The week was one of the highest stock market rallies in the past few years. Trump’s tax cut announcement that is coming within weeks based on his saying pushed the uncertain market higher.
EUR: Euro followed downtrend pattern that was going on for the past two weeks and broke it on 15th February. I have not much traded Euro based on the matter that Euro has been hard to predict as Eurozone is economically and politically uncertain area.
GBP: Pound sterling is having a tough time to recover as Brexit is in the spotlight and coming mixed news from the UK. The currency moved between 1.24$ and 1.27$ range for the past one month and it is close to breaking below 1.24$. If it does break, it will be hard to keep it above that level. Therefore, I will be closely watching pound move in the coming week.
JPY: I lost big on Japanese yen. which I shorted so far the biggest by 1.5 Mln dollar. 150% of portfolio size by leveraging. it cost me more than 1 % of my portfolio. The Reason I misjudged was too much optimism in dollar and inability /lack of time to keep an eye on the market due to my work. none is an excuse for my mistakes but myself. I should not have gone that much short when I knew I could not handle to keep an eye on it. Dollar, on the other hand, kept weakening against Japanese yen. I should do more research on Japanese economy and yen. I think I lack the information on the Japanese side. I focus more on US dollar. That is something that does not work like that. I should know the best for both sides. That is the interesting part of a currency. Knowing one side economy is not enough like it is for stocks or commodities.
Gold: at some point my positions in gold went up above 1 mln $ which made more than 1% return on that within a week. However, my returns were offset by my misjudged Japanese yen trade. I later closed my position when it was approaching a week’s high. After closing, gold went down a bit and closed. I will be waiting for Monday reaction to gold and right time to hop in. I believe Gold has a long way to go. It is not done yet. After many years of sluggishness in gold, investors are again jumping to buy gold as a safe haven asset due to Trump presidency.
Oil: During the week I kept increasing my long positions in oil futures in an anticipation of rising prices. However, again oil was not able to break above the range it has got stuck in the past month. Prices are moving up or down as before between 52-55$ despite all time high long futures in oil.
Oil inventories are all-time high in the US and OECD countries which was heavily built up since Oil price crash in 2014.
On the other hand, for the past few months production has started going up in the USA by 290K per day. New investments in Permian Basin is a major reason for higher production. OPEC cut did not play its role in price increases as many expected. When many was anticipating above 60$ per barrel. It was not realized and I don’t think it will unless we get one of the issues below:
- Major news comes out from OPEC about keeping the deal beyond 6 month period as agreed before.
- OPEC decides to cut more ( unlikely currently in my view when countries are more likely to cheat this time or less optimism for another cut )
- Highly inventory draw downs. ( that is going in another way around as the US had the second largest oil inventory built up recently)
- Sime kind of breaking news coming out of OVAL office regarding oil & gas industry.
I did not roll my futures contracts which ended on this Friday as I am as uncertain as before. However, I might try to buy oil when price hits range low or short when hits range high. Right now it is somewhere in the middle.
P.S: I got two new books. One is actually a large research paper by Ray Dalio of Bridgewater Associates called Economic Principles.
The second is the book ” Security Analysis” by Benjamin Graham and David Dodd. I found another one which I should read next. Phil Fisher ” Common Stocks and Uncommon Profits”.
There are, to be honest lots of books I have to read but due to work and upcoming CFA exam, I can not do much reading. After the exam, I can finally focus on investing, both on my real account as stock picking and my simulated account for macro investing.