Stay Vigilant

#markets #investing #stocks #bonds #commodities #economy2023

Okay, last one about assets being backed by something...until another major news event.

Stole this one from Unconventional Acquisitions newsletter. LMK, if you know of a similar service, I've been more curious about small businesses.

$SCHD with their first dividend of the year and typically the lowest of the year coming in at $0.59/share a 14.7% increase YoY.

The odds of a 0.25% raise are fairly high at 86%. What do you think it’ll be?

GME became profitable today for the first time in two years. The market has responded by a 40%+ jump in AH. Tomorrow should see some short covering action.

Let the memes begin. GameStop $GME reported an unexpected profit in Q4, and its shares surged about 34% in after-hours trading (so far). The video game retailer generated $4.5 million from digital sales during the quarter, while revenue fell by 0.9% to $2.25 billion. The company’s net income in Q4 was $48.2 million, compared to a net loss of $147.5 million last year.

The reduction in costs and headcount contributed to an increase in operational efficiency. Hardware and accessories sales accounted for 55.8% of total sales, while software sales fell to 30.1%. Collectibles revenue rose to 14.1% of the total. Additionally, GameStop's inventory was at $683 million compared to $915 million a year ago, while its cash and cash equivalents stood at $1.39 billion.

The company’s turnaround plan received a boost after a leadership shake-up, with CEO Matt Furlong and board chair Ryan Cohen, the founder of Chewy, leading the charge. GameStop has also been working on improving its digital identity through experiments with NFT marketplaces and collaborations with crypto exchanges.

Original post here

First Republic Bank (NYSE:FRC) is exploring options to sell parts of its business, including some of its loan book, as it seeks to raise cash and cut costs. The lender is considering the sale of its loans to other parties, including private equity firms, according to sources cited by Reuters. First Republic is also working with JPMorgan to find new sources of capital. Although a sale of the entire bank remains possible, First Republic is currently focused on a capital raise, according to another source. The bank is also looking at downsizing if attempts to raise new capital fail.

The move follows a consortium of major banks injecting a total of $30 billion in deposits into First Republic over the past week. The bank's share price has been under pressure due to the withdrawal of deposits by investors, which followed the failure of Silicon Valley Bank.

The bank had a disappointing start to the week after S&P downgraded its long-term issuer credit rating to 'B+' from 'BB+,’ citing "substantial long-term challenges for the business." Moody's also downgraded all long-term ratings and assessments of First Republic Bank and may cut them further as the lender faces pressures of deposit outflows and higher-cost funding as the value of its assets declines.

Despite these challenges, First Republic's stock surged by as much as 59.6% today amid a sector-wide rally, with the U.S. financial sector currently up nearly 3%. A potential conversion of some or all of the $30 billion in deposits into a capital infusion has been seen as a "vote of confidence" in the bank, according to Bloomberg Intelligence analyst Herman Chan.

Although the stock finished 29.5% higher today, it’s still down quite significantly in the past few weeks.

Original article here

They say patience is a virtue.

Slowing down and formulating a plan is useful in many aspects of life, especially the stock market.

Patient investors could be rewarded soon as markets are quickly nearing a major buy signal.

Consider this: Studies have shown that there’s power in waiting. Facing unsettling circumstances is part of life. But if we reframe our situation, we can turn challenges into opportunity. Sit tight and wait for the storm to pass.

Stocks have been under serious pressure since February. Yesterday’s Fed meeting further strengthened that trend. Additional increases in interest rates are pressuring the economy… and equities.

However, we’re closing in on an extremely rare buy signal. History shows it’s worth waiting for. We’ll get to that in a bit.

Now, let’s take an unemotional journey through Big Money data.

Sellers remain in control. There’s no better way to see that than with the Big Money Index (BMI). It’s fallen like a rock for weeks.

When buyers are few, the trend favors lower levels. Notice how markets ebb and flow with the BMI’s every move. At 33%, it’s just 8 points above the green area of 25%.

Our data is at a very distressed state:

A fall of this magnitude indicates heavy supply in stocks. Below plots the last 2 weeks of buys and sells by market cap.

