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Chamath Palihapitiya Sold 15% of His SOFI Stock. Why?

In a tweeted statement, Chamath Palihapitiya said that he has sold 15% of his stake in SoFi Technologies (NASDAQ:SOFI), raising questions about the market…

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In a tweeted statement, Chamath Palihapitiya said that he has sold 15% of his stake in SoFi Technologies (NASDAQ:SOFI), raising questions about the market timing of the sale. His announcement also put pressure on shares of SOFI stock.

Source: rafapress / Shutterstock.com

Palihapitiya made the sale of SOFI stock after he said publicly that inflation is running too hot and as stock markets are at all-time highs, with some prominent investors calling the current situation a “bubble” that is waiting to burst.

These comments — and the current market froth — have investors scrutinizing Palihapitiya’s sale of SoFi shares. Now they are looking for signals of what it says about stocks moving forward.

What Happened With SOFI Stock

In a lengthy Twitter statement, Chamath Palihapitiya sounded a pessimistic tone, stating: “It’s not all green lights.” He also noted that inflation is running at 30-year highs and that the U.S. government is printing more money than at anytime in the past. The influential investor also noted that entrepreneurs “are taking chips off the table,” selling more than $10 billion of equities this year.

Following the musings on the current state of the economy and stock market, Palihapitiya said, despite the current risks, he still sees opportunities and that he is selling 15% of his holdings in SOFI stock to raise cash and “fund several new investments.”

1/ Many of us are trying to make sense of what’s happening in the markets these days. Here are some observations and moves we’ve recently made to continue our work: pic.twitter.com/Z4yA7sS3N6

— Chamath Palihapitiya (@chamath) November 18, 2021

In particular, Palihapitiya said he is investing in several private startup companies, as well as healthcare insurer Clover Health (NASDAQ:CLOV). CLOV stock took a hit earlier this week after it announced plans for a secondary stock offering.

Why It Matters

Chamath Palihapitiya is an influential venture capitalist who has a big following. When he speaks, investors listen. The generally pessimistic comments about the economy and stock market echo the bearish sentiments expressed by many prominent investors in recent weeks. As stocks continue to reach all-time highs, many of the loudest voices on Wall Street are claiming that a bubble has formed, pointing to unsustainable valuations and the run-up in cryptocurrency prices as evidence.

Chamath Palihapitiya’s sale of SOFI stock is unlikely to harm the company or its share price significantly given that he only unloaded 15% of his holdings and did so to raise cash. Year to date, SoFi Technologies’ share price is up nearly 70% at just over $20. However, his stated intention to invest in Clover Health is curious given that the healthcare insurer continues to struggle financially and CLOV stock is down 64% YTD at $5.61 per share. Clover Health has also been treated as a meme stock.

Chamath Palihapitiya’s interest in Clover Health is likely to be seen as a vote of confidence in the struggling company and might help CLOV stock rebound some in the near term.

What’s Next for SoFi

Market sentiment is increasingly mixed with many investors becoming more bearish as we near year’s end. Chamath Palihapitiya is the latest influential investor to lend his voice to the growing chorus that is sounding the alarm on risk. That said, he continues to search out opportunities and claims to have found a handful.

Other investors will have to decide for themselves if they want to follow Chamath Palihapitiya or stick to their own plans for allocating capital.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Author: Joel Baglole

Economics

“Team Transitory” Is Dead After Powell Says “Time To Retire Word Transitory Regarding Inflation”

"Team Transitory" Is Dead After Powell Says "Time To Retire Word Transitory Regarding Inflation"

Remember when clueless macrotourists  and…

“Team Transitory” Is Dead After Powell Says “Time To Retire Word Transitory Regarding Inflation”

Remember when clueless macrotourists  and worthless econo-hacks who have zero understanding of actual economic dynamics spent miles of digital ink convincing their tiny echochambers that they were right and that inflation was transitory (or rather, desperately scrambled to mask their utter lack of grasp of even the simplest concepts):

Well, one month ago we made it quite clear where in the financial pecking order these so-called ‘experts’ fall…

… and then moments ago none other than Jerome Powell put to rest any further debate on the topic of transitory vs permanent inflation:

  • *POWELL: TIME TO RETIRE THE WORD TRANSITORY REGARDING INFLATION
  • *POWELL: THREAT OF PERSISTENTLY HIGHER INFLATION HAS GROWN

Powell’s cremation of “team transitory” took place after the Fed chair was asked how long inflation has to run above-target before he decides it’s not so transitory, with Senator Pat Toomey mocking the term “transitory”, saying: “Everything is transitory. Life is transitory” to which he could have also added that “on a long enough timeline the survival rate for everything drops to zero.

In response, Powell said it’s probably a good time to “retire that word”, a clean and clear admission from Powell that inflation is no longer transitory.

And while it is certainly good news that we can finally stop polluting the airwaves with idiotic discussions whether inflation is transitory or not, it hardly helps Americans because as the latest BofA transitory vs permanent inflation reading shows, both are at all time highs.

The market was not happy either because just moments later, Powell also said the one thing that traders dread, namely that the taper could wrap up a few months earlier:

  • *POWELL: CAN CONSIDER WRAPPING UP TAPER A FEW MONTHS SOONER

Tyler Durden
Tue, 11/30/2021 – 11:12

Author: Tyler Durden

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Economics

Stocks, Bonds, & Cryptos Crushed As Powell Threatens Accelerated Taper

Stocks, Bonds, & Cryptos Crushed As Powell Threatens Accelerated Taper

Fed Chair Powell has been more hawkish than many expected during…

Stocks, Bonds, & Cryptos Crushed As Powell Threatens Accelerated Taper

Fed Chair Powell has been more hawkish than many expected during this morning’s hearings, specifically noting the non-transitory nature of inflation and the need to use his tools to address it.

