The Week Ahead
Volume 86 - Frothy
Don’t think it’s likely Fed will cut in March
Jay gets quote of the week…
What started as a dovish presser quickly became a hawkish one… QRA non-event, NFP questionable reaction… There is a quieter week to come, but there is much to discuss in this post.
I had a better week last week, with a few trades that on net worked out well, I am still finding this year a tad slow to start, but expecting it to pick up soon. Long-term holds, what a week! Friday added just shy of $200B of mkt cap to META, which I went OW in the low 90s back in 2022 (when I was told the metaverse was the end of Meta), I am now +416% from entry. That idea was shared in the post below.
On the topic of tech… that’s now 13 out of the last 14 weeks green for NDX.
Going back to The Week Ahead Volume 84, I gave all 9000 of you a euro put spread - “6E 03/08 1.07/1.08 put spread costs 0.00246” - this now trades at 0.00460 so you could start to think about cutting 1/2 to cover costs.
A trade for all… if you’re looking for short term tactical upside on oil, you could look at the 02/14 CL 72C that we traded not long ago which currently trades at 1.6.
The Usual Charts
We shall start with FX as we are on the topic, and I believe the dollar is at an inflection point. One in which we see my thoughts finally play out with EUR returning to the ~1.06 mark and cable 1.24. I have been relatively consistent with my whole “carry still works, so buy USD” theme, and thus far, it has worked well. Our long in USD/JPY from the late 2023 dip is working wonders, with USD/JPY +5.33% YTD. You know the fundamentals and why long USD makes an excellent hedge… With JP categorically pushing back on the March cut, it was reinforced by the strong NFP print, which helps the momentum to the upside, alongside positioning. Last year, or perhaps late 2022, concerning bonds, I said something along the lines of “Why buy bonds when the man who holds all of them is a seller”… Now, why would the man with more information than the market be pushing back on the March cut? (yet we still have an 18.5% probability of a cut as of this morning)… The bar is high for a cut in March, and as I have always said - it’s premature to do it then.