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Vinco Ventures Combines Several Elements Young Investors Love

Savvy companies know there are a few things that create an immediate buzz among investors, such as electric vehicles, NFTs, SPACs and cryptocurrency. Enter…

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This article was originally published by Investor Place

Savvy companies know there are a few things that create an immediate buzz among investors, such as electric vehicles, NFTs, SPACs and cryptocurrency. Enter Vinco Ventures (NASDAQ:BBIG), a business comprising several interesting elements.

Source: Michael Vi via Shutterstock

Vinco Ventures includes a TikTok-like application, non-fungible tokens (NFTs), video and music content. Due to this exciting business mode, BBIG stock caught fire. Shares are up 170% in the last month alone.

Vinco Ventures has a joint venture partnership with Ted Farnsworth-backed Zash Global Media, named ZVV Media Partners. Many investors might be familiar with Farnsworth and some of his earlier ventures; he is behind the unsuccessful MoviePass subscription service and Psychic Discovery Network, based on the more famous Psychic Friends Network.

ZVV Media Partners recently purchased Lomotif, a short-form video platform with over 31 million on-platform monthly active users (MAUs) as of June 2021. The intention is to build out its brand to compete with the likes of more illustrious names like TikTok.

Vinco has also purchased Emmersive Entertainment, which focuses on NFTs. The subsidiary recently came out with an NFT album from Canadian rapper Tory Lanez. There was a hard limit of 1 million albums sold with accompanying artwork at $1 each. The album has sold out. Users who picked it up initially can now resell it to make a profit. Vinco will be limited in what it can get because of its original royalty agreement with the artist. But these moves attract the casual investor.

That brings us to a very good point. Most of the investors interested in BBIG stock are those looking for short-term profits. The buzzwords will attract them, making the stock sensitive to any positive PR or news.

NFTs Are Taking Over and BBIG Stock Is Reaping the Benefits

In the last few years, we have seen a massive change in the way people invest their hard-earned capital. After the stock market crash of 2007-2008, many investors became skeptical. However, after the longest bull market in history, investor confidence returned, and you can see it with the speculative bubble we see in several assets.

Against this backdrop, it seems not a day goes by without hearing about another new collectible NFT selling for millions of dollars. Cryptocurrencies and blockchain were already concepts the investing world was struggling with, along with these digital assets.

Michael Burry, the former head honcho at Scion Capital who managed to profit by shorting the real estate market in anticipation of the 2008 financial crisis, is a notable critic of the NFT space. He changed the header of his Twitter profile to a screenshot of the following quote: “NFTs exist so that the crypto grifters can have a new kind of magic bean to sell for actual money, and pretend they’re not selling magic beans.”

NFTs are extremely speculative. That is true for companies connected to the space, such as Vinco Ventures. Using assets acquired in the Emmersive Entertainment takeover, it created a platform E-NFT.com. It is a streaming service dedicated to the NFT game that aims to protect artists from exploitation. It’s an important selling point. The NFT space is full of grifters and spammers who are hawking the work of others without their permission and notice.

However, NFTs are still a highly volatile asset class. Yes, you could say the same thing for cryptocurrency, but at least there, you have several use cases and can trade them.

Scaling New Heights

Considering the hysteria surrounding NFTs, you will make short-term gains with BBIG stock. Plus, as my colleague Mark Hake pointed out in his article, the brand value of Lomotif is not fully reflected in the share price. Under these circumstances, purchasing a small number of shares will not hurt. Since this is the only NFT pure play out there.

Crypto mining stocks and Bitcoin (CCC:BTC-USD) ETFs have done very well in recent months, mainly because people want to hedge their risk when investing in this space. Keeping that in mind, it should not surprise anyone that this stock can triple in a matter of weeks.

However, dedicating a huge portion of your portfolio to this one is not a great investment strategy. It could prove very costly.

On the publication date, Faizan Farooque 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.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio. Faizan does not directly own the securities mentioned above.

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Economics

For The First Time Since The ’70s, Demographics Support Higher Rates

For The First Time Since The ’70s, Demographics Support Higher Rates

Authored by Bryce Coward via Knowledge Leaders Capital blog,

New projections…

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For The First Time Since The '70s, Demographics Support Higher Rates

Authored by Bryce Coward via Knowledge Leaders Capital blog,

New projections of the labor force growth rate by the US Bureau of Labor Statistics show the US labor force growth accelerating in the 2020s for the first time since the 1970s.

How could this be?

There are two reasons.

More people are working past 65 and the millennial generation is entering the labor force en masse.

Why is this important?

There are lots of reasons, but here are five.

  1. A labor force growing at a faster rate is associated with rising aggregate income and more spending power.

  2. Second, after people enter the labor force and get steady, well-paying jobs, they do things like get married, buy houses, and have kids. All of those things are associated with increased spending.

  3. Third, increased labor force growth implies faster GDP growth.

  4. Fourth, higher aggregate incomes, household formation, and increased spending is associated with firm to higher inflation.

  5. Fifth, all of these things are associated with higher interest rates.

In this first chart below, we can see that population growth (the blue bars) will continue to slow in the 2020s, but labor force growth will actually rise decade-on-decade for the first time since the 1970s.

The rise is due to both the 25-64 age cohort growing relative to the size of the population as well as people over the age of 65 remaining in the labor force for longer.

The BLS estimates that, as a result, trend economic growth will accelerate from 1.5% to closer to 2.5% in the 2020s. This would be the first decade-on-decade increase in growth since the 1990s. At that time, growth accelerated due to productivity gains rather than brute labor force growth.

Not surprisingly, labor force growth is highly correlated with interest rates. The last time labor force growth accelerated was from 1960-1980. Over that period 10-year Treasury yields increased from 6% to 16% as spending increased and inflation surged. Since then 10Y rates fell from 16% to basically 0% as labor force growth deflated and other factors like globalization contributed to outright disinflation. Now, for the first time in 40 years, labor force growth will accelerate for the next several years.

This boomlet in the labor force is likely to coincide with increases in rates, as it did the last time labor force growth picked up. This is to say nothing of deglobalization and climate change mitigation that add incremental pressure to inflation trends.

Tyler Durden Sun, 10/17/2021 - 13:10
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Precious Metals

Russia’s Gold and Currency Reserves Soar to Record-High as Economic Uncertainty and Inflation Accelerate

Russia’s international reserves have soared to unprecedented levels over the past several years, as the country embarks on gold and
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Russia’s international reserves have soared to unprecedented levels over the past several years, as the country embarks on gold and foreign currency investments amid rapidly accelerating inflation and economic uncertainty.

Russia has now ranked fifth in the world in terms of international reserves, after China, Japan, Switzerland, and India. According to the country’s Accounts Chamber, Russia’s international reserves have surpassed $618.2 billion at the beginning of September, after the central bank raised its share of gold in its international reserves to 23.3% in December 2020— up from 7.8% at the beginning of 2014. “This is a historic record. No such figure has been achieved before in the whole existence of the Bank of Russia,” read the analysis.

Not only has Russia accumulated a sizeable amount of gold and foreign currency, the country’s reserves also include special drawing rights (SDRs), which are a form of payment issued from the International Monetary Fund. The Accounts Chamber report revealed that Russia’s SDRs have jumped substantially from $7 billion to $24.6 billion as of August. The international reserves are primarily comprised of highly liquid foreign assets that can be accessed by the Bank of Russia, while government reserves are made up of monetary gold, SDRs, foreign exchange funds, and a reserve position in the IMF.

The latest figures come as Russia’s finance minister on Thursday warned that the world risks succumbing to an unprecedented period of stagflation, as prices continue to rise rapidly while economic output slows. “Inflation is running above target in 14 of the G20 countries already and in many developed nations the scale of inflationary pressure is unprecedented,” he said, as quoted by RT News.


Information for this briefing was found via RT News and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

The post Russia’s Gold and Currency Reserves Soar to Record-High as Economic Uncertainty and Inflation Accelerate appeared first on the deep dive.

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Economics

Bulls Regain Control Of The Market As Fed Taper Looms

Bulls Regain Control Of The Market As Fed Taper Looms

Authored by Lance Roberts via RealInvestmentAdvice.com,

Market Rallies As Earnings…

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Bulls Regain Control Of The Market As Fed Taper Looms

Authored by Lance Roberts via RealInvestmentAdvice.com,

Market Rallies As Earnings Season Kicks Off

Two weeks ago, we laid out the case for why we started increasing our equity exposure in portfolios.

