Goldman Stacks

October 18, 2021 Goldman Stacks Good morning traders, Welcome back to The Daily Setup. Markets were mixed riding into the weekend. Here's what's on the docket today: - Bitcoin futures are here - Goldman Sachs makes it rain - Hertz rises from the dead So let's pour a cup of joe and start this work week right. Regards, Jeff Chart of the Day – Masterworks Masterworks is a new platform that claims to democratize investment in fine art. How? By doing its best Robinhood impression of course, and allowing investors to purchase fractional shares of individual works. The company raised $110M in series A funding and [fetched a valuation of $1B]( earlier this month. It's undeniable that lots of fine art appreciates well as a store of value, but as fine art has a [notoriously unregulated market](, it's unclear just how safe or responsible investment in Masterworks will be. You can't invest in the company itself, but those with an appetite for risk can apply to use their platform and invest in the art they currently own. Virgins and Bitcoin BIGGEST MOVER "I'm not ready yet" Virgin Galactic's stock dropped [over 14%]( on Friday when they announced that their first commercial flights would be postponed until Q4 2022 due to delayed test flights. Virgin claims that it will spend this time running its spacecraft through an "[enhancement program](" to improve performance, but I think we all can agree that they're just nervous for their first time. - The spaceflight company is also running a safety inspection on their ships after a testing lab found that some materials lost their hardness under stress. I've heard the more experienced spaceflight companies don't have this problem. - This is a bad hit for Virgin because competition really is the name of the game-- Blue Origin has already sent double the number of non-profession astronauts to space, and SpaceX has sent theirs much further into orbit. Action Item: Regardless of Virgin's stumble, the space tourism market is projected to grow enough in the near future-- from $885M last year to $2.5B in 2027, [by some estimates](-- to justify investing in the industry. To make matters even better for Virgin, Blue Origin [doesn't have a whole lot going on]( in 2022 either, so Virgin's setback might not be as bad as it looks like now. [HODL'ers Rejoice!]( A Bitcoin futures ETF should start trading tomorrow. Fund sponsor ProShares [appears to have won]( regulatory approval for its Bitcoin Strategy ETF (BITO). These funds won't hold actual bitcoins, but instead will deal in bitcoin futures, which trade separately on regulated U.S. exchanges. Regulators prefer futures-based ETFs [because the SEC lacks jurisdiction]( over crypto trading venues that aren't registered as exchanges in the U.S. In other words, Uncle Sam wouldn't be able to get his cut of the action. There are advantages and disadvantages to a futures-based ETF: - One advantage is greater liquidity than closed-end funds that hold actual Bitcoin, such as Grayscale Bitcoin Trust and Bitwise 10 Crypto Index Fund - Another advantage is lower fees. ProShares ETF will have an expense ratio of .95% vs. 2-2.5% at closed-end funds. - Disadvantages, however, include roll-yields, which are costs passed on to the consumer as fund managers must continually roll-over expiring contracts into new ones. There are also tax consequences as futures contracts are taxed on a mark-to-market basis, which can lead to tax liability on unrealized gains or losses. Action Item: In response to the news, Bitcoin surged to over $60k for the first time since April of this year. This has a bit of a buy the rumor, sell the news type of feel to it. That said, this could be a boon for cryptocurrencies in general as more liquid investment vehicles, like ETFs, will allow for better price discovery and tighter markets. Keep your eyes open to other Bitcoin ETFs that may gain approval in the coming months. Goldman Stacks Goldman Sachs [hit all the greens]( this Friday with an earnings report that made the other big banks jealous. Goldman's Q3 profits climbed [63% to $5.28B](, while its total revenue for the first 9 months of 2021 was greater than any previous 12-month total. Shares were up 3% after the report came out. - Much of the wild uptick in profit and revenue comes from trading, especially of repackaged debt from loans made to tech start-ups. Why do I think we could see another financial crisis? - The other big contributor to GS' recent sachcess was equities trading, which basically consists of lending to hedge funds. - CFO Stephen Scherr has decided to turn this moment into a mic drop and go out with a bang, retiring at the age of 57 to be replaced by Dennis Coleman. ACTION ITEMS: - ✅ Big banks are killing the game, and GS is at the top of the heap. Because GS lends to other banks and hedge funds, the industry’s success uniquely amplifies Goldman’s. CEO David Solomon has acknowledged that the bank will have to cool it a little on mergers & acquisitions in the future, trading growth for stability, but if anything that’s a reason to trust in them even more. Mondays with Tim Buy the Rumor Apple (AAPL) is expected to announce new