A Wall too Tall

As of late the concept of a wall has been a controversial item, causing great discord between political partisans, left and right. Historically, in reference to financial markets the proverbial wall of worry that a bull market faces is a unifying concept.

Our indicators are showing too many big bricks in the wall, at the moment.

This week's renewed trade strife between China and the US may have just put that wall at a level that is hard to scale for any bull.

Let's dissect some of these bricks of worry. The trade war with China is back on.

In efforts to motivate the Chinese to get back to the table with some urgency, President Trump has threatened to restart and escalate a trade war.

Threatening to increase current levels from 10% to.25 % percent on $200 billion and then to ramp that up on the remaining $300 billion of exports from China to 25% ,Trump wants attention now. As of this writing the Chinese trade team still is making its way to meet in the US later this week to discuss possible solutions.

A second ugly geopolitical brick layering was placed on the wall with the outbreak of hostilities this weekend in missile fire between Iran and Israel. With US military peacemaking assets steaming towards the Persian Gulf, a real war although remote, is now a very slight possibility. Although tensions have leveled off as a ceasefire has been called in Egypt between combatants Monday.

Now let's examine the mounting, negative internal indicators that are very disturbing.

Low volatility smacks of overconfidence, the vix indicator of volatility has reached lows not seen since last September preceding a 20% drop.

wall too tall img 1

Overly bullish sentiment. The Citigroup Market Sentiment Panic/Euphoria is again indicating euphoria. After the last buyer has bought who's left? Warren Buffett just announced that he sees Amazon (AMZN) as a value stock and therefore, is taking a large position. He has watched it go nearly up 1000 fold, from a billion to a almost trillion, before he capitulated.

wall too tall img 2

Not to be overlooked, we can mention the old standbys, high insider selling and the flat yield curve to provide more bricks.

wall too tall img 3

wall too tall img 4

Finally, in the tradition of saving the worst for last. The pipeline of IPO issuance this year could blow away the dot com. bubble levels from 1999 and 2000 by a large margin. Uber, the mother of all IPOs will be sucking a lot of the liquidity out of the market, later this week. Uber, Lyft, Palantir and Slack, Airbnb, and others could reach a combined valuation over $200 billion, with Uber the largest by far. This would make 2019 the year of the “Balloonicorm, shattering IPO issuance from the dot.com bubble with 226 companies set to launch of which there are 119 companies that would be classified as “unicorns,” or private companies with valuations over $1 billion. This could more than exceed 1999 and 2000 where just under $100 billion was issued in those years.


A bull market climbs the proverbial wall of worry but this looks like a great wall too high.
We like select shorts (HDGE), gold (GLD) ,Bitcoin (GBTC), as shelter from the storm.
For a free trail please visit us at : https://singularresearch.com/index.php/en/trial-offer

Commentary & Strategy by:
Robert Maltbie, CFA
President - Singular Research

Sports Gaming USA: The Next Big thing or Fool's Gold?

This is the first in a series of interviews with C- level execs, industry insiders and movers, shakers and influencers in the sports gaming.


We will be bringing you, in real time, our conversations and analysis of winners and losers in the burgeoning sports gaming industry.


US Sports Gaming Index:

  • MGM Resorts International (MGM)
  • Eldorado Resorts (ERI)
  • Caesar's Entertainment Corp. (CZR)
  • Scientific Games Corp. (SGMS)
  • International Gaming Technology Plc (IGT)
  • William Hill Pl/Adr (WIMHY)
  • Boyd Gaming Corp. (BYD)
  • Golden Entertainment Inc. (GDEN)
  • Churchill Downs (CHDN)
  • Stars Group Inc. (TSG)
  • VBX: Vegas Betting Exchange (Private)
  • Miomni (private UK based company)


The legal sports betting industry is on the verge of an $400 billion explosion following the U.S. Supreme Court ruling on Christie vs. NCAA, opening the door for major gaming and technology companies to develop systems for sports bettors nationwide.


