Bizarro World Podcast,
with Nick and Gerardo
Oct. 31, 2022
Stock earnings continue to contract, especially for tech stocks. Tesla, Meta, and, Amazon have lost hundreds of billion$ in market cap. The dollar and bond yields are taking a temporary pause, but commodities and precious metals aren’t ready to run yet. Lithium and uranium fundamentals remain exceedingly strong, with lithium prices at record highs and more countries turning to nuclear energy every week. Midterm politics and why it matters. Are cannabis stocks bottoming? Plus What we’re watching in the markets this week. This is investing in Bizarro World — episode 192 — with your hosts Gerardo Del Real and Nick Hodge.
1:48 Abysmal Meta & Tech Earnings
7:20 Is the Dollar Rally Over? And What Does It Mean for Metals?
10:44 Gold & Silver Squeeze? Not Yet
17:59 Lithium Looking Strong
28:28 World Embraces Nuclear Energy
31:00 Kanye Loses Business
33:25 Stop Getting Distracted By Noise
36:24 Midterm Politics
39:35 Are Cannabis Stocks Bottoming?
43:05 “Destroying” Paintings In the Name of the Environment
44:54 What Are We Watching in the Markets This Week?
Gerardo Del Real: Gold's still boring. Lithium's still making new highs. Uranium is making it rain. We'll talk Pure Gold, we'll talk Calibre, we'll talk Jim Cramer crying. We're going to talk a little bit about Kanye and a little bit about Ted Cruz. I am co-owner of Digest Publishing, Gerardo Del Real, along with my co-host and also co-owner of Digest Publishing, Mr. Nick Hodge. This is our therapy session that we call Bizarro World, number 192. Nick, how are you?
Nick Hodge: Getting ready for Halloween, as you are, Gerardo. I like the Guy Fawkes mask there.
Gerardo Del Real: Remember, remember, the 5th of November.
Nick Hodge: It's coming up very soon. Do you know what this mask is?
Gerardo Del Real: I'm scared to ask.
Nick Hodge: This is the faceless child mask from Pink Floyd's The Wall. They were getting turned out in the meat grinder from the teachers and becoming a cog in the system or another brick in the wall, as it were, a faceless child.
Gerardo Del Real: Very, very well done. I am going to go ahead and do away with the hat and the mask for now and maybe we'll bring it back here in a bit.
Nick Hodge: Oh, a little fun for Halloween. I had a buddy who made those masks when we went to a Pink Floyd show in Philadelphia a couple of years ago. One of the guys we went with, he made these. He hand-poured them and painted them and everything.
Gerardo Del Real: That is awesome. That sounds awesome.
Nick Hodge: What a show that was.
Gerardo Del Real: I love it. Oh, I can only imagine. I can only imagine.
Abysmal Meta & Tech Earnings
Let's get right into it. Let's get into the markets, Jim Cramer is crying. Meta (NASDAQ: META) earnings were absolutely abysmal. We keep telling you all that the stock market is not ... The economy is not the individual stocks that you pick and buy, all very different things, and look, the markets are rallying. We'll talk about whether that's a head fake or not, but the markets can rally and Meta could still be down 24%. Both things can be true and Jim Cramer can still be crying, while the market rallies three, four, 500 points on an almost daily basis this week. It's been a great week for the overall indices, except for the NASDAQ. I'd love to get your thoughts on the markets there, Nick. You've been calling it right for a very long time now.
Nick Hodge: Another bear market bounce, like we saw from June through August. You're seeing one materialized now. S&P has been making lower highs and lower lows and that continues to be the case. We're in a down trend. Those Facebook earnings were horrible or Meta, as it were. You'll recall that was the F in FANG for so long when it was the FAANG stocks, the FAANG stocks. Remember?
Gerardo Del Real: It's the F in something else now.
Nick Hodge: Well, that's right, and so drastic cost overruns in their metaverse spending. As you mentioned, the stock dropped over 20% in a day since they reported earnings, which led to Jim Cramer tearing up on CNBC about how bad his call was that Facebook was a good investment and then admitting that he got it wrong. This market's making grown men cry and Meta erased $90 billion, with a B, in market cap in 24 hours, and so-
Gerardo Del Real: That's a lot, right?
Nick Hodge: That's a lot of money, and it's still potentially overvalued. Tech stock earnings are abysmal. So is earnings growth across the entire S&P. That's one of the largest 20 companies in the S&P, for example. Anyway, we've got about 200 companies of the 500 reporting in the S&P and earnings growth is negative 3%. And it's still going to get worse in the coming quarters. So head fake rally, whatever you want to call it, bear market rally is not going to last long, the same way that the pullback in the dollar that we're seeing and the pullback in rates isn't going to last long.
Gosh, to keep piling on, that was four quarters in a row of shrinking profit growth for Facebook, and Microsoft (NASDAQ: MSFT) didn't have good earnings. Apple (NASDAQ: AAPL) hasn't reported yet, but will by the time this podcast comes out.
And Tesla (NASDAQ: TSLA), which we're going to talk more about, had bad earnings, as well. They're saying that they've got to cut prices for their cars in China, which is one of the few areas that they're actually profitable in. They got to cut the price of their cars because of global softness in the economy. I guess those are the thoughts on the tech side of things. The NASDAQ remains down 30% and it continues not to be a bottom is what I would say.
