The daily view: 10/27/2023: No Bitcoin ETF, Low-trust Societies, Meta/tech Earnings

Item 1: It looks like I was wrong about Bitcoin, with the price having surged to $34,000…or am i?

It’s just a deadcat bounce, and I remain short. I am down on my latest short at $28.5k, but not a problem. Temporary losses are an inevitable part of trading. According to this excellent article, the listing of the Bitcoin ETF ticker on the DTCC website is not indicative of approval.  Nothing has changed between now and a month ago except the price is $34k instead of $26k.

Any billionaire or  expert  promising that the ETF will be approved is clueless and blowing smoke. His or her guess is as good as mine, but I think it will not be approved.  The SEC has until Jan 12th to make a decision, which is an eternity in the world of crypto and gives plenty of time for the price to fall back to $24k or lower as soon as the hype wears off and the realization sets in that nothing is going to happen.

Item 2: On October 4th Ryan Carson was killed at a Brooklyn bus stop. The story went viral on Twitter, until being eclipsed by the Gaza conflict days later.  Which made me think, in many respects, America’s cities are more dangerous than being in Gaza. Instead of militants , America’s streets are overrun by the criminally insane who are liable to strike at little or no provocation. Instead of masses of homelessness  due to bombings and razings, it’s masses of homelessness due to drugs. Instead of destruction over religious differences, it’s riots, arson, and looting over alleged racial injustices. Instead of tanks on the streets, it’s those huge SUVs and trucks about the same size, but at high speed, resulting in thousands of pedestrian and vehicle accidents and deaths. Pedestrian deaths are at 40-year highs, with “those bigger, heavier vehicles account for a growing share of traffic deaths.”

Doesn’t  this contradict earlier  posts about America not being at risk of collapse? Not really. In terms of macroeconomics and geopolitical stability, America is still head and shoulders above the rest of the world. But on a smaller or more local  scale, America is more atomistic and low-trust, whereas there is more cohesion overseas but more weakness and or upheaval on a macro or geopolitical scale. America’s considerable economic, racial, and cultural diversity helps protect it against societal unrest, but possibly at the cost of cohesion or social trust on a smaller scale. For the rest of the world, it’s reversed.

Item 3: Meta and stocks fall. Meta fell a couple  percent after reporting blowout earnings, from $300 to $285/share. Earnings were the strongest in years:

The Facebook parent company posted year-over-year quarterly revenue gains of 23% to more than $34 billion, exceeding the $33.5 billion analysts had projected. Meta also more than doubled profits compared to the year-ago quarter, reporting net income of nearly $11.6 billion — during the same quarter in the prior year, Meta’s profits had dropped by half.

I predict it will recover, so not worried. A year ago people were writing the obituaries for Meta, with viral videos on YouTube about Meta’s imminent demise getting millions of views…how poorly those have aged. I have never seen as big of a turnround as this…a half a trillion dollar company with as much upside as a penny stock but much smoother, less risk.  Even if the Metaverse is a dud and a money pit, the rest of the company is firing on all cylinders.  Where is the money coming from? Ads. Mobile ad rates (such as cost-per-click or cost-per-thousand-impressions) are insanely high. Companies and non-profits of all sizes are shelling out big bucks for traffic on Facebook and Instagram–things like financial services, home remodeling, trinkets, healthcare/drugs, etc. It’s also a hedge against inflation, as ad rates tend to track inflation.

There was so much hype in May/June about AI, with Eliezer Yudkowsky going on podcasts every day to warn of the world coming to an end (even though his position is a contrarian one, it helped fuel the hype by generating media coverage about the risks of AI), but now AI has taken a backset to inflation and the Middle East. It’s like the late 70s again but Biden instead of Carter, Israel instead of Iran, and surging interest rates and high inflation. Nevertheless, all capital will continue to flow into big tech (and some exceptions such as Walmart) and out of everything  else. A few weeks of weakness does not change this.