Thanks for viewing,
Just a quick one to say that there is some quite strong RSI divergence apparent on the daily timescale - a higher high compares with a (much) lower RSI peak. Maybe you have some reasons to be bullish on the USD right now - I don't.
- Recent 0.5% emergency rate cut and expectation of another 0.25 - 0.5% cut next week - Early last week many saw negative interest rates as impossible - not so much towards the end of the week though. Cramer, Gundlach and others now envisage near term negative rates,
- 10 year treasuries now WELL under 1% nominal return - this is already a negative real rate of return, The only possible way to make money off these instruments is in the hope that yields go to zero or lower, because rate increases during the duration of the instrument would wipe out significant value.
- The US President has raised USD devaluation as a possibility as well as calling for lower and lower interest rates. Luckily for him, the US Fed has come to believe that it is their role to support the stock market so he will gt his wish - no matter the downstream implications for the US.
- Ok, I am going off track for a bit. It is becoming evident just how badly managed the C****-19 outbreak is being handled in the US (especially Washington State - which has gone from containment to triage / management of the outbreak) with cases well on their way to going geometric - By the way; what large manufacturer is based in Washington State that will be affected by a freezing up of global travel, financing and has already had a string of super negative stories preceding this outbreak? The CDC that is so effective in containing an outbreak on the movies blocked testing for weeks, produced a flawed test that has had to be recalled, might just have produced an semi-effective test that will enable testing of the virus that is already out of control. The only way to stem the spread now is to enforce mandatory and aggressive social distancing, testing, and contact tracing (Singapore has seemingly prevented exponential growth at this point - as well as producing a 99% effective test that takes 3 hours). Clearly putting someone who doesn't believe in science in charge of a task-force trying to counteract a fast mutating, fast spreading virus is not helping and may cost hundreds and possibly thousands of people their lives - if you don't believe me just wait until the cases pass 1 million in the US which will likely be in late April to early May (this is someone else's prediction - not my own). Canada will undoubtedly also be affected, but it will respond appropriately and recover sooner. Soon we in the US will know definitively why a single payer healthcare system isn't socialism - but is just essential in a wealthy democratic society. In Canada people do not have to face bankruptcy if they get sick, they get paid sick days, they have a proper employment contract (I was blown away when I found out from people that worked on Wall Street for one of the largest Companies (at that time that they had "at will" contracts - meaning that even after years of dedicated service they could be terminated without notice and did not get paid sick leave). In the US people will avoid healthcare even when they are sick, even if they are employed and have insurance (because some cannot afford the co-pays and out of pocket expenses) resulting in people infecting their co-workers. There are some pretty fundamental structural reasons why the US is expected to not do as well as Singapore, Canada, or Hong Kong in the context of a extremely easily communicable virus. So, what I am saying is that there are several reasons for people to have the perception that the US is likely to be more impacted by this virus and very possibly is also incompetently run. No one wants any of this to happen, including me.
LONG
- I am long on gold and silver - assessing Platinum in case of mine closures, Unfortunately mining stocks may not be the winning trade in these circumstances (lower energy costs will help (energy intensive), but freezing up of corporate credit (credit intensive industry), potential virus induced mine shut-downs (labour intensive), and a general sell-off in equities may mean they remain a risky trade in the short-term).
-Gold because I wanted to diversify away from fiat currency due to the certain dramatic expansion of the money supply / quantitative easing coming and possible helicopter drops is bullish for gold - the more money printed the more gold has to appreciate in $ terms to account for that - plus I like gold and there are very few safe havens left. I will not be selling gold when the crisis is over but will retain it as unsurance (insurance for when you are unsure and as protection against larger systemic crises with fiat currency or a potentially insolvent Government). Presently around 25% of assets are in gold (which I admit is possibly a bit much) and another 8% in silver.
-Silver for the same reasons as gold, and because the % upside is potentially greater, and because I believe that the goldsilver ratio points to historic significant undervaluation of silver relative to gold. If / when the goldsilver ratio dips below 45 (currently 96) I will trade silver for gold - buying silver as a way to get more gold. Bullionstar in Singapore has some great offers - and low storage fees.
-Platinum because it is a strategic metal in US industry and defence and domestic sources cannot fulfil US demand. 75% of supply is from South Africa and Southern Africa and is susceptible to labour, electricity supply issues. Potential play for Canadian and US platinum miners -but not yet.
I am long some equities - but only unloved undervalued ones (hard to find these days) that have good fundamentals and solid revenue streams.
SHORT
- I am short USDCAD, USDCHF (flight to safety), and crude oil since it broke below $50, because of cratering demand - OPEC can not cut deeply enough to impact price without drastically cutting their national income.
- I am short treasuries in that I wouldn't touch them under any circumstances. They currently guarantee a negative real return and are becoming more and more risky in my view,
- I am short S&P500 and a number of individual Companies heavily exposed to supply chains in China (e.g. Qualcomm) or dependent on a majority of their revenue streams from China (e.g. Wynn Resorts, Las Vegas Sands - both get more than 50% of their revenue from China), and some Airlines, also some Oil and Gas Companies.