“At this point the economy is very strong and inflationary pressures are high and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases, which we actually announced at the November meeting, perhaps a few months sooner. I expect we will discuss that at our upcoming meeting.”

This is a significant change from earlier this month, when the FOMC was pointing to wrapping up the taper in June 2022, and was not what the market wanted to hear…

Stocks immediately reversed their post-open ramp…

That leaves Small Caps down 6% since the onset of Omicron anxiety…

Yields jumped across the curve with the short-end spiking most (30Y has almost erased the initial spike)…

Rate-hike odds spiked dramatically…

And the yield curve puked as ‘policy error’ fears soar…

Cryptos also plunged…

And the Dollar spiked…

The Powell-Put just went kaput…

Tyler Durden
Tue, 11/30/2021 – 10:59




Author: Tyler Durden

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Economics

Rabobank: Brushing Up Our Greek Alphabets

Rabobank: Brushing Up Our Greek Alphabets

By Michael Every of Rabobank

Brushing up our Greek alphabets

After a ‘sell first, ask questions…

Rabobank: Brushing Up Our Greek Alphabets

By Michael Every of Rabobank

Brushing up our Greek alphabets

After a ‘sell first, ask questions later’ Friday, markets regained some confidence on Monday. News that Omicron may lead to relatively mild symptoms may have helped the mood, though much about the new strain still remains unclear, including how infectious it is compared to other variants and whether it requires updated vaccines. The health ministers of the G7 issued a joint statement that contained little new information on the strain, but did warn that it “requires urgent action”. European equities also defied news that Germany is now the next country to consider stricter measures to curb the rise in cases.

The risk-on tone weighed on fixed income, with 10y Bund yields rising 2bp on the day, though that reverses only part of Friday’s decline. And the German inflation numbers didn’t provide much support for Bunds either. High inflation was already expected, with a 5.5% consensus forecast. Nevertheless, the German HICP managed to surpass that, as prices rose 6.0% y/y in November. With similar inflation rates already observed in other European countries, including Spain (5.6%) and Belgium (5.6%), a high Eurozone-aggregate HICP today shouldn’t come as a surprise.

In addition to German inflation being higher than expected, it was also a bit more broad-based: certainly, energy was an important contributor, but clothing, furnishing and household equipment, and particularly recreation and culture -though notably a volatile component- also drove prices higher. Despite the wider base of inflationary pressures, that doesn’t take away from the fact that most of these effects are probably still temporary factors that result from the reopening of the economy, supply chain disruptions, and the changes to German VAT at the start of the year. Indeed, the Bundesbank had already warned for a near-6% inflation rate this month, and the ECB’s Isabel Schnabel stated in a TV interview that “November will prove to be the peak.”

Nikkei reported some reassuring news to that extent, noting that the supply chain disruptions in the auto sector are starting to ease. According to the newspaper, the global supply of chips used in the auto industry may finally be improving: “after months of shortages, inventories have risen for the first time in nine months.” While it may still take some time before shortages across the entire supply chain are resolved, this does suggest that some bottlenecks are indeed gradually easing, boding well for both price pressures and for the output of one of Germany’s key industries. That said, bear in mind that the chip shortages were at the forefront of the global disruptions; since then shortages in many other materials and sectors have followed.

The rebound in China’s manufacturing PMI may also offer some reassurance about the recovery of the global value chain. The headline recovered to an expansionary reading of 50.1, but this may understate the improvements in actual output, seeing that one of the main drags on this headline relates to a sharp decline in energy prices faced by manufacturers. This likely reflects the government’s interventions in the coal sector, boosting production. Bloomberg reports that the National Development and Reform Commission met with coal producers last week and that prices would have to be guided towards to a “reasonable range”.

That is, of course, assuming that omicron does not throw a spanner in the works here. It certainly does make central bankers’ jobs that bit harder again. Fed Chair Powell said yesterday that the new strain, as well as the general rise in Covid-19 cases, poses downside risks to the full employment mandate and adds uncertainty to the inflation outlook. While he didn’t specifically mention any implications for the Fed’s current policy trajectory, it adds to the markets’ doubts whether the FOMC will still decide to accelerate the pace of tapering in its December meeting, and whether the market wasn’t too aggressive in its pricing of rate hikes next year. EUR/USD continues to find some support in this revaluation of potential for US policy moves.

Certainly, uncertainty also clouds the ECB’s decisive December meeting. However, with a more dovish starting point, that is less of a marked change. If anything, the European Central Bank may want to commit less in December, leaving more options open for earlier in the year when the Governing Council has more clarity on the outlook and omicron’s impact. A key case in point are Vice President De Guindos’ remarks on the TLTRO-IIIs this morning: he is clear that “the TLTROs are not finished yet”, confirming that -in his view- this year’s long-term liquidity providing operations certainly weren’t the last. However, he added that “it’s not going to be a decision we discuss in December”. Assuming that the future of (or rather after) PEPP will still be decided in December, that does put much more weight on the few other tools the ECB could use to mitigate the expected end of pandemic purchases. This could set markets up for an initial disappointment.

Tyler Durden
Tue, 11/30/2021 – 10:45






Author: Tyler Durden

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