Archive for the ‘Phil’s Favorites’ Category

Venture Capital…Big Money Still Flowing and Power In The Valley

 

Venture Capital…Big Money Still Flowing and Power In The Valley

Courtesy of Howard Lindzon 

Money continues to flow into the venture capital industry.

I won't complain.

The money flow should increase as rates stay low and the mantra of alternative investing picks up pace. I can feel that happening.

One big rule change that should really accelerate money flows is the final Volcker Rule:

The Final Volcker Rule[1], which goes into effect October 1, 2020, makes a number of significant modifications that are encouraging for venture capital funds. Most notably, the rule change permits banks to take stakes in venture capital funds that were previously banned, meaning that Wall Street and other banks will soon be able to boost investments in these funds.

Elsewhere…

AngelList came up with a new twist on Venture Capital this year with rolling funds.

As discussed yesterday in my podcast with Chetan of Benchmark, the biggest secret in technology right now is that the TAM of the cloud (total addressable market) continues to expand.

Tom Tunguz at Redpoint does a quick analysis of the enterprise sector to explain the large opportunity that still exists as the enterprise TAM continues to expand.

With this growth comes a huge shift in power and MD Gabriel has a great free newsletter and excellent post up titled ‘Power in The Valley‘ that is worth a read.

Have a great [weekend].





Why do bankers behave so badly? They make too much money to ask questions

 

Why do bankers behave so badly? They make too much money to ask questions

Rudy Balasko/Shutterstock

Courtesy of Mark Crosby, Monash University

Over the past 16 months journalists have been scouring through more than 2,000 Suspicious Activity Reports originally sent by banks to the United States Treasury, before being leaked to Buzzfeed and then passed along to the International Consortium of Investigative Journalists.

The reports relate to more than US$2 trillion in transactions over the period from 2000 to 2017. Some of these transactions will already have been investigated, and may be legitimate. In the case of the Australian banks, the regulator AUSTRAC has already asked the US Treasury for some of this information.

There are a number of questions raised by this latest episode of bad behaviour by banks. Firstly, why don’t banks have better controls to stop these kinds of transactions from occurring?

With transactions from tax havens, from shell companies, or to countries under sanction why aren’t banks themselves doing some investigation rather than simply passing information along to the US Treasury?

The short answer is that banks make too much money and it is not in their interest to ask too many questions.

An obvious example are the transactions processed by JP Morgan relating to the 1Malaysia Development Berhad scandal which netted the bank millions of dollars in fees despite the obvious questions the transactions should have raised.

International Consortium of Investigative Journalists.

A second question is why do banks consistently seem to behave so badly?

Australia has seen banking scandal after banking scandal over the last 30 years, with the latest detailed in the report of the Hayne Royal Commission in 2019.

Big rewards, less regulation

I believe the reason the banking industry is particularly prone to scandals is because of the amount of cash sloshing through the system, and the fact that in recent years there have been fewer regulations and less policing than is needed.

Deregulation has been the general trend in finance since the mid-1980s, first in…
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The Suburban Housing Boom is Just Getting Started

 

The Suburban Housing Boom is Just Getting Started

Courtesy of 

 

Are you a buyer? The sooner the better. Are you a seller? Ask high, and take your time.

Because the boom in suburban real estate was going to happen, beginning this year, pandemic or not. And it could have legs for years. That’s according to my special guest, Logan Mohtashami, who joins me for the latest episode of my podcast – out this morning!

You can listen to the whole thing below, or find it wherever you like to listen to your favorite pods!

And be sure to leave a rating and review – they go a long way!

Get it here:

Apple podcasts

Spotify podcasts

Google podcasts





Senator Sinema Tells Mnuchin and Powell She Lived in an Abandoned Gas Station as a Child; Asks What they Plan to Do About Wave of Coming Evictions

Courtesy of Pam Martens

Senator Kyrsten Sinema

Senator Kyrsten Sinema

Fed Chair Jerome Powell looked genuinely troubled as Senator Kyrsten Sinema of Arizona shared her traumatic childhood during yesterday’s Senate Banking hearing. The witness panel included both Powell and Treasury Secretary Steve Mnuchin. Sinema first asked Mnuchin and Powell if they had ever been evicted from their home. Both said no. She then shared this:

“Well, as you may know, I was homeless for a number of years as a child. And I wouldn’t wish it on anyone. I know the challenges that Arizona families are facing right now and it’s an important perspective for people here in Washington to understand.

“When I was in elementary school, my Dad lost his job and my parents got divorced. We lost our car and our home and we were homeless for almost three years. We lived in an abandoned gas station without running water or electricity.”

The New York Times has suggested that Sinema has embellished this story, but concedes that she and her family did live in an abandoned gas station; that it was a trying time; and that she had the grit to go on to graduate high school at age 16, as valedictorian of her class.

Sinema was making the case that dramatically more stimulus from Congress is urgently needed. She said “According to the Census Bureau’s household Pulse Survey, over 300,000 Arizona families missed their July rent payments. Two-thirds of those households are families with children.” Sinema went on to remind Mnuchin and Powell that Arizona’s unemployment insurance, at $240 a week, is the second lowest in the nation and without Congress passing a continuation of the prior unemployment supplement of $600 a week, the eviction crisis is destined to get worse.


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The Stock Market Is Losing Believers: Equity Funds See Net Outflows for Six Straight Weeks

Courtesy of Pam Martens

By Pam Martens and Russ Martens

Refinitiv Lipper has been reporting fund flows into and out of the stock market for the past 18 years. According to its most recent report, for the week ended Wednesday, September 23, equity (stock) funds, including both equity mutual funds and equity Exchange Traded Funds (ETFs), have now seen a net outflow of money for the sixth straight week.

This week’s outflow from equity funds totaled -$14.9 billion. That’s the largest outflow by far in the past six weeks. It brings the total net outflow from equity mutual funds and equity ETFs to a net outflow of $42 billion beginning with the week ending August 19.

That may not sound like a lot of money in a $35 trillion (as of June 30, 2020) market, but it is if you focus on the word “net.” If you have a long-term pattern of “net” outflows from stocks, it’s going to be tough to move the needle higher, even if you have Nasdaq Whales trying to gin up the market with options. (See here and here.)


More from Pam Martens here.





Benchmark Capital’s Chetan Puttagunta Joins Me On Panic With Friends – As Software Eats The World – How Hungry Is Open Source?

 

Benchmark Capital’s Chetan Puttagunta Joins Me On Panic With Friends – As Software Eats The World – How Hungry Is Open Source?

Courtesy of Howard Lindzon

I am fascinated by the software sector and lately the open source category of software.

I started down this rabbit hole back in January 2019 and covered it here.

Wired magazine just put out this ‘opinion’ piece titled ‘The Future Of American Industry Depends On Open Source Technology‘.

So I asked Chetan from Benchmark to come on the podcast and chat about the sector. Chetan is one of the few investors at the absolute center of the open source software industry sitting on the board of Elastic and Mongo DB which are the two large public open source companies. He was also on the board of Mulesoft that was acquired by Salesforce.

The show outline is below and you can listen to the podcast here on Spotify or on Apple. Please do subscribe.

Enjoy…

Guest: Chetan Puttagunta

Profile: Partner at Benchmark Capital (LinkedInTwitter)

Fun Fact: Chetan is originally from India, but he grew up all over the U.S. He’s spent time living everywhere from Utah to Maryland, but has called California home for almost 20 years. (Just don’t ask him to ski)

What’s the Panic About:

