#197: China vs. US Battle

micksonmatch
December 10, 2024

S2N Spotlight

I have been keen on going long China via the Hang Seng and short the US for a couple of months now. Last week I was a little worried about this trade and suggested we place a stop loss where I have drawn a green line. We have not been shaken out, and with more stimulus coming, this trade idea may still work out. With Trump tariffs and all the geopolitical tension in the air, this remains a highly contrarian trade.

S2N Observations

From 2020 until the end of 2022, I used to watch Dave Portnoy daily with incredulity. This guy was literally doing the exact opposite of what anybody with any background in trading or investing would tell you to do. If an expert said to do your homework on a stock, he would put his hand in a bag and pick out a random ticker and invest a “milli.” The gift of the gab, extremely obnoxious, and wildly entertaining I found him; he was flying so high he interviewed Trump, a sitting US President. He was regularly interviewed on CNBC. He did very well (I think) in the Covid rally up to the end of 2022. Then he lost a fortune and got bored of the markets and focused on his bread and butter – sports betting. Now he is back, and yesterday he had on his show the leader of market cheerleaders, Michael Saylor. I add a quote from BlackRock saying that the boom and bust cycle has passed. It has an eerie ring to Irvin Fischer’s “permanent plateau,” said on 16 October 1929 only 2 weeks before the 1929 crash.

These 2 images are as good as any symbols of excess, and fitting to be included as to call a top.

To counter my argument, the current sentiment of market exposure at 85% is high but not extreme. My views remain that the market is too expensive to be fully invested here.

The Bank of Japan’s Balance Sheet has moved sideways; I am interested to see where it goes from here, as I think it will foretell where the Yen is going.