Hey Influence Traders,
Like clockwork, it’s once again the weekend!
Weird how that works.
I, for one, had an awesome week – I attended a charity event to raise money for veteran suicide awareness and got to break bread with Medal of Honor recipient Clint Romesha.
Clint is a great guy helping with a great cause. Check out the movie “The Outpost” to see his story.
- The Olympics kicked off, with a team almost as impressive as the A-Team the Biden administration is putting together. (In this instance, A stands for antitrust.)
- Big News for Bitcoin (BTC) – the Crazy Horse 3 strip club in Las Vegas announced that it is now accepting BTC payments through the Lightning Network for “VIP bottle package.” Or as I like to call it, the “Russian Oligarch Package.”
- DC is taking dysfunction to all new levels.
- The steel market is up; the debt ceiling is not … yet.
Trading Like a Hedge Fund
I’ve been telling you for a while that trading guru Andrew Giovinazzi and I have been building a #PowerMoves surprise for you.
Well, it’s here.
I’m a fan of the way hedge funds operate …
Sure, they get bashed in the press sometimes, but let me cut through the noise:
- Hedge fund assets under management grew to more than $4.1 trillion at the end of Q1, a new record.
- In 2020, the top-25 hedge fund managers made a combined $32 billion.
Bottom line: There is staggering wealth to be had using the same techniques employed by hedge funds …
And here’s a little secret – Andrew and I run the PowerMoves Portfolio that way.
This Thursday at 8 p.m. EST, we (along with OptionPit CEO Mark Sebastian) are going to show you how to do it in our all-new live webinar:
Andrew and I are going to crack open three HUGE industry secrets that can transform your trading forever:
- Secret 1. The Hedge Fund Info Advantage: What the funds know that you don’t … and HOW they know it.
- Secret 2. Pulling the Profit Lever: How hedge funds turn their knowledge into MASSIVE profits.
- Secret 3. Timing the Gain Train: How hedge funds know exactly when to enter/exit trades.
PLUS all attendees will receive a FREE copy of Option Pit’s new Hedge Fund Secrets Checklist.
See you there!
We had a ton of bickering this past week in DC (shocker!).
January 6th Panel
House Republican leadership pulled all of their reps from Nancy Pelosi’s January 6th commission (you’d think someone in Pelosi’s office tested positive for COVID … oh, wait …).
Just to continue needling Republicans, and to apparently make the panel look even more biased than it already does, on Saturday, Speaker Pelosi appointed a second Republican on her own to sit on the panel, Rep. Adam Kinzinger from Illinois, a fierce critic of former President Trump.
He joins Rep. Liz Cheney of Wyoming, also appointed by Pelosi, and someone who loathes Trump, as the only two Republicans on the committee.
Chuck Schumer got shellacked in his initial vote on the bipartisan infrastructure bill (it’s almost as if he took a knee prior to the vote).
The Senate Energy and Natural Resources Committee on Thursday voted along party lines to advance President Biden’s controversial nominee to head the Bureau of Land Management, Tracy Stone-Manning.
While never formally charged, Stone-Manning has had ties to eco-terrorist events which Republicans believe should disqualify her.
Her nomination now goes to the full Senate.
And the end of the week did not disappoint, as a new topic was raised – the debt ceiling!
In order to pass their $3.5 trillion spending measure, which is short on payment details, Democrats will need to raise the debt ceiling by October or November.
But Republicans are digging in saying that they will not lift a finger to help Democrats raise it, and that it’s up to Democrats to figure out how to avoid a federal default.
Treasury Secretary Janet Yellen jumped into the fray and urged Congress to raise the limit as soon as possible or risk “irreparable harm to the U.S. economy and the livelihoods of all Americans.”
Here’s a little secret – it’s all games.
This nonsense happens every two years, and they always end up raising it or finding a compromise plan.
No one wants a federal default.
But strategically, it makes no sense for Republicans to discuss raising it until after the spending bills are negotiated.
It gives them leverage in the negotiations.
So, what is the debt ceiling anyway …
It’s a limit that Congress imposes on how much debt the federal government can carry at any given time.
