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Elon Musk’s Twitter Showdown With Bernie Sanders Will Impact Bitcoin More Than Tesla

Over the weekend, Vermont Sen. Bernie Sanders got into an eye-catching spat with Tesla (NASDAQ:TSLA) CEO Elon Musk. The duo exchanged shots over taxing…



This article was originally published by Investor Place

Over the weekend, Vermont Sen. Bernie Sanders got into an eye-catching spat with Tesla (NASDAQ:TSLA) CEO Elon Musk. The duo exchanged shots over taxing billionaires, Sanders’ age, and whether or not Musk should sell more Tesla stock.

Source: Grisha Bruev /

The fiery volley has certainly drawn in many commentators (even Michael Burry of Big Short fame joined the brawl). As a result, many investors have been worried about the implications of this showdown on Tesla stock. 

However, it isn’t Tesla that investors should be paying attention to right now. Instead, the spat between Sanders and Musk led to an unlikely discussion about Bitcoin (CCC:BTC-USD) and the impacts of inflation.

For savvy investors, this means now could be the perfect time to buy BTC on the dip.

From Tesla Stock to Bitcoin Benefits

This exchange began with Sanders tweeting about one of his favorite things — billionaires needing to pay more taxes. Musk, currently the world’s wealthiest person, was unable to resist taking a jab at Sanders, mocking him for his age. Musk then proceeded to ask Sanders if he should sell more shares of Tesla stock after selling 10% of his shares following a Twitter poll. His following voted that he should sell, and Musk did exactly that.

Sanders never responded to Musk’s question about selling Tesla stock, but he didn’t have to. The Tesla CEO closed out last week selling roughly $6.9 billion in shares, and offloaded another $930 million yesterday

While the controversy that stemmed from Musk’s decision to offload shares based on a social media poll caused TSLA to fall last week, Tesla stock has rebounded today and is currently up by 3%. Some experts, such as Burry, have suggested that Musk has other reasons for selling stock, such as needing to cover personal debts. More recently Burry implied in a now-deleted tweet that it may be because he just wanted to sell TSLA. 

But so far, the conclusion is that Tesla stock will exit this saga relatively unscathed. Sure, a near-term drop in shares briefly took the company’s market capitalization below $1 trillion, but TSLA bulls will continue to push ahead. Plus, the recent debut of Rivian (NASDAQ:RIVN) has brought meaningful attention to the world of electric vehicles. 

For investors then, there’s a much more relevant theme that emerged from the Twitter spat. It seems Sanders’ dismissal of billionaires struck a chord with many cryptocurrency supporters. Why? Bitcoin bulls see the leading cryptocurrency as a solution to inflation, a symptom of what they see as economic problems that go far beyond Musk’s wealth. 

Take for instance crypto influencer Natalie Brunell, who has over 90,000 followers and chimed in to hint that Bitcoin was the solution.

Hey @BernieSanders, if the govt wasn’t stealing from the middle class/poor for decades through the inflation tax, you wouldn’t need to go after people like @elonmusk. You folks in DC create the problems & moral hazards then blame others and falsely claim to be prophets. #Bitcoin

— Natalie ₿runell (@natbrunell) November 14, 2021

Cameron Winklevoss, founder of the Gemini exchange and one of the most powerful voices about Bitcoin, backed her up. 

Imagine a crypto where the supply increased 4x without input from the community. It wouldn’t pass the shitcoin giggle test. Now think about the fact that I’m actually describing the US dollar.

— Cameron Winklevoss (@cameron) November 14, 2021

Inflation Catalyzes Crypto Investors

So what does this all mean for investors? 

The argument that Bitcoin is a hedge against inflation is certainly not new. In fact, it largely fueled the rise of BTC to all-time highs through 2020 and into this year. However, interest in BTC and other so-called inflation hedges is picking up in recent weeks. This comes as consumer prices jump by record amounts and the Federal Reserve preps to start tapering. 

Underpinning this trend is the fact that, during the pandemic, the government pushed cash into the economy to keep things afloat. As we start to see a recovery, fears of inflation — and consumer prices — are on the rise. That’s why Bitcoin Magazine’s Jerry Goddard continues to advocate for Bitcoin as a portfolio-saving investment.

It’s an asset that also helps investors distance themselves from a government they may be struggling to trust. With rising consumer prices, some critics have even called the credibility of the Fed into question.

