Q4 Newsletter – Today’s Fears Won’t Be Tomorrow’s: The Fed and Beyond
Q3 in Review: The Bond Market Knew After the Fed brought pain to stocks in the first few months of the year, investors drew a line in the sand i...
Newsletter
October 3, 2022
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IYT
IYT
What is it?
iShares U.S. Transportation ETF.
Why is it included?
Transportation stocks stand to benefit in a disinflationary regime that sees oil prices subside, benefiting the profit margins of these energy-intensive businesses.
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Investment Thesis
June 14, 2022 46 comments
The Consumer is Down But Not Out, A Contrarian Bet Against Record-High Pessimism
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Tactical Updates
November 15, 2022 0 comments
Disinflation is Materializing and the SP500 is Rallying | How Are the Disinflati...November 2, 2022 8 comments
Risks and Opportunities on FOMC Day | XLK, XLY and Oil Tactical UpdatesSeptember 30, 2022 10 comments
Major Divergences Are Building on Stocks, Are We About to See a Reversal at the ...September 12, 2022 15 comments
The Consumer Discretionary Has Been Hot, Can We Expect it to Continue?July 28, 2022 14 comments
The SP500 Just Cleared Some Major Levels. | Head Fake or Brand New Bull Run?
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XLK
XLK
What is it?
The Technology Select Sector SPDR® Fund.
Why is it included?
It represents a unique opportunity to buy high-profit margin businesses at a big discount.
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Investment Thesis
June 21, 2022 16 comments
Tech Stocks: Premium Businesses on Sale? The Fundamentals Look Constructive
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Tactical Updates
November 26, 2022 22 comments
Lightning Report: Topping Pattern on Yields, Turning Point For Technology and Sh...November 15, 2022 0 comments
Disinflation is Materializing and the SP500 is Rallying | How Are the Disinflati...November 2, 2022 8 comments
Risks and Opportunities on FOMC Day | XLK, XLY and Oil Tactical UpdatesOctober 25, 2022 16 comments
Extreme Internal Developments We’ve Only Seen a Handful of Times in the La...October 10, 2022 15 comments
Good Economic Data is Taking the Market Down | The Odds of a Waterfall Selloff L...September 30, 2022 10 comments
Major Divergences Are Building on Stocks, Are We About to See a Reversal at the ...July 28, 2022 14 comments
The SP500 Just Cleared Some Major Levels. | Head Fake or Brand New Bull Run?
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XLY
XLY
What is it?
The Consumer Discretionary Select Sector SPDR® Fund.
Why is it included?
Consumer discretionary stocks win big in disinflation regimes because they’re highly sensitive to interest rates, and hence an easing Fed can be a tailwind.
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Investment Thesis
June 14, 2022 46 comments
The Consumer is Down But Not Out, A Contrarian Bet Against Record-High Pessimism
Expand
Tactical Updates
November 15, 2022 0 comments
Disinflation is Materializing and the SP500 is Rallying | How Are the Disinflati...November 2, 2022 8 comments
Risks and Opportunities on FOMC Day | XLK, XLY and Oil Tactical UpdatesSeptember 30, 2022 10 comments
Major Divergences Are Building on Stocks, Are We About to See a Reversal at the ...September 12, 2022 15 comments
The Consumer Discretionary Has Been Hot, Can We Expect it to Continue?July 28, 2022 14 comments
The SP500 Just Cleared Some Major Levels. | Head Fake or Brand New Bull Run?
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COPX
What is it?
Copper Miners ETF.
Why is it included?
Levered short dollar expression; China reopening; high free cash flow yields.
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Investment Thesis
November 25, 2022 7 comments
Adding Silver and Copper Miners to Our Model Portfolio
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Tactical Updates
November 28, 2022 6 comments
Lightning Report: Big Bets On a Weak USD | What To Make of The Recent SP500 Weak...November 26, 2022 22 comments
Lightning Report: Topping Pattern on Yields, Turning Point For Technology and Sh...
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EWGS
What is it?
The iShares MSCI Germany Small-Cap ETF
Why is it included?