Get this, 93% of our signals were sold from March 9th – 22nd. Small- and mid-cap stocks have been torpedoed, while mega-cap stocks ($300B+) have been better to buy:

Drilling down further, 2 areas are feeling the brunt of the pullback: Financials & Real Estate. Let’s view Financials first. Recent bank runs have sent smaller regionals down hard.

On March 13th, 54% of our Financial universe was sold (vs $XLF) – that’s a major reason for the decline in the BMI:

Higher rates have also weighed heavily on Real Estate stocks (vs $XLRE). Incredibly since March 8th, zero stocks were bought in the sector, while 263 equities were sold:

These sectors partly explain the downtrend in our Big Money Index. But now it’s time to shift from negative to positive!

When market meltdowns reach a tipping point, it means we’re nearing a major buy signal. Going back to 1990 (including back-tested data) when we hit oversold the forward returns for the market are stunningly positive.

We’ve had only 24 oversold instances in just over 30 years, indicating just how rare this signal is.

From the first day we reach a reading of <25% in the BMI, the average gain for the S&P 500 a month later is +3.6%. A year later gains average +15.3%.

Two years later it’s nearly a 30% jump!

Does it pay to be patient? It does. Based on history, breaching the green zone means expect a monster rally in stocks weeks and months later. That’s worth waiting for and why I’m happy relying on data for answers rather than headlines.

Let’s wrap up.

Here’s the bottom line: Selloffs are painful in the short-run. We’re in the midst of a major pullback, that appears to be nearing a major buy signal.

An oversold Big Money Index has rewarded patient investors with a great entry point in the past. Chances are in the coming weeks, that signal will offer another greenlight for those in waiting… like me.

These selloffs often preface breakneck rallies. It’s important to plan now!

Studies suggest people can benefit from reframing negative circumstances. There is power in patience.

The same goes for investing. Wait for the signal. And use a map!

Let MAPsignals help inform your trading and investing. Get started with a subscription today!

$GOOGL $SHOP Shopify has extended its partnership with Google Cloud to create a solution designed to help retailers build Google-quality searches into their sites. Retailers miss out on a staggering $300B each year due to search abandonment in the US, and $2T annually globally.

Shopify merchants can now deploy advanced search and browse experiences using Google Cloud’s Discovery AI solution

Rainbow Shops has leveraged this technology to increase search volume by 48% and slash the bounce rate on visits by 3x on its e-commerce properties.

Read more: https://www.prnewswire.com/news-releases/new-shopify-and-google-cloud-ai-integration-brings-advanced-ecommerce-capabilities-to-retailers-and-merchants-worldwide-301779249.html

Did you know $MSFT operates the most profitable Cloud business from all hyperscalers while maintaining almost the highest % growth of all?

$GOOGL $AMZN

Source: https://www.battery.com/wp-content/uploads/2023/03/Battery-Ventures-State-of-Cloud-Software-Spending-Report-March-2023.pdf

I am Long $SQ

What a good morning 😔

Contrary to popular opinion, I think what $GOOGL is showing us with Bard is a very restricted version of what they are capable of. Their intention isn’t probably to make the most impressive chatbot out there as soon as possible, but rather to push the word out there that they are in game.

Over time, they’ll fix problems, iterate, take the feedback of community and improve it in a meaningful and safe way. Microsoft is able to risk more as they don’t face the same degree of risk as Google faces reputation risk given their business with advertisers.

I also don’t think chatbots are here to disrupt search business, as they tend to at least from what I observed serve different use cases, and ultimately both are monetizable either through query pricing/subscription/ads.

Sure, there will be certain impact to search business, but what most are forgetting is that the number of searches continues to grow year after year for years now. Search is still an expanding business, and therefore both $GOOGL & $MSFT benefit.

At the end of the day, $GOOGL & $MSFT are both winners as they became once again more innovative, therefore more attractive as an employer for great talented people, and also us the end users as we get to witness some of the greatest leaps forward in tech imaginable.