The Lure of Decentralization

It might seem ironic that in a debate between a billionaire CEO and a politician about taxing the rich, Bitcoin ends up as the winner. 

However, when we consider this in depth, it starts to make sense. Sanders is employing his classic ideology that taxing billionaires will provide the money that struggling Americans require as prices rise. Despite unemployment recently hitting a pandemic low due to job growth under President Joe Biden, much of the country is still under a cloud of economic pessimism. And history has taught us just how easy it is to blame politicians when constituent attitudes toward the economy are overly pessimistic, as a recent Axios podcast discussed.

Crypto supporters just see a different solution. Instead of bickering about taxes, they support Bitcoin, which InvestorPlace contributor Alex Sirois describes as a “counter” to the U.S. dollar. It’s potentially an inflation-resistant way to bypass the U.S. economy and escape the woes fueling Musk’s debate with Sanders.

Although the Fed is set to start tapering, many investors are bracing for continued inflation. While Musk and Sanders continue to debate taxes, take a closer look at Bitcoin. Some analysts estimate it will go as high as $89,000 in the year ahead, if not higher. 

On the date of publication, Samuel O’Brient 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 Publishing Guidelines.

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Author: Samuel O'Brient


Why You Should Give an Extra Big Holiday Tip to Your Dog Walker and Babysitter This Year

The service workers who make your life easier deserve a bigger tip this year.

It’s December, and that means it’s time to work through your holiday gift list. In addition to presents for family and friends, it’s time to show appreciation for everyone who helped you get through the year. We’re talking about holiday tips and gifts for babysitters, dog walkers, in-home caregivers, house cleaners, and perhaps even your hair stylist and manicurist, not to mention the mail carriers and sanitation workers that visit your neighborhood every day.

Between ongoing challenges caused by the pandemic and shortages and price hikes caused by a global supply chain crisis, 2021 has been an unusual year. Service employees worked on the front lines of the pandemic, often for lower pay than white-collar workers who had the ability to work remotely. That’s one argument for making room in your budget for an extra big tip this year.

And then there’s inflation. If workers didn’t get a raise of at least 5% this year, they’re probably falling behind because of how quickly prices are rising. That’s another good reason to give a generous tip this holiday season.

Here are some more specifics, if you still need convincing about why it’s important to be more generous this year — and some advice on how much to give.

Inflation is making everything more expensive

Consumer prices have grown a record 6.2% this year. Almost all household essentials — from groceries to gas to clothing — are more expensive than they used to be.

In other words, your money doesn’t stretch as far as it used to. So that $100 tip you gave your dog walker in 2020? At today’s rate of inflation, it’s only worth about $94 this year.

Rising prices, especially for gasoline, have hit the workers in the service industry harder than most. “As costs continue to rise, it’s definitely affecting childcare providers,” says Morgan Clark, founder of STL Sitter, which employs 425 babysitters in the St. Louis area. “Many of our sitters will work three or four different jobs per day.”

That’s a lot of driving between jobs, and with gas prices more than a dollar higher than they were this time last year, the costs can add up quickly.

Not to mention the fact that low-paid childcare workers are quitting their jobs in droves this year. “If you combine the issue of inflation with a staffing shortage, and then you add in a high demand for service,” Clark says, “you have a recipe for chaos.”

Service workers took on extra risks in 2021

As in 2020, workers in the service industry faced additional risks — and sometimes, additional hurdles — related to the coronavirus pandemic. UrbanSitter co-founder and CEO Lynn Perkins noted that many families asked their caregivers to avoid public transportation and carpooling during the pandemic. Not to mention the inherent risks involved with a public-facing job that doesn’t allow a worker to limit their interactions to a small circle of people.

“If they’re being asked to jump through additional hoops due to Covid, I think that’s another reason to give a little more this year,” Perkins says.

Jessica Abernathy, president of the National Association of Professional Pet Sitters and owner of two petsitting businesses in the Chicago area, pointed out that many pet caregivers looked after animals when their owners were hospitalized with COVID-19 this year. “We’re there for you, no matter what the circumstances are,” she says of petsitters.

Tips are going up, but rates are too

In a survey conducted by UrbanSitter, 42% of 500 parents polled said they are planning on tipping their babysitters more than $25 this year. That’s up from 25% of parents who said the same in 2018. Another survey conducted by found that 45% of people plan to give bigger tips than usual this holiday season.

