The Era of COVID Lockdowns is Officially Over; $SHOP Plunges

Shares of SHOP are down 17% after posting what appeared to be solid results. But that was’t good enough. The also suggested growth would slow in 2022 due to an end of the COVID era lockdowns.

Year-over-year revenue growth to be lower in the first quarter of 2022 and highest in the fourth quarter of 2022 due to three factors. First, we do not expect the COVID-triggered acceleration of ecommerce in the first half of 2021 from lockdowns and government stimulus to repeat in the first half of 2022. Second, our new terms with apps and theme developers cause two differences from last year’s first quarter: the elimination of Shopify’s rev share on partners’ first million dollars of revenue annually reset on January 1st, and the shift from gross to net revenue recognition for the sale of themes as a result of revised contract terms with our theme partners. Since these terms didn’t come into play until the second half of last year, these will be a headwind to Subscriptions Solutions revenue in the first half of 2022, particularly in the first quarter. And third, we expect certain commercial initiatives and sales and marketing investments will gain momentum over the course of 2022.

We have seen this story play our painfully the past year, as once high flyers come crashing back down to earth. It started with ZM and DOCU and now its hitting the online stores like AMZN, SE, and SHOP. The basis for valuation is simple. What were the pre-covid price to sales and where are they now?

SHOP is now trading 21x sales, even with the stock CUT IN HALF in 2022. In 2018, the shares were valued at 18x. There’s your line in the sand. Another 10-15% lower from here and perhaps a bottom gets put in, providing the economy doesn’t fall apart.

SE is already trading at 2018 valuations and ZM is below it.

The fact normalcy is creeping back into the economy is of course good news and we’d like to see people going out again, eating out, going on trips. I suspect once the lunatics remove all of their restrictions for vaccines — we might see a true revival in GDP. Until then, restrictions are abound and people would rather not shop online anymore. Perhaps they’ve gotten sick of it and want to hide their money under their mattresses? Or, maybe just maybe the wealth effect of runaway stocks and cryptos has truly reversed, given the negative returns, and discretionary income amongst the dumbest people on the planet is now lacking.

I am fairly certain, based upon these comments out of Russia that they do not intend to invade crazily like we feared a short while ago.

Russian Foreign Ministry spokeswoman Maria Zakharova: "A request for US and UK disinformation outlets Bloomberg, NYT, The Sun etc: please publish the timetable of our 'invasions' for the coming year. I'd like to plan my holidays."

— The_Real_Fly (@The_Real_Fly) February 16, 2022

If they did, it would suggest a scorched earth stratagem of total war against the west and I doubt they’d want that.

And then there’s this.

RUSSIAN FOREIGN MINISTRY SPOKESWOMAN SAYS UNITED STATES IS TRYING TO GRAB EUROPEAN GAS MARKET SHARE FROM RUSSIA – TASS

Since the conflagration with Russia, US shipment of LNG to Europe have soared.

The US supplied 24% (4.2 Bcm) of the EU’s overall LNG imports (17 Bcm in Q1 2021); Russia placed second at 21% (3.7 Bcm); and Qatar was third at 18% (3.1 Bcm)

US LNG SHIPMENTS TO EUROPE

It appears the US, for the first time in 60 years, is the largest exporter of natural gas to Europe and Russia isn’t too happy about this, since this is their bread and butter. The main play for LNG is LNG, but there are many others.

Here’s my LNG watchlist inside Stocklabs.

Bottom line: The economy is the main hangover for stocks now, probably not World War 3. We have bad inflation, a hawkish Fed, and the 30 year mortgage rates above 4% while prices are at record highs. The tightrope we are attempting tp navigate is treacherous and will likely lead to a housing collapse, at some point in the future.

Big rally today because Russia seems to have moderated from their position of attacking Ukraine. Biden came out at 3:30 and warned we financially rape Russia if he attacked our pet Khazar state and offered to engage in military combat if he opted to fuck with any NATO states.

Since I had some hedges and lots of oils, I was entreated to losses of 1.7% and that trend is continuing in the AHs, due to the fact I chose to take an earnings gamble into the AHs and of course…TOST blew up. Toast must be the worst company in America to sink like this, 15% in the AHs — providing a dying industry of Nazi collaborators with software to keep track of their patrons vaccination status.

I added to UVXY before the bell for the sake of averaging down. It’s a high stakes bet; I am however very long in other areas and view it as a hedge.

These past two days I have forsaken my good fortune and given back more than 3% — thanks to being wrong about the direction of the market. Just last week I could not miss — making 12% in a period of turmoil.

