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My Gut Feeling For Today, July 27, 2021: Don’t Buy Fake

My Gut Feeling For Today, July 27, 2021: Don’t Buy Fake

July 27, 2021
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It’s a Fake World

I can remember walking down the streets in Manhattan with street vendors selling fake Burberry scarfs, fake Rolex watches and fake sports team apparel. They had a catch phrase for those products – “knockoffs.” Maybe you got some enjoyment from wearing a fiberglass scarf or “Relex” watch that turned your skin green, but let’s face it, it was fake crap.

Now, society has taken fake to a whole new level.

  • We have fake meat – Beyond Beef (BYND). Trust me when I tell you there is nothing better than a Hebrew National Hot Dog (made by Conagra (CAG)).
  • There is fake jewelry – cubic zirconia (If I gave that to my wife, she would give me a real divorce).
  • Fake news – if you don’t believe so, just look at the debunked stories jammed down our mouths by CNN, which is now the bloated AT&T’s (T) mess to deal with. My readers know my opinion of Anthony “Fake” Fauci.
  • Fake money called digital currency which incredibly is not illegal counterfeit money. What is backing Bitcoin that does not also back Monopoly money?
  • And drumroll please….. fake art, called NFTs or non-fungible tokens. I am considering my own line of NFTs, because this investment business I am in requires too much hard work. Don’t get me started with Hunter Biden art. But then, after all, as P. T. Barnum said, “there is a sucker born every minute.”

 

Now we are getting passed some baloney from the Biden administration that inflation, the highest in nearly two decades, is just transitory. As we say in Brooklyn, where I grew up – NFW (guess what words to stick in there).

Not only have excessive fiscal expenditures and poor energy policy in the last six months created long-term permanent inflation, but there is also more drunken sailor spending coming down the pike.

By the time this administration is done, all that you will be able to afford is fake goods.

Big Week on Wall Street

This week is rather important on the investment calendar. Big tech earnings are out in full force. The recent highs in the NASDAQ 100 (NDX) will either be confirmed or reversed when companies such as Tesla (TSLA) which reported a sold quarter last evening, Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG / GOOGL), Amazon (AMZN) and Expedia (EXPE) report 2q21 results. Also on the calendar are worthy non-tech company reports such as Ford Motor (F), Pfizer (PFE), Mastercard (MA), T-Mobile (TMUS), Caterpillar (CAT) and Chevron (CVX), to add some variety to the mix.

Don’t’ Forget the FOMC

The Federal Reserve Open Market Committee (FOMC) July meeting and subsequent policy statement will take place on Tuesday and Wednesday. Expect more transitory inflation talk and accommodative monetary policy as the COVID Delta Variant is scaring people.

We should not be scared about the Delta Variant, because I will assure you that there will be the Epsilon, Zeta, Eta, Theta, Iota, Kappa, Lambda, Mu, Nu, Xi, Omicron, Pi, Rho, Sigma, Tau, Upsilon, Phi, Chi, Psi and Omega Variants (the Greek alphabet was burned into my memory as a pledge at Pi Kappa Alpha at the University of Pennsylvania), because as anyone who graduated the fifth grade knows, natural selection will force the COVID-19 virus to evolve in order to survive, masking or not.

There is no way on heaven or earth that interest rates will get jacked up given the trillions of dollars that the US Treasury is borrowing. Notice how the markets freaked out when the 10-year went over 1.60% earlier this year? Of course, a few weeks ago, the markets also went apoplectic when the same benchmark went below 1.50% in June. In other words, markets are clueless as to the direction of interest rates but seem to get freaked out in either direction. For every 1% increase in Treasury borrowing rates, the incremental interest alone on the $28.5 trillion in debt would cost $285 billion in incremental interest costs. We simply cannot afford to borrow more or pay higher rates of interest. The problem is that in Washington, the national debt is used to buy votes.

Here is the balancing act – how to keep rates lower when inflation increases? There is one answer – the substitution effect. Except this time, the substitution will be for real goods with fake goods. Soylent Green anyone?

Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC was long AAPL, AMZN, MSFT, GOOGL, PFE, TMUS, QQQ & TQQQ –  although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, an investment advisor representative specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right-hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ

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