High-rtificial Intelligence and CLOs

What a week. How do I summarize it? Firstly, a Tamagotchi messed around every single macro pod in London and New York with nonsense like QRA and its mix. Poor hedge funds were distracted by the QRA, only to be blindsided by JPow on Fed Day who pretty much took the March rate cut off the table. And then an uber-hot jobs report on Friday solidified this view. In the middle of all this, a couple of banks blew up on CRE / multi-family concerns, so those who were short duration for the correct reasons, ended up not making much money. Robbed of a fair victory I say, but the Tamagotchi wins again!

And we didn’t even discuss how Google kicked off the Mag7 earnings with a weak tone, giving bears a glimmer of hope, only to finish the week with Amazon and META disproving anyone who thought of calling a Top. Even Apple with its mediocre results ended up closing down only 50bps. I noted on Friday that I can’t be bearish when the jobs data is good and lo and behold we got a big Friday ramp. The monkeys might still get those “Spoo 5000” hats!

A few things that got my attention:

High-Rtificial Intelligence

Cannabis ETF, MSOS, had a +10% ramp this week. I wrote about the trade here (Please read with appropriate reggae soundtrack). I think they are getting close to a Rescheduling announcement. What amazed me was seeing Elizabeth Warren and her minions calling for a DE-scheduling. This is Election year after all and the polls are overwhelmingly supportive of rescheduling. So it’s no surprise that the career politicians try to up it a notch and call for a de-scheduling. I’ll keep my personal opinions to myself whether that’s a good idea or not, but let’s just agree that the momentum for a Rescheduling is pretty strong heading into Feb - April period. It could end up being a “sell the news” event or it could be the start of a new bull market, so keep an open mind (and a substance-free mind!).

CLOs

Sometimes you find a gem on Twitter that makes it all worthwhile. The latest is from Twitter friend @aryal1994 who identified a multi-family foreclosure in Houston where Arbor (ticker: ABR) is the lender. The tweet is here:

https://twitter.com/aryal1994/status/1753416009376006150?s=46&t=6d-8pE1NdoFl1h5W80yCwA

But it gets better. Someone pops up in the comments section and he used to be invested in the property (at half price of Arbor’s loan balance, so good luck to that equity). He found the current owner of the property to be a “private equity group run by physicians” whose task is to “generate passive income streams for physicians”.

Chef’s kiss. Luckily for those physicians they make enough money from their day job to withstand a few hits. It really reminds me of that scene in the “Big Short” where the guy realizes the stripper has 5 houses and a condo. So next time you visit your physician ask him how many CLOs he owns!

Lastly, a moment of silence for the Macro funds, the Vol funds, the Long/Short funds and all the Monkeys that we lost this week. The odds were always stacked against them. Bless.

Disclaimer:

This isn’t financial advice.

This is the trading blog of a shrub.

By now you should know: Don’t be Stupid.

Like, seriously … Don’t be stupid …