Portfolio down; Sold LATAM

Portfolio was down 1% last night: mostly from LATAM and gold.

I sold 2 of my LATAM positions.   These were longer term trades, or shorter term investments.  Bought several quarters ago as South America had upcoming elections expected to swing to the right.  Now thats behind us, the macro outlook for the next few quarters is bad, and the price action starting to reflect this.  They were cyclicals (banks), not buy-and-hold-forever stocks.  Took profits of 20% and 35%.

I need to think about the remaining LATAM position.  It fell due to stock specific factors, and the factors above are more balanced.

My new crypto position from last week is down a bit, I could buy more or cut loss.  If it does work out, I must remind myself to take some profits when overbought.  Crypto is really volatile.

Only consolation is that my short term trades, both long and short, are mostly working.  I may take some profit in oil if it keeps going up next few days.  Now 34% net cash.

This year has been tough for my account.  Up 9% YTD, but been through a grinding 9% drawdown in the past 7 months.  I remind myself that I've been through worse, a learning experience.  My trading style does not do well in non-trending markets.  Eventually the market will start trending again, probably to the downside - if it hasn't started already.  Need to be ready for that.

Bought some crypto

After falling one-and-a-half years, crypto broke out last month, I managed to buy a tiny bit.  It broke out again 2 weeks ago and corrected over the past few days, letting me buy bigly, up to a 6% position.  Lets see if it keeps going up.

Other than that, just made a few small trades:

• Managed to add to some shorts, and Europe, Russel, some rate sensitive.
• And to some longs: software, consumer, and refiners (long oil/refiners is that same as shorting the market).

No change over the weekend.  I had thought that Xi and Trump might come to some sort of deal.  For example, the US could allow Iranian oil to be sold to China, if Xi lifted the export ban on refined products.  Instead, the opposite may have happened.

And there was never any chance the Iran/US sides could reach a deal.

Expect the same as before.  Iran gets slowly strangled, as oil/product grinds higher, pulling most stocks down, even as mag7 and the indices rise.  Eventually the IRGC loses effectiveness and Hormuz gets fully restored.

Longer term, expecting a bear market next year.  Here is a good interview:

  

Neither here nor there

Added some shorts plus long oil at market last nite.

Its a mixed market.  Some sectors are going up, many down.  Short some stuff, long others.  It changes, with no overriding themes.

Probably looking to buy some crypto soon and cover some shorts.  Before flipping back to do the opposite a week or two later.

In the short term, rising oil/diesel is grinding almost everything else down through higher rate expectations.  In the long term, I think we are near the end of a multi-year boom.  Stay small, nimble, and don't get attached to anything.  Float like a butterfly.

Wait and See

We don't know how the market will go, so wait and see.

Everything depends on oil and Iran and Houthi news.  We could get a new war or a TACO tomorrow.  My base case is that the US continues to strangle Iran while the Houthis allow non-Saudi oil out.  Crude in the 90s. Inflation grinds up while the market grinds down.

I added some shorts (High Tech Beta) and some trades.   Not much change.

Waiting to add some gold, copper and rate-sensitive shorts.  We'll see if it haoppens.

Some Links

• US negotiates with Houthis.  Not a big deal, but theres scope for a quick deal.  The Houthis said they do not want to attack US interests, and will not attack Israeli vessels, or any commercial vessels apart from Saudi's.  Back-of-the-envelope its 3.5m bbl/day crude, with 1-1.5m of that re-routed through Suez - based on ships docking at Saudi terminals, not just Saudi flagged.  If this is true, we could see a quick deal between the US and Houthis, leaving the Saudis out in the cold.  

Options from here (not mutually exclusive): 

• Saudis rally the Sunni world against the Houthis after an alleged(?) drone attack on Mecca. 

• Saudi signs Abraham accords after their 'Mecca pact' proves useless. 

• US peace deal with Houthis.

Bab Al-Mandab closure is now being priced in, but may not be as bad as expected.  Geopol changes faster than macro.

• China passes mass mobilisation law.  For Great Reunification.  A day after they imposed travel bans on their citizens.

• Hedgeye talk with Mike Taylor: The AI bubble numbers are too big to make sense.

• Michael Every.  Economically, the US must become more like China, while China is not becoming more like the US - in a zero sum world.  Economic statecraft, US grand macro strategy and Brazil.

Sold stuff

It was a mistake buying gold (miners) on Fri, I have sold these down to a minimum position.  Kept only some Royal Gold.

Sold some trades.  Losers that I got stopped out of and winners that are overbought.

Separately I sold one of my speculative miners.  They sold their best producing asset a month ago, and the stock price went up but this removes the asymmetric upside.  Small profit.

Now 36% cash.

Rising oil/diesel kills everything.  Probably continues until Trump taps out or the IRGC is strangled and Iran breaks up.

Waiting for signs to buy.  Either golds or stocks.  Or maybe to short stocks/bonds on the next bounce.

Bought Gold

Bought Gold on Friday night.  But I may have been too early as oil went up and the market dropped on news of the Houthis capturing Bab El Mandeb.

Hard to know how this plays out for gold.  Its a risk-on asset, any hot war in the ME means they sell gold.  Rising oil/diesel increases the chance of rate hikes on Wed.  I don't think the Fed should increase rates - we've reached the stage where US govt debt cannot be paid off unless the dollar devalues, and increasing interest rates doesn't help cost-push inflation.  But they might do a token rate hike just for credibility.

Looks like higher inflation for a few months.  This is the IRGC's play to unseat Trump in the mid-terms.  Maybe the market picks up if Trump does a helicopter-dump of money on voters, but I haven't see any signs of it in the market yet.  And if it happens, gold goes up further :)

Still haven't found anything to buy, for the rest of my trades: