The Times They Are A-Changing

Everything has been relatively stable for the past few weeks, but the time for that to change is not far off.

Over the coming weeks, the way the charts are developing, I will look for the opportunity to get short of the Euro, equities and BTC.

TBH, I would like to see more strength coming into certain markets this week, as this would have given me more confidence in promoting levels to sell. But the lackluster performance since Easter inclines me to believe the levels I had hoped to see a week ago might have been too ambitious. That doesn’t change what side of the market I want to be on; I just want to see a bit more action before jumping in.

In the current confusing environment, I have maintained a low level of exposure, and hence I remain cautious before deciding to get back into the markets.

When I say my exposure is low, it’s not because I don’t have any positions. I have positions that I initiated over the past 18 months, which are a hedge against further inflation and recessionary pressure, and I occasionally adjust these to add value (such as my recent closing of a long position in BTC), which I hope to re-instigate at lower levels over the summer months.

Inflation is going to be with us for some time, because as Elon Musk recently said (excuse the “click bait”), “we are continually printing money, but not producing the goods and services which will close the gap”.

My biggest concern is working out what equity markets may do, based on events unfolding in China.

Many players and commentators seem to be quite comfortable with China being in the driving seat, but for me, it comes as natural as singing “God save the King”, which is something I still cannot get my head around. Old dogs and new tricks?

My biggest disappointment this year is the commodity sector, which has been hibernating for far too long for my liking.

Gold has been very good to me, but I took a slight whack on both Nat Gas and Wheat.

These commodity markets seem ridiculously cheap. Although I am fully aware of the effect a drawn-out recession might have on consumption, as values decline, it is almost impossible to keep my finger off the buy button.

Something is going to occur which will spark a few rallies in the commodity sector; I just don’t know what.

When I was a young analyst/broker, not knowing was something very much frowned upon. Back in the day, when I worked at Merrill Lynch, we always had to have an opinion because our incomes relied solely on brokerage and turnover. If a salesman asked us to speak to a client, it was to help generate turnover, so not knowing was not an option.

In the 80s, this changed a little.

When big banks like Goldman steered the markets, their research guys appeared much more integrated with the traders than salespeople.

I recall numerous occasions when the bank would quietly build a significant house position. Then their research department would loudly, with bells, whistles and flashing lights, issue a buy recommendation. The effect of these recommendations almost always guaranteed Goldman a massive profit on its quietly amassed position. (Goldman was not the only major company to use their research departments in such a way) though.

Some people may say this is unfair or market manipulation. But today’s commentators should not be too eager to point fingers and make accusations. In the crypto sector, whales are doing a similar thing all the time.

They build their positions and then make statements or forecasts, which are reposted a million times by unquestioning social media “influencers”. Many do not have a position, so they have no skin in the game: they simply want the clicks and followers.

I sometimes shake my head when those who criticize the way banks and brokers work are happy to do the same thing, spread stories for personal enrichment. At least banks and brokers put something on the line. Most of today’s “influencers” have no exposure, just a desire to gain a million followers on YouTube.

And it is only going to get a lot worse with AI. At least you know my stuff is written by a human and will remain so (Unless I find a way of linking my trading account to ChatGPT).

I will finish this week by plugging my sponsors at SGT and trademakers.

I mentioned a few months back that I had put some of my money into their fractionalized investment programs, which allow smaller investors to enjoy the same returns as more prominent investors.

These professionally managed programs have become very popular, and over recent weeks, more programs and strategies have been added to the platform, giving investors a more extensive choice in where to place their capital. And, I hear, a lot more programs are in the pipeline.

I rarely plug products I am not involved in, but the recent programs added to the list, such as those from GAIA FX, Dunmore FX and Lecka from AlphaTrade, are worthy of mention. Have a look for yourselves!

Until next time.