Hey Influence Traders,
It’s the weekend, which means it’s time for the Weekly Roundup.
It was a BIG Week!
K Street and Wall Street both made #PowerMoves.
And so did I …
On Thursday, Option Pit CEO Mark Sebastian and I did a wide launch of the Power Moves newsletter and Power Moves portfolio.
Live events with Mark are always fun, but this week’s event was extra special …
Headlines of the Week
- We reached the one-year anniversary of Covid
- The next round of stimulus was signed into law (cleaning out a large part of the US Treasury)
- Mexico legalized recreational marijuana
- Dow set a new record high on loosening inflation fears
- Three more Biden were confirmed by the Senate
- Secretary of Housing and Urban Development: Marcia Fudge, a Cleveland-area congresswoman, has been confirmed as the HUD Secretary. The pandemic has caused millions of people to fall behind on rent and mortgage payments, which is driving a housing crisis, and HUD will be tasked with crafting the administration’s response.
- Attorney General: Merrick Garland, the D.C. Circuit Court of Appeals judge who was snubbed for a Supreme Court seat by Senate Republicans at the end of Obama’s term, is the new Attorney General. He has stated that “equality” will be at the forefront of his agenda, which could play into union and environmental issues that I’ll discuss later.
- Environmental Protection Agency: Michael S. Regan, North Carolina’s top environmental regulator, is now running the EPA. The agency will be central to carrying out Biden’s ambitious climate change plans, including eliminating carbon dioxide emissions from the power grid by 2035 and ensuring “climate fairness” for disadvantaged communities facing threats from pollution.
The COVID Relief Bill
The name is coming to be a bit of a misnomer, because there is a lot of money in that bill unrelated to COVID!
The fact is, the US is the world’s largest economy. No country can move money and impact markets more quickly.
This stimulus bill is larger than the entire GDP of Brazil, the ninth-largest economy globally.
What’s in it?
Well, there’s the most generous expansion of aid to the poor in recent memory – along with bailouts for union funds and state/local governments.
What about stocks?
There is not a lot of money flowing directly into industry, although the bill will put disposable income into some people’s pockets, which could flow into consumer goods and travel areas … as well as the broad market through Robinhood and others.
Despite all of the money going in, which normally would stoke inflation fears, stocks rallied because the messaging from Janet Yellen and other DC Power Movers is that there’s no cause to worry about inflation.
DC players playing and causing stocks to Power Move!
Power Loser of the Week
- Andrew Cuomo: An apparent glutton for punishment, the “Luv Gov” makes the list for a second straight week because, while the hits keep coming, he refuses to go down … and more hits are on the way.
- March Madness: Duke, UVA and some other big name teams had to pull out of conference tournaments because of positive COVID tests.
Duke’s story is particularly interesting and I’ve got some inside scoop on my law school alma mater …
The word from my inside man at Duke (my former law school roommate who’s now a professor there), is that the player who tested positive is one of three walk-ons — and he did so after attending an off-campus party.
One of the walk-ons is Coach K’s grandson, and the three combined for 9.5 minutes of total playing time out of 960 game minutes this year … yet they took down the entire team and ended Duke’s season.
But my Power Loser of the Week is BIG TECH. The stimulus bill and other Power Moves from DC are not boding well for some in the gig world.
Not All Power Moves Go Up
The Biden administration has been vocal about its desire to increase unionization …
Just look at the support it threw at a recent union drive at an Amazon fulfillment center in Alabama. The administration pulled some strings and even got Hollywood and sports stars to get behind that drive.
The COVID bill included an $86 billion bailout for nearly 200 union pensions — which is more money than for vaccine distribution and testing.
A taxpayer-funded pension bailout is unprecedented, particularly when there are no conditions tied to the funding.
The plans will not be required to make any operational changes, pay the government back, or freeze accruals.
So what is the purpose?
The intent is to put unions in a better light and increase membership.
Mary Walsh, a former Union boss, is now leading the Department of Labor and he will do everything in his power to increase unionization, including nominating pro-labor members to the National Labor Relations Board.
In addition, the House passed, with little attention, the Pro Act, which will make unionization much easier. Included in the Pro Act is a provision making it harder for employees to be considered independent contractors.
Does that sound familiar? It should … it’s similar to California’s Proposition 22 that was shot down by voters last year. Prop 22 would have declared Uber/Lyft and other gig workers employees, not independent contractors, and thus subject to union organizing.
The Pro Act will force California’s failed union contractor test down the nation’s throat …
And this will negatively impact a lot of Big Tech.
On top of that, throw in Lina Khan and Tim Wu, and you have a Tech Tsunami.
Columbia Law professor Lina Khan has been nominated for the Federal Trade Commission, which means that the administration wants to get tough on antitrust.
Khan is a leader in the progressive movement known as “hipster antitrust,” which calls for new ways of reviewing companies’ market control, including how that affects peoples’ “roles as citizens.”
I’m still trying to figure out what that last part means … but it sounds aggressive.