Gerardo Del Real: So, let me translate for those of you that watch your IRA or 401k and aren't able to self-direct it, self-manage it, and only get limited options on the stocks and the funds that can be in there. You're likely going to see more losses there, more rain before it gets sunnier for sure here. Again, a further 20% drop in the NASDAQ would not surprise me at all. And I think everybody should be by now braced for it, at least those of you that have been reading Nick's work, who comments more on the overall indices than I do and follows it more than I do. If you're reading his work, he's prepared you for the past year and a half for this, right? You positioned beautifully. You got the oil call right. You've gotten several other calls right. You got this plunge right. You've always said, you've written for the past year that we could see pre-COVID lows and it's continued in that direction. Now, just to be clear, Nick, you're calling for a bear market bounce, is what you're calling this past week’s action?
Nick Hodge: Absolutely, yeah. In a letter I wrote today for Hodge Family Office, I put a channel on the S&P and you can see that there's much more downside risk than upside potential, especially as earnings continue to worsen, not only this quarter, but like I say, will again next quarter, and as the economy continues not to grow, is essentially flat. We can talk about GDP, if you want, but regarding your comments on your 401k, you might not have a lot of options, but certainly one of your options, even if you're limited, is to not own things — otherwise known as moving to cash, having a cash position. While you might only be able to pick a couple of funds or blue chip NYSE-listed stocks, you don't have to own anything. That's been one of the smartest things you could do this year. I was on a podcast earlier this week, the Korelin Economics Podcast, and they were asking me about the 60/40 portfolio, and I said, "Yeah, it's 40% cash now, not 40% bonds."
Gerardo Del Real: And, if it wasn't, it would be 40% gone.
Nick Hodge: That's right. Yeah. Oh, so yeah, that reminds me as well, I was reading Grant's Interest Rate Observer this week, and he was saying that bonds are off to their worst start since the English speaking language was started.
Is the Dollar Rally Over? And What Does It Mean for Metals?
Gerardo Del Real: Funny, not funny. Funny, not funny, guys and gals. We told you last week that in the near term the dollar would likely get weaker. It has significantly. It's flirting with the 110 range right now. It was as high as 115 recently. Again, I'll caution, I think the weakness is temporary. I think it's just near term. I do see dollar strength returning in the next few months, and I think a large part of that is some of the central banks are already starting to slow the pace of their rate hikes. We saw the Bank of Canada have a come-to-Jesus moment, per se, going from 75 to 50 basis points, and some of that is what led to the dollar weakening a bit.
It's very simple, folks. The interest on the debt is not sustainable at higher interest rates, it's just not. Will we see higher rates in the near term? Yes. Will we see a weaker dollar in the near term? I think yes, but again, I think there's another dollar rally coming. I think there are more rate hikes coming in the US, but we are getting closer. It does feel like, Nick, and I hate to go off a feeling, but it does feel like we are getting closer to a deceleration of the rate hikes, maybe not 75, maybe talks of 50 after this next 75 basis point rise. Any thoughts on that?
Nick Hodge: Every day that passes you get closer to the end of this bear market and getting back to actual economic growth, but I still don't think that comes for six to nine to 12 months. When's the next Fed meeting? Is the 2nd of November, I believe it is. I think they're going to hike 75 basis points. As I've mentioned on this podcast, if you look back to the early '80s when Volker was hiking rates, the dollar went much higher than it is going now. It's the inverse of what we were just talking about with the S&P. Just as the S&P's trend is still down, albeit with little uptakes here and there, the overall trend for the broader indices is down and the inverse of that is the overall trend for the dollar and rates is still up. Just like you're seeing a little bump in the S&P now, you're seeing a little tick down in the dollar, and that's honestly what allows stocks and commodities to go up, but that's the short term move.
We should define timeframes here, short term, three to six months, but it's not going to last, is what I would say. I think that a strong dollar returns, perhaps as soon as the 2nd of November, getting back above the 110 level on the DXY. And that's going to continued pressure on commodities. I was selling oil stocks again today, after taking a 6% gain in a month, which is good work if you can get it. That's close to what the S&P normally goes up in a year. I wrote to my monthly subscribers this morning in fact, before we recorded this, saying we've been in this energy ETF for basically a month and a half, since the middle of September and I think it's coming up against, not only resistance in its own chart, but I think the dollar's going to turn back around, which is going to send oil stocks and oil lower. Yeah, I mean that's how I see it right now. Same reason that gold continues to be a side show and is relatively week.
Gold & Silver Squeeze? Not Yet
Gerardo Del Real: You took my next question and you answered it. Good job, Nick. Gold remains boring. It's $1660, I think you could see $1600. It doesn't matter. No real capital is going to be allocated into the gold space and the gold stocks anywhere near these levels. It's going to take $1900, $2,000 gold for people to really perk up and start getting interested again. We have tax loss selling season. A couple of you had some questions about that recently. Tax loss selling season is just, when you sell stocks at a loss, your losers in the portfolio to offset any gains that you may have, or if you have significant gains, you take a loss in some of those stocks to offset those gains to make your tax bill a lot less here in the US. I realize that's not the case around the world, but here in the US, when we refer to tax loss selling season, that is what we are referencing. So, gold remains boring. Silver, industrial metal, same, going lower, right? Is there another silver squeeze coming, Nick?
