I’m glad I didn’t amble into my office in the middle of the night to see how the market was doing, because I was at risk of having a brief heart attack. In the latest exchange in this risible trade war, China signaled that it would be open to negotiations of the U.S. acted more respectfully. That news alone since equities exploding higher, with the /RTY in particular erasing all losses and zipping into the green!
I guess even the algos realized that the likelihood of the trade war suddenly vanishing were about as likely as Lauren Sanchez winning the Pulitzer Prize for Literature, so everything has faded back into the red.
Evidently, one thing that ticked off China was J.D. Vance’s sneering remark that our relationship with China was simply that we borrow money from Chinese peasants in order to buy things from Chinese peasants. While I can understand snobbery from someone with a sophisticated and cosmopolitan upbringing in rural Ohio by a drug-addled mother, it was still an ill-advised smear.
Just in case the crumbling stock market isn’t an indication of how things are going in the world, take a look at gold, which has, once again, lurched to another price never seen before in history. The notion of $4,000 gold is becoming more plausible by the day. Take THAT, Bitcoin!
Listen, gold doesn’t go up 100% in a matter of months because things are looking terrific ahead for the people of Earth. Something big is brewing (which rhymes with Wourth Fave).
Importantly, another metal, copper, is sending a different message. The global economy is heading for a catastrophic collapse, and weakness in copper market is one of many “tells” as to this fact.
For my four portfolios, my allocations are:
- 159%
- 131%
- 130%
- 172%
In other words, deep into margin territory with twenty-eight different bearish positions.
This is my favorite kind of market, because it’s kind of like gardening. I “tend” to my existing plants by re-examining the charts, updating stops, and when appropriate, taking partial or full profits, and I “plant” new stuff by continuously hunting for new opportunities and entering fresh positions. The beautiful part about things like last night’s mega-spike is that it’s kind of like getting the answer key to a test in school. You already can see what the market’s reaction would be to various kinds of news in advance so you can prepare accordingly.
In summary, for things to settle down in the trade war, the U.S. will need:
- well-mannered and respectful communications;
- reasoned and mature leadership;
- a consistent message among various senior staff members;
- a grasp of important cultural differences between ourselves in China.
All of which is to say, I’m looking forward to a long and very profitable global bear market.