She will be paired with her Columbia Law colleague, Tim Wu, who was recently named to the National Economic Council and who has been vocal about attacking consumer welfarism in antitrust.
Big waves have been known to tear apart even the most sturdy ships, as Gordon Lightfoot taught us in the The Wreck of the Edmond Fitzgerald – “She was the pride of the American Side”
Power Mover of the Week
- Time: Clock jumped ahead an hour!
- Almost everyone: As most Americans will see money from the COVID bill — but in particular, state/local governments and unions, which are getting a windfall.
But my Power Mover of the week is the – YOU!
You are going to get access to stocks that will benefit from the COVID bill and the infrastructure bill that is already being discussed.
More on that when we discuss the Power Moves Portfolio …
As a trader, you know that good intel paired with the right access and insights makes an invaluable combination.
But did you know that your success also hinges on a revolving door of insiders in the murky bog of Washington D.C. making HANDSHAKE DEALS.
I built my career working on and studying the interaction between K Street and Wall Street, and I’m going to help ensure that you’re not on the outside looking in when it comes to Power Moves in Washington.
My three pillars will DRIVE THE WAY WE TRADE …
Pillar #1 – Laws & Regulations Create Wealth
Legislation, and the regulations that implement them, cause massive market flows.
That means you can’t be truly confident about your investing without eyes and ears in Washington.
Simply put, your wealth is directly impacted by D.C.
Here’s an example:
You may recall that the outgoing President removed the U.S. from the Paris Climate Agreement …
Climate, however, is priority No. 1 for the incoming Biden Administration.
As I projected, in his first week in office Biden rejoined the Paris accord.
Pillar #2 – There’s A Revolving Door of Insiders Moving Between the Public and Private Sectors
Neither laws nor regulations create themselves.
Laws are created by elected politicians … but the regulations that implement those laws are created by unelected bureaucrats.
These are an “insider class” that regularly moves back and forth between the private and public sectors. These people run the country.
As a trader, familiar faces can give us an idea of what to expect next in terms of tone and tenor.
And, really, government appointees often have more direct impact on businesses and the economy than elected officials who selected them … because they determine how regulations are implemented.
Governments pass laws that affect firms’ competitive environment, products, labor force and capital, both directly and indirectly. While this relationship is well-understood, it is often difficult to determine which firms any given piece of legislation will affect, and how it will affect them.
But keep in mind, these people come into government from the private sector and go back into the private sector when a new administration comes in. Thus, there is a natural relationship between those current and future employers and the government.
We can observe the behavior of people with a direct interest in firms affected by legislation … whether that’s through an elected official trying to appease their electorate or through an appointed person implementing the legislation who might have an interest in being hired after their term ends.
When you cross reference DC insiders’ interests in certain areas of the economy or specific stocks, you can start building a pretty clear directional path of which securities might benefit down the road.
Pillar #3: The Collision of K Street and Wall Street
The fact is, actions on K Street and Wall Street both produce ripples in the economy … and the connection between the two sometimes causes those ripples to crash into each other.
When that happens, the strength, speed and direction of the impact either increases, decreases or stays the same.
Seas can calm – or they can AMPLIFY and you get a tsunami!
For instance, why did the Dow hit a record high? Yellen’s statements playing down fears of inflation
D.C. is starting to cause some waves!
That’s why it’s a great time to launch the Power Moves Portfolio …
Power Moves Portfolio
The theme of my initial Power Moves Portfolio is: EV + EV Power + EV Production
An infrastructure bill is coming and Biden is putting a team in place to ensure that it has a green economy bent to it.
In addition, Biden has instituted buy-American policies for government procurement.
Part of that procurement will be to buy US-made “clean vehicles” for federal, state, tribal, postal and local fleets, as well as accelerating the shift towards electric mobility by adding 500,000 EV charging stations to the grid.
Here are the building blocks of the portfolio, with more to come …
Lordstown Motors (Ticker: RIDE) makes EV trucks. It just came off a 50% correction so the price is right. It also just got a cash infusion from G.M. — and the company’s new truck is considered cutting edge. Being U.S.-based, it should benefit from Biden’s executive order to transition the federal fleet of trucks to electric vehicles. … RIDE July 20 calls for 3.50
ChargePoint (Ticker: CHPT) is one of the world’s largest suppliers of EV charging stations. It recently completed a reverse merger through a special purpose acquisition company (SPAC). That resulted in its share price being halved in the past two months, but it will certainly benefit from EV installations. … CHPT May 30 calls for 5
Freeport McMoRan (Ticker: FCX) is a U.S. mining entity that is a large producer of copper and platinum, two elements that will be necessary to modernize the power grid. They also produce gold and silver. They’ve recently corrected and are cheap, and some new assets coming online are expected to double output over the coming year. …FCX Aug 40 calls for 4.00
This is the start of something fun and I’m looking forward to running and building the Power Moves portfolio with you!
Cutting Through the Noise for You.
SOUND OFF: I would love to hear from you as we move forward. Leave a comment below!