One of my goals with this podcast is that both my listeners and I can learn and grow together. And that’s why it was so great to have someone like Chetan Puttagunta on to take the time to share his knowledge about open-source software and its business model. Chetan is a general partner at the venture capital firm Benchmark Capital and is someone with a fantastic eye for early stage investments targeting everything from software to social media to marketplaces. Although Chetan and I haven’t met in-person yet, I’ve been a fan of his work for a while now and have been fascinated to learn more about his work with open-source. With that in mind, in this episode we discuss all things open-source software: what exactly it is, misconceptions, misinformation, how to invest, its role in public cloud companies, and how these ideas go beyond just a…
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Homes are flooding outside FEMA’s 100-year flood zones, and racial inequality is showing through

 

Homes are flooding outside FEMA's 100-year flood zones, and racial inequality is showing through

Hurricane Harvey showed the racial disparities in flood damage outside Houston’s 100-year flood zones. Joe Raedle/Getty Images

Courtesy of Kevin T. Smiley, Louisiana State University

When hurricanes and other extreme storms unleash downpours like Tropical Storm Beta has been doing in the South, the floodwater doesn’t always stay within the government’s flood risk zones.

New research suggests that nearly twice as many properties are at risk from a 100-year flood today than the Federal Emergency Management Agency’s flood maps indicate.

Unfortunately, many of the people living in those properties have no idea that their homes are at risk until the floodwaters rise.

I am a sociologist who works on disaster vulnerability. In a new study, I looked at the makeup of communities in Houston that aren’t in the 100-year flood zone, but that still flood. What I found tells a story of racial disparities in the city. Research in other cities has shown similar flooding problems in predominantly Black and Hispanic neighborhoods.

Poor stormwater infrastructure, expanding urbanization and limited flood mitigation efforts are a few of the reasons why.

Flooding outside the zones

About 15 million Americans live in FEMA’s current 100-year flood zones. The designation warns them that their properties face a 1% risk of flooding in any given year. They must obtain flood insurance if they want a federally ensured loan – insurance that helps them recover from flooding.

In Greater Houston, however, 47% of claims made to FEMA across three decades before Hurricane Harvey were outside of the 100-year flood zones. Harris County, recognizing that FEMA flood maps don’t capture the full risk, now recommends that every household in Houston and the rest of the county have flood insurance.

A woman puts her daughter's shoe on after they were rescued from a flooded apartment complex.

Harris County, home to Houston, now recommends all households have flood insurance, whether they’re in a FEMA flood zone or not. AP Photo/David J. Phillip

New risk models point to a similar conclusion: Flood risk in these…
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The PhilStockWorld.com Weekly Webinar – 09-23-2020

For LIVE access on Wednesday afternoons, join us at PSW!

 

Major Topics

00:02:57 – Checking on the Market
00:09:49 – Futures
00:19:50 – STP
00:22:52 – TQQQ | SQQQ 
00:26:45 – SDS | CMG
00:27:16 – UNG
00:30:02 – LTP
00:38:10 – BRK-B
00:41:51 – AAPL
00:43:45 – Trading Technique
00:48:25 – INTC
00:51:01 – COVID-19 Update
01:07:14 – More Trading Techniques
01:13:19 – Current News
01:16:41 – STP
01:17:09 – CMG | TSLA
01:19:36 – IMAX

 

Phil's Weekly Trading Webinars provide a great opportunity to learn what we do at PSW. For LIVE access to PSW's Weekly Webinars – demonstrating trading strategies in real time – join us at PSW!

You can also subscribe to our YouTube channel and view past webinars here





Shhh! Don’t Tell the Fed these Wall Street Banks Have Tanked 34 to 48 Percent Year-to-Date. (The Fed Thinks They’re a “Source of Strength”)

Courtesy of Pam Martens

Federal Reserve Chairman Jerome Powell’s oft repeated mantra this year – that the behemoth Wall Street banks “are a source of strength” in this economic crisis – is melting away faster than a snow cone in July, along with the share prices of these banks. So whom should Americans believe: The composite wisdom of the market or the opinion of a federal regulator whose supervision of these banks has been far from stellar.

