🗞 Don't Blink

WHILE YOU POUR THE JOE… ☕️
Chinese Balls

That’s what these guys must have, honestly.

Your biggest customer and “trading partner” calls you saying that he’s not happy with the way he’s been treated lately, and you just say lawyer up asshole because we’re never going to back off. 🫢 

That’s movie-worthy, and I hope the next “The Big Short” movie has some sort of scene like that between Trump and Xi.

Speaking of China and fights, let’s get on with today’s email 📧…

WRONG WAY
Missed the Exit

For those of you who have been part of our remote “Trading Floor” on WhatsApp:

Congratulations, you’re now up over 300 points on the S&P 500, which is right around the average we push on a weekly basis. 🔥 

This one has been accelerated due to volatility, which I think is going to keep persisting for a bit.

By the way, how come you haven’t joined? It’s as free as this newsletter but with 10x the fun. Instructions are in this newsletter right here.

Anyway, that’s gold/copper spreads above in that pretty chart I made. 🔼 

Look, we were hoping for the downtrend to continue as gold started to sell off and copper rallied to a new high, then Trump and Xi decided to have a fight.

Now this ratio is starting to shoot back up again, but it’s not because of gold. ⬇️ 

Copper is now coming down harder than it was building up, and I take it as an extreme warning (just like that ratio above) for a risk-off theme spreading across the markets.

Why?

Copper is used in electricity, infrastructure, cars, etc. When economies aren’t expected to keep growing as much as they have been, then copper sells off, in turn gold can rally or stay stable as is the case today because of its “safe haven” status.

But get this. 👀 

The commitment of traders report shows institutions have been selling some gold inventories lately, which is contrary to what should (historically) be happening.

And this is the beauty of financial markets, they’re never so black and white and repetitive.

Today, I think that gold is going to be sold off along with other risk-on assets for one purpose and one purpose only:

• Liquidity

If markets keep panicking as China escalates a full-on trade war, which God forbid turns into a physical war, then liquidity will be king.

And where is the safest form of liquidity when the whole world becomes uncertain? Think COVID-19.

Dollars baby. 💵 

Maybe bonds too, but dollars 100%, which is why we’re going to dig back into our long $TLT / short $DXY trade that we’ve had on since December 2024, because I think taking profits might be warranted in this next scenario.

It was a good run, we proved a lot of haters wrong, and made a few bucks too.

Despite the ratio between bonds/dollar still not reflecting an economic theme shift, I think it would be wise to anticipate the shift before it’s here.

What theme may it be?

• Recession 📉 

But a different kind of recession, a global one, which I gotta give Trump credit for in all honesty.

He knows that a domestic recession will send the dollar down, while a global one will make EVERYONE want to run to dollars and US bonds.

Then rate cuts happen and QE begins again.

Nice one, Donnie.

More about this coming soon. 🫰 

TRADE OF THE WEEK
Fatten the Pig

Want a quick 20% return? Look into Walgreens stock.

They just reported earnings yesterday morning, and it looks like they’re putting a nice shade of lipstick on before going on a round of blind dates.

Tha't’s right, Private Equity firms are now bidding to buy out Walgreens, and this recent quarter may have just sealed a more competitive bidding war.

I mean you really think that Walgreens conveniently came up with nearly $1.5 billion of “Other income” items just in time to get the juices flowing in its valuation potential?

Lol 🤷‍♂️ 

Anyway, I think this thing could push back at least to $12 if not $15, and that’s an easy quick math for 20-50% return potential. 📈 

Now imagine what you can do with options.

Speaking of which, it seems like a lot of traders have found a consensus view for $12.50 per share on Walgreens moving forward.

Can that be the big bid? ✅ 

GO AND MAKE IT HAPPEN
Lights, Camera, Sermon

Thre’s about 20 new subscribers from Monday, I guess the group chat leaks really got people excited about those 300 points in the $ES huh?

Well, the reason we can collect those moves boils down to one single ability:

• Connect the dots

Every trader does this whether they realize it or not. However, most don’t know what dots they need to connect or how.

So today’s book recommendation 📖 is actually a video, my video covering global macro and a list of assets you can keep in mind each and every day for a bias reference in the market.

To your success,

G. 🥃