Rocket to wherever - Cue CNBC's "Markets in Turmoil" and No Crying in the Casino - Edition #100

A DOSE OF WISDOM

"The journey of a thousand miles begins with one step."— Lao Tzu

THE FIRST HIT

Edition #100!!

A few years ago, we were in a situation where "reporting" to AEs wasn't optimal (meaning....we didn't have many reports and what we DID have was wrong) and as a result, someone use to push out a daily market update with some additional reporting for the AEs. At the time, that was the only way the AEs saw that data. When that person left, I took it upon myself to start pushing that out every morning and I started adding some commentary, and some sales stuff and all of a sudden, that version of CONTROLLED SUBSTANCE was born.

If you think about it, it IS a bit of a commitment to do something EVERY DAY.

I did a short interview with Robby Chrisman at the Lenders One Summit and was talking to Rob about the newsletter afterwards and he kind of giggled when I told him I was publishing this thing every day. He KNOWs how much of a challenge it can be...especially when you are traveling....to an all inclusive resort....and you are up late the night before.......WORKING....and you don't feel like writing before you go to bed, or when you wake up.....

You get the idea......

I am sure Rob has seen his fair share of people trying to imitate him.....for a few weeks or months anyway......then they give up. And....I don't try and imitate Rob...in fact, early on I made a decision NOT to check Rob's reports too frequently for fear of just echoing things that appeared there. When you are pressed for time....and content.....the temptation is real.......

Truthfully, the REAL reason I started this initially was to challenge myself. I am NOT good at tasks that require this type of focused consistency. I am better at THINKING about things and delegating them, then I am consistent execution...especially from the standpoint of knowing you HAVE to do this EVERY DAY. I KNEW it was going to be a challenge to say "I AM GOING TO DO THIS EVERYDAY".....then....actually DO it.

So....in some ways I am proud of myself for doing so. The truth is I did it a lot longer than this as an internal rant....which frankly is a little more fun as I can be a little more irreverent. All in fun I might add.......

Lastly....I have to say THANK YOU to everyone who has ever said anything nice about my efforts here, or subscribed..... it means a lot. I know that with just over 500 subscribers, I am talking mostly to my mom who runs 462 fake LinkedIn profiles, but to the forty or fifty of you real people.....thank you.....I mean that.....

Anyone hear anything about Rocket Mortgage buying Redfin?

Just kidding....you had to be deep under the Gulf of America not to hear that yesterday. I spent the whole morning shooting pool in a neighborhood bar and drinking beer and that is all anyone was talking about.

Either the market thinks that is a bad idea....or Rocket just picked a REALLY bad day to announce that acquisition. Rocket (RKT) was down over 15% yesterday on over 4 times the average daily volume.

I know a LOT of mortgage folks are praising that deal....and there are some synergies to be sure, BUT.....I am not so sure I would start patting everyone on the back. It's a whole lot of buzz about nothing really. What has changed??? Here's the answer.....NOTHING.

Rocket threw Redfin a lifeline. It was SO cheap....it was almost like....."why not"? In return, they get some tech and access to users they didn't have before and are doing so with stock.....so they keep their cash in their pockets and the ACQUISITION doesn't affect their liquidity. Which is a good thing since a capital raise through the equity markets might be a little tough for Rocket. Side note: Redfin shareholders will receive .7926 shares of Rocket stock for every share of Redfin they own. As of today...that .7926 is down 15% from the beginning of the day.....

A lot can happen between now and the time this deal gets done.....and as COOL as the deal sounds.....you still would have to SHOW ME THE MONEY......

P.S. - If you are a bagholder of Redfin stock at this level....you MAY want to consider a sell....SOONER than later......NOT ADVICE.....just something to consider......

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CONTROLLED MARKET SUBSTANCE

Or is it.......

If I have said it once, in this daily rant, and to my kids, and to pretty much anyone that will listen....., I have said it a million times......"PERSPECTIVE IS A SUPERPOWER"!!!

At the end of February, Warren Buffett's Berkshire Hathaway reported that they were sitting on about $334 billion of CASH. That was up roughly DOUBLE from the approximately $167 BILLION they reported in 2023. What do you think Warren Buffet's perspective is on this drawdown?

You know.....Buffett....has famously never invested in Tesla stock. While praising Musk, he has never dipped his toe in those waters. Hmmmm........

Tesla was on a MASSIVE tear.......and has essentially been cut in half. Fire sale time? Again....I do NOT recommend stocks here....or anywhere really....I have learned the hard way, that you can't win at doing that. What I like this morning, I may not like at all by lunch....it's ALL about the news.....and Buffett may have ZERO interest in Tesla. The point is...what is your perspective?

I guarantee it's a whole lot different if you are sitting on a pile of cash, salivating over Tesla at sub $225/share, then if you had just spent your cash buying Tesla just under three months ago at over $488/share.

And then there is this........

There are a lot of market indicators and studies, and moving averages and levels....but at the end of the day....the stock market....money...is very simple. There are buyers and sellers....and when there are more sellers then buyers....the price goes down....and when there are more buyers then sellers....you get the opposite.

If you follow the market closely, I am sure you have heard of the magnificent seven. Apple, Amazon, Google, Microsoft, Meta (Facebook), Nvdia, and Tesla. Their combined market cap represent approximately 33% of the entire S&P 500 index. Instead of charting these companies separately, you can actually chart them together....as a "Magnificent Seven Index" if you will.

You can see those seven stocks combined are sitting on what looks like pretty solid support, but we'll see. On a combined basis, they could easily push down another 150 points. You DEFINITELY don't want to try and catch a falling knife, but nothing goes down forever....and some of these things have gotten beaten up a bit too much.....at least from where I am sitting. One things is for certain.....as long as these seven stocks go are doing down, the market as a whole will have a hard time going up.

But.....I think we are almost there.....from a bottom standpoint. We'll see.....

Next Friday is triple witching Friday....a massive options expiration that happens to nearly coincide with the FOMC meeting. There could be some ugly choppiness until we get on the other side of the FOMC meeting and the $3 to $ trillion in expiring options next Friday.

10 Year Yield - And lastly......the 10 year......wish in one hand.....and actually get rates to drop with the other!! RIGHT NOW.....after that relatively precipitous drop, I can almost guarantee that refinance are running at about 15 - 20% of people's production AND.....the Rockets and UWM's of the world are calling their customers. They are NOT waiting.......

FOMC next week. At the moment....Powell and crew probably not going anywhere with rates, but the pressure is building in both directions.

This morning we'll get the JOLTS (Job Openings and Labor Turnover Survey) job opening report. TRUST ME......I am NTO a prognosticator.....but what I CAN tell you is that the markets (both stocks and bonds) are going to become VERY sensitive employment and unemployment numbers in the near term.

FOMC next week.....the DAY before a triple witching OPEX. The VIX is elevated.....volatility is in the air!!! And.......

PERSPECTIVE IS A SUPERPOWER!!!