Author: Andrew Packer

Cryptocurrencies

Level Up Coding: You Must Look Closer at Ethereum Before It’s Too Late

Posted on by Andrew Packer

Cryptocurrencies remain a beaten-down asset class. But they’ve rebounded strongly this year thanks to a number of positive developments. The biggest positive? A lack of any further implosions with leveraged lenders or crooked brokerage firms.

Following that, it’s clear that cryptocurrencies themselves haven’t been the problem. Many look to solve real-world problems. And as they grow as a network, they’re capable of big increases in value over time.

Ethereum (ETH), the second-largest cryptocurrency by market cap, is becoming a go-to for crypto projects. And thanks to last year’s shift from proof-of-work to proof-of-stake, it no longer has massive electricity needs. That makes it an environmentally friendly cryptocurrency.

But more importantly, Ethereum is becoming the go-to crypto network. And network effects are massive. The cryptocurrency has about 4,000 active developers on each blockchain, coming up with new apps and tools that can be built on the Ethereum network.

That’s in contrast to about 1,000 for Solana and 500 for Bitcoin. While Bitcoin will likely continue to dominate as a peer-to-peer exchange crypto, Ethereum has more opportunities to expand.

Adding in the recent upgrades, and it’s likely that the rising number of digital technologies in the world will run on this blockchain. Owning a piece of that blockchain could be highly rewarding.

 

To read the full analysis, click here.

Commodities

U.S. Global Investors: Is This The Start of a New Golden Age of Gold Mining Deals?

Posted on by Andrew Packer

Gold prices are back over $2,000 per ounce, close to the record highs set in mid-2020. Gold developers looking to increase their reserves may look towards acquiring smaller companies with promising new developments.

But even big players are getting in on the game. Newmont (NEM) made an offer to buy Newcrest Mining (NCMGF) for $19.5 billion. And that’s after the initial offer of $17 billion was rejected.

Of the 10 largest proposed or completed deals in the mining space, 3 have taken place in the past year. The last big cluster of activity occurred in the mid-2000s amid the peak of the commodity boom.

Gold mining deals could create value for buyers of smaller gold companies. That’s because this industry is highly fragmented, with the top 10 producers bringing 28 percent of total supply. In other metals industries, the top 10 players bring in closer to 50 percent of the total supply.

Much like the energy industry, the big players haven’t been spending money on developing new properties. To replace aging mines and declining reserves, an acquisition of proven resources is the likely way the big players will solve that problem.

Add in a rising interest in gold as an investment right now, and it could be an excellent time to buy smaller companies in the space.

 

To read the full analysis, click here.

Income investing

Bob Sharpe: 7 Mistakes to AVOID When Dividend Investing

Posted on by Andrew Packer

In volatile markets, traders tend to focus less on growth stocks and more on income-producing stocks. An investment portfolio focusing on dividends can provide more than income. It can improve portfolio stability, and avoid large losses over time.

That’s especially true when looking for dividend stocks capable of growing their payouts over time. However, not all dividends are created equal. And investors have just as many challenges to navigate in this environment as they do with investments like growth stocks.

For instance, when considering a dividend investment, look to the payout ratio. This number looks at how much of a company’s earnings are being used to pay the dividend.

A low ratio leaves the company with enough cash to reinvest and grow the business – and the dividend. A high ratio may leave the dividend susceptible to a cut, which tends to also cause the share price to drop.

Next, income investors should look to avoid yield traps. These are companies that have unsustainably high dividend payouts. A common stock that pays out a double-digit yield is likely a yield trap, although some REITs and MLPs may have such high yields.

Looking at a company’s financials can give you a clue as to a yield trap. Growing revenues and increasing income can be a sign that a high yield isn’t too good to be true.

 

To watch the full list of 7 mistakes to avoid, click here.

Economy

Blain’s Morning Porridge: Inflation, Rates, Recession or Stagflation – Nothing Is Clear Yet

Posted on by Andrew Packer

Markets are in a wait-and-see mode right now. Last week’s CPI data looks good, at least from the headline number showing a decline. However, we could still face sticky inflation, with rates remaining higher than desired for some time.