My ideas have gravity and they’re mostly well thought out aside from the occasional trade. I cannot accurately predict the actions of nation states but can merely view what is normal and what is different. It is normal to assume peace will continue and that other countries might not choose pain and suffering for their people’s. But then you see things like large military build ups on borders and cannot help but to wonder what is really happening. Is it all a ruse or is it really happening this time?

For me, this is a RARE occasion to place bets. I could very well lose betting this way, heavily long oil/gas and short small caps and long volatility. Should we get a break in inflation, not that we will any time soon, energy stocks will crater and tech might rise terrifically. In a scenario such as that, I could lose 5-7% in a single session. Alas, I trust the Gods won’t harass me in such a manner and merely toss obstacles and toasters in my way towards success. We shall see this evening what the news from Moscow brings.

What can this cocksucker possibly say? Perhaps he will tell us again the grave dangers Russia will face for attacking Ukraine, a NON DEMOCRACY, and non member of NATO. Our obligation to Ukraine is 100% grift and corruption and all for malevolent purposes. Perhaps this is merely the talking notes of a Russian spy, or perhaps it’s the opinion of one man based upon countless instances of improprieties. Or maybe the US govt is just misunderstood and it’s way above my pay grade as to why Hunter Biden deserved $83,000 per mo while Daddy was VP.

Either way, how is it our business? Does Empire America help you? Perhaps one could argue without Empire America the dollar would not be reserve status and we could not spend to our heart’s delight on social programs that ruin the fabric of this country. So again, how does Empire America help you?

Nevertheless, we haven’t any say in the matter and we’re all just disgruntled subjects lashing out at our masters. While still legal, I will mock and jeer and denigrate as much as I can.

Biden speaks at 3:30pm. I’m sure that bumbling sack of shit will do wonders for stocks.

Copper should be up more but I don’t want to look into the commodity sector too seriously today, since the theme is to be long unreliable tech and biotech sectors due to a short squeeze, thanks to the news out of Russia. I also don’t want to get caught up in the notion that “MUHHHH things are still bad and the Fed is going to destroy us.” The market is pricing in the Fed and today we see the 10yr +4bps to 2.04%, while semis and SAAS and all of the maddening sectors of the market jimmy higher. These are the places you’d expect to see a rally, once the selling abated, and we’re getting it in spades.

There are two schools of thought now, one being to fade it because the Russian news isn’t done and also since the economy might be weakening. The other is we have perhaps 10% upside,  since we’re so oversold from the January drubbing. I grant there is premium in WTI due to fears of war and that is being worked off today. However, I cannot concede we are out of the inflation death spiral phase of our lives and oil/gas stocks, frankly, are the best games in town, fundamentally speaking. Growth is booming and profits are extreme. And, might I add, they are the only real hedge against the scourge of inflation, which if I’m thinking smartly is where people with serious money want to allocate in this environment.

While SAAS and semis are always interesting, they do have rich valuations and there is little to no arguments for buying them at 10-30x sales if in fact inflation will be met with tightening, which will cause, inevitably, the economy to slow. That is what the stated goal of tightening is, to slow the economy. That being said, if the economy did slow appreciably, we’d likely see inflation abate and commodities sink, so there’s always that. In other words, both tech and commodities possess risk due to Fed tightening, but only one of these sectors has fundamental underpinnings.

I am down 230bps today, up from -340bps at the open. I have since purchased some WCLD, LABU and sold out of my NUGT, BOIL positions. I haven’t closed out my hedges — because, I don’t know, it doesn’t seem right and the verbiage coming out of Moscow sounds like pretext for war.

What I mean by this is, Putin is citing violence in Donbass as being genocidal, strong words and certainly worthy of war if true. Also, there is a resolution out of Eastern Ukraine to breakaway from Ukraine — which also happened in Crimea before Russia annexed it. Lastly, Russia only pulled out some forces from Belarus, while at the same time moving other forces closer to Ukraine — a parlor trick if I might say so. Instead of an outright invasion without pretext, it appears Putin is now applying pressure via diplomatic means with a massive gun to the heads of everyone, and at the same time greasing the gears to acquire half of Ukraine without firing a shot.

I still like my hedges.

Oh what the fuck is going on already now? Last night Russian tanks were ripping up streets in Belarus and this morning, all of a sudden, peace has broken out and it was all an elaborate ruse to make the west look like fucking morons. What sort of animals move 60% of their military to the borders of a hostile country, only to then say “JK, we got you.”