MGM Resorts International (MGM) has signed wagering partnerships with the NBA, MLB, the NHL and a few professional sports teams that allow it to promote its sports books. It seeks to leverage its existing resorts location, driving additional traffic to these locations via its association with the organizations.


Caesars Entertainment Corp. (CZR), the largest U.S. casino operator by properties, has signed wagering deals with the Philadelphia 76ers and the New Jersey Devils. Caesars looks to leverage expertise from its World Series of Poker brand.


Mixing it up with the corporate players are entrepreneurs like Anthony Curtis, publisher of Huntington Press and an authority on gambling, having been booted from most Las Vegas casinos for being what they call a "sharpie," someone who consistently beats the house.


"It's huge, gigantic," Curtis said about the Supreme Court ruling during an interview with Singular Research at South Point Casino in Las Vegas.


anthony curtis

Anthony Curtis President of Vegas Betting Exchange


"It was a landmark, powerhouse decision that is absolutely going to change the gambling landscape. We're seeing it already, but it's not the gold rush everybody thinks because the margins are relatively small."


Curtis and his business partners are developing Vegas Betting Exchange (VBX-private), a mobile software application that would allow bettors to circumvent the 10 percent commission, known as the "vig," collected by sports books and illegal bookies around the country.


It's a peer-to-peer betting exchange, premised on European exchanges where the action is between consumers.


Vegas Betting Exchange would retain 4 percent of the amount wagered – 2 percent from each side – not as vigorous, but as a transaction charge for providing the platform. It still greatly reduces the books' edge.


"It's a better deal for the consumer and that's a big selling point," said Curtis, who quit college at age 21 to make his living as a professional gambler in Las Vegas. "It's the same product and less expensive."


VBX feels that an initial goal of garnering a 5 percent market share is achievable with an efficient marketing plan and customer-acquisition strategy.


While the U.S. Supreme Court ruled in May 2018 to overturn the Professional and Amateur Sports Protection Act (PASPA), essentially allowing states to legalize sports betting, it's going to be a slow process.


Only eight states are currently accepting sports wagers, including Nevada and New Jersey, while about a dozen are introducing legislation with an expected approval time frame of two to three years.


"This is why we're not rushing our product," Curtis said. "We're just perfecting our product until we think the landscape is mature. Right now, it's a matter of states legalizing it."


Olaf Vancura, former vice president of game development at Mikohn Gaming and American Gaming Systems, is developing the software for Vegas Betting Exchange.


Louis Fenn, who's worked with startups in Northern California, is heading up the financial side.


The venture has been self-funded in its early stages. VBX is seeking to raise $1.5 million in its first round of funding, $20 million in the second round and $100 million-plus in the third round, Curtis said.


Market research shows more than $150 billion is wagered illegally in the United States and offshore and several gaming consultants have placed the betting handle above $400 billion when the market is fully mature.


Curtis is monitoring progress in California, which could generate more than $2.5 billion in revenue once legalization and mobile capabilities are in place.


He believes the betting exchange model will be a "disrupter" in the sports betting industry.


"This thing's going to be cool," Curtis said. "Maybe it won't be us, but I believe it's the way people will end up betting sports in the future."


Anthony then offered insights from 30,000 feet on major emerging players in sports gaming USA. On Scientific Gaming; "they're doing quite a bit in the sports betting field as far as I can tell. As discussed, Stars Group (TSG) (formerly PokerStars) is probably one to watch, as they've already done it with poker. Same with Caesars (CZR) mimicking its World Series of Poker brand, plus it has casinos in lots of states. Of those we didn't discuss, Boyd (BYD) could be an under-the-radar player -- also with lots of locations in different states. Churchill Downs (CHDN) is interesting, but I assume they're mostly horse racing. I doubt that Sands (LVS) will be a significant player given Adelson's dislike of online gaming". On Draft Kings and Fan Duel "They're both positioned because of their customer lists that were built during the big DFS push of a couple years ago. Also aggressive in deal-making and poised to move into new markets as they open. DraftKings established the Sports Betting National Championship this year, a $10K buy-in contest that was held in New Jersey, which they have designs on making the sports betting equivalent of the World Series of Poker." Curtis is also bullish on a broadly exposed player in online solutions with some huge contracts with many leaders in sports gaming called Miomni (private UK based company). Miomni delivers the best end-to-end solution in the online gaming industry. It is a veteran in the online space for over 10 years with emphasis in the gaming industry for the last 8 years. It has specialization in all areas of online development and product design, and has built the best-of-breed apps with intuitive user experience and full interactivity.


For more information on VBX
or any other companies mentioned please contact:

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and type in "sports"

ETFs: A Triumph of the Slothful and A Guaranteed Disaster

ETFs are a poor excuse for real investing, they are a manifestation of a surrender to laziness and a bonus to wealth managers who don't do anything. but sponge off 1-2% of your NAV perpetually. They also guarantee their investors a 100% participation in the next market crash.


ETFs create large capital market misallocations, equally rewarding the strong and the weak. When you go to buy a suit,do you buy every suit on the rack? Nope, you look for that perfect suit that has the best quality, best value.and best look. Why do that when investing?


Soon investors will realize the wastefulness of ETFs and get fed up with just average returns as the market averages revert back to a 4% annual return. They will realize that they are allocating over 95% of their capital to suits they would never wear and never want to wear and would never actively buy. Active management and deep research are worth the time spent and will be rewarded - as it always has been and should be. (particularly when applied to small-caps where information inefficiencies and a higher relative cost for research prevails).


etf research img 1


Dispersion is typically higher for small-cap stocks than large caps. Value added opportunities for skillful stock selection among small caps are therefore much larger than in the large-cap universe.


etf research img 2


Financial Gurus Warren Buffett, John Bogel, and Larry Fink have reaped massive fortunes by propagating the false proposition that the average investor should never expect better than average returns.and should therefore surrender to passive indexing.


etf research img 3


*The dispersion of the S&P 500 as of Nov. 30, 2017 was 18.3%, moderately low by historical standards.


The mass migration out of active managed funds into passive ETFs has accelerated greatly since the great crash of 2008. This represents the mass collective evasion by wealth managers to be held accountable for underperformance and their allegiance to the Wall Street profit machine of maximizing fees to the detriment of their clients best interests. It is an act of oligarchic collusion to collect egregious management fees to match only the return of the market indices. Isn't that what a prudent fiduciary should do? How can anyone be held liable or culpable for the crime of being average?


ETF growth has been very consistent and shows no signs of slowing down. ETFs had an organic growth rate of 16.5% on average over the last 10 years, which is much higher than the 2% growth of mutual funds. Organic growth strips out the effect of market returns to highlight where investors are putting their new investment dollars.


etf research img 4



Corporate managers seem to have bought into this contempt full form of greed. They deplore individual shareholders,preferring the silent, supporting passivity of ETFs.WItness the lack of stock splits. They manipulate their stock prices and manage earnings by wave after wave of share buy backs while consistently selling shares into financially engineered, artificial price levels inflated by low cost borrowed funds. Buybacks lower a stock's beta and provides a consistent flow of demand, regardless of management's performance.


Since this bull market began, there have been at most 16 stock splits in a year, which happened in 2011. In each of the last three years, the number of splits has shrunken. The average number of stock splits per year since 2008, when the bull market began, is just 10.


