Thanks for all of the assistance guys. Truly appreciated.

irish pete ag06 said:

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DavysApprentice said:

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Here is a weekend question for the thread:

If you could buy 100 shares of any ETF or stock that was sub $100/share for the sole purpose of selling covered calls on, what would it be?

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Idiot here, but my 2 cents...

ARKK


Now like Brew says below, you can probably wait and buy this for $60 in a few months.

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But wouldn't it be much more fun to short it ineffectively and lose a bunch of money trying?!? That's what I usually do.

Triple_Bagger said:

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US Economics: The Week Ahead pic.twitter.com/DgVXkgp1ex

— *Walter Bloomberg (@DeItaone) December 11, 2021

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First line: They are estimating that small buisness owners will be more optimistic? Have any of these people met a small business owner lately?

I have investments in a bunch of small caps. My portfolio is not what one would describe as "optimistic".

I'm optimistic that it can't go much lower, but I've been wrong about that for the last month.

Futures popping tonight. All indications are lining up for a Santa rally. IMO, the mega caps like AAPL, MSFT, etc, will be the beneficiaries of most of it. I'm not expecting it to affect small caps.

sts7049 said:

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that doesnt seem worth it to me. invest roughly 4k to receive 750 dollars in one year?

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you have better ideas for an 18.75% return with the potential upside of 400%?

This is TexAgs! We don't get out of bed for anything less than 500% on a day trade!

Equity markets are marginally higher overnight as S+P Futures are up 10, the middle of their overnight range... Treasuries are marginally higher and flatter ,as the most consequential Fed meeting this year looms... It seems like this Fed ends up making major moves in the month of December... Inflation is still rampant with supply chains struggling, along with a strong economy... Inflation is now the number one fear out of the University of Michigan data, showing it the primary concern of 76% of those surveyed versus employment at 21%... We seem to be at full employment at this juncture and the Fed now is about to make a big move... We see three scenarios for Wednesday's announcement...

Scenario 1... HAWKISH Move by the Fed.... Here we expect the current tapering to double from 15 billion a month to 30 billion... That would be a reduction of 20 billion a month in treasuries and 10 billion of mortgages... The Fed dot plots, which indicate rate rises, will move from 1 to 3 for 2022... The yield curve will flatten as the front end, which is currently building in 1-2 rate rises, will adjust... 2 years will hit .90, on the way to what we think will eventually be 1.31.. 5 years will break 1.34 on the way to 1.60...given the expected flattening and a potential build in of a mistake of aggressive rate rises, we have not certain how much the back end of the yield curve moves...

Scenario 2 MODERATE.. Here the Fed increases tapering by 50% from 15 billion to 22.5 billion... Treasuries tapering is increased from 10 billion a month to 15 billion... Mortgages from 5 to 7.5 billion... Dot plots show a move from 1 to 2 rate increases... Rates rally modestly as the more is currently built in... 2 years move to .90-1% but not much more... The long end does ok and continues the range of 10 years from 1.70 high yield to 1.35 low yield... Equities would rally.

Scenario 3...DOVISH... Here the Fed leaves tapering alone. 15 billion a month currently... And dot plots still 1-2 for next year... While markets may rally initially, the Fed would lose their credibility on fighting inflation... The curve would steepen with the long end doing worse... Equity markets would rally initially and then reverse... Those that are already blasting the Fed weekly, like El-Arian and Summers, would go ballistic... Those like Minerd of Guggenheim, who is already calling for a recession in 2022, would be praising the Fed... No way there is a recession in 2022.

Twenty Central Banks make decisions this week.. The Fed is the most important as they are on the cusp of a break out of inflation... We may see some tweaks from the ECB, but the Bank of Japan has been dovish for decades and sees no reason to move from that posture... The BOE, who had looked to be the most Hawkish, has their hands tied do to soaring Covid and lockdowns...Expect to see some of the smaller Central banks raise rates...

Rate rises... Fed likes to move rate changes at meetings... So next year we currently see a rise in June, September, and potentially December...if the Fed is Hawkish, we could see the first rate rise move to May, and the next two to July and October... Some even see a rise in March... Others, like Steve Blitz of TS Lombard, are calling for 4 rate rises for 2022... Most aggressive we have seen...Over the weekend we see that JPM raised their forecast for 2022 to 3 rate rises... While Morgan Stanley raised their 2022 2 year forecast from 1% to 1.25%, while leaving their 10 year forecast at 2.1%

Inflation....Friday saw the largest CPI number in 39 years... But the treasury markets initially rallied... This had to do with whisper numbers that were higher.. The whisper number for the NSA (not seasonally adjusted) was 278.25, while the actual came out at 277.94... You may think we are grabbing on esoteric numbers, but most of the directional trading is being dominated by algos and other sophisticated fast traders...the Cleveland mean trimmed number came out at a 16% annually inflation...Costco said that prices are up 4.5-5% in the latest quarter. inflation is bad, and while it may have peaked, we do not see rents and wages reversing any time soon

Supply chains... Some have said that supply chains are getting better... They look at the ships waiting at Long Beach being reduced... That is not the case, the number of ships has been spread out, but is increasing... Our Classmate ,
Richard Galanti, is the CFO of Costco... He said in Barron's, that 79% of import containers have been delayed an average of 51 days...We saw an interview with the head of Intel last week, he said supply chains will not normalize until 2023.

Equities... Morgan Stanley said that last Monday "was the LARGEST DAY OF SHORT COVERING in North America since January 2021" . While equity markets are at their highs, S+P now at record highs, the selling of the first 2 weeks of December has subsided. Investor defensiveness has lead to a significant rise in money market flows of over 200 billion over the past two months... This money has left international equities and moved into cash and US large caps... US is way ahead on Covid and has limited restrictions...Leveraged and Vol sensitive traders have derisked in the last two weeks...we see strength in the underlying equity bull tone into year end, but With a tricky Fed result at the end of the week...Equity excess longs have been liquidated or hedged. Barron's reports that they have seen increased buying of put options to hedge equities... Sophisticated investors (institutional) have been risk adverse...

This will be the most important Fed meeting of the year...we went through the scenarios above... Equities have a bullish trend into the end of the year... If the long end of the treasury market stays within the range of expectations, We think equity and other risk markets are ok...remember year end has tremendous window dressing flows... We expect a mild risk on trend... With the potential for a melt up.. Bond vigilantes seem to be in the weeds for next year... But one last reminder, whatever the Fed does, fade the first move as the real trend starts the next day in London time.... Hope this helps