Combined with poor economic growth, and it could lead to stagflation. The last episode of that condition lasted for nearly a decade. Even worse, the last time that happened, asset prices sank massively in real terms.

That’s why markets remain focused on inflation, and rightly so. While a drop to 5 percent looks better than the 9.6 percent at its peak nearly a year ago, it’s still too high. With central banks like the Federal Reserve targeting 2 percent inflation, it still needs to drop more.

Adding these factors up, we see why the market will likely remain in a wait-and-see mode for a few more months. Interest rates may not be high enough to finish off inflation. But the rapid rise in interest rates has created stress in the financial system.

Ultimately, it will take higher interest rates past todays. Bond yields are still negative in real terms. Energy costs have jumped higher. And food, clothing, and housing prices have risen high enough to keep inflation sticky for some time.

Investors may want to shift away from growth stocks, and towards companies that can keep up with inflation if this kind of market continues.

 

To read the full analysis, click here.

Stock market strategies

Elliott Wave Options: Inflation Slows But Yields Remain Inverted

Posted on by Andrew Packer

There’s a lot of negative sentiment about the economy right now. But the job market remains strong – some say too strong. And inflation is coming down, even if the rate of the drop may slow. Amid all that, the market has moved higher so far this year.

More importantly, stocks have made higher lows on each pullback and has made higher highs. And with tech stocks up over 20 percent from their lows, they’ve entered into a bull market.

Working against that trend is the start of earnings season. So far, things have been quiet, with strong reports from the big banks. However, many expect to see a drop in overall earnings. This earnings recession could impact stocks to the downside in the coming weeks.

If so, the downside may be limited. Markets are more forward looking, and the market has been calming somewhat following the move higher in banking stocks in March.

One improving sign is the U.S. Treasury yield curve, which has come off the worst of its lows in the past few weeks. Traders see a rising chance of interest rates peaking and even declining in the coming months. That could be from the result of more fears in the banking sector, or due to the economy continuing to muddle along.

 

To watch the full video, click here.

Cryptocurrencies

ARK Invest: Could Bitcoin’s Price Reach $1,000,000?

Posted on by Andrew Packer

While the market has had an increase in downside risks with recent banking failures, some areas have stood out. Gold prices have moved back near all-time highs, as investors have sought safety in the metal.

Another surprising winner has been Bitcoin, which was viewed as a “risk-on” asset like a tech stock. The crypto has jumped about 50 percent in the past month. While it’s still well off its all-time highs, it’s possible that there’s substantially more upside ahead.

One recent prediction even suggested that Bitcoin moved to $1 million within 90 days. While such predictions grab headlines and often don’t pan out, it’s clear that this may be a winning moment for Bitcoin.

That’s because the original cryptocurrency was designed during the great recession, with the first Bitcoin being mined in early 2009. The initial mined block even contained text regarding bank bailouts in England.

Since then, the Bitcoin network has grown substantially. That has helped increase the price of Bitcoin and increase the resilience of the network. And with a global network numbered in the millions, it’s clear that Bitcoin is no longer at a stage where it can be shut down.

Meanwhile, Bitcoin has a programmed hard cap of 21 million. In an age where banks may fail or governments may try to print money to avoid a failure, Bitcoin may continue to rise over time as a digital store of value.

 

To listen to the full interview, click here.

Real Estate

John Rubino: The Commercial Real Estate Bust Isn’t Coming. It’s Here

Posted on by Andrew Packer

Following a 70 percent average rise between 2014 and 2021, commercial property prices have started to level out. That’s due to a number of factors.

The largest? An increase in hybrid and remote workers. That’s keeping demand subdued. And many companies will likely scale back their office size when it’s time to renew their lease. However, the recent rise of inflation has taken its toll, as interest rates have jumped.

Consequently, commercial real estate faces the two major headwinds of higher financing costs, and a lower demand trend for years to come.

This trend is just getting underway. A number of companies looking to sell commercial properties have had to either pull the listing or lower prices substantially.

