Rinse/repeat

Here we go again

The most important chart in the world remains this one:

Or, if you prefer a more professional read, this one:

You can see in the first chart that a break of $120 opens up new highs, which is something crude could not achieve after the Sunday gap on the most recent invasion of Ukraine (2022). Such a break would ratify most expert opinions that this is the worst disruption in oil market history with ~20% of global flow offline.

As we enter the second month of this war, the expert view has been that bigger supply shocks will ripple through the global economy starting soon. Ships that were moving stuff across the world have made their deliveries, and now subsequent drop-offs are not happening. Seeing force majeure in helium, fertilizer prices are skyrocketing, etc.

While the President suggested a timeline of two to three weeks for the war to end, nothing the U.S. or Iran says is credible. We are in a war. It’s propaganda. On the two week comment specifically, we have years of experience with the two weeks thing with Trump. It is a running gag since 2017. Everything is coming in two weeks.

If last night’s speech was meant to sway the electorate or calm markets, it did not work. Now, we wait to see if ground troops are deployed on the weekend. For now we have another “sell and hedge and short into the weekend” trade with yet another bounce on Monday if nothing horrible happens over Easter.

Meanwhile, the political betting markets are getting a bit ahead of themselves as they fail to factor in that the Democrats consistently put up candidates that voters find extremely undesirable. Neither party has much to offer to the majority in the middle. Anyway, I dislike all U.S. politicians equally, D and R, I am simply forced to focus on the present administration as the improv around the policy shocks infects markets. I would much prefer a world where I did not have to read or write about politics. To me, good government is like a good referee. It operates quietly in the background, unnoticed.

Feels like escalation and fear into the weekend and then we see what happens. Everything is still fairly closely tied to crude oil. Gold and silver still trade like risky assets and BTC and ETH are doing nothing as people have completely lost interest.

Rates have not gone as crazy on this last runup in crude, but you can see that yields, FX, and oil are still moving in lockstep. I think if front-month Brent takes out $120, a new wave of fear will take over.

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Some thoughts from the dumber regions of my brain

1. Does anyone have a strong view on HYPE and/or PURR? I am doing some research on these things. I start from a position of extreme skepticism with this stuff, and I find myself getting bullish here. Tell me why I am right or wrong. Please.
2. The Law of One Price does not hold in the short-term as anyone who traded the PALM spinoff knows. But VCX is trading above $100 despite NAV of $20 and SATS is trading at $120 even though its SpaceX stake alone is worth at least $125/share. Both are plays on SpaceX and yet one trades 5X fair value and one trades 0.7X or something. Markets are weird. VCX is hard and expensive to borrow, but still. What are we doing here?
3. Today: *BLUE OWL LIMITS REDEMPTIONS FROM TWO PRIVATE CREDIT FUNDS AT 5%.
4. DRAM prices are coming off just as helium shortages and other challenges loom over AI Capex. This chart is kind of simplistic, but it makes sense that spot DRAM prices would serve as an approximate anchor for SNDK.

I have been selling rallies in SNDK with okay results. It’s a fun and terrifying stock to trade.

I am not recommending you sell it here; it’s just dropped $60 in the past 12 hours. I am simply pointing out that maybe (maybe) these highly cyclical memory stocks have peaked as they face multiple headwinds now.

Have an earnest day.

The etymology of sarcasm

From the Greek ‘sarx’ meaning “flesh” or “piece of meat”…

Comes the verb:

Sarkazein

Meaning: “to tear flesh”

Sarcasm verbally (proverbially) tears flesh.

 

 

USDMXN in 200 for Sarkazein Capital, please?  Good guy, new guy.

good luck ⇅ be nimble