To The Moon

Tue Feb 21

Remember that game where a mole pops up and it is your job to hammer it down? There’s an eerie comparison to perpetual Fed pivot longs who keep getting monkey hammered every time they get a taste of momentum. Will the Fed pivot this year? They may stop raising rates in Q3 but I seriously doubt any drop in rates. Inflation is unlikely to comply any time soon. I doubt it will reach their 2% goal in the next several years. I am waiting for massive layoffs as corporate America re-calibrates to a higher cost of capital. None of this looks promising for a year or so.

Last year was a good year for me. My trading capital reached a new all time high. This year has shifted into a much harder paradigm to make money. Bonds will be the next big trade when yields finally peak. Everyone hates the dollar but don’t sell it short. The massive eurodollar market rests on dollar denominated collateral. Energy is promising but it will face headwinds if a worldwide recession sets in. Precious metals are also on a short buy list but the dollar needs to top before they get traction. There is a swirling pool of macro economic factors that needs to settle. In the meantime, expect knee jerk volatility. Dire geopolitical prospects (WW3?) compound the situation.

So what do you do? I am staying with short term plays that don’t lock up capital. Speaking of capital, cash is king at this point. Nothing wrong with 100% cash and some traveling. A month vacation can be the cheapest trade out there.

Good trading!