Congress Needs a Father Figure

Hey Influence Traders,

It’s Father’s Day weekend!

If you are celebrating – have a wonderful day.

My three kids are all running around, which is going to keep this weekend review brief.

Short Squeezes

In case you missed it, trading guru Josh Hawes and I wrapped up Part 2 of the Option Pit two-day Short Squeeze Series on Friday.

For all those who attended the sessions, thank you! (If you missed either, Part 1 is here and Part 2 is here.)

The conclusion?

These volatile market #PowerMoves aren’t going anywhere.

Josh, a hedge fund manager and former high-frequency trader said it best, “This is one of the last areas banks make real money on.”

And they offer you a chance to profit.

For example, Option Pit CEO Mark Sebastian is able to win on short squeezes time and again – by staying ahead of them.

He does it thanks to one proprietary tool — which would make a pretty good Father’s Day gift to yourself.

The Weekly Highlights

• • • We have a new national holiday! Juneteenth, which marks the emancipation of enslaved African Americans in the US, became the first new federal holiday in over 40 years.
    • The House voted to repeal the 2002 authorization for the Iraq War! While largely symbolic, the move is meant to claw back presidential war powers. I’ll be watching how it possibly curbs the movement of money to defense contractors.
    • Executives from Tesla (Ticker: TSLA) made some #powermoves … in both directions.

Elon Musk flip-flopped … again … announcing that Tesla will resume Bitcoin transactions once it confirms there is “reasonable (~50%) clean energy usage by miners with positive future trend.”

Meanwhile, in a filing to the SEC, it was announced that former TSLA president Jerome Guillen, who left the company a couple of weeks ago, has sold an estimated $274 million in company stock, which should raise concern for investors.

• • • The IRS is being pulled in two different directions after the release of tax data amidst a move to expand its power.

Republicans renewed attacks on the agency, arguing that the release of a ProPublica report based on the confidential tax records of the wealthiest Americans, like Jeff Bezos and Elon Musk, undermines tax-payer confidence. 

Republicans dislike the IRS and are trying to stop President Biden’s proposal to enlarge the agency and give it more resources.

Meanwhile, Democrats want to give the agency more work to do by leveraging a “Patriot Tax” on multimillionaires’ wealth, which would be a one-time 2.5% tax on the wealth of the Americans between $50 million and $100 million and a 5% tax on wealth above $100 million.

Infrastructure Spending

A bipartisan infrastructure deal unveiled last week by a group of five Republicans and five Democrats is coming under fire from both sides of the aisle and may not survive the week.

Here’s my breakdown:

• • • Democrats want to kill the proposal for an array of reasons:
      • It falls well short of President Biden’s $2.25 trillion American Jobs Plan
      • Does not go far enough on climate change
      • Includes indexing the gas tax to inflation, imposing a mileage tax on electric vehicles and repurposing unspent COVID-19 relief funds to help pay the bill.
    • Senate Majority Leader Chuck Schumer (D-NY) argued that he can’t vote for any proposal that doesn’t include “bold action“ on climate change.
    • On the Republican side, many are simply against the sheer size of the proposal … and giving Biden a major legislative accomplishment on a top domestic priority.
    • Senate Minority Leader Mitch McConnell (R-KY) says he’s open to the proposal as long as it remains focused on traditional infrastructure priorities, such as roads and bridges — and doesn’t reverse any of the 2017 Tax Cuts and Jobs Act, former President Trump’s signature initiative.
    • Some Republicans argue that indexing the gas tax to inflation, which would raise revenue, would “technically” not represent a tax increase, although other Republicans argue it would
    • Meanwhile, Senate Democrats led by Bernie Sanders (I-VT) are discussing passing a partisan spending bill in the neighborhood of $6 trillion via budget reconciliation.
    • But centrists seem to be gaining leverage in the Senate as 11 more backed the $974 billion infrastructure framework, which brings the total to 11 Republicans, 9 Democrats and 1 independent who caucuses with Democrats.
    • Centrist Democrats argue that this bipartisan plan is the best way to pick up 60 votes and pass the Senate outside the budget reconciliation process.
    • Most strategists, on either side, don’t believe that any proposal of this scale will get 60 votes in the Senate while Washington is so partisan.

While it appears to be politics as usual in DC, it is gearing up to be a hell of a show.

No one wants the bill, but no one wants to be the one to kill it either, for fear of looking like they are holding up the legislative process.

A game of political chicken is at hand and I’m going to be watching closely so see who blinks first … as that might telegraph future #PowerMoves.

Sounds like Congress needs a father figure to sort out all this fighting.

Timeouts for everyone!

Power Moves Portfolio w/ Frank Gregory
Option Pit Director of Education Andrew Giovinazzi and I run a portfolio approach to trading options with stocks that have good long-term prospects based on my K Street knowledge and Andrew’s options expertise.

Check out the updated trade log and track record 24/7 here

We are adding a buy of 2 SPDR S&P 500 ETF Trust (Ticker: SPY) July 02 400-strike puts for $1.68.

Given market conditions, it’s a small hedge just in case things get ugly. 

I’ll have a full Power Moves Portfolio update for you every Wednesday.

And we’ll continue a number of this week’s highlights in the coming days.

Cutting Through the Noise for You,

Frank