Neither Here nor There

 Two scenarios for the medium term:

• Rising real GDP growth from Sept onwards, combined with stimulus for the mid-terms propels the market higher.  I want to be 100% long a rising market.  Buy the dips now, don't sell.  Being a pig made me a lot of money in 2024 and 2025.

• Rising crude or product prices derail read growth and hit market confidence.  We go back to our on-again off-again war.   Market chops, slightly downwards.  In this sort of market I want to cut exposure, both long and short.  No FOMO, have a comfortable cash cushion, let the world pass me by.  Only take trades heavily in my favour.  Swing trades, take some profit after a few days.  Any profit is good.  Float like a butterfly.

I don't know which scenario happens.  Maybe some messy combination of both.

I have cut back on my trades and shorts, both cutting losses and taking profit.   Added a LATAM bank:

Lets see how it goes.

Another podcast abt the war

A different PoV from Anas Alhajji on Macrovoices.  He expects product (esp diesel) prices to rise, not crude:

• Oil market knows the war will drag on, even after the mid terms. 
• Iranian regime fractured: IRGC hardliners benefited greatly from sanctions.  These "rebel" factions benefit from Hormuz tolls.  Irans oil production increased substantially - in Feb 2026 Iran oil exports were highest since 2017. Hardliners benefit from prestige, control and money.  If everything goes back to normal, they lose everything.  They attacked ships and other countries to derail the negotiations.  The negotiating team does want to bring about a peace deal.
• Anas is not bullish on crude:
• During the crisis China reduced imports by 6m bpd, reducing price from 90s to 70s.  They did not draw down their inventory significantly: only 50m bbls.  Of the 6m:
• 800k-1m bpd was for filling their onshore inventory.  
• 1.5m for filling floating storage.  
• Banned exports of refined product (1m bpd decline in crude).
• A little declining consumption from declining growth.
• Significant domestic oil production increase.  
• Market was balanced at $75-85.
• So far decline in crude inventory levels has been is US & Japan SPRs, not commercial inventories.  This does not affect prices. 
• Only risk for a short term crude oil spike is Saudi/Houthi attacks - they had agreement where Saudi supported economy of Sanaa, while Houthis stopped attaching the Saudios.  It held well, but was broken.  May see attacks on ships in red sea (6m bbl/day - mostly Russian/Saudi oil).  4m bbls per day of Saudi crude at risk.   Would push prices way above $100.  Only for a short time as the Saudi/US response would be hard.  But a disruption is unlikely, they are likely to go back an agreement.
• US shale (light sweet) can produce gasoline but not diesel.
• SPR can only be refilled max 400k barrels a day.  Will not raise prices signifigantly.  China will not refill above $70.  SPR refilling creates a floor, but does not increase it.
• US refining sector running at 96-97% capacity, even if product demand recovers, they cannot take more crude inputs.
• Anas believes the US originally wanted Hormuz to be closed as a message to China:
• US wants "Energy Domination", both Trump and Biden want the US to supply energy to the world to make them dependent.  
• 75% of Helium comes from Qatar, that plant was destroyed in the beginning of the war, Bessent declared last month that semicon industry is returning to the US.  TW investment in Arizona, 150 bn, mis more than the revenues of Kuwait & Iraq for a year.  Asian energy prices rose more than US or Brent.  Giving their AI production problems.
• Straits closure hurts Asia/China more than the US.
• China weathered the storm well, but they cannot do it long term (eg: 1 more year).  China wants to help the US get out of the mess.
• But did not go according to US plan.  Bad execution.  Later when the US wanted the straits open, they cannot make the Iranians factions open it!  US does not have a problem with the Iranian negotiators.  Will it turn into a full scale conflict?  He believes it will not be a full scale war: they will attack the IRGC elements who attach the ships, not the regime, watch where the weapons and drones are coming from, and attack to weaken them substantially.  So the negotiations can continue.
• No one wants Iran to collapse, which would be a disaster (civil war, refugees).  Turkey wary of Kurds, Pakistan of Baloch.  
• Refined product is a problem, not crude:
• 3 refineries in Gulf (UAE, Kuwait, Saudi).  All their export of diesel and jet fuel is shut down.
• Trump released medium/sour crude from SPR for Asian refiners to produce diesel.
• Russian refining capacity lost to Ukranian drones (with US support).
• The US is now exporting products to countries they have never exported before.
• Most likely, will get rising diesel/gasoline prices, not crude.

