WOYM: Apple vs. Samsung; Bitcoin halving, Iran / Israel; Sleep Hacks

Speaker 1 [00:00:01] Address. And how's it going? 

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Speaker 2 [00:00:03] Hey, Rahm, I'm doing well. How are you today? 

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Speaker 1 [00:00:05] Good. Springtime. I went out to get a quick bite in the weather. Was absolutely gorgeous. Host. 

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Speaker 2 [00:00:11] It is. It is beautiful. It is tax day too though. 

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Speaker 1 [00:00:15] It's tax day. Tax stays bullish. The day before tax day is bearish. That's never happened again this year. 

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Speaker 2 [00:00:24] I'm a bigger fan of today being Jackie Robinson Day. That tax day I'm rocking my. Game. Game worn. Jackie Robinson, day hat. 

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Speaker 1 [00:00:33] Oh, wow. You got that. Is that. 

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Speaker 2 [00:00:37] Yes yes, yes. This was worn by one of the Nats players a few years. 

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Speaker 1 [00:00:43] After a collector's item. It's not just a hat. 

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Speaker 2 [00:00:46] Yeah, I guess it it's a collector's item technically, but I'm wearing it and not worried about its resale value. But it was worn by Anthony Rendon, who used to play third base for the Nats. He's now on the Los Angeles Angels. And, he wore it on Jackie Robinson Day, which is every April 15th, and all Major League Baseball teams celebrated. And everybody wears number 42, in honor of Jackie Robinson and every. Hat has a patch. So it's every year tax day. So if you don't like paying taxes you can just think about Jackie Robinson stuff. 

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Speaker 1 [00:01:24] Or the other tax day is like how many days have to go by before you've earned enough to pay your taxes? Two different ways. Yeah. Jackie Robinson is a hero. Obviously, breaking into Major League baseball, baseball. And, it's great, like, to honor heroes. But we got a lot, right? We got, Apple versus Samsung, League tables, Iran, Israel conflict, Bitcoin having we got some highlights in aluminum ledger. You interviewed somewhere in on sleep sleep expert last week. That's right. That's China. 

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Speaker 2 [00:02:05] So that's China. 

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Speaker 1 [00:02:07] So it's China. So where should we begin? 

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Speaker 2 [00:02:12] Well, let's let's start at the latest, I would say, because some of the topics could go heavier. Bitcoin having I am not as interested in the fundamentals on a personal level for sure. But I'm interested because we learned when we were last in Puerto Rico about rare Satoshis rare SAT. And there will be an epic SAT. It's happening because the first Satoshi of the first block mined after the halving, is predicted to be worth millions of dollars in the resale market. Now that ordinals allows individual sats to be traded like an NFT or a collectible. 

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Speaker 1 [00:02:57] Great framing and setup. I don't think people really appreciate this. So the idea behind Bitcoin is that it's fungible. You can buy small denominations like sets, but there are actually special bitcoin based on the date that they were mined to your point. So like the Genesis block is a special Bitcoin and it's worth more. And other bitcoin and their markets to buy and sell the special bitcoin. And there's a race right to your point to mine the Bitcoin that will be immediately on or after the have any. I think it's just fascinating to see that. 

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Speaker 2 [00:03:40] If coin is right. Yeah. I mean if you think back I mean there's a great, there's a great book, Liar's Poker, which is an old Michael Lewis book where, you know, there's gambling about that number that the numbers on bills. Right. Like, oh, I have one, two, three fours, whatever. And that's the only way you can differentiate a given dollar bill, right? Money is fungible, but there is a stamped set of numbers on it, much in a similar way with the rare sats. Right. Bitcoin should have should be fungible. It is fungible. Yet there is this technological mark that indicates whether that sat that is it. 1/1,000,000 of a Bitcoin is a Satoshi. I always get. 

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Speaker 1 [00:04:32] And I just have to. We'll look it up. But the, look it up, it's complex, virtually similar. It's like a $2 bill. A $2 bill is worth $2, but people collect them. I don't know if anyone pays more than $2 for $2 bill, but in the case of like that special Bitcoin, people say far more than the quote face value of the bitcoin. 

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Speaker 2 [00:04:53] That's right. This is the first SAT since ordinals launched that will be this first sat at the. Right. So it's the first every four years it has this will be the first epic Satoshi. 

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Speaker 1 [00:05:08] Right. Pretty well I think by the the ratio for set is it's 100 million to 1. 

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Speaker 2 [00:05:13] That makes that make 100. 