Nick Hodge: Well, let's lump it together. Let's lump it together with Pure Gold and Calibre. Yeah, just for the same reason as it was at the end of September and early October. You've got the pull back in rates and dollar, which we already mentioned, and so you've got silver ticking up close to $20, but that's not the direction. It's just a counter trend move. The trend is down or at least sideways. It's certainly not up for silver and gold. I continue to hear about all these, "The COMEX is running out of silver. There's not enough silver to go around." Well, we've been running out of silver every month for decades. I mean, same with diesel. I saw an article this week, "The US only has 25 days of diesel." It's like, "Okay, but in 25 days, we'll have another 25 days of diesel." There's going to be gas. You know what I mean?
Gerardo Del Real: I only have two weeks of shampoo left.
Nick Hodge: Right, but you get-
Gerardo Del Real: Go get some more.
Nick Hodge: Exactly, and so these shock headlines for both things like that, for things that people need to go higher or that's the only thing they talk about, it's the same thing as incumbent politicians, certainly Democrats, saying that the GDP was a good print. It's like that's their shtick, that's their mantra. They have to say that, right? But if you look at the GDP that came out this week on October 27th, consumer spending was down for both durable goods and non-durable goods. Real estate investment was significantly down. The only reason it was a positive number, putting a halt to the two consecutive quarters of negative growth, which by the way means we're in a recession, was that imports-
Gerardo Del Real: Technically.
Nick Hodge: ... were slowing faster than exports, and so it was a technicality, and even left-leaning rags, like he New York Times and NPR, had to put caveats in their headlines, like, "GDP returns to positive growth, but there are still fears a recession or still not good for the consumer," or whatever that but is, right? Things are not good I don't think, from the perspective of the economic contraction cycle. Another reason, by the way, a positive GDP, why the fed is going to continue to hike, so they're going to say, "Oh, look, the economy is growing. We haven't put an end to economic growth. We're going to continue to hike another 75 basis points." Yeah, and that's what you asked about, silver. That's why there's going to be a lid, because they're going to continue to hike. There is no pivot. Keep waiting.
Gerardo Del Real: Silver, lower. Gold, sideways to lower, dollar, lower maybe for another few days and likely higher, the Dow, likely lower, maybe not the next few days, but that's definitely the trend going into year end, same for the NASDAQ, same for the S&P, same for the TSXV. I got that right, Nick?
Nick Hodge: That's exactly right. Oh, and the thing I neglected to mention there, you said we were going to talk about Pure Gold and I said I was going to mention Calibre, is speaking of people talking their books. I've seen a couple of newsletters this week who were definitely long in recommending Pure Gold, which just absolutely pretty much went to zero, down to a penny or two pennies, because they don't have funding and are immediately halting production at their mine, quietly walk away and whatever they do, discontinue coverage or pretend they weren't recommending it.
Anyway, that's the same as people always having to talk their book, in some respects, and so that was Pure Gold. With Calibre, it's jurisdictional risk, which we always talk about. You and I know gentlemen at Calibre. I think it's a fairly decent company, but have never been keen to invest in it, simply because it was in Nicaragua. The Biden Administration has come out now and said that they're placing sanctions on the gold mining industry in Nicaragua. Now, I did something that I wouldn't recommend you do, and that's I bought some Calibre for the dead cat bounce the other day and I flipped it for a couple of pennies, holding it less than 24 hours, but that's not going in and making a long term investment in a Nicaraguan jurisdiction. That's just watching the chart and knowing that it's going to bounce after selling all 50% in two days or whatever it was.
Gerardo Del Real: Yeah, I mean, it was up 17% today, as much as 19%. In fairness, let's be fair, because we're familiar with the company, and look, it has a large cash position. I think it's something like $92 million. It's got an asset in Nevada. Nicaragua has always been politically challenged. The corruption there has always been very obvious, but to Calibre's credit, they came out with their release today, and this is what led to the bounce today, saying that operations will continue to be unaffected by Nicaraguan sanctions. It'll be interesting to follow that, because if I'm not mistaken, three of their four producing assets, including a new discovery, are in Nicaragua, and so Nicaragua is most definitely the cornerstone of that portfolio. Like the team, like what they've done, like the cash position, have always been weary of Nicaragua. I'm rooting for them and obviously want the country to politically and socially become a lot more stable, not just for mining companies, but for its own citizens, so rooting for good outcomes there on all fronts, right?
Nick Hodge: Absolutely. Yeah, you want good news for the industry, but you gotta be cognizant of the risks, I think is the point I was trying to get across.
Gerardo Del Real: No, and a very, very good one. It's a risky business, as is when you tack on some jurisdictional risk. It just adds another layer that can sometimes be tough to overcome.
Lithium Looking Strong
We talked about all the things that went down. I got to say, Nick, and I don't want to put your technical indicators out there or share how much you bought or how much you made, but you traded Patriot Battery Metals like a boss this past week, week and a half. I mean, I'll let you tell the story, if you want to share it, but a lot of you have been writing in and asking about Patriot. Hey, Nick did what the smart money does. Well, I'll let you tell the story. I don't want to talk your book for you.
