VIX Surge, Tech Dump — Markets Don’t Care About the Shutdown

Rebels Edge – Market Update & Super Bowl Preview (February 9, 2024)

Key Concepts:

• Government Shutdown Impact: Assessment of the market’s reaction to the resolution of the partial government shutdown.
• VIX (Volatility Index): Analysis of the VIX spike and its correlation to tech selloffs.
• Bad Bunny & Super Bowl LVIII: Discussion of potential political statements during the Super Bowl halftime show.
• Real Alloys (RE Alloys/BLBX): Spotlight on a small-cap company in the critical minerals space.
• Macroeconomic Data Reliability: Questioning the accuracy and relevance of traditional economic indicators (PCE, PCI, BLS data).
• AI Infrastructure Demand: Debate on the sustainability and strength of demand for AI-related technologies.
• Super Bowl LVIII Preview: Predictions and prop bet analysis for the game between the Seattle Seahawks and the New England Patriots.

1. Macroeconomic Overview & Government Shutdown

The discussion began with the resolution of the partial government shutdown. While the shutdown ended, the market reaction was described as “Eh, so what?” Mark Le Prey emphasized the importance of having accurate data produced by the government, which is hindered during shutdowns. Pete Najarian questioned the market’s indifference, suggesting it views shutdowns as political theater and anticipates intervention to prevent prolonged disruptions. Najarian further asserted that data from sources like the PCE, PCI, and BLS are becoming increasingly “antiquated, inaccurate, and bordering on useless” compared to real-time data available to professional traders. He highlighted the use of “poly markets” to predict the shutdown’s duration, noting that predictions were ultimately shorter than the actual event.

2. Market Volatility & the VIX

A significant portion of the conversation focused on the VIX, which breached 19. Le Prey noted this increase coincided with a selloff in the NASDAQ and Dow, indicating rising market volatility. He contrasted this with a VIX level of 14.50 in early January, highlighting the recent shift. Najarian agreed, stating the VIX had been “artificially low” even before the recent silver selloff. He emphasized the VIX’s importance as a gauge of market sentiment and noted a resistance level around 20. The discussion framed the volatility as a natural market reaction, not necessarily indicative of fraud.

3. Small Cap Spotlight: Real Alloys (RE Alloys/BLBX)

A “small cap spotlight” featured Real Alloys, a private company focused on critical minerals for magnets. The company is merging with Blackbox Stocks (BLBX). A key development was Real Alloys securing access to rare earth feedstock in Kazakhstan. This news led to a 12% stock increase the previous day, followed by some profit-taking. Le Prey and his brother are advisory board members of the private company and expressed optimism about the critical mineral sector, particularly in light of the President’s recent announcement of a $13 billion+ critical mineral reserve. Disclosure: The hosts are compensated for covering this stock.

4. Stock-Specific Analysis

Four stocks were analyzed:

• Uber: Initially down 6-7% following earnings, Uber recovered somewhat. The earnings miss (71 cents vs. expected 80 cents) and weak guidance were cited as reasons for the initial decline. However, a 22% year-over-year increase in trip demand provided some support. Najarian expressed skepticism, citing concerns about rising insurance costs and limited pricing power, particularly in cities like New York. He also questioned the long-term viability of their driverless car initiatives.
• AMD (Advanced Micro Devices): A significant 15% drop was discussed. While the data center segment showed strength, the forecast fell short of expectations. Le Prey argued the selloff was an overreaction, emphasizing AMD’s crucial role in the AI infrastructure and the strength of CEO Lisa Su. He dismissed concerns about an “AI bubble,” arguing that demand for AI infrastructure is underestimated.
• SLAB (Silicon Laboratories): Experienced a 50% surge due to strong revenue growth (34%) and a deal with Texas Instruments. Despite operating losses exceeding $70 million, the positive outlook and acquisition fueled the rally.
• InPhase: Saw a 35% increase, driven by strong gross margins (46%) and raised guidance. The discussion highlighted the company’s role in the data center space and the potential for growth in the solar energy sector. Le Prey emphasized that the demand for data centers is driving the growth, challenging the narrative of a solar sector downturn. He noted that the company’s success contradicts the bearish sentiment surrounding solar stocks.

5. Super Bowl LVIII Preview & Prop Bets

The conversation shifted to Super Bowl LVIII between the Seattle Seahawks and the New England Patriots. Le Prey predicted a Seattle victory, citing their superior defense (leading the league in points allowed and turnovers). He acknowledged the potential distraction of the Seattle offensive coordinator’s impending move to the Las Vegas Raiders. Najarian concurred, emphasizing the importance of turnovers and the overall defensive strength of Seattle.

They also discussed various prop bets, including:

• First Image Shown: A shot of the Golden Gate Bridge.
• Bad Bunny’s Performance: Speculation about potential political statements, including the possibility of performing in drag to protest President Trump’s immigration policies.
• “Mike and Mike” Commentary: Whether commentators will repeatedly refer to both head coaches being named Mike.
• Linebacker Touchdown: The probability of a linebacker scoring a touchdown (via interception or fumble return).

6. Active Trader Show & Upcoming Events

The hosts promoted the recent Active Trader Show in Miami, highlighting successful live trading demonstrations. They announced an upcoming trader boot camp in Chicago on April 24-25, in conjunction with the CBOE, offering live trading experience on the trading floor.

Conclusion:

The Rebels Edge episode covered a broad range of topics, from macroeconomic factors and market volatility to individual stock analysis and Super Bowl predictions. A central theme was the questioning of traditional economic data and the emphasis on real-time information. The hosts expressed optimism about the long-term potential of AI infrastructure and the critical minerals sector, while remaining cautious about companies facing significant cost pressures or uncertain futures. The Super Bowl preview offered a blend of football analysis and lighthearted speculation about potential halftime show antics. The episode concluded with a promotion of upcoming trading events and educational opportunities.