TLDR
The author discusses a severe escalation in the Iran conflict, arguing that the market is underestimating the resulting disruptions to global energy, freight, and agricultural supply chains. In response to the heightened volatility and risk of a global economic shock, the author is leaning into the volatility by going long commodities and shorting equities, while raising cash in their long-term portfolio.
• The conflict in Iran is intensifying, with significant disruptions expected for energy, freight, and fertilizer supply chains.
• The US and Israel's actions have triggered an Iranian scorched earth campaign, putting severe economic and political pressure on the US administration.
• A potential capitulation by the US might provide market relief, but Iran may continue to disrupt the Strait of Hormuz as leverage.
• The author is actively trading the volatility, establishing long positions in oil, natural gas, and corn, while shorting S&P 500 futures.
• In the long-term portfolio, the author is raising cash by exiting South Korea (EWY) and Global EM (EEM) equities, but holding Brazil (EWZ).
• Bitcoin is showing relative strength and is being held as a long position alongside other hedges.
{
"tldr": {
"summary": "The author discusses a severe escalation in the Iran conflict, arguing that the market is underestimating the resulting disruptions to global energy, freight, and agricultural supply chains. In response to the heightened volatility and risk of a global economic shock, the author is leaning into the volatility by going long commodities and shorting equities, while raising cash in their long-term portfolio.",
"key_points": [
"The conflict in Iran is intensifying, with significant disruptions expected for energy, freight, and fertilizer supply chains.",
"The US and Israel's actions have triggered an Iranian scorched earth campaign, putting severe economic and political pressure on the US administration.",
"A potential capitulation by the US might provide market relief, but Iran may continue to disrupt the Strait of Hormuz as leverage.",
"The author is actively trading the volatility, establishing long positions in oil, natural gas, and corn, while shorting S&P 500 futures.",
"In the long-term portfolio, the author is raising cash by exiting South Korea (EWY) and Global EM (EEM) equities, but holding Brazil (EWZ).",
"Bitcoin is showing relative strength and is being held as a long position alongside other hedges."
]
},
"trade_ideas": [
{
"ticker": "USO",
"direction": "LONG",
"confidence": 0.85,
"sentiment": 0.80,
"quote": "I went long Brent on Thursday with the view that the market would come around to this view as we approached the weekend, and that trade is now over $30 in the money.",
"thesis": "The war in Iran is a big deal and will disrupt the supply of energy much worse than people expect.",
"instrument": "futures",
"timeframe": "short-term"
},
{
"ticker": "ES",
"direction": "SHORT",
"confidence": 0.75,
"sentiment": -0.70,
"quote": "In addition to my long oil, I established a new short position in ES...",
"thesis": "The geopolitical escalation and scorched earth campaign by Iran is inflicting maximum damage on the global economy, trapping the US politically and economically.",
"instrument": "futures",
"timeframe": "short-term"
},
{
"ticker": "UNG",
"direction": "LONG",
"confidence": 0.75,
"sentiment": 0.70,
"quote": "...and went long natural gas (after fumbling my long last week) and corn.",
"thesis": "A large portion of the global nat gas supply goes through the Strait of Hormuz, so a shortage would disrupt supply significantly.",
"instrument": "futures",
"timeframe": "short-term"
},
{
"ticker": "CORN",
"direction": "LONG",
"confidence": 0.75,
"sentiment": 0.70,
"quote": "...and went long natural gas (after fumbling my long last week) and corn.",
"thesis": "Corn relies heavily on fertilizer, and fertilizer supply will be significantly disrupted by the closure of the Strait of Hormuz.",
"instrument": "futures",
"timeframe": "short-term"
},
{
"ticker": "EWY",
"direction": "AVOID",
"confidence": 0.80,
"sentiment": -0.30,
"quote": "In my long term portfolio I’ve been raising cash - I got out of EWY (South Korea) and EEM (Global EM)...",
"thesis": "Raising cash in the long-term portfolio amidst global volatility and geopolitical risks.",
"instrument": "shares",
"timeframe": "long-term"
},
{
"ticker": "EEM",
"direction": "AVOID",
"confidence": 0.80,
"sentiment": -0.30,
"quote": "In my long term portfolio I’ve been raising cash - I got out of EWY (South Korea) and EEM (Global EM)...",
"thesis": "Raising cash in the long-term portfolio amidst global volatility and geopolitical risks.",
"instrument": "shares",
"timeframe": "long-term"
},
{
"ticker": "EWZ",
"direction": "LONG",
"confidence": 0.70,
"sentiment": 0.30,
"quote": "...but am still sitting on some EWZ (Brazil).",
"thesis": "Maintaining a long position in the long-term portfolio despite raising cash elsewhere.",
"instrument": "shares",
"timeframe": "long-term"
},
{
"ticker": "BTC",
"direction": "LONG",
"confidence": 0.75,
"sentiment": 0.60,
"quote": "I’m comfortable holding a long BTC as long as I have my other trades as a hedge.",
"thesis": "BTC has been trading well and is showing good relative strength during the volatility.",
"instrument": "spot",
"timeframe": "medium-term"
}
]
}