SIR, I cannot invest based upon these headlines.

Russian Foreign Ministry spokeswoman Maria Zakharova just now: “February 15, 2022 will go down in history as the day Western war propaganda failed. Humiliated and destroyed without a single shot fired.”

— Mark MacKinnon (@markmackinnon) February 15, 2022

Here we have units NOT LEAVING, but steaming towards Ukraine.

Russian VDV BMD infantry fighting vehicles heading South-South West towards the Ukrainian border and Kyiv. https://t.co/MlHEup1ZuR pic.twitter.com/gW6rmjnhsu

— Petri Mäkelä (@pmakela1) February 15, 2022

Ah, also Eastern Ukraine wants to be recognized as an independent state. No big deal.

The EU strongly condemns the Russian State Duma’s decision to submit a call to President Putin to recognise the non-government controlled areas of Donetsk and Luhansk oblasts of Ukraine as independent entities. This recognition would be a clear violation of the Minsk agreements.

— Josep Borrell Fontelles (@JosepBorrellF) February 15, 2022

Now Putin is ready for talks!

PUTIN: I'M READY FOR MORE SECURITY DISCUSSIONS WITH THE US AND NATO.

— Breaking.Live (@BreakingLive_) February 15, 2022

PUTIN: I HAD A BLUNT AND HONEST EXCHANGE OF VIEWS ON RUSSIAN SECURITY INITIATIVES WITH SCHOLZ.

— Breaking.Live (@BreakingLive_) February 15, 2022

Putin: "the three basic Russian requirements that were put forward have not been met"

— Mark MacKinnon (@markmackinnon) February 15, 2022

Lastly, unnamed sources inside the “US Intelligence” declare Zerohedge to be compromised by Russian spies. You’ve got to be fucking kidding me. Hoe incredibly timely post their COVID bullshit to now somehow tie in this Russian-Ukraine saga with ZH being a Russian scheme. I am sure it has nothing to do with their 110 million page views last month, publishing opinions not beholden to current US fascist cult followers. They crushed Joe Rogan because he didn’t conform and now Zerohedge, all the while their human rights violations go unpunished.

U.S. intelligence officials accuse Zero Hedge of amplifying Kremlin propaganda, a claim the website denies, AP reports

What the fuck does this mean? Is there proof or simply unnamed intelligence officials angry at any site's not pledging fealty to their demented policies?

— The_Real_Fly (@The_Real_Fly) February 15, 2022

Bottom line: Oil down, risk assets up, markets up, in celebration of peace again. How long will it last? Stay tuned.

If you snoozed you missed it. The early morning tech led rally and subsequent collapse with the Ukraine news followed by a nonsensical recovery based upon hope. Here we have a day of chop and if you played it wrong, like me, you lost.

While the NASDAQ closed flat, all stocks were appreciably lower — with the Stocklabs 4000 index closing down 0.8%. I had opened the day down, following being up 2% pre-market, and then I dove back into the tape and lost — due to my short exposure in TZA and UVXY. All in all, I think I have a good position — heavily long commodities and hedged with a small cap short and volatility long. There is always a chance peace can break out, even if for a period of a few days. That’s all the market really needs — one or two days of +500 NASDAQS to ruin a perfectly good short position. But then there’s also the specter of the Fed going gangbusters with rate hikes and how it might deleteriously effect the economy. In short, we are only 1 year into the Biden administration and it’s only gonna get worse.

On the bright side, perhaps everything will work out the way we want it to, without death, pain, suffering, and division. It seems, if we’re being honest here, the world is in a very dark place now, bereft of love and light and this manifestation is seen in how we price things in the market. Things have been broken for more than a year and the feeling is of continuation with this trend, instead of some sort of reversion against the mean.

If you had an empire on your doorstep with 100 battalions intent to kill you — the best course of action would be to issue sarcastic funny quips right? Maybe if you’re a lunatic comedian. Sadly for citizens of Ukraine, this is exactly what their leader just did.

LATEST: Ukrainian leader Volodymyr Zelenskiy spooked markets with what appeared to be a sarcastic comment about the rest of the world predicting a date for a Russian attack, which he said should be a day of unity instead https://t.co/g8vWEkpF1T

— Bloomberg (@business) February 14, 2022

His position has been to mock and jeer and publicly leer at US intelligence reports that any person with eyes can see is happening. Sir, a giant army of war is on your border.

