“I will not allow yesterday’s success to lull me into today’s complacency, for this is the greatest foundation for failure.” – Og Mandino
Here is a summary of our view into earnings and FOMC:
– Even if we expect the FED to cut, we are not looking for a 50 move and therefore have been using all rips in bonds as tactical selling opportunities.
– Ultimately, we have no inclination to fight rate cuts or even a possible cutting cycle but we are well aware that short-term especially into the decision we could easily have a buy the rumor / sell the news event across the board and these tend to present very interesting asymmetric r/r opportunities.
– Following on from the above we have been positioned long USD and will be trying to ride these FX moves for as longs as we can into the 31st with the expectation of reversing to get back into swing position that have already been good to us this year.
– As discussed on Twitter too, this would imply that we see poor r/r getting long GOLD here, having used the exhaustion at 1450 as an opportunity to fade for a move back into 1400. We would consider a chance to reverse long (from a long term perspective) in the 1350/1300 range as a ‘gift.
– We continue to stress that participants that are riding the free money train expecting indices to continue with this run rate and annualized performance are not humble students on probabilities, cycles and history. Having said this most of out tactical indices plays have been longs for now…
– Unless something unexpected happens, our base case is still for a 5/10% correction in indices somewhere into the next 2+ months but that the correction will very likely provide an extremely interesting buying opportunity for a run up into the end of the year and the 2020 election.