But in the bull market from 1998 to 2000, there were an average of 91 stock splits per year. And in the bull market from 1987 to 1990, there were 57 on average per year.


etf research img 5


What will be the catalyst of change? What will create a prevailing aura of disdain and disgust for ETFs.? WIll it be a globally synchronized crash where correlation approaches unity? Or will it be a dull aching period of underperformance? Have we as the investing masses exchanged "a walk on part in a war for a lead role in a cage" Will we take a guaranteed universal income stipend, weekly home deliveries from Amazon prime, accept a passive 4% over a volatile 9% and spend our remaining days tweeting, googling, facebooking and Netflixing B movies ad infinitum?


*Roger Waters - Wish you were here 1975


Robert Maltbie CFA
This email address is being protected from spambots. You need JavaScript enabled to view it.
President, Singular Research
Email me to receive our coverage list.

Three Buy Ideas from our Chart room

MMI March 2019

Singular research MMI mildly bullish


Slightly Bullish

MMI Report


(Below 50 is bearish, above 50 is bullish)

Is this a bull rally in a bear market? Until markets indices make new highs and breadth improves, we are still technically in a bear market. Less than 50% of all stocks are still below their 200 day moving averages, reaching a high of 46% recently. The S&P 500, having experienced a failure to penetrate 2820 several times since last September is attempting to break this level again. At a 51 score, there is not much conviction that a breakout will occur this time. Save a surprise trade deal with China, near term catalysts are not clear cut.



S&P 500 stalling at 2820

Singular research MMI mildly bullish1


Market sentiment :negative this indicator is slightly bearish, the bull/bear ratio below 1x, is our only positive sentiment indicator while Citibank’s Greed / fear indicator is mild but still slightly too zealous. The VIX and VXN in at mid-teens, not at last summer’s complacency levels but reflecting a bullish attitude. Bond spreads are normalized again and TRIN/ARMS index are mildly overbought. MACD shows upside momentum is waning.

AAII Index

Bullish 33.5%

Bearish 36.3

Neutral 30.2



Technicals: Positive

As S&P 500, QQQ and DJA averages are above 200 day moving averages, confirmed by unweighted S&P 500. Meanwhile, the Russell 2000 small cap index was just turned back below its 200 day moving average.


QQQ above its 200 day Moving average

Singular research MMI mildly bullish2



Liquidity: Negative

The mystery of what sources of funds has powered to rally off the Christmas Eve bottom remains to be wholly solved, but it looks like a combination of share buybacks, inflows from money markets funds and some short covering were the catalysts. This indicator shows only $4-5 billion of net inflows over the last four weeks. This is below our minimum threshold of $20 billion to generate a bullish reading. Contributing positive factors are 1) a high level of money market assets, currently over $3.3 trillion, representing over 12% of total US equity market cap and 2) closure of IPO & SPO markets due to the recent government shutdown which prevented SEC review of these offerings.


Valuations : Positive

Based on 2019 S&P 500 eps estimates, the market is +/- 5% of fair value at 16x. The ftm eps yield is 6.09% vs BAA corp. Bond yield of 4.95% protecting the argument that growth is undervalued.

The market is slightly above fair value vs GDP at 1.42 x and replacement value is not cheap at approximately 1.2x. Assuming a PE at parity of bond yields, discounted by 10% multiplied by eps of $169 for 2019, which assumes a modest + 3.5% eps increase, we derive 3070 as fair value, this represents +12% total return potential.


Earnings momentum: Negative

We are uncomfortable with the assumption that the “market” has priced this in at press time. Most revisions are trending steadily down. Q1 2019 eps has been cut by 6.6% to a -3.4% estimate for Q 1 2019. Negative guidance on individual company estimates is -74% vs. a historical -71% average. It is the largest y/y decline since q2 2016. Similarly, the market bottomed ahead of this in Feb 2016. Q2 2019 eps estimates is +0.2%, with revenues +4.6%, Q3 2019 eps estimate is +1.7% with revenues +4.5%, Q4 2019 eps estimate is +8.1% with revenues +4.8%. CY 2019 e is + 3.9% with revenues + 5.0%. CY 2020 eps is forecast at a robust + 11.5%. Meanwhile, net profit margins continue to rise, from 10.7% of revenue in q4 2017 to 11.4% in q4 2018. The largest sector declines in eps in q1 2019 are expected in energy, materials, technology and info tech. The source of the slowdown is Europe and Asia, while domestic US companies are expected to be positive +6%. Fully 38% of S&P 500 revenues are derived from abroad.