Just a quick one to say that there is some quite strong RSI divergence apparent on the daily timescale - a higher high compares with a (much) lower RSI peak. Maybe you have some reasons to be bullish on the USD right now - I don't.
- Recent 0.5% emergency rate cut and expectation of another 0.25 - 0.5% cut next week - Early last week many saw negative interest rates as impossible - not so much towards the end of the week though. Cramer, Gundlach and others now envisage near term negative rates,
- 10 year treasuries now WELL under 1% nominal return - this is already a negative real rate of return, The only possible way to make money off these instruments is in the hope that yields go to zero or lower, because rate increases during the duration of the instrument would wipe out significant value.
- The US President has raised USD devaluation as a possibility as well as calling for lower and lower interest rates. Luckily for him, the US Fed has come to believe that it is their role to support the stock market so he will gt his wish - no matter the downstream implications for the US.
- Ok, I am going off track for a bit. It is becoming evident just how badly managed the C****-19 outbreak is being handled in the US (especially Washington State - which has gone from containment to triage / management of the outbreak) with cases well on their way to going geometric - By the way; what large manufacturer is based in Washington State that will be affected by a freezing up of global travel, financing and has already had a string of super negative stories preceding this outbreak? The CDC that is so effective in containing an outbreak on the movies blocked testing for weeks, produced a flawed test that has had to be recalled, might just have produced an semi-effective test that will enable testing of the virus that is already out of control. The only way to stem the spread now is to enforce mandatory and aggressive social distancing, testing, and contact tracing (Singapore has seemingly prevented exponential growth at this point - as well as producing a 99% effective test that takes 3 hours). Clearly putting someone who doesn't believe in science in charge of a task-force trying to counteract a fast mutating, fast spreading virus is not helping and may cost hundreds and possibly thousands of people their lives - if you don't believe me just wait until the cases pass 1 million in the US which will likely be in late April to early May (this is someone else's prediction - not my own). Canada will undoubtedly also be affected, but it will respond appropriately and recover sooner. Soon we in the US will know definitively why a single payer healthcare system isn't socialism - but is just essential in a wealthy democratic society. In Canada people do not have to face bankruptcy if they get sick, they get paid sick days, they have a proper employment contract (I was blown away when I found out from people that worked on Wall Street for one of the largest Companies (at that time that they had "at will" contracts - meaning that even after years of dedicated service they could be terminated without notice and did not get paid sick leave). In the US people will avoid healthcare even when they are sick, even if they are employed and have insurance (because some cannot afford the co-pays and out of pocket expenses) resulting in people infecting their co-workers. There are some pretty fundamental structural reasons why the US is expected to not do as well as Singapore, Canada, or Hong Kong in the context of a extremely easily communicable virus. So, what I am saying is that there are several reasons for people to have the perception that the US is likely to be more impacted by this virus and very possibly is also incompetently run. No one wants any of this to happen, including me.
LONG
- I am long on gold and silver - assessing Platinum in case of mine closures, Unfortunately mining stocks may not be the winning trade in these circumstances (lower energy costs will help (energy intensive), but freezing up of corporate credit (credit intensive industry), potential virus induced mine shut-downs (labour intensive), and a general sell-off in equities may mean they remain a risky trade in the short-term).
-Gold because I wanted to diversify away from fiat currency due to the certain dramatic expansion of the money supply / quantitative easing coming and possible helicopter drops is bullish for gold - the more money printed the more gold has to appreciate in $ terms to account for that - plus I like gold and there are very few safe havens left. I will not be selling gold when the crisis is over but will retain it as unsurance (insurance for when you are unsure and as protection against larger systemic crises with fiat currency or a potentially insolvent Government). Presently around 25% of assets are in gold (which I admit is possibly a bit much) and another 8% in silver.
-Silver for the same reasons as gold, and because the % upside is potentially greater, and because I believe that the goldsilver ratio points to historic significant undervaluation of silver relative to gold. If / when the goldsilver ratio dips below 45 (currently 96) I will trade silver for gold - buying silver as a way to get more gold. Bullionstar in Singapore has some great offers - and low storage fees.
-Platinum because it is a strategic metal in US industry and defence and domestic sources cannot fulfil US demand. 75% of supply is from South Africa and Southern Africa and is susceptible to labour, electricity supply issues. Potential play for Canadian and US platinum miners -but not yet.
I am long some equities - but only unloved undervalued ones (hard to find these days) that have good fundamentals and solid revenue streams.
SHORT
- I am short USDCAD, USDCHF (flight to safety), and crude oil since it broke below $50, because of cratering demand - OPEC can not cut deeply enough to impact price without drastically cutting their national income.
- I am short treasuries in that I wouldn't touch them under any circumstances. They currently guarantee a negative real return and are becoming more and more risky in my view,
- I am short S&P500 and a number of individual Companies heavily exposed to supply chains in China (e.g. Qualcomm) or dependent on a majority of their revenue streams from China (e.g. Wynn Resorts, Las Vegas Sands - both get more than 50% of their revenue from China), and some Airlines, also some Oil and Gas Companies.
Trade closed manually