The market would seem to have spoken clearly on just how “strong” these banks are. Since the first trading day of the year, January 2,  to yesterday’s closing price, here’s the factual reality of just how much common equity capital these banks have bled: Citigroup is down a stunning 48 percent, losing almost half of its common equity capital; Bank of America has lost 35 percent; while JPMorgan Chase, the bank that has perpetually bragged about its “fortress balance sheet,” is down 34 percent year-to-date. And the U.S. is only seven months into what could become a prolonged economic downturn.

The reason Powell has to tippy toe around the Wall Street mega banks’ condition is because, as of June 30 according to the Federal Deposit Insurance Corporation (FDIC), Citigroup is sitting on $1.2 trillion of deposits, of which half are foreign and might take flight; Bank of America is sitting on $1.8 trillion in deposits, of which 94 percent are U.S. based; and JPMorgan Chase holds $2 trillion in deposits, of which $1.7 trillion or 85 percent are U.S. based.

As of September 10, the FDIC reports that the U.S. had 5,059 federally insured institutions including banks and savings associations. The three banks named above are holding 30 percent of all deposits held by all 5,059 federally insured financial institutions in the U.S. while representing just 0.059 percent of the number of federally insured institutions.

The 5,059 banks we have today is less than half of the 10,220 banks and savings associations that were federally insured at the end of 1999 – the year that the Bill Clinton administration passed the Gramm-Leach-Bliley Act that repealed the 1933 Glass-Steagall Act. The repeal of the Glass-Steagall Act, which had protected the U.S. financial system brilliantly for 66 years, meant that Wall Street’s…
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SPACs are still bulls***

 

SPACs are still bulls***

Courtesy of 

I almost slipped and bought into the SPAC Renaissance. Almost.

Draftkings looks legit. But Draftkings could have been a true IPO. The SPAC wrapper was beside the point. Chamath and Ackman will probably do something legit, those guys usually find a way to win. Maybe a few others. The rest are / will be garbage. My first impression was right.

Nikola’s stock has now fallen from near 100 down into the 20’s as the guy’s whole story has unraveled. Then the guy stepped down and ran away. None of this had to happen. But Nikola arrived on the markets as the quarry of a Special Purpose Acquisition Vehicle and the hype drowned out the diligence.

In a traditional IPO, you go public by crisscrossing North America (and sometimes Europe and Asia) sitting in front of investment bankers, syndicate personnel, pension fund managers, mutual fund portfolio managers, investment committees, NYSE and Nasdaq exchange officials, family office CIOs and hundreds (sometimes thousands) of other intelligent, skeptical, well-trained professional investors to explain your business. It’s called a roadshow and it’s f***ing grueling. It should be grueling. That’s the point. It’s called vetting.

By selling your company to a SPAC and then taking over an empty shell that’s already public, you skip most of this experience. You only need to convince one investor instead of thousands of investors to fund you. And that one investor – the guy who raised capital in the SPAC – he wants to believe! It’s the opposite of vetting.

The vetting takes place post-deal, when the stock market has its chance to tell you what you really are. It can be a very violent public bloodletting. For Nikola it certainly was.

I wonder if NKLA would have made it through a traditional IPO roadshow. Maybe, but as a small cap IPO from a third-tier brokerage firm. It reminds me of some of the deals I’ve seen placed in my bucket shop days. But in the Big SPAC Era they got the red carpet treatment right away. Never paid any dues. Never had to convince more than a few people that they were legit.


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ValueWalk

5 truths about the second round of coronavirus stimulus checks

By Aman Jain. Originally published at ValueWalk.

Whether or not Congress will be able to issue another coronavirus relief package or if there will be another round of direct payments is the biggest question nowadays. Although no one has accurate answers to these questions, there are a few truths about the next round of coronavirus stimulus checks.

Truths about coronavirus stimulus checks

The first truth is that everyone wants to send stimulus checks. “Everyone” here means Republican and Democratic lawmakers and President Donald Trump. Both Republicans and Democrats have included stimulus checks in their proposals, the HEALS Act and HEROES Act, respectively. Alt...



