🗞 Collateralized Burrito Obligations

WHILE YOU POUR THE JOE… ☕️
Carrer Defnining Moment

You’ve probably tried lots of different strategies in the market

And I say “lots” because that’s the typical path of a retail trader

• This one doesn’t work for my size

• That one only worked on a backtest

• The market changed and this one no longer works

We’ve all been there, which is great

Because we’re about to fix that for you in a few days, here’s what you can expect from this free webinar that we’ve put together for you:

• The difference between having an approach vs a strategy

• How we combine the global macro picture with the auction nature of the markets

• Go over a successful example, as well as how we plan our weeks ahead of time

Now this isn’t something I created out of the blue, it’s exactly what was engrained in me during my time at Goldman Sachs

And now it can be engrained in your head too
The link to join is below if you want in ⬇️ 

SUMMER IS HERE
Bears Come Out Their Caves

Remember when Michael Burry went all crazy in early 2023? 🐻 

He was a bit early as is his custom since calling the 2008 financial crisis all the way back since 2006.

That doesn’t mean he’s wrong though, and given that we’re nearly 3 years into this call, here are (what I think) the right moves coming out of his portfolio. 👀 

Actually let’s cut the crap and go straight into the highlight:

• He’s gone net short across US tech, with a majority in put options for $NVDA (worth up to $97.5 million)

I can go all day about how NVIDIA makes sense as a short today, but let me just give you the protein of this idea here, before we move onto more important stuff that’s happening underneath the market’s fabric:

We can all agree that NVDA has been one of the most popular names in the Magnificent 7 run right?

Well looks like the magic is about to run out, as this is the one stock out of that group that has seen its price diverge this much from the forward P/E ratio.

If you’ve been with us for a while, you know we like to interpret this as the market losing confidence in the future EPS growth potential, a major tail risk for the stock price.

Then you get something that looks like this:

• Hedge fund short positioning being at levels not seen since peak COVID-19 months

That shouldn’t come as a surprise though should it? There are plenty of economic indicators that suggest we may be on the brink of a crash.

Let me explain:

Bond yields have just gone up after a failed auction, which might be due to Moody’s credit downgrade on US paper, but who knows? 🤷‍♂️ 

The reality is that bond prices have brought countries like China and Japan billions in losses so far, as the Fed refuses to act and ease financial conditions. 📉 

Now here’s my train of thought on this:

• Fed won’t act until there’s a proper panic (that means S&P 500 back to $4900)

• Bonds are acting in a way that might trigger an equity selloff and cause this Fed reaction

In other news, here’s what’s not that great about the US economy right now. ⬇️ 

Yep, it’s the yield curve.

Steepening mainly due to the long-end (10yr) rising fast without the short-end (2yr) to follow as aggressively.

More importantly we are coming from negative territory and past the 2022 recession fear levels, 100% of the time this means recession.

And without boring you too much here, there are other things to consider:

• Both PMIs are softening, with manufacturing being in a 28 month contraction

• Consumer credit delinquencies are through the roof

• Housing data is worsening more and more with each release

So be careful about retesting $4900 sooner than we think, there’s no world in which the S&P keeps rising with yields the way they’re going right now. 🫰 

GO AND MAKE IT HAPPEN
A Good Story

I don’t usually read trader biographies other than Hedge Fund Market Wizards (to me it’s the best of the wizards saga).

However, I felt compelled to send you today’s book recommendation 📖 as one I could honestly read again in 3 months to refresh my world view.

It talks about the realities of becoming an being a retail trader, now this one is focused on intraday futures mostly, but it’s great to pick up some mental tricks.

To your success,

G. 🥃