22 Oct 2021

I am sure most of you missed it. While Bitcoin was making all time highs throughout the world, one exchange Binance US was registering an 87% drop with BTC trading down to 8200. The culprit was an institutional client whose “algo” made a mistake – ouch!!!! It turns out that volume was pretty thin at the time with only around $40 million, if only I had my exchange arb running at the time, that was some incredible spread.

For some reason I am seeing no headlines that the S&P500 has made a new all time high. Perhaps it wasn’t on a closing basis but I think we have become so accustomed to new ATH’s that it doesn’t make the news anymore. The VIX continues to collapse and the AAII bear sentiment index continues to drop as the bears throw in the towel. I am probably one of the only schmucks still short.

A chart of the Nikkei 225 caught my eye yesterday with a drop of more than 2%, it is trading below its 50 day and looks set to drop below its uptrend channel.

Do not think the Evergrande story is over, it traded – 12.6% yesterday coming back online after suspension. This weekend is key as we will know if it honours its bond obligations. A chart like this tells me bankruptcy is all but assured, which will result in nationalisation to save face and protect the economy from knock on effects.

It would be wrong not to bring up inflation once again. PPI always leads the CPI there is simply not enough margin available for producers to swallow the increases.

You only have to read the papers to see that there is ironically a global shortage of workers which is starting to translate into wage growth above trend, read inflation. This picture below is a classic representation of what we saw with the pandemic. Lots of lower level jobs were laid off with managers hanging onto their jobs. Now that the economies have opened up we are seeing a scramble to fill the positions #cancelled.

The fight with the RBA and bond traders continues with the RBA not coming into support the April 2024 bond yield target of 0.1% they set. It is starting to seem like Philip Lowe is starting to wake up and is signalling to the market that the red hot property market needs some cooling. He will probably sit on his hands for a little longer, the AUDUSD has jumped onto the hiking trade and is currently trading around 0.75 from 0.71 in late August.

Australia with some USA tag wrestling let their feelings be known about China’s “economic coercion” at the World Trade Organisation – WTO in Geneva yesterday.

I nearly fell off my chair when I heard the name Trump is planning to use for his new social media platform next year. It’s called Truth Social. At the risk of upsetting a lot of my readers I was a Trump fan for some time. I despise the man but I felt his unconventional, couldn’t care what people think was needed to break the classic Washington gridlock. However the irony in calling his platform “Truth” is even too much for President Pinocchio.

A final comment for today which is pretty cool for our new business at least I hope so. In Australia retail trading has increased from 15 – 20 billion a month pre pandemic to 35 – 40 billion. According to Morgan Stanley the Retail Investor is here to stay. Talk about confirmation bias, I have never quoted a sell side research report but this time it makes me feel good 😎.

A final final comment, can you believe WeWorks is going to IPO. What a joke, I thought we have just discovered that working from home is something that is likely to become a permanent feature. From darlings to cannot get a thing right. I have seen this movie before.

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