For instance, Wells Fargo (WFC) tried to sell one of its properties for $160 million in 2022. It pulled the listing, and has relisted this year for $53 million. That’s a 67 percent drop in only a year. And it’s still for sale.

Unlike housing, commercial mortgages reset every few years. With prevailing interest rates much higher now, the costs of carrying a building with lower rental demand could prove devastating for the space. And it may impact the balance sheets of the often small and regional banks that service these loans.

Ultimately, this could have a widespread impact on the overall economy, and weigh on growth for some time.

 

To read the full analysis, click here.

 

Economy

We Study Billionaires: Calling a Super Bubble: The Crisis Is Bigger Than Banks

Posted on by Andrew Packer

Markets have moved higher in recent weeks, shaking off some fears from the second and third largest bank failures in U.S. history. While that looks good on the surface, there’s trouble under the water.

However, debt remains high, and interest rates to pay for that debt continue to rise. And confidence has been shaken in the banking system. That includes depositors looking to move money elsewhere and banks looking to lend to other banks or customers.

The bank failures have led some to see a repeat of a 2008-style meltdown, focused on the banking sector. Part of the rapid response by policymakers in the past few weeks has been to avoid such an outcome.

However, the issue is much bigger than the banks themselves. It’s a result of high debt, across the entire economy, and the costs of financing that debt. Looking at the history of financial bubbles, there’s always a long upward move, followed by a belief that nothing will get worse.

From there, it’s a long drop. And at the top, overconfidence leads to an increase in debt. That’s true in the U.S. economy, and in other nations and periods, such as Japan in 1989. With or without the Fed raising interest rates further, it’s clear that the market has broken, and there will be further dangers ahead.

 

To listen to the full interview, click here.

Commodities

Deep Knowledge Investing: The Petrodollar Is Dying

Posted on by Andrew Packer

The world runs on two things: The U.S. dollar as a reserve currency, and oil. However, a growing number of developing countries, particularly oil-rich ones, are moving away from using the dollar for trade. Instead, they’re opting for bilateral agreements, using their respective currencies.

No single move is a big deal. However, developing countries now house over half the world’s population and nearly a quarter of global GDP. These collective moves could lead to an end to the dollar’s supremacy.

Amid the gradual reduction of the dollar in global trade, there’s been a rise in discussion about alternatives. So far, other currencies such as the Euro or Chinese Yuan haven’t met the criteria for a global reserve currency.

However, we could see the rise of more regional currencies similar to the Euro. Or there could be a digital currency that many nations could use as a means of payment.

The shift away from the dollar has big implications. For Americans, it will likely mean more inflationary pressure. With less global demand for dollars, there will be fewer places for newly-printed money to go.

The move would also suggest the end of U.S. geopolitical supremacy. Like prior nations that have held the reserve currency, such as Great Britain or Spain, it may mean a move towards permanently slower growth.

 

To read the full analysis, click here.

Stock market

Game of Trades: This Is Now Worse Than Before the 2008 Financial Crisis

Posted on by Andrew Packer

The stock market closed out the first quarter of the year entering a new bull market. Many stocks more than doubled off of their lows last year, particularly beaten-down tech stocks. But overall, with the average stock up over 20 percent from their lows, things look bullish.

However, there are always a few dark clouds in the investment world. And the clouds today are fairly dangerous ones.

That’s because the issues with the banking sector and the credit market are likely to continue. While there’s been a lull following the quick collapse of three banks last month, more danger lies ahead.

The big danger for investors is that the market has tried to look too far ahead. Investors have been betting on the Federal Reserve to “pivot” and start cutting interest rates.

Yet so far, the bank has continued to raise rates. They’ve simply slowed the pace of the increase.

Meanwhile, the spread between the two-year yield and the three-month bond yield shows a collapse in the past month. It’s not in the deepest negative territory since the 1970s. That suggests that the bond market sees interest rates decreasing over the next two years.

While it’s likely we still have another rate hike ahead, it’s time to start planning for a shift in interest rate policy.

 

To watch the full video, click here.