UrbanSitter also found that childcare rates on its platform have risen 10.5% over the last year. That means that for families that tip their nannies and babysitters based on an extra week or two’s worth of pay rather than a set amount, an inflation-adjusted tip is already baked in.

But that’s not the case for everyone. Real hourly wages in October were 1.2% lower than the year before, according to data from the Bureau of Labor Statistics. For most Americans, wage gains haven’t been enough to keep up with rising inflation. So if you haven’t begun paying your babysitter more already, now is a good time to start.

Cash isn’t the only way to say thank you

If you don’t have the extra room in your finances for a holiday tip, there are still ways to show your appreciation for the people who helped you get through 2021 through thoughtful words or personal tokens of your thanks.

“Homemade gifts from the kids can go a long way in showing appreciation,” says Sheri Reed, Managing Editor for “Things like a scrapbook of quotes from the kids or a heartfelt drawing are always a great idea.”

There’s also the gift of time: UrbanSitter’s Perkins recalls one family that gave their nanny an afternoon off and the use of their car when she was scheduled to work, as a holiday surprise.

Or if your dog walker has a pet of their own, Wag! CEO Garrett Smallwood recommends making a homemade puzzle toy or another DIY pet gift.

Service workers can find other jobs

Regardless of how much you tip, or whether you can afford to tip at all, a tightening labor market means that showing you value the service providers in your life is extra important in 2021. Caretakers and service workers are in especially high demand, and record levels of Americans quitting their jobs translates to more openings and tight competition for workers.

STL Sitter’s Clark says that on her platform, some families are even offering bonuses above and beyond a sitter’s rates to secure services. “Retention should be something that’s in the back of your mind when you’re thinking about tipping,” Clark says.

“If you really like your care provider, this is not a bad year to give a little bit more just because people are starting to look around [for other jobs],” says UrbanSitter’s Perkins. “If this is someone who’s really meaningful to your family…show them a little additional love this year.”

More from Money:

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4 Ways the Labor Shortage Could Wreck Your Holiday Plans

6 Reasons You’ll Spend More Money This Holiday Season (Even if You Aren’t Buying Gifts)

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Here We Go: Market Begins Pricing In Rate Cuts As Yield Curve Inverts

Here We Go: Market Begins Pricing In Rate Cuts As Yield Curve Inverts

With Powell effectively confirming an earlier end to the Fed’s taper…

Here We Go: Market Begins Pricing In Rate Cuts As Yield Curve Inverts

With Powell effectively confirming an earlier end to the Fed’s taper program this week, parts of the US yield curve inverted, and as the chart below shows, forwards traders are starting to price in rate cuts in a few years suggesting the Fed will not only end its tightening campaign prematurely, but will be forced to cut relatively soon. 

And, we would add, the more stocks drop, the greater the priced in future rate cut will be. In fact, with the forward swaps curve now pricing in more than 10bps of cuts, we are now where we were in late 2018, just weeks before stocks tumbled 20% and Powell capitulated, sparking a massive rally as the Fed’s last brief tightening cycle came to an abrupt close.

In inverting, the US curve joined the UK, Europe and especially many Emerging Markets where yield curves have already inverted aggressively.

Commenting on this inversion, DB’s chief FX strategist George Saravelos argues that the omicron variant – irrespective of the precise immunological properties – would just help reinforce existing trends, not change them. It is a fallacy that the market has been “looking through” COVID.

What does he mean by this? In his own words: “weak US labor supply, strong inflationary pressure in the goods sector, high excess saving, very low terminal rate pricing, a stronger dollar and very negative real rates are all because of persistent COVID forces this year not despite of them. It’s the new “COVID normal”, very different from the “old”. Is the market right to price such late-cycle dynamics?”

His conclusion: “If the whole point of the Fed turning hawkish is to slow the economy down and take the unemployment rate back above the “new” NAIRU, the answer is yes.”

The only problem: Powell is also taking down the entire market down with him, and today risk assets made it clear that they will not go down without a fight, and will push back until Powell capitulates on his rate hiking plans.

Tyler Durden
Fri, 12/03/2021 – 14:53

Author: Tyler Durden

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High flying growth companies will badly damage new shareholders

The problem with having a huge amount of anticipated growth baked into your stock price is that the expectations become incredibly difficult to achieve….

