RKLB’s Neutron Dance, CRE Crashing, SVB Bailout, And Much More

Here’s the transcript from today’s live Q&A chat. Also, don’t forget to follow us on Twitter @TradingWithCody!

Q. With rates confirmed to stay all year, what’s your sentiment towards the market? Do you like any shorts/options on things like TLT, GLD, QQQ?

A. I’m not very dependent on the Fed’s commentary about rates for my market outlook but I do think higher rates after decades of near 0% rates is indeed meaningful for the economy and the markets. I’m long GLD and plan on remaining so for years as inflation isn’t likely to subside very soon and GLD made a historic move higher back in the 1970s, the last time inflation was high for a while. I am short some QQQ but not aggressively and covered some of it yesterday in the downswing. But I think we’ll have some real upside in some of our names in coming months and years regardless of the Fed’s moves (or non moves) this year.

Q. I remember a years ago or so you said rates going higher. I didn’t believe you. Great call on that. My question is how on earth is it possible to have rates at 4%, even 2% long term when we have 31 trillion in debt? There’s gotta be a breaking point, right? Is it soon or is it something my teenagers will deal with when they are our age (50)?

A. Yes, some of my predictions from last year that people mocked and laughed and disbelieved have come to fruition this year. See this thread on Twitter for how people were laughing at the end of last year when I said that oil would trade down into the $60s or maybe the $50s when it was above $100 at the time. As for higher rates and their impact on the US government, it’s not a good thing but the government will likely print/QE/Peter-Paul-Pocket much of the pain away for investors and wealthy people. That will mean that inflation will likely stay elevated for poorer people though. That said, the fact that AI and The Tech Revolutions that always go on and are strongly deflationary will help create prosperity and wealth for the country in coming years as always, and will also help get the US through the higher rates cycle. The Republican-Democrat Regime will be less able to spend/waste money than we’ve seen in decades and that will also be a good thing for the US, its economy and for individual citizens and private businesses in this country too.

Q. Cody: feet to fire, quick SPY, QQQ, DJIA, IWM prediction for next 3 months?

A. SPY will be down 3% in the next three months. QQQ will be down 5%. DIA will be down 7%. IWM will be down 9%. Feet-to-fire guesses, obviously and not something I’d necessarily try to game.

Q. What is your favorite stock to buy today?

A. I haven’t bought anything today. My favorite stocks right now include: INTC, RIVN, UBER, MP, WOLF, ROK, TSLA.

Q. You making any trades today?

A. I trimmed some INTC calls. I trimmed some VZ. I bought some FSR puts. I bought some SMH puts. Only a handful of trades in the hedge fund today, none in the PA.

Q. In light of the banking situation, I have some money in a money market mutual fund with Schwab, should I be concerned that there is no FDIC insurance on those funds?

A. Maybe a little bit, but I’m not losing sleep over money markets right now. Always a risk though!

Q. With the craziness of this market, I’m enjoying picking up Long Call Option positions in tech. Thoughts on this approach and on the following recent positions: -TSLA Jan 2025 $250 Calls @$32 – MP Jan 2025 $50 Calls @$4 Any Long option position recommendations Cody?

A. In general, most people lose money trading out of the money options but using very long dated strikes like you’re talking about can help. But you have to pay a premium for the right to those shares out in January 2025. I mostly stick with common although I do use options to hedge and/or get some extra juice. The INTC calls dated out to January 2024 or January 2025 are cheaper than either the MP or TSLA calls but that’s because INTC is a much less volatile stock.

Q. Hi Cody, thanks for the RKLB update. Quite a story. Any thoughts on their exposure to Silicon Valley Bank? According to their 8k filing last Friday, they have $38million in cash with the bank or about 8% of their total. That would be about 3 months of their annual cash burn according to Bryce’s extremely well done analysis and would bring them to about 26 months net cash on hand. I don’t know if that’s good, bad or otherwise for them and I don’t have any idea where else they may have cash if there are more closures. I would appreciate your insights.

A. Sorry I missed your question when this was a concern. The government bailed out RKLB and its shareholders when it bailed out all the giant bank accounts at SVB.

Q. What is the timeline for Rocketlab’s first Neutron launch and are you adding any more RKLB at these levels?

A. They’re hoping for 2025 for a couple of them and then a ramp of Neutron launches into 2026 I’m a buyer of more RKLB near $3. Writing that prior sentence made me think of this song.

Q. Hey Cody — you buying more UBER at this price. It’s pretty much at your “where i’d buy more” price right now and bouncing along at that level.