German small-caps embody the doom and gloom of the energy crisis, given their exposure to Russian gas. We also find the exposure to the euro attractive as a bet on a weakening dollar, given our view that the Fed will ease its stance.
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Investment Thesis
November 1, 2022 15 comments
Adding German Small-Caps To Model Portfolio: The Ultimate Contrarian Bet
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Tactical Updates
November 26, 2022 22 comments
Lightning Report: Topping Pattern on Yields, Turning Point For Technology and Sh...
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EWY
What is it?
South Korea ETF.
Why is it included?
Leverage to falling dollar and China’s reopening.
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Investment Thesis
November 30, 2022 2 comments
Adding Korean Stocks to Our Model Portfolio
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Tactical Updates
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BTC
BTC
What is it?
Decentralized digital currency that can be transferred on the peer-to-peer bitcoin network.
Why is it included?
We believe Bitcoin will benefit from rising stocks and a weakening dollar; a bet that the Fed will ease off.
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Investment Thesis
September 2, 2022 11 comments
What the Dollar Does from Here Will Seal Bitcoin’s Fate
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Tactical Updates
November 12, 2022 8 comments
Big Reversal on Bitcoin Following FTX Mess | What’s Next?October 28, 2022 1 comment
Bitcoin’s Volatility Spread with Stocks turns Negative | What Does It Mean?October 17, 2022 10 comments
Is Bitcoin’s Falling Volatility a Red Flag for the Digital Asset?September 21, 2022 12 comments
Bitcoin’s Vicious Bear Market: Is Macro About to Turn Into a Tailwind for ...
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SLV
What is it?
iShares Silver Trust ETF.
Why is it included?
Levered short dollar expression; less correlated with equities than silver miners; silver miners have unremarkable free cash flow yields.
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Investment Thesis
November 25, 2022 7 comments
Adding Silver and Copper Miners to Our Model Portfolio
Expand
Tactical Updates
November 28, 2022 6 comments
Lightning Report: Big Bets On a Weak USD | What To Make of The Recent SP500 Weak...November 26, 2022 22 comments
Lightning Report: Topping Pattern on Yields, Turning Point For Technology and Sh...
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OIL
OIL
What is it?
iPath Pure Beta Crude Oil ETN
Why is it included?
Oil looks overvalued relative to the rise in global economic uncertainty, the Fed’s aggressive tightening, and the fading demand shock that overran the commodity market post-Covid.
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Investment Thesis
August 19, 2022 8 comments
Oil: Demand Takes Center Stage, Still Looks Overvalued
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Tactical Updates
November 2, 2022 8 comments
Risks and Opportunities on FOMC Day | XLK, XLY and Oil Tactical UpdatesOctober 7, 2022 7 comments
Strongest 2 Day SP500 Rally Since 2020, Here is What it Tells Us About What is C...August 10, 2022 4 comments
What the Risk/Reward on Oil Looks Like After its 30% Drop – Key Levels and...July 5, 2022 17 comments
Oil Down 10% Today | Pessimism on Stocks Remains at Record Highs
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TLT
TLT
What is it?
iShares 20+ Year Treasury ETF.
Why is it included?
Bonds are an attractively-priced hedge to our big equity exposure. They can protect us if the economy weakens more than expected.
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Investment Thesis
July 15, 2022 25 comments
Bust in Treasury Bonds Creates Attractive Hedging Opportunity, Stocks and Bonds ...
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Tactical Updates
November 21, 2022 5 comments
Stars are Aligned For Lower Yields But Not Because of Growth Concerns | Key Tech...October 27, 2022 5 comments
Global Bond Yields are Warning a Fed Pivot.| Is Inter-Market Analysis Confirming...October 25, 2022 16 comments
Extreme Internal Developments We’ve Only Seen a Handful of Times in the La...September 9, 2022 16 comments
Treasury Bonds: Are They Poised for a Major Reversal?July 29, 2022 19 comments
TLT Has Become A Cheap Hedge Against A Major Economic Downturn: Key Tactical Set...Model Portfolio i
Our investment horizon is 6-12 months, and the Model Portfolio synthesizes our Strategic and Tactical research into a simple and transparent vehicle that expresses our bets.