“It is worth noting there are two primary support levels for the S&P. The previous July lows (red dashed line) and the 200-dma. Any meaningful decline occurring in October will most likely be an excellent buying opportunity particularly when the MACD buy signal gets triggered.

The rally back above the 100-dma on Friday was strong and sets up a retest of the 50-dma. If the market can cross that barrier we will trigger the seasonal MACD buy signal suggesting the bull market remains intact for now.

Chart updated through Friday.

While the market started the week a bit sloppily, the bulls charged back on Thursday as earnings season officially got underway. With the market crossing above significant resistance at the 50-dma and turning both seasonal “buy signals” confirmed, it appears a push for previous highs is possible.

Correction Is Over For Now

After nearly a month of selling pressure, the rally over the last couple of days came on cue and supported our recommendation to increase exposure to equities. As noted by Barron’s:

“Market sentiment is getting more buoyant. Thursday, the S&P 500 saw its largest gain since March 5, according to Instinet. The percent of stocks on the index that rose, 95%, was the highest since June 21. Friday, about 90% of components were positive. Instinet sees a high likelihood that the index will reach 4.570 fairly soon, for a more than 2% gain.” 

Two factors are driving the rebound. Earnings, so far, are coming in above estimates. Such isn’t surprising as analysts suppressed estimates going into reporting season. Secondly, bond yields declined.

However, there are still reasons to remain cautious near term. As shown below, the internals of the market, while improved slightly, remain negatively diverged. The number of stocks above respective 50- and 200-dma remains low, the bullish percent index remains weak, and relative strength declines.

Furthermore, most companies haven’t reported earnings yet, and macroeconomic challenges still exist. So far, large banks beat estimates on reduced loan loss reserves, but they don’t deal with supply-chain limitations. We are about to see earnings from companies directly impacted by, and don’t benefit from, higher inflation, labor costs, and supply line disruptions.

Technically, If the current rally is going to push back to all-time highs, the market’s underlying strength must begin to improve markedly over the next couple of weeks. If not, the current rally will likely fail sooner than later. Furthermore, the odds of a correction increase as the Fed begins to reduce monetary accommodation.

FOMC Minutes Confirms Taper Is Coming

In the most recent release of the Federal Reserve’s FOMC minutes, the much anticipated “taper” of bond-buying programs got confirmed. To wit:

The illustrative tapering path was designed to be simple to communicate and entailed a gradual reduction in the pace of net asset purchases that, if begun later this year, would lead the Federal Reserve to end purchases around the middle of next year.

The path featured monthly reductions in the pace of asset purchases, by $10 billion in the case of Treasury securities and $5 billion in the case of agency mortgage-backed securities (MBS). Participants generally commented that the illustrative path provided a straightforward and appropriate template that policymakers might follow, and a couple of participants observed that giving advance notice to the general public of a plan along these lines may reduce the risk of an adverse market reaction to a moderation in asset purchases.

While the Fed did not explicitly discuss rate hikes, as noted in our Daily Commentary, the futures market has already priced in two rate hikes next year.

Between reducing bond purchases and lifting overnight rates, the risk to investors is more than evident. As we noted in “3-Things That Will Trigger The Next Bear Market:”

“The risk of a market correction rises further when the Fed is both tapering its balance sheet and increasing the overnight lending rate.

What we now know, after more than a decade of experience, is that when the Fed starts to slow or drain its monetary liquidity, the clock starts ticking to the next corrective cycle.”

The problem for the Fed is that while they suggest they will “adjust” based on incoming data, they may well get trapped between surging inflation and a recessionary economy.

Inflation: Transient Or Persistant

As noted, the risk to the Fed is getting trapped by inflation. The hope has been that current inflationary pressures from the economic shutdown would be “temporary” or “transient” and resolved as the economy reopened. However, nearly 18-months later, with the economy booming, employment running hot, and more job openings than unemployed persons, the disruptions remain. Notably, prices are surging, particularly in the areas that affect households the most.

If inflation is running ‘hot” and employment is full, the Fed should remove monetary accommodation and hike interest rates. However, with economic growth weak, financial stability dependent on monetary interventions, and record numbers of near-bankrupt companies dependent on low-interest-rate debt, a reversal of accommodation could be disastrous.