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Speaker 1 [00:05:14] Yes to one. So there you go. Trivia night. So I post this article about that the having or the having, depending how you want to pronounce this, I kind of like to have a name that sounds more has more gravitas to it. Sounds like a real event. Doesn't sound like you're cutting a loaf of bread. The the have that has more meat to it. Here we go. So check this out. There's $2 billion in short bets on bitcoin miners. And you know what I know here is that I'm simplifying a lot here. But in general you think about it as like the cost of manufacturing. And in the next Bitcoin roughly doubles because the hash rate requirement doubles all that's encoded in the algorithm. And so you can expect revenue to be cut in half. And the folks that have the best technology and equipment will outperform. So it's a parlor game. The folks that the best technology will do well. And the folks that have weak technology, a lower hash rate will not and a likely get consolidated go to business because they have obsolete technology. So you can see the bets against these firms on the screen here. Marathon digital $900 million clean spark riot. And then it declines. And so take a look now at the have a watch list here I'm going to share this tab, covering different miners and all the rest so you can see the miners as a bucket. See, these are not all the miners I see. I got some up there. Down there. Okay, there we go. So, by and large, the miners are down. 10 to 26% over the last week. And 11 to 36% over the last month, although some are up. And the ones that are performing better, market procedures, having better technology. Okay, so take a look at Morra, which is the one that has the most short interest now. So we have no positions in any of these. And I'll come back to why in a moment. I call these battleground stocks, and I don't like, waging in warfare with battleground stocks. The easier things to do in life. So here's Morra, and you can see it just touched down to the 200 day moving average. And, you know, had been at, you know, $31 and now it's it Morra has had its own having Morra has had since its most recent peak. You had that peak volume up day here, on February 28th. That was around, more recent peak in Bitcoin prices to these are correlated. Sometimes I think of these as I call options on, bitcoin. So really fascinating to watch what plays out there. Ma is down 3% today. It's going to 8.2 forward p e ratio, which on the one hand you might think of it as cheap. On the other hand earnings is going to decline presumably. 

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Speaker 2 [00:08:26] that's right. 

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Speaker 1 [00:08:27] So that's that on a miner's, pretty big event. You know, generally, if you were to plot the price of Bitcoin over the happening, you don't see like a moment on the chart that you can identify some technical feature. But generally these are bullish. Usually all time highs happen after the have. And in this cycle we had all time highs happened before the happening. Prices dropped. And you know one might expect that we'll see all time highs after the happening here. So you can see CLSA is up 4% today. This is a miner that it has better technology. It's outperforming. So there's a lot there's a lot of miner dynamic. And there are people that specialize just in miners technology. Some miners don't have that. Other miners do. You have that a lot of dynamics around that. It's also one of the most telegraphed changes in the market. Everyone sees that all the miners see it coming. They also know their debt position. They've been trying to refi by issuing new stock to pay off debt when they're at their highs. This is a it's a really fascinating market in terms of like the technicals, the fundamentals, the hashrate, the raw competition taking place amongst these firms. 

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Speaker 2 [00:09:47] Yeah. And big pullback this weekend in Bitcoin pricing too. Yeah. With Iran attacking Israel. Yeah yeah cause of that. 

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Speaker 1 [00:09:58] Well you know funny thing about that that was another telegraphed move right. So Iran had been projecting for like days like hey we're going to live rockets. I'm sure they use some more incendiary language than that at Israel. So markets think Friday. Right. JPMorgan had its largest down day in many, many years like 6% plus unreasonable earnings. And you know stock market tanked on Saturday. I posted a note on Twitter, when crypto prices were dropping, I said, this is the dip you're supposed to buy, but you're not going to buy. But you know, crypto US is trade 24/7. So you can see macro pricing impacting those assets. And you know, that's what that's what happened here. And Bitcoin is flat as. 

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Speaker 2 [00:10:46] We. 

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Speaker 1 [00:10:47] up flat to up up 400 points 64,200 ish. So, yeah, it's recovering from that dip that we saw two days ago. But one of the things that, you know, we shared an aluminum ledger, this is our newsletter that goes out every Sunday at 11 a.m. eastern is what the impact of geopolitical risk is on stock prices. 

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Speaker 2 [00:11:15] Yeah. You have a good right up there. It was an interesting. It was interesting to see the recovery in things like the, you know, Israeli stock market following the atrocities that occurred at the start of October. Because stocks really did rally. Interesting to hear you go a little deeper on that. 

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Speaker 1 [00:11:35] Yeah. Let me pull this up here. So, here's our newsletter. Here's a visual of it. But there are a few charts. My friend Stephen McBride from Risk Hedge shared this chart, which I like, and this shows the average, the SNP movement around these major, major geopolitical events. Zero marks. The date of the event before zero is the average change in price in the S&P 500 before all such events, and then afterwards shows the average change in the S&P 500 after such events. So what you see here is there's some temporary bifurcation measured in weeks. There might be a relief rally and then some kind of retest. Obviously this is looking across all manner of geopolitical events, you know, including, nine, 11, you know, Iraq, Kuwait invasion, etc.. So there's a lot that's been lumped in here. And this, you know, so far, I mean, we're, already bouncing, you know, this is not a, does not appear to be a major expansion of hostility and conflict. One of the comments that came out of Israel was, quote, we will, respond at a time and place of our choosing. That's an interesting way to. Not escalate but save face. And in my estimation, I think all these parties are are just attempting to save face. There's no interest that any party has to escalate here. Israel's got its hands full. The United States is influencing that and stepped in over the weekend. And you can bet that that subsidy program to Israel will be influenced by Israel's behavior, too. So I don't think it's like the buy the dip happens. And again, to your point, we saw that on October 7th, Israel had about, the Ise ETF dip for about 3 to 4 weeks. That was a by then it was back to an all time high. And it was the best performer in the month of November. So don't don't panic and don't sell the message for anyone. That's that's listening. 