The portfolio's objective is to maximize the risk reward across the various opportunities derived from our research - it's a collection of our best bets and protection against major tail risks to the economy.
We use the S&P500 as our performance benchmark and update our portfolio depending on the outcome of our ongoing research.
As of December 1, 2022
Insights i
Our research features a Strategic and Tactical component:
The Strategic component formulates our investment thesis that has a horizon of six-to-12 months. The approach is top-down, contextualizing the macroeconomic backdrop with historical analysis. To do that, we leverage our extensive quantitative capabilities. We seek to understand the fundamental dynamics operating across markets and exploit big dislocations.
The Tactical component leverages our expertise in technical analysis to highlight attractive and actionable setups that best express the views derived from our strategic research. We look for opportunities that maximize the risk-reward.
Watchlist i
The Watchlist features our regularly updated assets with potential favorable risk: reward ratios (long or short).
The expected targets and ratings are derived from quantitative analysis work and are based on 6-12 month investment horizons. For example, in the case of the S&P 500, the expected target is a function of our forecasts for earnings growth and P/E valuation multiples. Our technical analysis work also vets the targets.
We update the Watchlist depending on the outcome of our ongoing research.
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S&P500Buy -
XLKBuy
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XLYBuy
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IYTBuy
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TLTBuy
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OILSell
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BitcoinBuy
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EWGSBuy -
SLVBuy
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COPXBuy
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EWYBuy
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Game of Trades@GameofTrades_
Consumer confidence is beaten down.
We're at record levels for consensus to be betting on markets continuing to collapse. -
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Game of Trades@GameofTrades_
World economy is not done just yet.
China's credit impulse might be the life saver for Global Manufacturing PMIs. -
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Game of Trades@GameofTrades_
Big deleveraging happening in markets.
Weak hands have been flushed out. -
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Game of Trades@GameofTrades_
11/ Thanks for reading!
If you liked this, please like and retweet the first tweet below.
And follow @gameoftrades_ for more market insights, finance and investment strategy content.
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Game of Trades@GameofTrades_
10/ With Euro gaining momentum, Dollar has broken below its key 50-day moving average.
Bearish momentum on the greenback is dominant now. -
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Game of Trades@GameofTrades_
9/ The EUR/USD pair rallied over 9% since its bottom in October.
But there's still room for other critical levels to be broken before a confirmed uptrend is established. -
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Game of Trades@GameofTrades_
8/ Strengthening of the EUR has put massive downward pressure on the Dollar.
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Game of Trades@GameofTrades_
7/ Europe makes up a big portion in the basket of currencies that the Dollar is measured against.
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Game of Trades@GameofTrades_
6/ Falling energy prices help stabilize the current account balance of Europe and in return strengthen the EUR.
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Game of Trades@GameofTrades_
5/ As a result, European energy prices fell off a cliff.
Dutch TTF natural gas fell by over 60% in a matter of just weeks. -
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Game of Trades@GameofTrades_
4/ However, Europe shocked the world with its ability to fill up its natural gas storage facilities with over 90% capacity.
Exceeding their 80% target long before their target month of November. -
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Game of Trades@GameofTrades_
3/ Uncertainty around Europe caused the Euro to lose value rapidly.
This played a key role in strengthening the dollar. -
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Game of Trades@GameofTrades_
2/ Europe's systematic stress index caught investors by surprise.
It ran up to levels last seen during the eurozone crisis a decade ago. -
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Game of Trades@GameofTrades_
We're at a paradigm shift with dollar breaking key market structure
The bullish USD bet is in trouble
And Europe is playing a critical role to make that happen
A thread -
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Game of Trades@GameofTrades_
Add this to the record books.
Small speculators are going bananas over betting on the market falling. -
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Game of Trades@GameofTrades_
This is the biggest USD monthly decline in over 10 years.
5% in a month. Let that sink in.