When reached, the U.S. Treasury cannot issue any more Treasury bills, bonds, or notes. It can only pay bills as it receives tax revenues.
If tax revenue isn’t enough, the Treasury must choose which bills to pay (e.g., federal employee salaries or the interest on the national debt).
While it happens every few years, the government is in a particularly tight spot this time around, and will probably run out of cash in the fall, which will lead to delayed payments, defaults on debt obligations — or both.
Fortunately for the Treasury, the government writes its own rules.
The debt limit was suspended for two years under President Trump in 2019, but that suspension expires on July 31.
The debt ceiling, which was $22 trillion when the limit was suspended, now sits at $28.5 trillion because of additional borrowing.
On August 1, 2021, the limit will reset to $22 trillion, and Republicans don’t want to borrow more to pay for the $3.5 trillion partisan “human” infrastructure bill.
Republicans want to leave it up to the Dems to figure out how to manage and pay for their spending.
But one thing that Republicans are opposing is Biden’s proposal to change how capital gains are taxed.
Biden has called for taxing capital gains at death, which they currently are not.
Many believe that such a move would hurt family-owned businesses and farms, despite Democrats’ promises to include protections for such.
Moreover, when heirs sell an asset, they are taxed on a “stepped-up basis,” which means they have to pay capital gains taxes on the difference between the value of the asset when it was sold and the value of the asset when they received it (not on the difference from when it was originally purchased).
Biden wants to end stepped-up basis for capital gains in excess of $1 million per person and tax those gains at death.
President Biden named Jonathan Kanter to lead the Justice Department’s antitrust division.
Kanter spent years as a lawyer fighting Facebook (Ticker: FB) and Alphabet Inc. (Ticker: GOOGL) Google on behalf of rival companies.
If confirmed by the Senate, he will join Lina Khan, the spiritual and academic head of the antitrust coalition, who now leads the Federal Trade Commission, and Tim Wu, the special assistant to the president for technology and competition policy who has long argued for breaking up FB and similarly large companies.
This trio should put Big Tech on notice. Despite having created a collective zero amount of wealth themselves compared to the trillions created by Big Tech, they are going to come gunning.
Last month, a federal judge threw out an FTC suit against FB, which has them reeling like a first-round Olympic soccer loss and looking for retribution.
Khan plans on refiling the suit soon.
The Power Moves Portfolio
Andrew and I run a portfolio approach to trading options with stocks that have good long-term prospects based on the ripples that I see flowing from K Street to Wall Street. (I am a former DC lawyer and Wall Street exec, by the way.)
Pair that with Andrew’s options expertise, and it is a powerful combination … an information advantage that other traders just don’t have access to.
With that in mind, I’ve been a big fan of Cleveland-Cliffs (Ticker: CLF) …
- They are U.S.-based, which plays into Biden’s buy America plans.
- Their CEO is highly regarded.
- They’ve been managing their balance sheet well and have made smart, strategic acquisitions.
- The company reported Q2 net income of $780 million on revenue of $5 billion.
- A year earlier they ran a loss of $124 million on just $1.1 billion in revenue.
When the infrastructure bills are finally passed, CLF will see its contract prices for steel rise with demand.
And as CLF noted in its most recent quarterly report:
- “Steel demand remains excellent and, as we continue to negotiate our contract businesses with several clients in different sectors, it is progressively translating into substantially higher contract prices later this year and into 2022."
- “Our team has done a remarkable job in meeting the demand for steel we have been experiencing over the past six months, overcoming the impact of the automotive chip shortage as well as limited rail and truck availability."
That news and analysis caused Andrew to jump all over CLF.
- Andrew looked at CLF and decided that it’s a name that he wants to “buy on a solid dip.
- He sold some CLF Aug. 20 12/17.5 put spreads at $.45 after the earnings report.
- He played too close to the fire during the last cycle, selling the 21 puts, so he figured selling the 17-strike was a better area. And it was!
Also of note, our Coinbase (Ticker: COIN) flies are in and out of profitability and they are likely to get reduced by half since there is no trend. The saving grace has been the fly has held its value on some steep $25 adverse moves.
And the portfolio is currently up more than 11% overall since launching in April.
Cutting Through the Noise for You.