So Zelensky was mocking the deep state too… and stocks crashed:

Zelenskiy spooked markets with what appeared to be a sarcastic comment about the rest of the world predicting a date for a Russian attack: BBG

— zerohedge (@zerohedge) February 14, 2022

PENTAGON SPOKESMAN SAYS STILL DOES NOT BELIEVE PUTIN HAS MADE A FINAL DECISION TO INVADE UKRAINE

This has become a total farce

— zerohedge (@zerohedge) February 14, 2022

*KIRBY SAYS PUTIN COULD INVADE WITH LITTLE OR NO WARNING

Humor content: 100%

— zerohedge (@zerohedge) February 14, 2022

The initial response was collapse in stocks, bids in oil/gas, but now we’re climbing the wall of worry again as if nothing happened. Is peace on the verge of busting loose again, or will the President of Ukraine joke his way into a world war? Find out soon!

At this point with over 100 Russian battalions surrounding Ukraine, menacing to invade, you’d think the leaders of the Ukraine would perhaps be a bit more tactful with their statement, if only for the sake of their own people who will be killed in a war.

But not our dear dear friends from the fucking Ukraine. Those crazy sons a bitches just released this statements.

Ukraine’s strategic course on joining NATO remains unchanged. It is enshrined in our Constitution and National Foreign Policy Strategy, supported by a growing majority of Ukrainians. It’s only up to Ukraine and thirty NATO allies to decide on the issue of membership.

— Dmytro Kuleba (@DmytroKuleba) February 14, 2022

I can only assume this is because their President is an actual comedian and is playing a joke on Putin. Whatever the case, markets do not find it funny and the early constructive action has since soured and we now look down the barrel of a market that is on edge. If not for FANG stocks jimmying higher, and select semis and SAAS, not much going on today with breadth at 43% and getting worse.

All of the Russian war plays are lower because there will be discussions soon, so people are putting them on ice. But the general market isn’t too happy and maybe, just maybe, this is more to do with BONE BREAKING inflation laying waste to the middled class — a prelude to the inevitable recession to come?

Futures dove off a cliff after 3am, down more than 170 NASDAQs, following a sundry of comments out of Russia that gave the impression that kinetic action was nearing.

RUSSIAN TANKS ARE OFF TRAINS AND MOVING
pic.twitter.com/luRiDUli8P

— The_Real_Fly (@The_Real_Fly) February 14, 2022

RUSSIA'S LAWMAKERS AGREE TO SEEK PUTIN'S OPINION ON PROPOSED RESOLUTION CALLING FOR RECOGNITION OF TWO BREAKAWAY REGIONS IN EASTERN UKRAINE AS INDEPENDENT STATES – IFX

— The_Real_Fly (@The_Real_Fly) February 14, 2022

RUSSIA WILL NOT TAKE PART IN OSCE MEETING CALLED FOR BY BALTIC COUNTRIES – RIA

— The_Real_Fly (@The_Real_Fly) February 14, 2022

RUSSIA IS READY TO OPEN FIRE ON FOREIGN SHIPS AND SUBMARINES THAT ILLEGALLY ENTER ITS TERRITORIAL WATERS – IFAX CITES SENIOR MILITARY OFFICIAL

— The_Real_Fly (@The_Real_Fly) February 14, 2022

Bombs will drop on Ukraine minutes after Putin gives order, armed forces minister says ***

— The_Real_Fly (@The_Real_Fly) February 14, 2022

But then Lavrov said Putin agreed to permit him to have further discussions with the west and futures took off, rightly so.

*RUSSIA'S LAVROV PROPOSES TO PUTIN TO CONTINUE TALKS WITH WEST
*PUTIN SAID 'ALL RIGHT' IN RESPONSE TO LAVROV'S PROPOSAL

— zerohedge (@zerohedge) February 14, 2022

And then in a CNBC interview Fed’s Bullard reaffirmed his position that rates need to be hiked by 100bps ASAP and the Fed must defend its 2% CPI policy, otherwise lose credibility. He was firm on this point, in spite of the incessant nagging by the CNBC hosts prodding him about markets and how his comments might be viewed as hurtful of stocks.

The net result has been another drip in futures, presently down 65, placing the market between a rock (the Fed) and a Russian tank. Which is the preferred object to bash our heads into and knock ourselves out?

Clearly, the news out of Moscow is noteworthy because every indication since then was war was imminent, in spite of Russia denying it. Who exactly expected Russia to flatly come out and say “we are going to attack Ukraine?”

My sense is markets should be relieved by this but aren’t because they’re filled with babies and RETESTOORS who want to see certain technical levels tested again. I will likely cover my shorts today and go to cash.