The problem with having a huge amount of anticipated growth baked into your stock price is that the expectations become incredibly difficult to achieve.

High expectations result in high stock prices.

I’ll post the charts of two of these companies which are household names – Zoom (Nasdaq: ZM) and Docusign (Nasdaq: DOCU):

We will look at Zoom first.

At its peak of $450/share, Zoom was valued at around $134 billion. Keeping the math incredibly simple, in order to flat-line at a terminal P/E of 15 (this appears to be the median P/E ratio of the S&P 500 at the moment), Zoom needs to make $9 billion a year in net income, or about $30/share.

After Covid-mania, Zoom’s income trajectory did very well:

However, the last quarter made it pretty evident that their growth trajectory has flat-lined. Annualized, they are at $3.55/share, quite a distance away from the $30/share required!

Even at a market price of $180/share today, they are sitting at an anticipated expectation of $12/share at sometime in the future.

Despite the fact that Zoom offers a quality software product (any subscribers to “Late Night Finance” will have Zoom to thank for this), there are natural competitive limitations (such as the fact that Microsoft, Google and the others are going to slowly suck away any notion of margins out of their software product) which will prevent them from getting there.

The point here – even though the stock has gone down 60% from peak-to-trough, there’s still plenty to go, at least on my books. They are still expensive and bake in a lot of anticipated growth which they will be lucky to achieve – let alone eclipse.

The second example was Docusign. Their great feature was to enable digital signing of documents for real estate agents, lawyers, etc., and fared very well during Covid-19. It’s an excellent product and intuitive.

They peaked out at $315/share recently, or a US$62 billion valuation. Using the P/E 15 metric, the anticipated terminal earnings is about $21/share.

The issue here is two-fold.

One is that there is a natural ceiling to how much you can charge for this service. Competing software solutions (e.g. “Just sign this Adobe secure PDF and email it back”) and old fashioned solutions (come to my office to scribble some ink on a piece of paper) are natural barriers to significant price increases.

Two is that the existing company doesn’t make that much money:

Now that they are reporting some earnings, investors at this moment suddenly realized “Hey! It’s a long way to get to $21!” and are bailing out.

Now they are trading down to US$27 billion, but this is still very high.

There are all sorts of $10 billion+ market capitalization companies which have featured in this manner (e.g. Peleton, Zillow, Panantir, etc.) which the new investors (virtually anybody buying stock in 2021) are getting taken out and shot.

This is not to say the underlying companies are not any good – indeed, for example, Zoom offers a great product. There are many other instances of this, and I just look at other corporations that I give money to. Costco, for example – they trade at 2023 anticipated earnings of 40 times. Massively expensive, I would never buy their stock, but they have proven to be the most reliable retailer especially during these crazy Covid-19 times.

As the US Fed and the Bank of Canada try to pull back on what is obviously having huge negative economic consequences (QE has finally reached some sort of ceiling before really bad stuff happens), growth anticipation is going to get further scaled back.

As long as the monetary policy winds are turning into headwinds (instead of the huge tailwinds we have been receiving since March 2020), going forward, positive returns are going to be generated by the companies that can actually generate them, as opposed to those that give promises of them. The party times of speculative excess, while they will continue to exist in pockets here and there, are slowly coming to a close.

The super premium companies (e.g. Apple and Microsoft) will continue to give bond-like returns, simply because they are franchise companies that are entrenched and continue to remain dominant and no reason exists why they will not continue to be that way in the immediate future. Apple equity trades at a FY 2023 (09/2023) estimate of 3.8% earnings yield, and Microsoft is slightly richer at 3.2%. Just like how the capital value of long-term bonds trade wildly with changes of yield, if Apple and Microsoft investors suddenly decide that 4.8% and 4.2% are more appropriate risk premiums (an entirely plausible scenario for a whole variety of foreseeable reasons), your investment will be taking a 20% and 25% hit, respectively (rounding to the nearest 5% here).

That’s not a margin of error that I would want to take, but consider for a moment that there are hundreds of billions of dollars of passive capital that are tracking these very expensive equities. You are likely to receive better returns elsewhere.

Take a careful look at your portfolios – if you see anything trading at a very high anticipated price to cash flow expectation, you may wish to consider your overall risk and position accordingly. Companies warranting premium valuations not only need to justify it, but they need to be delivering on the growth trajectory baked into their valuations – just to retain the existing equity value.

Author: Sacha Peter

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