Global Macro Trading Journal

Now Brazil will tackle pension/entitlement reforms. I got a different view on this than economists, people think the markets needs this reform in order to be able to rise. I think thats wrong, the government will fail to pass this as its too controversial and the President is losing influence every week. I dont think he will have the votes to pass this.

This will create a short-term hicup in the stock market but eventually people will ignore this and find other reasons to buy (like rate cuts, a rebounding economy). I have been observing stock markets for quite a bit, they dont have to make sense like people think. They think they can figure out what the market "needs" and make their projections based on that but I dont think thats right. Markets go from undervalued to fairly/over valued, even if the news isnt necessarly supportive. The news can help the TIMING of the adjustment but the adjustment will be made eventually anyway. If not for a specific piece of news, it will be through another. People have their finger on the buy button, they are looking for reasons to buy. Bad news will DELAY that buying but that wont change the fact that the market is undervalued, so people will still hang in there with their fingers on the buy button, once they see something else they can focus on, they will go ahead and buy like mad, repricing the market higher

We saw that with US stocks since 2009 (it stared with the '2nd derivative' changed in 09, that was the first thesis, then it became corporate profits come back, then QEs, then low rates, etc) if you thought the market "needed" low rates to rise, you would think Trump would send stocks down huge. But it was just the opposite, this 'markets need this or that' can change in an INSTANT, markets change their posturing about stuff that they were convinced just one day ago. We also saw that with the whole 'Trump is bad for stocks, oh wait, Trump is good for stocks'

That reform is quite likely to come in 2019 anyway, a failure now will just delay things a bit and force a tax hike/spending cut of some kind to make up for the delay. Its not a big deal
 
I've learned the hard way, the stock market doesnt have to make sense. You try to use logic to figure things out, you are just asking to miss out on a big rally
 
People look at day to day movements (and the logic/news behind them) and then try to project long-term returns based on that short-term logic. Lets say they bail out because they project that logic and they dont like what they see.

Then the game changes, that logic no longer applies and the market starts to ignore that news, those same people then feel cheated. They trusted the market and got their ass handed to them. Next comes the point where they start to say its irrational, they say they are 'skeptical of the market'. They recommed longs to take money off the table and run. As stocks continue to march they say its all a speculative mania that will end badly.

There is a reason why some say bull markets climb a wall of worry
 
And believe me, I was that guy. But I learned the hard way. You got to be studborn when dealing with stock markets, the default answer should always be to buy or hold what you have. The exceptions should be saved for really important events that will have huge impacts. It certaintly shouldn't be based from a thesis derived from observing short-term market logic, thats ridiculous. And I see very smart (and rich) people doing that
 
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Because I was that guy I can usually them when people are doing that. Lots are doing right now with the Trump rally, they say "I want to see the policy specifics" "This market is up on pure hope, nothing concrete" "I just feel that this all will end badly" "What about the bad things about Trump? The market is only looking at the good things, this makes no sense"
 
PSH sold 3.5M VRX shares at 14. Thats for tax loss selling purposes to offset the liability from CP sells. He will rebuy within a month
 
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Trump support will increase in 2018. He might even develop a fillibuster proof Republican support
 
Daal said:
PSH sold 3.5M VRX shares at 14. Thats for tax loss selling purposes to offset the liability from CP sells. He will rebuy within a month
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They've also apparently unwound that seagull options trade (9.12MM shares; 20Jan2017 expiry 60 puts vs 95 - 165 call spreads). Looks like that generated a loss of roughly arnd $500mio.
 
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