Nick Hodge: I mean, there was a gap in the chart where it had gapped up a couple of months ago. One thing I've learned over the years is that gaps get filled, man. I was thinking for a while that there was a gap, I think it was around $3.40 something on the US side on PMETF, and I had a limit order placed there, and it was coming down towards it.
It was coming down towards it, and you were hitting me up saying, "Patriot, it's heading towards that gap," and I was saying ... I almost chased it, but I just left my limit order in, and sure enough, the day after that, it filled that gap. My order got filled and then I've added to my Patriot Battery Metals position at a price that's the lowest it's been in probably in a month or a month and a half or something like that, so patience is key. Charts are important.
It's probably a good segue to talk about investing in lithium, if you want to talk about Tesla first, and then maybe lithium second, or maybe I'll just jump right into it. We already talked about the FAANGs and how they were the darlings of the market for a long time. Tesla was one of the biggest market darlings there was. A cult following stock, despite marginal profitability and lots of empty promises from its founder and leader, Elon Musk. Well, in the past couple of weeks here, it's missed earnings, it's lost I think something like ... Oh, gosh. Do I even want to come up with a number? I think something like $600 billion in market cap over the past year or something like that is right, because it was like a $1.3 or $1.4 trillion company and it's lost 40% to 50% of that.
What's happening, is what you and I have been saying was going to happen, the gains from this electrification of everything, from this transition to a decarbonized economy into electric vehicles, are going now to the producers and the upcoming suppliers of the elements that are needed to make these cars, and more specifically, the batteries for the cars, as opposed to the Teslas and the Nikolas and the Rivians of the world — not the automakers, but the critical elements companies are starting to be the beneficiary.
We were talking last week about how words matter and accountability for people like Alex Jones and Kanye West, who said that he would never be dropped from his Adidas partnership. He was on some podcasts saying, "I can say anything and Adidas won't drop me." Well, they dropped him, and that's going to be a quarter billion dollar hit to their company. I think it's something like $230 or $250 million dollar hit, and then they went ahead and did that.
Well, I was thinking about that in relation to Elon Musk, because you know that the Department of Justice has now opened up an investigation into the things the company was saying about their driverless car technology. If there's going to be accountability for people like Alex and Kanye, we're going to see if there's going to be accountability for people like Elon and the empty promises that he's made. He was saying that his cars didn't need a driver. When they were doing their tests, they had a driver in them, but he wasn't touching the wheel because he wasn't needed. It turns out, the technology's not as far along as he said. There's been car crashes, for example, related to people using the autopilot. Then that got me thinking about, and I had the article up here, let me pull it up so I get the guy's name right, the founder of Nikola. You remember? That guy just got found guilty of fraud, which carries up to 25 years in prison, for overpromising and essentially lying about what his electric cars could do. Anyway-
Gerardo Del Real: Or that they even have electric cars.
Nick Hodge: Right. That was the guy who rolled the truck down the hill and it wasn't even powered.
Gerardo Del Real: If only you would've known. If only there was a sign to tell us this guy might be a fraud.
Nick Hodge: Anyway, but lithium, outside of Tesla and Nikola and the car makers, is going gangbusters. I mean, I was looking at the prices today and ... Viagra charts, is that what you say?
Gerardo Del Real: I don't know if I could say it anymore. Don't look at me. You said inverted yield curve earlier and I kept my mouth shut. I didn't call it 69 yield curves. He said it, not me, everybody, powers that be.
Nick Hodge: $75,000 a tonne of lithium carbonate and spodumene lithium oxide pricees now approaching $6,000 a ton, where I'm invested in companies that use $4,000 and $5,000 a ton or lower in their feasibility studies, so the lithium side of things is getting increasingly interesting. Outside of Patriot, which we talk about all the time, there's another one that I'm excited about that I'm not going to talk about, because I've recommended it in a couple of letters and I'm going to do some advertising around it, but that company was 2-cents away from 52 week highs today on the back of hitting more lithium- tantalum, not only at its feasibility stage project, which I think a permit is coming for, I'll find out hopefully some more tomorrow, I'm going to interview the president, but 40 kilometers away, they're turning up 2% lithium in grab samples at projects that are not the project that has a feasibility study on it. Lithium's getting exciting and it's some place to do some due diligence. We'll be writing more about it here, for sure.
Gerardo Del Real: Excited about Lithium. It's really interesting. You mentioned Patriot and we talked about lithium making new highs every month. I had a really good conversation with Patriot's CEO, Blair Way, and we'll put a link up to the interview for Daily Profit Cycle, which I encourage everybody to go to. There's a ton of free content on there. That interview actually was on Resource Stock Digest, which also has a ton of sponsored-paid free content for you. There's two platforms that Nick and I co-own that have a ton of useful information. Anyhow, I digress. I was speaking with Blair and he said something to me near the end of our conversation that really caught my eye and it really caught my attention. He said, "Gerardo, you would be surprised at the amount of non-lithium miners and companies that are reaching out to me."
Nick Hodge: That's a good point.
