Random Thoughts – 7.21.2020
Below are some random thoughts on the market and tech. Not a lot of content, but I will be looking at more of the tech company results as we move through earnings.
Current Directional Plays: I went long crude last week and today I shorted the Nasdaq and started a position looking for increased volatility into August/September. I still have core longs in PG, SBUX and others, but the gross exposure is down. I plan to add to VOL position and will closely monitor the short positions. I want to short more, but I will let the positions ride for awhile. A former PM sent me this yesterday “Amazing the sheer amount of market cap certain stocks have now. TSLA $310bb, AMZN $1.6 trillion. What is even more amazing is the amount of market cap they add a day. Today TSLA $30bb, AMZN $120bb….both on NO NEWS!”
FX: Weakening USD tread. Last week I wrote that I did not see a big FX move coming, in fact I wrote “…it seems unlikely there will be any significant move in the USD over the next year.” The USD is weakening and last night IBM said on their earnings call that the weaker USD is shifting buying behavior. With the global reach of IBM, that is enough for me to reconsider my position and will watch this more carefully. I can envision a scenario where the Fed has to flood the market with dollars and light up big swap lines and if that happens I want to bet on VOL.
Gold: A former colleague posted a note from GaveKal Research (link here) and my favorite line in the note was that gold “…is in essence a short position on central bankers.” That is the only reason I see to own gold outside of liking shiny objects. It does not work as currency, for that you should own silver, but it is a reserve of value, but then again, many financial instruments are a store a value. If the Fed does have to light up big swap lines and I did own gold, I will be selling into the strength as fast as I could.
Cryptos: Cryptos are a store a value and I own cryptos. Not a lot, but enough that if the market grows it will be meaningful and if the crypto market does not grow, it will be a just a waste of time. If you are long gold betting against the Central Banks, then you should be long cryptos and go for the complete collapse of society as we know it.
As always, my thoughts on these matters might be completely wrong.
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