Here are portfolio positions to take in a risky economy:
The hope for a more optimistic earnings recovery in the second half of the year may have to be downgraded due to the rising cases of COVID-19 and an impending trade war with China. To mitigate volatility, we recommend taking these trading strategies.
Defensive structures of SPY, HYG, and XME all look interesting as the underlying indices look vulnerable. Strategies may have to target August and September with spreads to keep costs in line. With the Fed willing to backstop so well, downside may be limited to 2 standard deviations but why risk losing 10% on the S&P or 7% HYG from here?
XME looks particularly interesting with the sharp recovery since 3/23 counting on a major Chinese supply impetus. It looks to me like demand may not regain enough strength to warrant that move and the recent breather of copper and steel is giving the signal XME could be vulnerable. XME 2m IV is in its 81
st percentile and fair to forecast. 2m Skew is 1.26 standard deviations over its mean showing options investors are concerned.SPDR Gold Shares (GLD)GLD longs look advantaged, as are selling iShares Silver Trust (SLV) higher volatility call spreads to buy GLD calls. We recommend a 2 to 1 contract notional ratio (remember each GLD contract is a bit greater than 10 times more underlying capital than each SLV contract) on the GLD to sold SLV spreads and think the roll-over of economic expectations will leave SLV more vulnerable than anticipated. SLV 2m IV is in its 72
nd percentile and 18% expensive to forecast. 2m Skew is 0.68 standard deviations over its mean. GLD 2m IV is in its 76th percentile and 39% expensive to forecast. 2m Skew is 1.28 standard deviations over its mean.Something to keep an eye onFXE looks to have gained momentum from the odd place of better European COVID-19 reopening performance of late. If that plays out, a weaker dollar advantages GLD and hurts iShares MSCI Emerging Markets Index (EEM). A US trade war with China and any reduction of US purchasing power hurts the top lines of EEM companies.
Ngl, that picture reminds me of the bridge from Asgard in Thor... There is a risk here that the hope in the more optimistic earnings recovery of the second half may have to be downgraded and the impact across more highly correlated portfolios hit hard.
5 Stocks To Hedge Your Portfolio With Instead Of BitcoinThe Nasdaq is within reach of all-time highs made last week. With the amount of fiscal and monetary stimulus on the table, and the economy seemingly rebounding from the lows, will it be enough to keep stock markets elevated? Our AI has identified the top stocks to short today. moujacki Really? Interesting
Opinion | The job numbers are much-needed good news. And they’re likely to get better.Opinion: The job numbers are much-needed good news. And they’re likely to get better. Greg, bud. Come on. That's just so stupid. : NO THEY R NOT GETTING BETTER AS BUSINESSES SHUT DOWN AGAIN WHAT IS SMOKING
Europe contains jobless rate, but faces summer of discontentEurope has limited the rise in unemployment caused by the pandemic with a wide array of government support programs, but that cannot hide widespread economic distress and anxiety among workers and small business owners. On other side: If the CO Government Trump / Joh of Honduras facilitates the leakage of productive companies Will the country survive exporting only 'coca'?
Athlete A's Rachael Denhollander Says Larry Nassar Was Just 1 'Symptom of the Problem'POPSUGAR spoke to Rachael Denhollander from Netflix's Athlete A about coming forward with abuse allegations against Larry Nassar, as well as her healing. R_Denhollander It's so powerful. She, and all the girls and women showed so much strength, so much courage. It's not an easy watch, but it was inspiring to see these women.
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Banco do Brasil sells $545.4 million in loans to BTG PactualBrazilian state-run lender Banco do Brasil SA said on Wednesday it has sold a 2.9 billion-real ($545.40 million) non-performing loan portfolio to BTG Pactual SA .