The Quick Read - Vix Crushed, Cryptos Ripping, Rates at Resistance. Equities are going higher
VIX crushed, delta peaked, yields rallied, Evergrande rattled markets but have since shrugged it off and the Fed delivered a fairly aggressive tapering schedule & even raised the prospect of a hike next year. If we can shake those worries & turn green, it’s off to the races. Below are some highlights
Vix Crushed - The VIX curve is in contango, barely moved last week, and the VVIX (volatility of the VIX) was down on the day when the S&P 500 was down -1.2%. Learn Here - Positive for equities
Cryptos are ripping - (Below is our watchlist)
The 10yr treasury yield is topping for now.
QQQ is bid at the 100 day moving average
Don’t forget:
Price is an expression of shifting perspectives and is mostly driven by stories. Fundamental valuation is just a billboard of hope on a highway of bullshit. Just remember, let price highlight the stories
In 2008, Sugar tripled and the whole world was explosive around food inflation. What investors forgot was a box of cereal had 10 cents worth of food production and meant nothing to equities.
During the 1950-1970s, rates continued to rise but equities were not effected from increased production.
Commodities with open markets can self correct.
In the last 3-4 weeks, we have been pounding the table on protecting the portfolio and that a 5% pullback was a prudent level to start adding to positions. Adding exposure to both crypto and equities at these levels would be prudent if cash has been an over-weighted position aligned with our positioning.
COAL IS UP ALMOST 400% THIS YEAR. Open markets always self-correct.
Several factors have been pushing coal prices up, including tight supply in China as the country vows to achieve emissions standards and reach carbon neutrality by 2060; a lack of mine investment reflecting pressure from “socially conscious investors” and a surge in prices amid prospects of a shortage in inventories, specially in Europe. Coal is the biggest source of China's electricity.
A chart of household net worth to disposable net income.
Return always wants its risk payment.