Global Macro Trading Journal

Tepper says buy US and European stocks, SNAP (at the IPO price) and other than the French election that's not much that can go wrong this year.
I'm hedged a little against the French thing through my EUR short, this also protects me against USD strength (leading to a fall in gold and gold stocks) and also hedges out a bit Grexit risk (since I'm long GREK)
 
Tepper is a smart man, he is keenly aware that being in cash/bonds is like a 'short' in stocks (HF clients want gains above cash). So he says 'you can't go short in this enviroment'. If shorting is so bad, it must be a long what makes sense
 
Brazilian stocks have reacted pretty badly to the GDP report. But there are reasons to think this is just short-termism. Industrial production has has its first up month after 34 straight declines

C6ZbJMHWQAE1StO.jpg


Plus the 'typical' moving averages are still uptrending and are far from crossing

sc


I say 'typical' because they are the ones used by most people. I wont rely on them because I want something less crowded (with less slippage involved) but they can be a canary in the coal mine
 
Maybe the 60MA and 220MA on a closing basis? That way, the people using the 50 and 200 can flush themselves out of the market and I will be in. I will only be out if the folks with the 50 and 200 get a follow through out of their sell signal (if they are just panicking into each other and causing the decline, it should reverse in the day or two after and I wont be getting out)
But the important part (perhaps, the most important part) is not the getting out part, is the getting back in part. The MAs will get someone back after telling them to get out, its important to listen to that and ignore the fact that you will have to pay a higher price to get back in. That's part of the strategy. Its a form of insurance
 
I'm actually looking to increase my GREK bet a bit. If Tepper is right and the world can have this stable growth period ('syncronized growth' as he calls it, 'unsual since the crisis') that he seems to think (lead by US, France, Japan, China), Greece will be sensitive to that, especially on the EU part. I mentioned that on Bernanke's book (essays on the Great Depression) there is data showing that countries that stayed in the gold standard benefited from having neighbors off the gold standard (and the economic boom that ensued). So there is a sensitivity there even though they are stuck on the EUR. Given that Greece has a lot of tourism and the economy has started to bounce, if this global growth plays out, GREK could double. If not, I'm bailing out at the new all-time nows. I like that risk-reward
The only true risk is a fakeout, if GREK goes to lows on the IMF crap but then they don't leave the EUR and stocks bounce back. In that case, I get out but might not get back in. That's my real risk, otherwise the bet seems good
 
Last edited:
But this 'syncronized growth' thesis from Tepper is interesting, part of the bearish thesis on Brazil is that idea of 'every country since 2008 had a weak recovery, there is no reason to expect a strong one in Brazil'. But those were big countries that didn't get a syncronized growth period to benefit from. Brazil will be recovering with the US growing at perhaps 3%, the EU at 2% with some chances for more and Asia doing fine. Brazil being a smaller country won't impact those countries much but it will be sensitive to them.

Brazil GDP expectations for this year are 0.5-1%, if this turns out to be 2%, there might be an 'exponential' type payoff in stocks as people start to price in corporate profit margin expansion (and the compounding effect over the years that it creates) but more importantly, a decline in Brazil's fiscal risk premium (as the GDP part of the debt to GDP equation looks like will improve dramatically).

Effectively, this would be a light version of the commodity boom 'bailout' that Brazil got in 2000-2008 (after the 98-99 Brazil fiscal and FX crisis). If this happens, stocks would have a monster rally. If not, I will be out by selling as my moving averages tell me to. I like this proposition
 
Last edited:
Brazil also has a huge output gap right now. All the labor, tecnologies, buildings, capital goods are there. All the country needs is to get animal spirits going (and syncronized global growth could help with that) and then GDP will pop hard
 
Last edited:
Part of the key of being a good long investor seems to be able to recognize when you get lucky and all the sudden your invesment has a lot more upside than you thought (or the chance of the upside has improved). Maybe this is going on now with Brazil if the 'syncronized growth' thesis plays out. Maybe Brazil was going to 'muddle through' under the regular scenario, but if global growth pushes Brazil growth up, the bearish debt to GDP projections (that I'm sure are being affected by the pessimism now) will be proven wrong. All the sudden people will get a lot more comfortable with investment in the country. This will unleash more invesment/consumption, so better GDP, higher stock prices, wealth effects, lower central bank rates, more borrowing. Effectively, a Soros style reflexive boom.

It wouldn't be crazy to think that the output gap can close a lot sooner than people think. No one thought France, Spain, Italy yields could collapse like they did after 2012, but the power of self-fulfilling prophecies is huge
 
You must log in or register to reply here.
Back
Top