MacBook computers at a [launch event](today, which should usher in a new era of MacOS laptops. A new MacBook Pro would complete the transition from Intel chips to the proprietary M1 processor, and could also be a new opportunity for Apple to run its standard playbook of getting rid of normal USB and HDMI ports for something that requires users to purchase an additional dongle. - AAPL announced new iPhones, iPads, and watches in September, leaving MacBooks as the neglected stepchild of the product portfolio. - Also expected in today's scheduled event is the release date of MacOS Monterey, which is the latest version of Mac operating software. ACTION ITEMS: - ✅ While often overlooked, the laptop segment of Apple’s business is an important one, so making new products available for the holiday season could be a near-term catalyst. This is assuming that the company can actually source chips for production, produce the computers, then get them on ships and distributed across the globe. Hopefully, they don’t choose to ship them through the Suez Canal. Retail and Hertz Other News [Why save when you can spend?]( In what should come as a surprise to no one, economists were wrong in their estimates for September's retail sales numbers. Predicting a drop of 0.2%, retail sales rose 0.7%. Armed with stimmies and rising wages, consumers have shrugged off the 'rona and been surprisingly resilient when it comes to spending their money. - Retail sales, which aren't adjusted for inflation (because that makes sense), rose 13.9% in September from a year earlier. - Economists expected consumers to start their holiday shopping early to avoid empty shelves, which would probably keep retail sales higher in October. - Being the debbie-downers that they are, economists are still concerned about silly things like supply shortages, rising inflation, and a slowing labor market recovery. Action Item: The S&P Retail ETF, [XRT](, is up 43% this year. However, it has been trading in a range from $90-$97 over the last six months. Keep this range in mind, as a move outside of it may signal a change in trend. [Tether be like...]( Tether Ltd., the largest stablecoin issuer, agreed to pay the CFTC a $41M penalty Friday. Federal regulators say Tether falsely claimed that it backed each of its crypto tokens with an equivalent amount of USD from at least mid-2016 to Feb 25, 2019. What exactly did Tether do that wasn't kosher? According to the CFTC: - Tether misrepresented to customers and the market that it held USD reserves in bank accounts for all of its stablecoins, when in reality, it only held 27.6%. - Additionally, Tether relied on unregulated entities and third parties to hold the funds comprising the USDT token reserves. - Tether's response, which I'm assuming was taught in a masterclass by late 90's music star Shaggy, was as follows: “There is no finding that tether tokens were not fully backed at all times-simply that the reserves were not all in cash and all in a bank account titled in Tether’s name, at all times.” Action Item: [Regulators have often argued that stablecoins could fuel financial panics](. Whether that is true remains to be seen. What is known is that federal regulators will continue to put pressure on firms that issue stablecoins. Keep in mind that if this happens, stablecoin holders may well cash out and move their money elsewhere. It is possible that money moves into popular cryptos like Bitcoin and Ether. Hertz is back from the dead Hertz Global Holdings (HTZZ) has [filed for an equity offering]( after emerging from bankruptcy back in June. The zombie company became a[favorite of the Robinhood crowd]( after bankruptcy, as the shares saw wild price swings. The company is calling the offering a "re-IPO". - The company filed to offer $100M worth of shares but did not actually disclose how many shares or at what price this offering would represent. - Hertz plans to trade under the ticker symbol HTZ. - If the company wants to resurrect its image, perhaps they could partner with a former USC running back who won the Heisman Trophy….I wonder what Reggie Bush is up to these days? ACTION ITEMS: - ✅ The shares in the new offering are being sold by existing stockholders, so make of that what you will. Exits from bankruptcy have the inherent risk of shareholders looking to pass the bag to other holders. Pent up demand for travel could spark a catalyst for car rentals, so there could be some upside potential. Unfortunately, nowhere in the filing did the company explain how in any universe a Toyota Corolla could be considered a full-size vehicle. [Image] RagingBull, LLC 62 Calef Hwy. #233, Lee, NH 03861 [Unsubscribe from all RagingBull emails]( Questions or concerns about our products? Call or text us on your mobile: 1.800.123.4567 © Copyright 2020, [RagingBull]( - [Refund Policy]( - [Privacy Policy]( - [Terms & Conditions]( DISCLAIMER: To more fully understand any Ragingbull.com, LLC ("RagingBull") subscription, website, application or other service ("Services"), please review our full disclaimer located at [(. FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. 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