Opendoor: Buy the Ticket, Take the Ride

Posted on November 18, 2022 by MN Gordon

On February 11, 2021, the share price of Opendoor Technologies Inc. (NASDAQ: OPEN) hit an all-time closing high of $35.88.  As of market close on Thursday, the stock was trading at just $1.87.  That’s over a 94 percent loss.

Should you buy the dip?

Opendoor, if you’re unfamiliar with the business, is an online – iBuyer – company that buys and sells residential real estate.  Through its web-based platform, Opendoor provides instant cash offers to property owners.  For potential sellers, the process is very slick and very convenient.

Sellers that use Opendoor skip the tedium and all the phony interactions that come with real estate agents.  They also skip the ridiculous open houses, and the bummer of their nosy neighbors and other looky-loos trampling through their staged home.

In fact, with Opendoor, selling a house is as simple as selling an old pair of trousers on eBay.  For this service, Opendoor charges a fee that’s comparable to a real estate agent’s commission. Continue reading →

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Death to Zombies

Posted on November 11, 2022 by MN Gordon

On Thursday, the Bureau of Labor Statistics reported that consumer prices, as measured by the consumer price index (CPI), inflated at an annual rate of 7.7 percent in October.  Investors went bananas on this apparent pullback in the headline CPI.

The stock market responded with one of its biggest single day rallies in history.  The S&P 500 jumped over 5.5 percent.  The NASDAQ jumped over 7.3 percent.  Of greater note, the yield on the 10-Year Treasury note dropped to just 3.81 percent – its lowest yield in over a month.

So, is raging consumer price inflation no longer a concern?  Has the ugly storm come and gone?  Can Powell now pivot?

Probably not.  More than likely, consumer price inflation will rage throughout the decade.  Regardless, now’s not the time to go all in on stocks.  We’ll explain why in just a moment.  But first several words on consumer price inflation.

Consumer price inflation, remember, is an effect of money supply inflation.  The Federal Reserve inflated its balance sheet with upwards of $5 trillion in digital monetary units – created out of thin air – between September 2019 and April 2022. Continue reading →

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Are You Ready for the Coming U.S. Government Default?

Posted on November 4, 2022 by MN Gordon

The vast herd of investors are a deluded crowd.  Following the Federal Reserve’s much anticipated 75 basis point rate hike on Wednesday the major stock market indexes jumped upward.

Optimistic investors keyed in on the Federal Open Market Committee (FOMC) statement and, in particular, the remark that the Fed, “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation and economic and financial developments.”

Somehow this was perceived as being the precursor to a policy pivot.  Yet during the post-FOMC statement press conference, Powell clarified that, “It’s very premature to be thinking about pausing.”

Stocks then fell off a cliff.  The Dow Jones Industrial Average (DJIA) closing out the day with a loss of 505 points.

Will there be a pivot, pause, or no pivot?  This is the wrong question to be asking.  The reality is the major stock market indexes have much farther to fall before the bear market is over, regardless of if the Fed pivots anytime soon. Continue reading →

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The Sordid Politics of Inflation

Posted on October 28, 2022 by MN Gordon

“Some airlines, if you want six more inches between you and the seat in front, you pay more money but you don’t know it … these are junk fees, they’re unfair and they hit marginalized Americans the hardest, especially … people of color.”

– President Joe Biden, October 26, 2022

Fist Bump Agreements

President Joe Biden just crapped the bed.  Again!

The near octogenarian thought he’d struck a secret deal back in July.

You may have seen Biden’s fist bump with Saudi Crown Prince Mohammed bin Salman at the time.  The non-binding agreement called for increased oil production until at least December, after the midterm elections.

With additional Saudi Arabian oil, in combination with draining the Strategic Petroleum Reserve, now down 32 percent year-to-date, Biden planned to deliver cheap gasoline to American voters.

His calculation was that this gift would prevent a likely midterm catastrophe for the Democrat party.  What a slick political move, right?

Alas, Biden recently woke up – like a pig – rolling around in a mess of his making. Continue reading →

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