Two Police Officers Become Traders
I am writing this newsletter from Florence, Italy, where I came to meet some of our friends and traders. We had a small but very nice meetup, and I am grateful that some of our traders could make it on such short notice. Two police officers came to meet me and they brought along a bottle of Vin Santo and a card that thanked me for teaching them to become traders. I was thrilled! I hope everyone gets to taste the excitement of trading like Valerio and Lorenzo have.
Chinese stocks rallied in the pre-market as over the weekend Chinese authorities announced eased COVID testing requirements across major cities. Starting today, the financial hub of Shanghai has scrapped PCR testing requirements to enter outdoor public venues such as parks or to use public transportation. I had a losing day, but Paras has recapped his trading short on NIO and BABA. You can watch his recap here.
Is JPow the Best Banker in the World?
Friday was an interesting day. We got a strong jobs report and, not surprisingly, stocks instantly moved sharply lower, because we’re still in a “good news is bad news” environment. But it wasn’t just that the report was strong, but the wage growth number in particular was hot, causing economists to grow more pessimistic about soft landing hopes. Nevertheless, the market bounced back nicely from it. The Nasdaq QQQ index overall gained 2% last week. Not bad. Today, the ISM manufacturing index came in stronger than expected, which might again lead people to think that the economy may need to go into a recession in order to cool down inflation. Reaction to the ISM, however, was mixed, and it did not cause a big drop (at least not as of the time I am writing this newsletter).
What is happening with inflation, manufacturing, consumer sentiment, job market numbers, and the market?
It seems that the market is starting to give the Fed and JPow the benefit of the doubt. In other words, for a while, any strong datapoint in any category, such as the job market, manufacturing, or employment, was seen as bad news on the inflation front, even if it wasn’t an inflation measure specifically. There was no presumption of innocence or a potential for a “soft landing” (meaning cooling down inflation without a recession). Maybe things are shifting a bit now, so that the market isn’t automatically taking the most bearish possible interpretation of each new number.
JPow and his colleagues might go down in history as the best bankers in the world, cooling inflation with a soft landing, and without tipping the economy into a recession or depression. And, Michael Burry, the famous short seller of the housing market, tweeted on December 3 that he is not short.
What do you think about a recession and inflation? Let me know your thoughts by simply replying to this email.
This Week at BBT
Tomorrow, for Tuesday Strategy and TradeBook, Carlos will be presenting a webinar titled: Developing an Education Plan. As you approach a new year, it is important that you take some time to either develop an education plan for the upcoming year or refine your existing one. Join Carlos at 8pm ET as he dives into the various components of an education plan and then explains exactly how you can go about developing an effective education plan that will help you to achieve your trading goals for 2023.
I will be flying back to Vancouver soon and I may miss a few trading days as I am traveling. I will hopefully see you in the office soon!
To your success,