Gerardo Del Real: He said, "Chemical companies, oil companies, other Metals companies, because they're realizing that lithium is going to be one of the, if not the most important, energy source for the next several decades, and it's a mineral that supply is not going to be able to come online as fast as the demand." We just saw Europe say that, by 2035, it will be illegal to sell a non-electric vehicle. That is a huge pivot. Now, do we get there? Is some of that marketing, is some of that pie in the sky? Don't know. We're going to have to see if the electrical grid can handle a society of nothing but electric vehicles or hybrid vehicles, but that's definitely the goal and there's definitely bipartisan support for that.
When I look at a company like Patriot that's really only been exploring for a little over a year and they're having conversations with major miners, oil companies, companies that mine other Metals, not lithium, have never been in the lithium space, chemical companies that are all of a sudden interested in potentially taking a stake or getting a piece or securing supply agreements for future supply, that speaks, I think, to how robust the sector's going to continue.
Again, gold bugs, love you. Big proponent of gold, just like everyone else. It's a great hedge. I own some. I think these are spectacular levels to add. I think the stocks are a once in a lifetime bargain, especially some of these juniors, but I also think we're climbing uphill in the gold space right now. It's going to take another quarter or two for that trade to really turn around and for us to get momentum and trends going in the direction that we want. The lithium space is now, the uranium space is now.
Again, I sound like a broken record all week, but look, a broken record's been really good to me this year, and frankly, was really good to me last year. Those are the two sectors I will continue to pound the table on. Nothing wrong with gold, it's a great preserver of wealth, but it's not prime time for gold right now. Go where the action is, everybody, and do some due diligence, and again, go to Daily Profit Cycle, go to Resource Stock Digest, it's free. If you don't like it, don't click on it, but it's free. Get your money back.
Nick Hodge: Well, I'm supposed to tell you about my credentials, and I wrote a book called Energy Investing for Dummies a long time ago, but-
Gerardo Del Real: A best-selling book.
Nick Hodge: I don't know about that. No, look, just like Barrick semi-pivoted into copper, is the reason these other miners are pivoting into lithium. I mean, they're seeking cash flow. They're seeking profitable products and they see the cash flows and the market caps that are being generated from lithium mining. There's a report this week that Fortescue, which is a huge iron mine/ producer, the leader of that company was talking about making a long-term foray into lithium mining. It wouldn't surprise me if that's one of the companies that's ringing up these smaller lithium companies that you were just mentioning, how they're getting calls from other people. Elon Musk wasn't lying on a conference call last quarter when he said lithium mining and refining is akin to printing money.
Gerardo Del Real: It has been for us.
World Embraces Nuclear Energy
Nick Hodge: It's where the action is, right? You mentioned this transition and if the grid's going to be able to support it. Well, speaking of transitions, it's a good way to talk about investing in uranium, which we wanted to get to, as well. Got to know if you-
Gerardo Del Real: We’re getting good at this transition thing, Nick. After 191 of these, they're starting to click.
Nick Hodge: Trying. I put a little bit of forethought into this one, instead of just hitting the record button. Canada — Green, left-leaning, liberal Canada — came out this week and said, "We're going to give a billion Canadian dollars," which I don't know is like $50 US dollars or something like that, but a billion dollars to-
Gerardo Del Real: We kid, Canadian friends. We kid.
Nick Hodge: ... next generation nuclear reactors. The minister who made the announcement said basically, "Look, we can't meet our climate goals, unless we do that," which is precisely the point we've been trying to get across. You can't meet your zero emission targets by 2050 that all these countries have signed onto without building more nukes. Shoes continue to drop every week in the nuclear space. That was just the latest here in the US, Energy Secretary Jennifer Granholm said, "We're going to make a more fulsome," she used the word fulsome, "a more fulsome effort to produce our own nuclear fuel," and said there'll be more forthcoming plans for that.
We already know they're trying to establish a domestic uranium reserve. We already know that they put incentives for nuclear and uranium in recent infrastructure and Inflation Reduction Act bills, but that is the direction this is going. The world can't meet its targets. Well, first of all, the world can't keep the lights on without nuclear. Second of all, it certainly can't meet its carbon reduction targets without nuclear, and so that market, uranium stocks in general, saw a slight uptick this week on some of that news, but in general are much lower than they were earlier in the year. Uranium itself has a lot further to go to the upside, as well.
Gerardo Del Real: I want to be accurate in my statement about the EU reaching an agreement on the sale of combustion vehicles. It's prohibiting the manufacture of new combustion engine vehicles beginning in 2035. So again, still the trend is clear. The direction is clear, the demand side of it is clear. The supply side is ... It's not going to be enough to keep up, folks. A lot of money to be made in that space.
Kanye Loses Business
You mentioned Kanye, I think we mentioned Adidas taking a $260 million revenue hit. Kanye says he took a $2 billion hit. And it's freedom of speech, right? Speech should be free, and I'm a big believer in the First Amendment and freedom of speech. We've talked about accountability a lot on this podcast. Kanye's getting him some accountability. He's finding out what happens when Ari Emanuel, who of course was played brilliantly by Jeremy Pivens, from Chicago by the way, in the show. You remember the show, right?
