Time Stamps What Happened Last Week – 00:10 What’s Happening Next Week – 02:27 Nick’s Update – 09:11
9 Responses
Hi Nick. I’m actually following the 2GB portfolio with a much lower exposure to equities, so I’m not as concerned, but I would still like to hedge the odds of a reversal in equities that might lead to a significant correction (we’ve had 3 weeks so far and the last one was 13). After all, we could get a bullish continuation via the QRA or we might get an increase in coupons (hello, new massive Defence spending approved in the House!), which would surely keep interest rates high.
So, while I look at my options, how would see a minor allocation to ITA? I would also like to ask how you think financials (EUFN/XLF) will fare during a corrective period in equities overall. Thanks.
A minor allocation to ITA is fine. All the defensive sectors are fine, it’s mostly technology that is getting rotated out of. But long term, you just do not care…
It’s not MSCI Europe, it’s the banks sector. Very cheap to book and with positive rates and a recovering economy, the banks, which have been beaten down for years, should get re-rated.
What are the odds that both inflation and unemployment increase substantially at the same time? Would that be the market’s/fed’s worst case at this point?
9 Responses
Hi Nick. I’m actually following the 2GB portfolio with a much lower exposure to equities, so I’m not as concerned, but I would still like to hedge the odds of a reversal in equities that might lead to a significant correction (we’ve had 3 weeks so far and the last one was 13). After all, we could get a bullish continuation via the QRA or we might get an increase in coupons (hello, new massive Defence spending approved in the House!), which would surely keep interest rates high.
So, while I look at my options, how would see a minor allocation to ITA? I would also like to ask how you think financials (EUFN/XLF) will fare during a corrective period in equities overall. Thanks.
A minor allocation to ITA is fine. All the defensive sectors are fine, it’s mostly technology that is getting rotated out of. But long term, you just do not care…
(At best, more of a lower risk rotation than a hedge, I guess.)
Hi 2GBs, could you kindly explain the rationale behind the equity position on MSCI Europe?
Thank you
It’s not MSCI Europe, it’s the banks sector. Very cheap to book and with positive rates and a recovering economy, the banks, which have been beaten down for years, should get re-rated.
For those of us who sold VTI instead of doing the straddle, would you recommend we buy SPY if it goes to 485 this week?
Yes, it will be cheap. Or just buy back what you sold in VTI.
What are the odds that both inflation and unemployment increase substantially at the same time? Would that be the market’s/fed’s worst case at this point?
It would be. But about the same odds as a 3 legged horse winning The Derby. Completely different economic situation, for now.