Inflation/Deflation, War, ARKK And More
Here’s the transcript from this week’s Live Q&A Chat. I’ll be in Austin with Amaris and my family for a few days for Amaris physical therapy and unless something crazy in the markets happens, I probably won’t be able to write up and send out anything while I’m there.
Q. @ Cody, I had asked a few weeks ago about the inflation/deflation debate and which was a more pressing medium-long term issue. I never got to follow-up on your response. You made mention about deflation not really ever being an issue historically. Was the beginning of the great depression, not the worst time in US economic history? And can a debt based system such as our modern economy handle such a 5 year deflationary period without collapsing in its entirety?
A. I do not think deflation per se is going to be an issue anytime soon. Inflationary pressures might ebb, but I don’t think outright deflation is likely while we’re on this current Republican Democrat Regime fiat currency platform.
Q. @Cody . Just playing devil’s advocate here. Maybe because it eventually does need to be repaid. Can exponential debt growth continue forever without repayment? Or does the law of large numbers say eventually it pops and then way down it would fall.
A. I suppose there’s a breaking point at some point, but man, who knows when or what level. Could be an order of magnitude above here. Eventually, the system will break, but I don’t know when, where or what will be the straw.
Q. Cody, It seems to me there are too many looking at history and buying the invasion. I think it’s different this time. None of the other instances had monetary and fiscal policy like this nor inflation at these levels
A. Agreed and I wrote about why it’s different this time just yesterday though I neglected to mention how different the economic and markets and valuations set ups were between 2003 and today.
Q. Cody, UBER and INTC are your top 2 rated stocks yet are down from when you recommended them. How much lower do you see these names going? Do you think they will be higher from these levels at year end?
A. My ratings usually go up as my favorite stocks go down. I don’t know how much lower they will go and I have been buying more of both for the hedge fund lately. They might keep going down near-term though, I have no idea. I think they’ll be higher by year-end, but this I also don’t know. Depends on a lot of things that have nothing to do with the company’s or their individual stocks.
Q. Cody, you have shorted ARKK which was a great decision. Down huge from a $155 high about a year ago. Does your short become a long at some time? If so, what price? Thank you.
A. I’m just using ARKK as a hedge in the hedge fund sometimes and I don’t keep a long-term short on ARKK. I actually would image that ARKK will be up from these current $62 levels by the end of the year.
Q. Hey Cody, thanks for a great job as always over the years…at one point back in the day around $6 a share we owned Calix, now around $52 and down from $81 and with Broadband infrastructure buildout moving to the forefront is it time to take another look at CALX?….thanks again.
A. Thanks for the kind words. Believe it or not, when I’m in NYC in a couple weeks, I’ll be having dinner with an old friend who’s an executive at Calix. I’ll talk some business, careers and life with him and will do some work on Calix beforehand and if it looks interesting, I’ll let you all know.
Q. Hi Cody, I still own some Astra and Fubo, and Blacksky( I never got out) Do you thing I should just sell them now and take some big loses or wait for a possible pop down the road. Not a huge position. Thanks
A. I don’t know what to say, really. I can only give my analysis and trade alerts along the way. I haven’t looked the ones I sold lately. I still own BKSY.
Q. Good morning, It has been painful watching INFI & SKLZ any thoughts ?
A. Agreed. I’m holding both and nibbled some as noted at some point recently, but not much to add here. The markets hate these kinds of stocks right now.
Q. @Cody Do you think Tesla has abnormal geopolitical risk not being calculated into its share price due to much of its future growth reliance so heavily concentrated in China (close ties to Russia) and Germany (need Nord Stream 2)? Meaning if things escalate, will Tesla be caught in the middle
A. Probably. But TSLA’s still just overvalued by most metrics anyway as it has been for a long time now.
Q. Cody, you mentioned that “I’m short more space-related names than I am long although I have much more capital exposed to the long side than the short side.” Could you please disclose us the shorts? We wanted to hedge our longs too!
A. I’ve mentioned most of them before — MAXR, ASTS, ASTR, TSAT, SATS. IRDM. And to be clear, each of these are small hedges in the HEDGE fund and not in my personal account and I don’t recommend most people short stocks!
Q. @Cody: Are you still bullish on BABA, and if so, is it because of AutoX advance in autonomous Vehicle? I believe BABA own at least some AutoX.
A. I am still bullish on BABA long-term, but no idea about short-term. No, it has nothing to do with AutoX. I like BABA because its dominance in China and its cheap valuation.
Q. Would you buy TSLA on a dip today?
A. If you don’t own as much TSLA as you want to own, buying on a harsh market dip hitting your stock is probably not a bad idea.
Q. @Cody Do you believe that bank loans are “real” money and therefore deflationary? Once it’s loaned into existence (stimulus) then doesn’t the required repayment imply contraction due to extracting those debt payments from the economy.
A. I’m not sure why that system which has been in place for decades would suddenly become deflationary…?
Q. Cody regarding FB, are you concerned about Apple releasing a VR platform that will achieve bigger scale than FB?
A. There will be more than one winning platform in VR. I’d expect maybe 5-10 major VR platforms with lots of applications and games that work across most of the platforms.
Q. Dear Cody, I have been reading your blogs for 20+ years, since before the telecom connection (maybe even earlier) and being a subscriber of trading with Cody for years. Cody, can you please let me or us know if you think FB can have a problem in Europe with the intercontinental data transfer issue. Can FB really be exposed to losing $29B of revenue from Europe?
A. No, I think FB will just do EU’s version of lobbying and paying fines to keep doing business over there mostly as usual.
Q. I would appreciate Cody addressing the linked article on the Feb. 23 chat. Thank You. https://fortune.com/2022/02/22/elon-musk-laughed-tesla-german-gigafactory-too-much-water-main-reason-not-producing-cars/
A. I’m not sure what to say. It’s an issue, obviously, if Tesla can’t get that German factory open, but it’s also not shocking that the company is having to jump through bureaucratic hoops to get it done.
Q. I see the latest trade alert for Paypal, what are your thoughts on Square (or Block as it’s known now)
A. SQ is down huge since we sold it and I haven’t looked at it lately, but I wouldn’t want to be short SQ. I’ll take a fresh look at it when I get a chance.
Q. Wondering if you think NOCs rocket from this article means competition for RKLB. I know you perceive RKLB as being in a category with not much potential disruption. But do you think or know if NOC could represent competition / disruption to them? Thanks Carlos Spaceflight Now @SpaceflightNow Northrop Grumman launched a cargo flight from Virginia’s Eastern Shore Saturday using an Antares booster with a first stage designed and built in Ukraine, a successful start for a mission to haul supplies to the International Space Station.
A. Like, read that headline again…how is it possible that Northrop has to use a first stage designed and built in Ukraine instead of being able to do that themselves. I would think that Northrop should buy Rocket Lab yesterday!
Q. What do you think of SPOT at these current levels.
A. Still a great company, still not cheap, still dominant in its business, still got issues with monetization and margins. I can think of worse ideas than buying SPOT with a $28 billion valuation, but I down own it.
