A New Villain Emerges - Macro Edition
Market Update! Bull vs Bear Chart! Jobs! Yen! Yield Curve! AIAIAI!
“Summer has come and passed, The innocent can never last. Wake me up when September ends” - Green Day
“Seasonality is just another way of saying that the Monkeys are back from vacation” - Green Shrub
How it started: Last week, we warned that September Seasonality is even worse than August. At the same time, Positioning was getting more stretched, with hedge funds and CTAs buying the highs (after selling the lows!). So we entered September in the “Fetal Position” i.e. a high cash balance (40% of the portfolio in cash) and hedges on (including the “Elegant Election Hedge” we described in the piece).
How it’s going: S&P finished down 4% on the week, its worst week since March 2023…and it’s only Sept 6th!
What we did:
The “Elegant Election Hedge” doubled in value so we trimmed enough to turn it into a “free” hedge
We closed the S&P short, a day early, but nicely profitable
Meanwhile, the high cash position has served as a great hedge by itself, allowing us to take advantage of the future opportunities once they present themselves! They always do…
We gave thanks
What we didn’t do:
We didn’t take Wall Street seriously at any point. Frankly, we take Beavis & Butthead more seriously…Keep reading, Wall Street really outdid itself this time...