DKI Takeaway: Many people are complaining that the Fed may be raising rates into a  recession. We think it’s important to understand the individual motivations here. Chairman  Powell is terrified of being the next Arthur Burns who stopped hiking rates prematurely in  the ‘70s leading to additional years of horrible inflation. He wants to be the next Paul Volker,  the Fed Chairman who crushed inflation by taking the fed funds rate almost to 20%. Instead of being upset, we think it’s best to hedge your portfolio for higher interest rates. Reach out  and DKI can help.

DKI Takeaway: I keep seeing lots of reports that the consumer is tapped out, drowning in  debt, and that we’re about to have a huge consumer debt write-off problem. These things  go in cycles and will eventually be true. For now, the consumer is spending wildly with high  employment, higher wages, and delinquency rates that are still better than the pre pandemic baseline. This is a great environment for DKI stock pick Enova International (NYSE:ENVA) which continues to post high loan growth with low charge-offs.

Recently, several of the massive asset management firms filed with the SEC to get approval for Bitcoin (CRYPTO: BTC) exchange traded funds. Even small allocations from these firms which control  tens of trillions of dollars of assets, would overwhelm the current value of all Bitcoin available for sale. In many situations, trading based on the order flow of other market participants could be illegal. It IS different this time. Because these firms have made public regulatory filings, you CAN buy ahead of them. 

In last week’s 5 Things we pointed out the recent downgrades of 10 small and medium sized banks by ratings agency, Fitch. This week, Fitch warned that further reductions in their view of the banking sector would lead them to reevaluate their ratings on all banks they cover. This would include the too-big-to-fail banks like JP Morgan (NYSE:JPM) and Citigroup (NYSE:C) among others. 

DKI Takeaway: While the market didn’t like the threat of a downgrade, at DKI, we don’t  think it’s all bad. Instead of treating banks like regular businesses with customer safety regulations, the government has extended an unofficial backing to the largest banks. That encourages unwise taxpayer-backed risk-taking from these firms and gives them an  unearned funding advantage over their smaller competitors. We credit Fitch for looking  through the government bailouts and seeing the real underlying risk. 

This week, RT announced that Mercedes had disconnected Russian customers from the software needed to run its vehicles. While this didn’t render existing cars inoperable, it does mean that future repairs will be more difficult. Aircraft manufacturers have denied Russian  airlines the parts needed to repair and maintain planes which has been one of the most effective of the anti-Russian sanctions. However, this move by Mercedes leaves us with a  slightly different concern. 

DKI Takeaway: Please remember that EVs, self-driving cars, and other connected cars can all be “bricked” and rendered inoperable by the manufacturer. If you’re depending on one for transportation, be aware that if the government declares another emergency lockdown, you might be prevented from leaving your home (or returning to your home). Last year, Canada disabled banking access for citizens who peacefully protested a government policy  they thought negatively impacted them. China already denies public transportation access to subjects who violate that country’s strict speech and conduct codes. If your current expressed views conflict with those of a future White House administration, your access to personal transportation can be prevented. If you can afford it, it’s best to keep an older model vehicle around that can’t be remotely disabled.

Information contained in this report is believed by Deep Knowledge Investing (“DKI”) to be  accurate and/or derived from sources which it believes to be reliable; however, such information is presented without warranty of any kind, whether express or implied and DKI  makes no representation as to the completeness, timeliness or accuracy of the information  contained therein or with regard to the results to be obtained from its use. The provision of the information contained in the Services shall not be deemed to obligate DKI to provide updated or similar information in the future except to the extent it may be required to do so.