Squeezing the "Covid Variant" Headline
Early reported data suggest that the variant causes ‘mild/moderate’ symptoms (less severity) and is more transmissible. Bullish for risk assets. Bearish for banks trying to get employees in cubicles.
Follow us on twitter @gmgresearch
Heading into last week, we made it aware that our main focus was on corporate spreads widening, the US dollar rallying (hindering inflation and commodity strength), the VIX and the fact that cash was a viable position. All of which were foreshadowing into that heavy selloff on Friday.
In short:
Banks and conglomerate stocks (the Dow Jones old-head average) brought the market down Friday due to the new covid variant news, increasing the difficulty of getting their employees back into their little office cubicles. This is terrible for the banks that own these dead commuter cities but better for the internet and crypto. It is clear that banks and financials (XLF) are hurting…. Index providers recently proposed moving Mastercard, PayPal, and Visa out of the tech sector and into financials here…
This week:
Futures are ripping: Early reported data suggests that the Omicron variant causes ‘mild to moderate’ symptoms (less severity) and is more transmissible. If this is true, the this is bullish for risk assets and bearish for banks trying to get employees in cubicle
If the market continues to rally, QQQ and large cap over everything else equity
Ethereum CME micro futures will release Dec 6, prepare for a TON of inflows
Dollar continues its strength (highest level since July 2020)
Prepare for the “rip-your-face-off-rally” if this variant is not significant
Cash is still a position
Last week we called for a short-term top in Nvidia… Gaps like these do not go unfilled.
Once again, our thoughts on cash:
With elevated valuations, unstable economic conditions, the backdrop is becoming much more hostile toward investors in the intermediate term, understanding the value of cash as a “hedge” against loss becomes more important. Yes, cash will lose purchasing power over time but when volatility spikes, equities can lose a lot more. And remember this, Wall Street does not make fees on investors holding cash…
We are watching the ZK-Rollups on the Etheruem network. Story Here
“Developers are trying to reduce the traffic on the central Ethereum blockchain, to reduce networks fees, by offloading the expensive work of processing transactions to more efficient secondary chains that record batches of transactions them sends them to the main What this means functionally is that developers can earn the benefits of speedier and cheaper transactions without having to lose the security of the Ethereum ecosystem.”
This is all for entertainment only. This is not investment advice.
Return always wants its risk payment.