Short idea update: The SPX500 rise continues

2:40 AM


I was trading interest rates futures yesterday when the FOMC minutes were going to be released.

It was not outside what I expected. June interest rates were on the table and the taper was going to begin. I sold my VXX position knowing I could lose whatever profits I had at the time. 

And the market rallied.

My thesis continues to hold true but has become even more reflexive. Short-term interest rates are going up and consumer spending I expect to decrease means that the US will have to rely on exports. This cannot happen given the policies put in place.

Credit is already high so increasing credit does not seem feasible for growth.

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The conditions that remain for not having a potential rate hike are as follows:

1) Jobs creations - less than 75k
2) Inflation - more than 2% as per CPE data
3) Growth slow - move into recessionary area
4) Disorderly decline of stock market - more than 10%

If not I expect there to be a continuous hike to the 3% area.

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Short-term rates and interest rates are looking to increase yet we are seeing a stock market rally. There is something wrong here.

Growth expectations are still high, in the last budget launched by Trump we see that there is an indefinite projection of 2-3% growth. This could be why markets are rallying, but it is based on demographics is simply a unicorn. 

Last week's drop in the SPX due to "Trump impeachment" was more likely due to funds flow to Europe. I see this from the market shrugging off the news, spreads on the German Bonds, the strength in Euro, and dollar weakness.

Trump impeachment was probably media hype, although extremely serious.


My position is quite down now and I must be more active on the position now. I will be adding a bit more to my SPX position trying to recoup some of the losses and increase profit if there is a large fall in prices.

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