Iran War and Consequences

Interesting interview with Michael Every on the Iran war and consequences: Kaos Theory episode 13

Hard to summarise the nuance, but the main points are:

• Base case is for middling peace till the mid-terms, war resumes afterwards.  But this could be disrupted anytime by a rogue IRGC commander with a few manpads.
• Saudis and regional countries are re-arming drones and interceptors, have a deal with Ukraine.
• Geopolitically, it would be a big loss for the US to just walk away from the middle east.  Harder to TACO.
• A realistic US victory means 1) Stop Iran from using uranium, they know where it is, monitor it and drop a tactical nuke if anyone goes near it 2) Keep the straits of Hormuz open 3) Bypass the straits, Saudis and UAE building alternative pipelines. 4) Stop Iran from rebuilding military capability by blockading them and cutting off belt-and-road links (eg: bridge bombing).
• No Iran regime change.  If it happens, its a lot later, after the above "victory" conditions and Iran gets choked a for few years.
• Israel is exhausted from fighting.  But the IRGC is an existential threat, they won't sleep at night until its gone.  Same with Hezbollah, Israel cannot accept peace with them.  Israeli election in Oct, Netanyahu is unpopular.  There is zero intersection between what the Israelis, US and IRGC need for a peace deal.
• Republicans win the Senate in mid terms, the House is a toss up.  If Trump doesn't win, he goes back to issuing Executive Orders on statecraft and foreign policy.  For the 2028 elections, one faction of the Republicans (Vance) and all the Democrats are isolationists.
• In the future, the US could create its own oil trading block: NAFTA + South America + UAE + a few more oil producers + Japan & South Korea (refiners).  Everyone else gets left out to die in the cold (Europe).

The key to everything is US disinflationary growth.

Covered most of my shorts

Covered most of my shorts at a small profit.  The market was overbought 2 days ago when news of the war hit, its not anymore.

I doubt the war will last, Trump cannot afford high oil prices into the mid terms. Cut my shorts on the dip,  as Trumpian news changes too fast.  

Cut most of my crypto and EM shorts, and all of my commodity shorts (mostly precious/industrial metals), and all the Mag7 shorts.

Will post my holdings tmr.

Update Monday 13 July before market open: My current holdings:

Cash includes cash from short positions.

Quick update. Short as hell.

 I am very short.  80% invested, 20% cash (excluding cash from shorts) and 41% short.

Green rows have new trades, black rows are unchanged:

• Sold the higher beta LATAM stock
• Added a few more longs, mostly rate sensitive.
• Shorted moar crypto.  And Mag 7.  And EMs.

We are in a short squeeze, which is starting to hurt, but I think its still part of a (probably) brief correction.  We'll see in the next 2 weeks - either my shorts make a lot of money, or I cut my losses.

Quick Update

 Made a few trades since the last update:

• Shorted some Mag7 stocks.  Unfortunately I shorted when they were oversold a few days ago, so the position has bounced into the red.  The addition of Marvell and SpaceX to the S&P500 and Nasdaq should squeeze out Mag 7 and result in selling pressure.
• Used last nights rebound to reload my MSTR short.
• Also increased positions in 'interest rate sensitive stocks' as they corrected a little yesterday.
• High-beta tech (longs) got kicked out.

If the market goes up tonight I may increase my Mag 7 shorts.

Only the last 3 rows here have changed:

After end-of-quarter window dressing tonight, I am bearish on the market for the next few weeks.

Market correction

 The correction is probably a buying opportunity:

• Have cut the EM shorts that were based on rising oil.
• I cut my Memory stocks before the correction, but only by 10%.  Bought it back on the first night of the correction.  Look to increase my memory holdings slightly.    I have to learn to trade around it cause its so volatile.  Daily 10% drops are normal.  And one day the bubble pops - probably not today.
• Sold off copper miners.  Another sector rolling over.
• Bought some lower beta stuff in other sectors.  Anything is lower beta then Memory stonks.
• Covered some crypto shorts last night, hope to reload.

I'm holding 30% net cash, with my fundamental plays (56%), and for short term trades, being long and short really high beta stuff like memory and crypto.

In the next few days/weeks I'd like to buy more Memory, plus lower beta stuff (as trades), and reshort crypto and EMs (the new short targets seem to be mostly oil exporters).  Longer term I'd like to buy gold royalties/miners, but no signal for this yet.

I've be too fast to buy into these past few corrections.  Need to earn to wait - when the market has a potential economic growth slowdown ahead, and VIX/VIXN are in the 20s or 30s, then wait 3 or 4 days into a correction for the market to fall before covering shorts and buying new longs.