Nick Hodge: The HBO show?
Gerardo Del Real: Yeah. The real Ari Emanuel picked up the phone and said, "Hey, how about everybody quit working with him?" Adidas is like, "Fine. We'll lose $265 million." Balenciaga, "Fine, gone." A number of companies are doing away with it. Is it right, is it wrong? Hey, that's for someone else to opine on, but again, like Alex Jones, words and actions have accountability. You can say whatever you want, but in the words of Mike Tyson, "Everybody has a plan, until they get punched in the mouth." Kanye's getting punched in the mouth right now. I hope he's got a plan. $2 billion isn't a little bit.
Nick Hodge: Play stupid games, win stupid prizes. Not just brands that are leaving him, but he had a promotional arm.
Gerardo Del Real: I thought you were saying wife.
Nick Hodge: Well, that's already happened, right? That's probably what set him off the deep end. She was getting with the white guy with the weird hair. No, he had ... What was it called? Donda or Dunda or something?
Gerardo Del Real: Donda Sports, named after his mother, correct?
Nick Hodge: Yeah. He had some pretty high-profile athletes. I'm not hip to all the names, but one defensive player I know the name of is Aaron Donald, and I think there was an NBA basketball player that was signed up to that, as well. They've also backed out this week. They cut ties with that group, so he's losing out all sorts of stuff.
Gerardo Del Real: Yeah. He had an academy that he funded, and a great idea and provided a lot of support for kids, was named after his mom, Donda, so Donda Academy, and that's being forced to close down. Look, say what you say, do what you do, everyone, but just know that words and actions have consequences. I'll leave that there. What else you got on your mind, Nick?
Stop Getting Distracted By Noise
Nick Hodge: I don't know. What do you want to talk about? I got to look back to the list.
Gerardo Del Real: Imagine giving a fuck about what James Cordon thinks about an omelet.
Nick Hodge: Oh, man. I don't even want to talk about it. That's actually the point. There's so much noise out there, and if you want to get ahead, if you want to separate yourself, if you want to not be the faceless child who is another brick in the wall, then you've got to stop catering to and honestly giving a fuck about some of this noise. I'm not going to spend a lot of time on it, but I've been seeing a lot of headlines about James Cordon, and that's the guy, at least in my mind, who sings karaoke in the car. I don't know what else he does, but I guess-
Gerardo Del Real: He hosts a late night show and he also sings karaoke in the car. It's one of the segments, yes.
Nick Hodge: Well, he should stick to that, because I guess complaining about omelets will get you unlimited press and ink.
Gerardo Del Real: My God.
Nick Hodge: I don't know. He was talking trash on a waiter or his wife didn't like an omelet and then he made comments about somebody else who was talking about eggs, while in the midst of some press people, and that's it. I don't want to talk about it anymore. It shouldn't be in a New York Times fucking article or newsletter that I receive, but it was, and that's the problem.
Gerardo Del Real: We have the lights about to go out on parts of Europe, and luckily there's been a glut of natural gas in Europe, so that may be Europe's saving grace for energy needs this fallen winter. That's awesome, because nobody wants to see anybody freeze or have their lights go out during the winter, but we have that going on. We have the continued aggression with Russia in the Ukraine and the invasion, however you feel about that. A lot of money is being allocated towards weaponizing the Ukrainian side. Again, however you feel about it, that has real consequences on a very human level for both sides, the Russian people, and the Ukrainian people.
So much going on in the world, and we got to read about James Gordon and a fucking omelet? Yeah, you're right. We have to do better, everyone. You get 24 hours in a day, folks. I've talked about my mother-in-law passing earlier this year and my father passing back in July. The one thing I'm so at peace with is we never spent time on frivolous matters. It was always quality time. We did the things, said the things, so no regrets on that front. Miss them? Of course we miss them, but it's awesome to have quality time memories.
Extend your quality time to everyone, extend it to your friends, extend it to your spouse, extend it to your kids. Have quality time with yourself. There's better things to do and much more serious topics to tackle than the New York Times putting James Cordon in an article about an omelet. We can absolutely do without it.
Midterm Politics
With that, I was going to talk about Ted Cruz, but just Google it everyone, Ted Cruz, New York. It's hilarious. It made me smile. That's one of those things that makes me smile, is Ted Cruz getting cursed out at a baseball game.
Nick Hodge: Let's talk about it, because I wouldn't mind talking about midterms just for a hot second here. I thought you were going to talk about him coming out swinging for Herschel Walker, which good Lord, reminds me of when Bill Cosby used to talk gibberish about pudding, is what Herschel Walker sounds like when he opens his mouth. I thought that's what you were going to talk about, but what happened with Ted Cruz?
Gerardo Del Real: Oh, he just went to a baseball game in New York, a playoff game. New York crowd, being a New York crowd, started saying, "Fuck you, Ted Cruz, you racist piece of shit. Remember when Donald Trump called your wife ugly and you didn't say anything?" and then they proceeded to tell him to get the fuck out.
Nick Hodge: Well, there's always going to be the crowd that does that, and conversely-
Gerardo Del Real: New York will give it to you, man.
Nick Hodge: Yeah, I was just going to say, and on the other side, we like to be equal here, is I saw Jill Biden was at an Eagles game, a Philadelphia Eagles game last week, and people were giving it to Jill Biden-
Gerardo Del Real: Absolutely.
Nick Hodge: ... who's not even an elected politician. Anyway, there was some, "Let's go, Brandon" chants there, which I guess brings me to the midterms, which I'm not too, too informed about, other than to say it looks like, as we get closer and closer, that the Republicans are going to regain the House, that the Senate races are really close. It's just laughable for a couple of reasons. You got a guy that's coming off a stroke running against a celebrity doctor in Pennsylvania for the fucking Senate. You've got a lady here in Washington that's almost 80 years old, that's been in the Senate since the early 1990s, feeling threatened.
I was reading an article this week that the Democratic Party is allocating more funds to her in what should be a solidly blue state here in Washington. She's running against, I think I might have mentioned on this podcast before, a young lady named Tiffany Smiley, who is surging in the polls, for no other reason than I can see, other than she's not Patty Murray. I mean, basically people are done with these people that have been in the Senate for 30-some years. It'll be interesting to see how these races shape up.
It looks like, right at the margin, the Democrats might squeak out the Senate, but lose the House, and then you get a lame duck session here for the president over the next year, year and a half or whatever, so big implications. Tying it back to the market, I guess which is important, is there's some antitrust stuff that they were trying to get passed for tech companies that might not come to fruition if the Republicans gain the House, as it relates to mergers and acquisitions and consumer protections from tech companies, like Amazon squeezing out third party sellers and things like that, and then ... Oh, I'll do another transition, because I think we wanted to talk about cannabis, but legalization of cannabis, for example, you might be able to punt, because they didn't get it done before the midterms here.
Are Cannabis Stocks Bottoming?
Gerardo Del Real: Marijuana's coming to Florida gas stations.
Nick Hodge: It's already in Washington gas stations. I don't know if anyone knows that or not.
Gerardo Del Real: It's everywhere, Nick. Officially coming to Circle K gas stations, which is a first for marijuana. Look, Green Thumb Industries (CSE: GTII)(OTC: GTBIF) is one of the largest US cannabis producers. They will be able to sell marijuana products, along with cigarettes, and snackies, all cannabis-infused, THC approved. Look, Circle K has got 7,000 stores in 47 states, 642 locations in Florida, so it's not insignificant. I only bring it up, because I think, again, we talk about the lithium trend, we talk about the uranium trend, I think cannabis stocks have been taken to the wood shed. There is an opportunity there, if you have the right timeline and you're a patient enough speculator and you know what you're doing. It's definitely not my space. I wrote one check, and I still don't know where that check is, for a potential psychedelics deal.
Nick Hodge: It wasn't even cannabis. Yeah.
Gerardo Del Real: It wasn't even cannabis, it was a psychedelics deal, but it was related. I think both industries have a ton of market share to capture. We know that, because again, marijuana's already everywhere, so you have a built in user base, is what I'm trying to explain to you all. No, this is a big deal for the commercialization and it going mainstream, and good job, Florida.
Nick Hodge: Yeah, cannabis is bottoming. I'm not sure it's bottomed, but bottoming is not a point in time. It's a process, so the cannabis space is bottoming. I was saying, in Washington, we have them in gas stations. They're not really in gas stations, they're just adjacent to. They're divided by a wall, so you got to go in separate doors, but it's the same building. I mean, gas stations already sell booze, which leads to much more, many more car accidents than marijuana, certainly, so it's not hard to envision a future where cannabis is sold in gas stations. They already sell the blunts, might as well sell the weed, too.
Then, big news actually in the cannabis space, was Canopy Growth (TSX: WEED)(NASDAQ: CGC), which is one of the largest weed companies in the world, is making a move to decouple a bit from ... Constellation (NYSE: STZ) was a big shareholder. They're creating a US holding company, so that when the legislation does turn, when cannabis is descheduled, then Canopy Growth can make an actual foray into the United States.
As we know, these large Canadian producers aren't operating in the US. It's only the so-called MSOSs, the multi-state operators, and so the process is happening. As you say, I agree, there's an opportunity there as well. I told you I was looking at buying cannabis stocks before Biden decriminalized the other week. They're not much higher than they were when he ... Well, they're not higher than they were after he did that, they pulled back a little bit since then, so like cannabis space, and like you say, it's a timeframe thing, relating it back to the politics, because I don't think it gets passed in the next six months, for example.
"Destroying” Paintings In the Name of the Environment
Gerardo Del Real: I agree. I agree. Do we want to talk about the people that are gluing themselves to walls and destroying paintings in the name of the environment?
Nick Hodge: Have you been following?
Gerardo Del Real: A little bit? Yeah, I read the funding for some of that was from a big oil magnate. I haven't been following it in much detail. I've seen some articles, I've seen some clips, but-
Nick Hodge: Me either. The biggest takeaway for me, is that it's noise. It's sort of like the James Gordon thing. The headlines never tell you that all these paintings have glass in front of them, so you'll see, "Activists Throw Tomato Soup on Priceless Van Gogh," and they want to make you think that they ruined the painting, but the museums aren't dumb, everybody. All these paintings are behind glass veneers, that they just wipe the soup and the mashed potatoes off, so that's the first thing.
Then, I guess good on these people, it's called Just Stop Oil or Stop Oil Now. There's some group that these people are a part of, and then they're gluing themselves to the wall. There was also a group of scientists who glued themselves to the floor. I think it was at a Porsche show in Europe recently and Porsche (OTC: POAHY) is owned by Volkswagen (OTC: VWAGY). It actually just IPO'ed, but majority owned by Volkswagen, and Volkswagen said, "Hey, we support your right to free speech, but we're not giving you any food and we're turning off the heating, so good luck."
Gerardo Del Real: Again, speech is free, accountability that comes with it, sometimes not so much, right?
Nick Hodge: Exactly, right.
Gerardo Del Real: Sometimes not so much.
Nick Hodge: So more of the comedic relief, I think.
What Are We Watching in the Markets This Week?
Gerardo Del Real: Yeah. We could always use the comedic relief. What are we watching in the markets this week, Nick? I'll start, actually, definitely looking forward to the progress at Nevada Sunrise's (TSX-V: NEV)(OTC: NVSGF) Gemini Project in Nevada. It's a project that has a rig turning now. I expect results relatively soon. I'm hoping within the next two to three weeks, as I know that core is being fast-tracked and sent to the lab as we speak. Tiny market cap, assets I like. There's a gold project I really like, that it owns 20% of the Kinsley Mountain Gold Project, and a copper asset I like, but look, the main event there, of course, is the potential for a lithium brine. I'll be following that closely. I own quite a bit of it, of course. It's my second largest personal holding, so looking for some more success there. It's gone from 3-cents to 33-cents here in pretty short order this year and I think headed higher, but we'll see.
Nick Hodge: I'll take it more macro. I am personally short the banks. I am personally short the S&P. I have a bid in to be short Bitcoin related companies, which is all to say that this recent rally across the things I just mentioned there, the entire market, the S&P, the banks, and Bitcoin, which is back above $20,000, is going to be short-lived. I personally sold my NASDAQ short today, so covered that, took gains off the table. I think that might be three in a row for me.
One of these days, I'll get around to being a good newsletter editor and putting out that trade, but it's tough to recommend shorts, and there's a lot that comes with that, especially when they're leveraged and you got to get in and out, and so I tend to just keep that as my own personal thing. All that to say, I think this rally fades in the coming week, as you get a Fed meeting right here after Halloween, and as earnings continue to come in. Like I said, Apple hasn't reported yet, will be out by the time you see this, and we still got over half the S&P earnings to come out. It's not going to be a good scenario, I don't think, over the coming weeks.
Gerardo Del Real: Amazon (NASDAQ: AMZN) just reported. Cramer loved Amazon heading into earnings. He said the cloud business seems to be doing really well. Do you want to know how Amazon is doing after hours?
Nick Hodge: It's probably down four to 8%.
Gerardo Del Real: Keep going.
Nick Hodge: Oh, my goodness. Yes, this is-
Gerardo Del Real: It was down 4% today. This is the after hours trading. Jim might be crying somewhere again.
Nick Hodge: That's what I'm saying, guys.
Gerardo Del Real: 18.53% to the downside.
Nick Hodge: That's a lot for one of the biggest companies in the world.
Gerardo Del Real: That's not a junior. That's not a lithium junior exploring for lithium in Nevada. That's not a copper junior that missed on an anomaly. This is Amazon, folks. Be very, very careful out there, everybody.
Nick Hodge: Probably shouldn't have covered my tech short so soon.
Gerardo Del Real: Well, you'll never go broke taking a profit.
Nick Hodge: I know.
Gerardo Del Real: Bust out the cliches, right?
Nick Hodge: I'll always lament not making more.
Gerardo Del Real: I'm supposed to tell all of you to like, comment, subscribe, and make sure to check us out at dailyprofitcycle.com to never miss our updates and market commentary.
Nick Hodge: Forward slash subscribe, I think it is, dailyprofitcycle.com/subscribe. Yeah, as Gerardo said, free reports there, free daily articles, links to all our paid publications, where we're a little bit more serious than we are in this podcast and make legitimate buy and sell recommendations in the things that ... Well, I guess we're experts in, Gerardo?
Gerardo Del Real: Some of the things, some of the time. Every now and then we get a couple right and hopefully we do more of the getting right than the not getting it right, right?
Nick Hodge: Yeah. I'll tell you that Foundational Profits, I’ll pound my chest, the closed portfolio is up, up, up. That's up 25% for the year, while the NASDAQ is down 20%. That's all with multi-billion dollar market cap companies and industry funds. It's not with tiny companies, it's not with trading, so yeah, a little bit proud of that.
Gerardo Del Real: All right. You want to send us off, Mr. Hodge?
Nick Hodge: No, that's it. I guess this was episode 192 of also what I'm supposed to say, Investing in Bizarro World.
Gerardo Del Real: Be kind to each other out there, everybody. The powers that be got me. They're ready to be changed, guys. Take care out there. Be safe. I hope everyone has a great Halloween holiday, whatever you celebrate. If you don't celebrate, go celebrate something. Take care, you all, and remember, remember, the 5th of November.