The hope was inflation would be transient and monetary accommodations could continue unfettered. Now, as noted by St. Louis President James Bullard, this year’s surge in inflation may well persist amid a strong U.S. economy and tight labor market.

While I do think there is some probability that this will naturally dissipate over the next six months, I wouldn’t say that’s such a strong case that we can count on it,” Bullard said Thursday during a virtual discussion hosted by the Euro 50 Group.

“I would put 50% probability on the dissipation story and 50% probability on the persistent story.”

As Michael Lebowitz noted this week:

“If demand stays high, and supply lines and production remain fractured, inflation will continue to run hot. If such occurs, CEOs may decide not to invest in new production facilities where ‘persistent’ inflation becomes more likely.   

Primarily, ‘persistent’ is not ‘transitory.’ Nor is persistent in the Fed’s forecast. Persistent inflation requires the Fed to take detrimental actions to investors.

Given the oddities of the current environment, and our fiscal leaders’ carelessness, it is something we must consider.” 

Both Bulls And Bears Have Valid Views

Given the potential for a “policy mistake” and our cautionary views, the following email question currently sums up many investors’ views.

“I really am not sure what to do. Should I raise more cash and be defensive with inflationary pressures rising, and the Fed set to taper. Or, should I just stay invested given the market seems to be doing okay?”

For investors, they have gotten caught between logical views.

From the bullish perspective:

  • The market just completed a much-needed 5% correction.

  • Short-term conditions are oversold.

  • Bullish sentiment is largely negative.

  • Earnings season should be supportive.

  • Stock buybacks are running at a record pace.

  • The seasonally strong period of the year tends to be positive for stocks.

However, those views get countered by the bearish perspective discussed last week.

  • Valuations remain elevated.

  • Inflation is proving to be sticker than expected.

  • The Fed confirmed they will likely move forward with “tapering” their balance sheet purchases in November.

  • Economic growth continues to wane.

  • Technical underpinnings remain weak.

  • Corporate profit margins will shrink due to inflationary pressures.

  • Earnings estimates will get downwardly revised keeping valuations elevated.

  • Liquidity continues to contract on a global scale

  • Consumer confidence continues to slide.

Given this backdrop, it is understandable why investors are finding reasons “not” to invest. However, as stated previously, avoiding crashes and downturns can be as costly to investment outcomes as the downturn itself.

Navigating Uncertainty In Your Portfolio

As noted above, the market has not done anything technically wrong. Longer-term, the bullish trend remains intact, the recent correction worked off much of the overbought condition, and investor sentiment is negative enough to support a short-term rally.

However, while we think a rally is likely near-term, there is considerable risk to the market as we head into 2022. Such is why we stated last week:

If you didn’t like the recent decline, you have too much risk in your portfolio. We suggest using any rally to the 50-dma next week to reduce risk and rebalance your portfolio accordingly.

So here are some guidelines to follow.

  1. Move slowly. There is no rush in making dramatic changes.

  2. If you are over-weight equities, DO NOT try and fully adjust your portfolio to your target allocation in one move. Think logically above where you want to be and use the rally to adjust to that level.

  3. Begin by selling laggards and losers. 

  4. Add to sectors, or positions, that are performing with, or outperforming the broader market.

  5. Move “stop-loss” levels up to recent lows for each position. Managing a portfolio without “stop-loss” levels is foolish.

  6. Be prepared to sell into the rally and reduce overall portfolio risk. Not every trade will always be a winner. But keeping a loser will make you a loser of both capital and opportunity. 

  7. If none of this makes any sense to you – please consider hiring someone to manage your portfolio for you. It will be worth the additional expense over the long term.

While we remain optimistic about the markets, we are also taking precautionary steps to tighten up stops, add non-correlated assets, raise some cash, and hedge risk opportunistically on any rally.

...as Seth Klarman from Baupost Capital once stated:

“Can we say when it will end? No. Can we say that it will end? Yes. And when it ends and the trend reverses, here is what we can say for sure. Few will be ready. Few will be prepared.”

We are not in the “prediction business.”

We are in the “risk management business.”

Tyler Durden Sun, 10/17/2021 - 10:30
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