Inflation back down to *only* 7.7%, we're saved.

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Swaggy's Top Stonks

Together with... Rally

Welcome newcomers to Swaggy's Top Stonks and thank you for subscribing.

Markets have been going down for some time and crypto exchanges are blowing up all around us... here are a few things in the investing world that are about to be worth less than nothing (this is satire):

• The FTX crypto exchange collapse and the subsequent filing for Chapter 11 bankruptcy.

• Meta Platforms share price after a 75% decline.

• Your portfolio in 2022.

Let's get started.

Today's Letter

• Inflation - Where it is and where it isn't?

• A short thread on the FTX collapse

• Top Meme Stocks

Before we get into the letter, here's a quick poll to help curate content to YOUR needs.

Inflation - Where it is and where it isn't?

Stocks rallied hard at the end of the week since inflation *only* came in at 7.7% (YoY). Is the market being irrational with this crazy swing, or were we simply due for a dead cat bounce of this magnitude? The QQQ rose 9% this week, the best performing week since 2020. However, even if 7.7% inflation "beats" expectations by 0.2%, and Fed Funds are at 4%, this is still not good news. It's becoming obvious to me that the stock market is becoming less of a rational investing machine and more toward wild swinging from  excessive fear to extreme greed. Is this behavior created by the latest generation of meme-stocks and crypto, where the environment is all about "I want gains, and I want them now". The pendulum has been swinging from one over-reaction to another for some time now... If you listen hard enough "welcome to the casino" is heard in the distance...

Where are we at with inflation? Here's what the last 12 months of CPI have showed us.

We are back at the same YoY increase in CPI from January, and that's why markets rallied on Thursday and Friday of last week... but where is the consumer seeing inflation hit their wallet the most? We'll get into that soon...

... and before we do check out today's sponsor, Rally, and their collection of unique NFTs

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Inflation - Where it is and where it isn't cont'd

Here's a quick take on where inflation has been hitting our wallets the most.

Notable Increases:

• Airfare

• Gasoline

• Energy

• Food

• New Vehicles

• Housing

Notable Decreases:

• Rent (slightly)

• Hotels

• Alcohol

• Used Vehicles (big drop from earlier this year)

The lower CPI print might be a precursor for the Fed, who have been extremely hawkish and showing no slow-down of raising rates, might pivot sooner rather than later. As they've stated before they are very determined to "break the consumer" by raising rates until chaos is let loose. They've been taking the stance of "we can fix the consumer and the economy with our tools (literally one single tool of changing rates), but inflation is something that cannot be tamed once it is out of control"... and thus the Fed Funds rate saw a 75 bps increase this month, marking it the 4th month in a row for a hike of this nature.

The result is the subsequent increase in mortgage rates, credit card interest rates, auto and bank loans that will force pain on the consumer by making it way more difficult to borrow money. Corporations are also affected who in turn borrow less, spend less, and then eventually the lay-offs begin. The Fed has also stated they expect a lag between the time economy goes bust and how fast inflation comes down. Like a magician, this soft-landing will be performed with utmost accuracy and no mistakes will be made. Soon the consumer will only be able to afford a loaf of bread for each meal, but that's fine because GUHHH WE CAN FIX IT WITH INTEREST RATES. Long wheat futures?

A short thread on the FTX collapse

The FTX collapse that occurred over the weekend was not dissimilar to an Enron moment, but in the crypto world. FTX was one of the largest crypto exchanges out there, so the fact that this is happening is very big news. For comparison, Enron lost shareholders nearly $75 billion in the time leading into bankruptcy. FTX was valued roughly $32 billion at peak and just filed for Chapter 11 bankruptcy just days ago. FTX was supposed to be a trusted space for crypto investors with prominent influencers also promoting the platform. How could we end up here?

Unfortunately, one of the more well-known names of FTX investors and ambassadors was Tom Brady who has reportedly attached most of their net worth to the investment (speculative of $600 million combined with Gisele). Talk about a FKN YOLO, dear lord.

Anyways, there's a lot of info to get into, so I'll summarize it then follow up with a few funny tweets I came across that describe additional details.

1. Rumors started last week that FTX was insolvent and didn't have enough assets to cover client funds.

2. FTX CEO, Sam Bankman-Fried (SBF), issued a statement on Twitter saying the rumors were false, and that client funds were safe. This uncertainty caused the native FTX token, FTT, to drop 75% in a single day.

3. Shortly after, another big-time crypto exchange, Binance, announced they would acquire FTX amid their liquidity issues.

4. Following the announcement of the deal, it was only a day later that Binance said they are scrapping it based on due diligence they performed. *Please see liquid assets vs liabilities below.

5. Then, FTX CEO, SBF, made a public statement apologizing for the bank-run that was happening throughout the company's assets as clients began withdrawing what they could, however, SBF added that U.S customers were completely safe from liquidity issues.

6. ONE DAY LATER, FTX filed for Chapter 11 bankruptcy.

7. If that wasn't enough and things couldn't get worse, late Friday night, FTX announced they were "hacked" and the remaining assets they had were being liquidated into various other crypto wallets.

The "hack" just happens to be well-timed and speculators think it was an inside job that was liquidating remaining FTX funds into cold wallets, aka wallets that are offline. This entire thing is bananas one of the biggest things to happen in crypto... YET.

At the moment, several news channels have come out and said that Sam Bankman-Fried was in custody in Bahamas, where he resides.

GRIT is going big or going home on the 20% of our “high-risk” portfolio where we know these investments could go to zero…or 10x! Subscribe to our new CRYPTO NEWSLETTER to follow us along this journey and see what we’re buying, why we’re buying it, what we’re paying, and what else is on our radar!   

Top Meme Stocks

Retail chatter on WSB around meme stocks has been bussin' lately as the talk of the town continues to remain around CPI and inflation. Other notable stocks being mentioned are:

CORN: AKA Bitcoin (Bitcorn), many users talking about Bitcoin's drop to $15k. Crypto currencies in shambles.

META: Down 70% YTD meta has shed over $700 billion in market cap. BTFD?

AAPL: Apple had a stellar week with a 10% move to the upside.

DIS: The mouse dropped 13% on earnings, but recovered slightly on Thursday and Friday's rip to the upside (down 6% for the week).

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