A Brazilian Reasons To Be Bearish
In a recent post (“A Brazilian with a Sudden Rip of the Wax”), Tim noted that Brazil ETF EWZ was in free fall. For those who haven’t been keeping up on the bad news from Brazil, the headline of this AP article from Tuesday will give you a sense of what’s been happening: “Brazil’s economy plunging; no relief in sight amid political, financial chaos”.
A Hedged Bet Against Brazil
Every trading day, Portfolio Armor ranks all of the hedgeable stocks, ETFs, and other exchange-traded products in the U.S. by its estimate of their potential return over the next six months, based on an analysis of price history and option market sentiment. Then it subtracts hedging costs, and ranks them all by potential return net of hedging costs, or net potential return. On Tuesday, the highest-ranked ETF, and the 6th-ranked security overall, was BZQ, the 2x levered bet against Brazil. Portfolio Armor calculated a potential return of 15.2% for it over the next six months.
The Tao of Steve
In the movie “The Tao of Steve” (2000), the lead character associates the name “Steve” with cool, charismatic men such as the actor Steve McQueen. Apple (AAPL) co-founder and CEO Steve Jobs was famously cool and charismatic, and when he passed away three years ago, investors wondered what impact that would have on the company. As we now know, Apple rocketed to new highs over the next few years. The company had a product pipleline in place, and a wide moat: the convenience of upgrading to a new iPhone, for example, and keeping all of your data and apps, was and still is a powerful inducement to remain an Apple customer. Reactions to Apple’s San Francisco product launch event on Wednesday, however, suggest that Apple may have finally ran out of the residual Steve Jobs cool factor.
I’ve written about American Girl before, such as this post. For those unacquainted with American Girl, it started off as a doll-based means for girls to learn about different periods of U.S. history, but it has developed into a phenomenal retail success story of overpriced Chinese-made junk sold in branded stores in high-end shopping malls (like, oh, say, the Stanford Shopping Center). It’s a big deal for the 9-12 year old crowd.
I just wanted to point out that the fear index crashed yesterday to levels hardly ever seen. It just illustrates how deep the complacency in this market remains.
Greetings from the Starbucks on the Google campus, which is cram-packed with people and laptops (these aren’t Google employees, naturally; just slobs like me; I hang out here a lot because there’s a Tesla supercharger here, and I can suck down all the electricity I want for free).
Anyway, when I saw all the chatter about how Keurig Green Mountain was getting its balls blown off after-hours, I was reminded of a post I did way back in November. The post relayed the news that, at long last, famed hedge fund manager David Einhorn was throwing in the towel on his GMCR short position. Here’s a snippet from that post: