Tuesday Target | 44/52
Trump Media, China Stimulus and the Repo Market
Wonderful times! And yes, we'll be back with a Trump Media play soon, but it's not quite time to pull the trigger. We're working on a 1:4 risk/reward setup with a 75% probability of profit. BOOM.
Below, as always, the minimum you need to know to get a feel for what's cooking:
Election-Driven Volatility: Preparing for the Craze
As polls tighten, markets are bracing for potential volatility surrounding the U.S. presidential election. Many institutional investors see a Trump victory as a likely outcome, and this expectation is already shaping equity and bond market trends. Historically, contested outcomes - as seen in 2000 - have triggered prolonged market declines due to lingering uncertainty. This year, investors are hedging more heavily, with the Volatility Index rising with equities, signaling a readiness for market disruption. Regardless of the outcome, both candidates show little inclination to rein in government spending, keeping inflation risks elevated.
China's Fiscal Stimulus: We Need More, Faster
China's proposed 10 trillion yuan ($1.4 trillion) stimulus package, announced yesterday, aims to revive its economy through infrastructure spending and support for local government debt. While this sizeable package initially sparked a small rally in commodities and equities, unclear timelines and unfulfilled policy commitments in the past have tempered enthusiasm. Chinese equities remain in a holding pattern as investors await specific actions rather than broad announcements, particularly as unresolved issues in the property sector cast a shadow.
US Treasury Market on Edge: Liquidity Strains and Mixed Auction Results
With a record $531 billion Treasury settlement scheduled for this Thursday, liquidity pressures are intensifying in the repo market, testing bank balance sheets and raising fears of a 2019-style crisis. The Fed appears willing to tolerate these pressures, increasing the risk of repo market instability and broader disruptions to funding flows. The recent 7-year Treasury auction was a positive outlier, with solid demand pushing yields below expectations, in contrast to weaker results at recent 3-year and 5-year auctions. There is a market for those assets, but increasingly selective.
Get Rich Overnight with Options? Yeah Right...
TUESDAY TARGET: Momentum Story Play - Mania vs. Dilution. When the narrative is contemporary and sexy, no one needs revenues. Besides, who understands dilution; cash inflow has to come from somewhere, duh.
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Please note, all content is for educational purposes and isn't personalized for individual portfolios or financial advice. Curious about putting any of these ideas into action? Juri von Randow is here to offer guidance or connect you with the right resources.