Blog – Page 34 – Red Pill Quants

0 Brave New World

We are only eight months into the year but for all intents and purposes 2020 will be remembered by future historians as a year of explosive change and implacable economic Darwinism. At no other moment in time was there ever the possibility of shutting down a nation’s entire economy – let alone a global one – due to war, disease, or any other reason. It didn’t happen during WW1, neither did it happen during WW2, the Spanish Flu in 1918, the American polio epidemic in 1916, or the Asian flu in 1957.

0 Big Tech Crunch

Big tech was stomped again over the past few sessions but the current retracement still lies within the parameters of a regular late summer shake down. What is a bit more disconcerting to me is the marked increase in realized (historical) volatility, which usually is indicative of a late stage bull market top. Since big tech has been leading this rally this would have major implications to equities across the board.

0 The Dollar’s Line In The Sand

The greenback seems to be in the process of forming a floor pattern despite ongoing negative narrative by the financial MSM. Although I happen to have a dog in this fight my general perspective remains to be one of skeptical optimism as the Fed continues to exert massive headwind against a stronger Dollar.

0 Revenge Of The Goldbugs

“Hello, is this TOS customer support? Finally, I was on hold for over 20 minutes! Anyway, I think something must be wrong with my installation, my daily gold futures chart just printed a red candle.” – “Are you certain, sir? Have you tried relaunching the platform?” – “Yes, I even rebooted my system twice – the candle is still red!” – “Okay, don’t panic sir, the system must be experiencing a data feed problem. I’m sure our tech guys will have this fixed in no time!”

0 Stairway To Perdition

Make no mistake – the current surge across numerous U.S. asset classes has very little to dow with good old fashioned value generation and is simply a natural response to the systematic destruction of the U.S. Dollar. It’s also part of a narrative that strangely seems to be favored by both sides of the political isle – for different reasons. In other words, rapid loss of confidence in the greenback is pushing asset holders into whatever tangible they can get their hands on.

0 The August Theta Burn

Every year here at the beginning of August the entire country of Spain enters into a one month long hibernation period. Although major retailers and stores are open most of the small ones close up shop and head out to the old ‘pueblo’ or their 2nd properties near a beach to spend quality time with the family. Good luck trying to get a hold of a doctor, dentist, attorney, plumber, what have you – everyone’s MIA until the end of the month.

0 The Perfect Storm

If you’ve ever been to Iceland then you may have come across this expression: There is no such thing as bad weather, just bad clothing. Well, if you happen to to hold any significant amount of Dollar assets these days – and as you are reading this blog I suspect you do – I recommend you better stock up on stormproof winter gear as conditions appear to be getting uglier by the day.

0 The End Of The Dollar Hegemony?

Over the past few days I’ve been seeing a noticeable uptick in opinion pieces questioning the Dollar’s status as the world’s reserve currency, first in line – to no one’s surprise – Goldman Sachs. None of this comes as a big surprise to me as the current rout in the Dollar only serves to encourage a spoiled, confused, and fearful generation that has made it its quest to kick over any remaining vestiges of permanence and stability. To quote Madame de Pompadour: Après moi le déluge.

0 Dollar In Freefall

Rumor has it U.S. Treasury Secretary Mnuchin wants a stable Dollar and that protecting its status as a reserve currency allegedly is the goal of the Trump administration. Unfortunately it appears that Mr. Mnuchin’s definition of ‘stable’ differs significantly from mine as the DXY has effectively entered a state of freefall over the past week.

0 Reloading On Big Tech

While the SPX has been retesting overhead resistance big tech (e.g. MSFT, AAPL, AMZN, GOOGL, FB) continues to linger near recent support levels. That’s a bit surprising given that the NDX immediately surged higher on Tuesday. Whether or not we are looking at sector rotation again, this retest offers us a short term entry opportunity with very defined risk. Just the way we like it.

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