A. I nibble a little bit of UBER whenever it gets near/below $30. Bought a few UBER calls the other day when it was at $30 (Sept $35 strikes).

Q. Is there a level where you might consider getting back into BITO?

A. If you don’t own any bitcoin at all, I’d consider getting some bitcoin but I’m not in a rush. BITO is fine if you don’t have a good custodian solution for bitcoin but longer-term I want to just hold bitcoin as I have in my PA for more than 10 years now.

Q. The first look at chat gpt 4 is pretty amazing. Would you consider buying MSFT or do you think google can come up with a competing service quickly? I read something like for every 1% of search bing takes from google is ~2B in revenue. If not msft, companies that can utilize it the best should do really well. Is this the voice revolution?

A. I think Google will do fine. I think the hype for MSFT AI is overdone and crowded right now. Yes, this is the next phase of The Voice Revolution. Here’s the book I wrote about The Voice Revolution back in 2017 featuring, among others, AMZN, GOOG, AAPL, META and NVDA. Free PDF version for TradingWithCody subscribers.

Q. Hey Cody – on the SMH Puts. Can you share strike price and expiration date? Seems like it’s definitely setting up for a pullback…

A. I’m long the long following SMH puts in the hedge fund and am short a little bit of SMH outright in the hedge fund, as hedges to my semiconductor longs like INTC, QCOM, WOLF, etc. March 31 $265s, April 14 $260s, May 19 $230s.

Q. Also, mind if I ask the strike or expiration on those BAC, FSR, SMH puts?

A. I’m long BAC April 6 $30.5s, April 28 $30s, FSR April 6 $7.5s, see prior post for the SMH dates and strikes.

Q. I’m listening to the “all-in” podcast, and I’m thinking about shorting commercial real estate. Anybody here know any good commercial real estate to short??

A. I think CRE (Commercial Real Estate) is in trouble, but much of that trouble is already or more than priced in at these levels. These CRE stocks have been demolished lately and were already down big from their highs a couple years ago. Yielding close to 15% or more some of the biggest CRE stocks are being priced for bankruptcy and I’m not sure they’ll go bankrupt before they get this all figured out. I’d be careful shorting stuff right now while everybody’s asking me about shorting stuff. Also, the All-In Podcast is hosted by Chamath Palitpatliya, yes? I wouldn’t listen to him except as a contrarian indicator.

Q. Cody: also, COF default swaps are way up. Do you think any other banks like BAC are up for shorting? Or do you like any of our shorts mentioned in the past?

A. I’m still long some BAC puts again and I am short some XLF and maybe a little WFC. My favorite shorts are a bit riskier in that they could get squeezed amidst volatility in the markets. Some of my shorts are: FSR, CVNA, CHTR, LAD, GM.

Q. If you had those BAC puts this whole time (since Jan – Feb), then wow, what call on that. Freakin sweet.

A. The BAC shorts/puts has been good so far and we’ve taken some off the table.

Q. Hi Cody, your thoughts on Guardant Health (GH) and Grab Holdings (GRAB)?

A. I think GH has been and remains in trouble. I don’t know GRAB well but will have Bryce take a look and if we find anything interesting, I’ll let you know.

Q. Cody: so with that Bitcoin prediction, do you think some common shorts you do in that space (MARA, RIOT, MSTR) are going to sit at these levels with it or will they end up going the way of SI?

A. I think MARA and RIOT and MSTR are in trouble unless bitcoin goes back to $40,000+. I’m long MARA and RIOT puts but not big time and I’ve no position in MSTR at this time.

Q. Hi Cody – quick question for the Chat. Love your work and appreciate your insights. I’ve been a holder of IONQ for some time. Speculative play on quantum computing. Thoughts about the stock and whether adding is a smart long term play?

A. Bryce and I are working on The Quantum Computing Revolution right now, but it’s still very early and therefore very speculative sector for now. Will let you all know if/when we make any investments into the QC sector.

Q. Definitely not a healthy space rn, but big $ has already been made… will be interesting to see how much is left on the short side.

A. Yes, I agree.

Q. Do you have any interest in getting back into Blacksky? RocketLab seems to be filling up with their satellites every liftoff.

A. Yes, I’m digging back into the space spacs that have been demolished partly because I really do feel embarrassed to mention that I like The Space Revolution as a long-term investment idea and when it’s embarrassing to mention my investment ideas, it’s usually the best time to be buying them!

That’s a wrap all!