MEMO

Yesterday's market dip was deep enough to trigger buying opportunities, and since then, the market has rebounded. The Nikkei surged by 10% this morning, and Bloomberg reports that 50-60% of the JPY carry trade unwind is complete. Despite this, volatility remains exceptionally high, with the VIX reaching 61, its highest since the COVID-19 pandemic and the Global Financial Crisis.

$DANNY

Market Outlook:

Given the extreme volatility, it’s unlikely the market will quickly stabilize. The aftermath of the carry trade unwind may still cause significant disruptions, as many funds could face severe impacts. However, my gut feeling is that we won't see any drastic fallout. I also do not anticipate an emergency rate cut, but the Federal Reserve will likely begin cutting rates in September.

Key Dates:

  • PPI: August 13
  • CPI: August 14
  • PCE: August 30
  • Payrolls: September 6 (crucial before the September 18 FOMC meeting)

Strategy:

  1. Market Stabilization and Relief Rally:
    • If the reports are accurate about the JPY carry unwind being more than halfway done, we might see market stabilization and a relief rally.
    • Plan to reduce exposure incrementally. Sell 25% of our current exposure during the expected bounce, and another 25% as we approach the US elections.
  2. Long-Term Considerations:
    • Maintain 50% exposure to capitalize on potential monumental rallies.
    • Monitor the impact of the upcoming economic data releases and adjust the strategy as needed.
  3. Political Wildcards:
    • Be aware of the potential market impact of the US presidential elections. If Trump wins, there could be a bullish sentiment for crypto, but the real-world implementation of his policies will take time.
    • Be prepared for possible market tops forming around the election period. Start reducing positions gradually to avoid missing out on potential gains while mitigating risks.

Conclusion:

Based on current market conditions and my assessment, I recommend preparing for a potential short-term relief rally. We should strategically reduce our exposure in phases, maintaining enough position to benefit from any significant market moves. Staying agile and responsive to economic data and political developments will be crucial in the coming months.

Action Plan:

  1. Monitor Market Trends: Stay vigilant on market movements and news related to the JPY carry trade.
  2. Gradual Reduction: Implement the 25% exposure reduction plan during the bounce and pre-election period.
  3. Stay Informed: Keep an eye on key economic indicators and political developments to adjust our strategy accordingly.

Let's discuss this plan further in our next team meeting.

I have no idea what the markets will do from here til EOY. I have high conviction that: 5 years from now we will be significantly higher than today and it will become significantly more difficult to outperform BTC and SOL with size

Cheers,
LiveTheLifeTV