- There has not been spike in volatility as has been seen in ALL major lows - this sell-off is extremely orderly - orderly and market low does not cooperate well.
- The above data states: Bottom line is that when the market falls 10% off of a recent high, and VXO stays below 30%, what was bad gets worse. In every prior instance where VXO failed to climb to above 30%, the market continued lower. The MINIMUM additional downside is another 10%. -- hmm....
- We passed the cyclical trough period, without reaction
- The banking sector again on the run. There is so much more reality which needs to be brought into the boardrooms before this is over. The banking system is the everything to market.....
- The yield curves - with the market "believing" both Fed and ECB on hiking spree - there be no easy rides from here
- The Fed has finally lost all credibility - Greenspan/Bernanke never had anything with me, but I note the market now ageeing with me (which scares me!)
So.. we are looking to reengage short positions across the board:
FX: Long EURSD, short GBPJPY(options)
FI: Long bunds calls - tiny delta, plus Dec- EURO dollar calls
EQUITY: Short DAX, Short C, Long Novo, Mittal, IVN
Commodities: Watching grains complex, nat. gas.
Strategy in short;
- New low in US dollar
- Rates expectations in both US and Europe too high
- Commodities entering blow-off face w. geopolitical risk increasing day-by-day
- Cyclical stronger JPY from here - like GBPJPY much lower
- New lows in banking shares across the board
- Like Drugs(stocks ;-), steel, agriculture, water- and solar energy
We had excellent June month for the funds strategies, and we are looking for weak data from Unemployment data Thursday, which also carries ECB meeting, so fire works all around this week.
In the S&P the key level is 1270/75 if broken we will see VIX & VXO above 30%
The summer is here, expect more "hammock thinking" from me, but further and further apart in July.