Friday 📸: Portfolio Review, Trades, Analysis

Kids, don’t you know all this shit is fantasy?

-A Tribe Called Quest

Good Morning - last week we said that this was a bull market until the equal weight S&P etf RSP 0.00%↑ says otherwise. Well, I’d like to amend that: this is a raging bull market, just maybe not the same bull market we’ve seen led by big tech which has become capital intensive. A bull market in hard assets: commodities and commodity processors, producers distributors… driven by a weaker dollar.

Yes, the lozenge of liquidity can dissolve at any time, and that will suck. There is always systemic risk in markets and in life. We can’t do anything about that. All we can do is manage portfolio risk.

Speaking of liquidity - you won’t see this in the mainstream media, but it is probably the most important driver of global financial asset prices full stop. And yes it’s visually boring. Look at the US Treasury’s schedule to buy back its own debt to support markets (how does that even make sense)… That’s 16 billion in debt to be bought in August alone and a cool 36.2 billion for September - both issued and purchased by the Treasury (technically they make the NY Fed buy the debt on Treasury’s behalf). This is money printing in disguise, and it’s a major reason you see the money supply and inflation moving higher… Why you see the dollar weakening, emerging market stocks, currencies, and risk assets across sectors moving higher.

Let’s take a look at some of my favorite setups.

I like Australia stocks here - and the ETF EWA 0.00%↑ is mostly comprised of miners, financials and insurance. I’m going to be adding this to the long term portfolio today - and will exit with a break below the weekly cloud.

A breakout like this which has then consolidated and squeezed into a wedge pattern looks ready to rip. Australia is the largest producer of iron ore in the world, is a top-ten producer of copper and the country supplies about 26% of the world’s aluminum — so it’s no surprise to see how highly correlated Australian stocks are to the price of base/industrial metals.

Look at Australia stocks EWA 0.00%↑ vs the base metals ETF DBB 0.00%↑ :

Where does this Aussie metal go? Mostly to China. And the Chinese tech index - the Hang Seng - is starting to look alive. I need it to break above this range on the weekly chart, and I’ll add a position to the long term accounts via the KTEC 0.00%↑ etf (which tracks the Hang Seng):

China is the #1 exporter in the world and the #2 importer - and you can see that both are moving meaningfully higher on a year-on-year basis:

YoY exports:

YoY imports:

China’s rate of iron ore imports has also increased 6% yoy for both May and June of this year — a notable increase and an outlier in relation to their imports of other key commodities:

Also - I know I’ve mentioned it before, but white sugar futures are still actionable in my opinion. I’ve been long for a few weeks now as it’s pushed up through the weekly cloud, and looks like it’s going to close the week above.

Beauty:

Cheers, y’all.

-Andy

Swing Portfolio Year-to-Date Performance: +13.29%