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Zero Hedge

The State's Response To This "Virus" Is Nothing More Than A Weapon Of Mass Submission

Courtesy of ZeroHedge View original post here.

Authored by Gary Barnett via LewRockwell.com,

“The great masses of men, though theoretically free, are seen to submit supinely to oppression and exploitation of a hundred abhorrent sorts. Have they no means of resistance? Obviously they have. The worst tyrant, even under democratic plutocracy, has but one throat to slit. The moment the majority decided to overthrow him he would be overthrown. But the maj...



more from Tyler

Phil's Favorites

Venture Capital...Big Money Still Flowing and Power In The Valley

 

Venture Capital…Big Money Still Flowing and Power In The Valley

Courtesy of Howard Lindzon 

Money continues to flow into the venture capital industry.

I won't complain.

The money flow should increase as rates stay low and the mantra of alternative investing picks up pace. I can feel that happening.

One big rule change that should really accelerate money flows is the final Volcker Rule:

The Final Volcker Rule[1], which goes into effect October 1, 2020, makes a number of significa...



more from Ilene

Kimble Charting Solutions

Key Inflation Indicators Facing Big Test In September!

Courtesy of Chris Kimble

Inflation has long been a word that the Federal Reserve uses but the general markets have forgotten about.

Why? Well because it’s been virtually non-existent for years. Key indicators like commodities (i.e. copper) have been in a down-trends and the Materials Sector (XLB) has lagged… until this year.

In today’s chart 3-pack, we take a look at the Equal Weight Commodity Index, ...



more from Kimble C.S.

Digital Currencies

The Great Unbanking: How DeFi Is Completing The Job Bitcoin Started

Courtesy of ZeroHedge View original post here.

Authored by Paul De Havilland via CoinTelegraph.com,

While most of us will prefer to forget the horrors of 2020, DeFi may well prove to be the guarantee of a better, more liberated future...

...



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Politics

'Colossal Backdoor Bailout': Outrage as Pentagon Funnels Hundreds of Millions Meant for Covid Supplies to Private Defense Contractors

 

'Colossal Backdoor Bailout': Outrage as Pentagon Funnels Hundreds of Millions Meant for Covid Supplies to Private Defense Contractors

"If you can't get a Covid test or find an N95, it’s because these contractors stole from the American people to make faster jets and fancy uniforms."

By Jake Johnson

Secretary of Defense Mark Esper and Chairman of the Joint Chiefs of Staff Army Gen. Mark Milley hold an end of year press conference at the Pentagon on December 20, 2019 in Arlington, Virginia. (Photo: Drew Angerer/Getty Images)

Instead of adhering to congressional inten...



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Biotech/COVID-19

How and when will we know that a COVID-19 vaccine is safe and effective?

 

How and when will we know that a COVID-19 vaccine is safe and effective?

How much longer must society wait for a vaccine? ANDRZEJ WOJCICKI/Getty Images

By William Petri, University of Virginia

With COVID-19 vaccines currently in the final phase of study, you’ve probably been wondering how the FDA will decide if a vaccine is safe and effective.

Based on the status of the Phase 3 trials currently underway, it i...



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Chart School

Stocks are not done yet - Update

Courtesy of Read the Ticker

There are a few times in history when a third party said this US paper (stocks, funds or bonds) is worthless.

Here is two.

1) 1965 Nixon Shock - The French said to US we do not want your paper dollars please pay us in gold. This of course led to the US going off the gold standard.

2) 2007 Bear Stern Fund Collapse - Investors said their funds collateral was worth much less than stated. This of course was the beginning of the great america housing bust of 2008.


In both cases it was stated .."look the Emperor is naked!"... (The Empe...

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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

http://www.insidercow.com/ more from Insider

Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

...

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

more from M.T.M.





About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.