Facebook's Moat Undeniable

Facebook (FB) is fresh off a strong earnings report, which underscores its massive moat in the social media space. Facebook has faced several public relations challenges over the past couple of years (i.e., Cambridge Analytica, coordinated boycotts, government inquiries into privacy, jumbled earnings calls, and anti-competitive testimonies). Exacerbating these public relation issues has been the COVID-19 backdrop, both domestically and abroad. As companies scale back advertising spending amid the COVID-19 pandemic, Facebook continues to grow across all business segments, with its user base continuing to expand slowly. Facebook’s moat is undeniable, and any meaningful sell-off could provide an entry point for the long-term investor.

Recent Advertising Boycotts

Facebook faced a very public onslaught of companies joining an advertising boycott across its social media platforms. However, its latest earnings suggest that this effort may have been largely symbolic and virtually inconsequential to its revenue and growth numbers. The advertising boycott had grown to roughly a thousand groups and multinational companies. This presented a unique challenge that still has the potential to weigh heavier on the company since this boycott will directly impact revenue as overall compliance/security expenses swell. The magnitude of this boycott may inevitably influence the stock price if this movement expands in sheer numbers and duration. However, as advertising spending is abandoned indefinitely until further notice due to this boycott and overall spend slows due to COVID-19, this culmination could cast uncertainty around its stock valuation. Continue reading "Facebook's Moat Undeniable"

Is There A Housing Bubble 2.0?

If you're looking at the stock market to sniff out a potential asset bubble, you may be looking in the wrong place. It may be right in front of your face.

When the millennial generation came of age, we heard all about their preference for renting – not out of any love for renting necessarily but because many of them were priced out of the housing market – and their supposed desire to live in urban areas with all the cultural offerings they provide.

Along comes the Covid-19 pandemic, and suddenly nobody wants to live in cities anymore. Instead, everyone it seems is moving to the suburbs, enabled by low-interest rates and the necessity of working from home. That has driven up the price of homes just about everywhere. Indeed, the National Association of Realtors announced last week that in the third quarter, every single one of the 181 metro areas it tracks showed a year-over-year price increase, something that's never happened before. Moreover, 65% of them – or 117 – rose by double-digit percentages, led by a 27.3% jump in Bridgeport, CT, the county seat of Fairfield County, which includes Greenwich, CosCob, Darien, and other New York City bedroom communities.

Needless to say, the runup in home prices nationally increases the income needed to afford a home. The median price of an existing single-family home nationally jumped 12% on a year-over-year basis, to $313,500, the NAR reports. At the same time, the monthly mortgage payment on a typical single-family home rose Continue reading "Is There A Housing Bubble 2.0?"

World Oil Supply And Price Outlook, November 2020

The Energy Information Administration released its Short-Term Energy Outlook for November, and it shows that OECD oil inventories likely bottomed in this cycle in June 2018 at 2.802 billion barrels. Stocks peaked at 3.205 billion in July 2020. In October 2020, it estimated stocks dropped by 62 million barrels to end at 3.069 billion, 189 million barrels higher than a year ago.

The EIA estimated global oil production at 91.89 million barrels per day (mmbd) for October, compared to global oil consumption of 95.31 mmbd. That implies an undersupply of 3.42 mmbd or 106 million barrels for the month. About 45 million barrels of the draw for October is attributable to non-OECD stocks.

For 2020, OECD inventories are now projected to build by net 104 million barrels to 2.982 billion. For 2021 it forecasts that stocks will draw by 55 million barrels to end the year at 2.927 billion.

Oil Supply

The EIA forecast was made incorporates the OPEC+ decision to cut production and exports. According to OPEC’s press release: Continue reading "World Oil Supply And Price Outlook, November 2020"

Bitcoin: My 1 Reason Why

MarketWatch used to pick up my posts on rare occasion but has not done so for a long time. Maybe they think I make fun of some of their articles or something. I don’t know what would give them that idea. I actually find MarketWatch useful in ironic and non-ironic ways.

But anyway, this morning an article tags along with the recent near-deafening Bitcoin noise…

6 reasons bitcoin is trading at its highest level since 2017 — and 1 warning

6 reasons are given for Bitcoin’s re-found popularity. They are the usual pap, including a Dollar/Gold rationalization.

“Bitcoin as a form of digital gold is also seeing its time in the sun as we see the floodgates open on monetary policy. Closing the sluice gate is more difficult than opening it,” Charles Hayter, founder and CEO of CryptoCompare, a company engaged in bitcoin data and analytics, told MarketWatch.

Bitcoin is not a form of digital gold. That is one of the zaniest things I’ve ever seen in print. I am admittedly an old fashioned gold valuing curmudgeon. But in my opinion, Bitcoin is a digital concept; one that I think can be controlled or co-opted by governments more readily than the gold buried in the woods behind some crusty old bug’s shack (to boot, the digital kids are not guarding their hoards with physical shotguns, just maybe virtual hacks or viruses).

1 Reason Why

It was time. Bitcoin is having its technical day in the sun and only this week hit the target NFTRH has had for it since early 2020. Due to nutty rationale like the above and the weight of momentum-fueled money starting to pile in, not to mention an overbought reading on this weekly chart, I think it can pull back here. Possibly to support at the 12500-13500 level. Continue reading "Bitcoin: My 1 Reason Why"

NASDAQ Holds On To Weekly Gain

The NASDAQ is the only one of the three major indexers to hold on to a weekly gain. Early in the week, the DOW was making a run at 30,000, but it ultimately failed to reach that level and has since been stuck in the mud incurring daily losses in the 3 of the 5 days this week. The NASDAQ, however, was able to post 3 winning days out of the 5 to produce a weekly gain.

As it stands heading into the close, the NASDAQ will post a gain of roughly +.75% while the S&P 500 and DOW will post weekly losses somewhere in the neighborhood of roughly -.4% and -.5%, respectively.

The U.S. dollar and gold are also on the losing side of the coin, posting weekly losses of -.4% and -.9%. Crude oil made a strong comeback with back to back weekly gains and will post a gain just short of +4% for the week. Continue reading "NASDAQ Holds On To Weekly Gain"