The 10 Second Read - GMG
Inflation is transitory. Physical and digital mining will be the alpha for the coming weeks. The breakout in Gold will pressure Copper and yields, leaving the "Low Vol factor" for the alpha as well.
Our Key Calls In Under 10 Seconds:
What to watch this week: Paypal, Nvidia, Gold, Riot Blockchain, Eth and Cash
Holiday congestion will break supply chains, raise inflation and help Bitcoin
Contrary to popular belief - Inflation is transitory and simply a supply shock
The US Dollar is breaking out, and it is bullish for equities given that strength in the dollar traditionally puts pressure on commodities and inflation
The breakout in Gold will pressure on Copper and 10yr yields, leaving SPLV (low vol factor) for the alpha
S&P 500 Q1 Target: 5100
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…
Now that you were spoon-fed, see more below:
Gold is starting to breakout in a big way, leaving Copper in the dust.
The chart below shows a time-series relationship of copper to gold. The weakness in Copper, and its higher correlation to the 10 year treasury, will bring down yields…
…and if you think yields are going lower (like we do), then you will notice that high beta equities underperform low beta equities (+ Gold) in times of falling yields. Leaving a solid L/S play here. Think for yourself.
Nvidia is going to carry the market even higher.
Facebook: A smooth 8.5% return on this easy risk/reward play mentioned 2 weeks ago.
Now it is Paypal’s turn to rebound. $240 in sight.
Our thoughts on inflation
“Transitory” inflation could mean one of three scenarios:
Prices rise and then a fall back down
Prices rise and stay where they are
Price momentum slows
Let Rick Rieder, the man who manages $2.4T, tell you.
These two ports in California account for 40% of US imports. Look how jammed they are. The supply chain will be crushed even more during the holiday season.
If you don’t combine asset allocation, trend & momentum following, macro and tail hedging strategies in your long-term portfolios then good luck to you.
Return always wants its risk payment.