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Speaker 2 [00:13:47] It's always hard to predict, geopolitical events and always hard to predict what happens in the Middle East. I am, I'm concerned, certainly, but, understand that there is a lot of support for de-escalation. I certainly don't I don't I don't see it de-escalating. Unfortunately, given kind of like a proxy war has now turned into a bit of a more direct, overt conflict. And, I don't I don't think there's much room for negotiation. 

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Speaker 1 [00:14:23] We'll see what happens. This is the first time you've had a country like Iran volley rockets into Israel, so that that's more in your side of the ledger there. I'll share briefly this chart too. So this is, October 7th. Is this date here to that big red candle? Is takes a major dip. It drops through the end of the month, October 26th, with the bottom of the October correction. It also bottoms around there and then V-shaped recovery. By the second week in November, you're back to flat. And then, as I mentioned in November, that ETF had the best country return out of other ETFs and then continue to sort of all time highs. More recently it's a dip. Had that red climax bar here. You can see on the right hand side. So we'll see. Let's do a quick check in on how ISIS ETF is doing. So it's up today. 

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Speaker 2 [00:15:18] Yeah interesting to hear the phrase V-shaped recovery again. I remember from the start of Covid there was the debate is it going to be a U-shaped or a V-shaped recovery. 

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Speaker 1 [00:15:26] So yeah these V-shaped happen often at these capitulation lows. And they are quite symmetrical. Kind of uncanny. Sometimes faster here. That melt up took place at a faster rate than the melt down. So so far markets are reacting positively. Futures are up. So markets aren't really concerned right now. Friday was you can see yeah. Yes. LED the market down though. So we had that sharp down day on Friday. But this was a market tell. So Friday's here Thursday Wednesday. You know if you were looking at Wednesday you might have said gee something's amiss. And maybe that would cause you to approach, you know, risk differently. But here we are. We'll see what happens as it gets closer to that range. But quite interesting to see all that play out, over the weekend. 

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Speaker 2 [00:16:19] From a stock market perspective? Yeah. 

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Speaker 1 [00:16:22] Market perspective just from a stock market perspective. And I also like technically the idea that we can shoot a rocket at another rocket moving at hundreds of miles per hour and like hit it is. This is an amazing act. We just got to get the rockets to point upwards in space to like the moon and Mars, not at each other. That would be the next level up in, you know, human civilization. We have good science, just not good objectives right now. 

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Speaker 2 [00:16:49] Yeah. Even better if we could just, you know, reduce the number of, you know, rockets that exist in the world. You think about, like, the level of nuclear weapons and we don't talk about it much. And I'm not certainly trying to go too dark or deep on this area. But, you know, when the Ukraine war that's got into, a slog and Putin started talking about tactical nuclear weapons, if these things would change the dynamic drastically, if any country were to make those moves. So you do hope that, de-escalation prevails in moments of, intense challenge where it takes a lot of bravery to make the first move towards de-escalation. It's much easier to, like, retaliate. It feels good. You know, anger feels good. It's easy to access anger and frustration. It's much harder to go the levels deeper. Realize that there's a lot more at risk. 

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Speaker 1 [00:18:00] Yeah. I think you know, these these actors. Are more rational than might seem on the surface. You know, the funny thing is, there was an article I saw earlier where it said this from Iran, and they said, we're crazier than you might think. Think about that. It's irrational to say that it's true. It's rational to be perceived as crazy. It gives you bargaining leverage. I mean, Trump has pulled that strategy for negotiation. This person's crazy. We don't know if he's right. So. 

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Speaker 2 [00:18:37] Unpredictability is a strategy. 

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Speaker 1 [00:18:39] Unpredictability is is a strategy. Right? So let's shift gears to something a little bit more positive here. We've got, yes. 

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Speaker 2 [00:18:47] I feel. 

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Speaker 1 [00:18:48] Somewhat more positive. They look at it versus Samsung. So I'm going to share my screen again here. Leaderboard change. And what the headline here is that Apple iPhone shipments fell 10% in Q1 2024. Worse than analyst predictions. You know, there's so many analyst predictions for Apple that just keep getting missed on the downside. I'm waiting for that to stop happening. That still hasn't been fully recalibrated yet. And you can see Samsung has not 20.8% market share. Of the smartphone market, and Shami, which is a China brand. Is gaining. So we I had this podcast interview with the portfolio managers, got like a dozen analysts on the ground in China. One of the main points you are sharing is that you're going to see a growth in China, domestic brands. So of course, more people know Luckin Coffee, which is their version of Starbucks right there. Shami is another. There's their version of cars, everything from Rolls-Royce Porsche level luxury down to the $10,000 vehicle from like a bid. This is signs of that though. You're seeing these local brands take share in. The other part is both Samsung and show me I built on the Android Google platform. 

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