Monetary Indicators: Positive

Our proprietary excess liquidity indicator is now bullish, showing a Fed that is again stimulating the economy. Our excess liquidity indicator, which compares monetary growth adjusted for velocity vs GDP weighs in at +115 bps. The yield curve spread ratio, comparing the 2 year treasury to the 10 year treasury is .95 which is still positive, below 1 but very flat at only +12 bps. High yield is just a hair below attractive at +396 bps to the 10 year treasury. +400 bps is considered attractive. Finally, as mentioned, the level of liquidity representing potential buying power in money market is over $3.3 trillion or nearly 12% of total domestic equity value. Over 10% is generally bullish.



Singular research MMI mildly bullish3


Addendum to the 1%

Underscoring a call for higher taxes and wealth redistribution are these data points: Median Household income in 2000 = $61,279 vs $ 60,714, in 2018 adjusted for inflation. And a lower proportion of public equity as % of total net worth at 29% vs 40-45% in the 70-& 80’s, reflecting the effects of more wealth being owned privately.


Robert Maltbie Jr. CFA


Singular research

This email address is being protected from spambots. You need JavaScript enabled to view it.-6915

ROKU Q4 update: Increasing our price target

Singular Research Director's Letter: November 2018


November 2018 Director’s Letter


The Correction Deepens  

Screenshot 2019 01 14 22.29.24

The market continued its sell off despite a couple strong rebound attempts. The China trade war fears and fed tightening continued to loom ominously over the market as investors de-risked and reduced exposure to equities.  
            Major market indices such as the S&P 500 in the DJIA struggled to stay in positive territory as the yield curve continue to flatten, triggering a recession fear sell-off as the three-year bond inverted above the five-year bond. Save a slightly tepid employment reports most economic series continued to display strength. But, as we know, the market is a forward-looking indicator, portending trouble ahead for 2019. 

Top performers for November

Screenshot 2019 01 14 22.30.48

Bottom performers for November

Screenshot 2019 01 14 22.32.17

We initiated coverage with a buy on Olympic Steel, (ZEUS), an operator of U.S based metals service centers with a growing focus on higher value- added, engineered products. We are very constructive on long term prospects for this beneficiary of Trump’s steel tariffs.
We wish our clients and friends and their families a joyous holiday season and thank all our subscribers for their continued support.Singular Research Staff

Singular Research Director's Letter: October 2018


October 2018 Director’s Letter

 Lowlights:  a triumvirate. of negatives overcomes bull market

Screenshot 2018 11 30 00.01.14

Nowhere to hide from the claw of the bear, or the wrath of the Fed. The new Fed chief  Powell indicated that the Fed plans on more hikes this year and next, a hawkish tone that spooked investors in October. The sell -off was deep and swift knocking most major indices approximately 10%, and individually issues 20-30%. The FAANG was hit hard for a 20% drop  

Investors are concerned about trade wars and declining earnings momentum as S&P500eps growth is expected to taper from 15% to 5% over the next two quarters. Meanwhile, GDP continues to steam ahead  at 3.5% GDP growth in Q3. 



Screenshot 2018 11 30 00.01.41


Singular best & worst in Oct.

Underscoring the bearish environment in October the best/worst list dominated by negative returns.

Screenshot 2018 11 30 00.02.36

Thank you for support.of our quest to discover forgotten,forlorned and mispriced, undercovered small and micro cap equities. We look forward to finding much more attractively valued coverage candidates in the months ahead. Happy holidays !

Singular Research Staff…