Email of the day on the VIX
Hi Eoin, isn't the VIX approaching a level or is already at a level where it is very attractive to go long the VIX? how much downside could there still be?
David Fuller and Eoin Treacy's Comment of the Day
Category - General
Video commentary for December 20th 2022
Bank of Japan Decision Will Affect the World
This article from Bloomberg may be of interest to subscribers. Here is a section:
The BOJ has been the last holdout on negative rates, so these tentative signs that it might be buckling will heighten expectations we may be in for more unsettling volatility in 2023. Markets really don't like uncertainty, and even a suggestion that Japan might be forced into letting bond yields soar higher is enough to get risk managers heading for the exit. Fixed income isn’t quite the haven some commentators had convinced themselves it might be in the new year.
BOJ Governor Haruhiko Kuroda was at pains to downplay any implications for official rates, but this sudden move after implacable denials speaks louder. The BOJ did increase its QE bond buying ammunition to 9 trillion yen ($68 billion) per month from 7.3 trillion yen — all to defend its new line in the sand, the 0.5% 10-year yield. But this is merely a symbolic delaying tactic. Kuroda steps down in April, so Tuesday’s decision increases the expectation that his replacement will usher in further monetary tightening. This is no longer an impenetrable negative interest rate fortress. It might make foreign speculators meditate on the perils of shorting both Japanese government bonds and the yen simultaneously.
Bitcoin Miner Greenidge Warns of Bankruptcy, Debt Restructuring
Bitcoin Miner Greenidge Warns of Bankruptcy, Debt Restructuring
Greenidge’s average monthly cash burn rate in the past two months was approximately $8 million. That is typically used to describe the rate at which a company spends capital to finance overhead before generating a profit or loss from operations. About $5.5 million of that cost was associated with principal and interest payments to NYDIG. The firm expects to have a similar cash burn rate and similar payments to NYDIG in December, according to the filing.
The Fairfield, Connecticut-based miner has a natural gas plant that powers its Bitcoin mining facility in Dresden, New York. It is one of the earliest and largest crypto-mining firms in the state. While Greenidge’s current operations remain intact, New York Governor Kathy Hochul signed one of the most restrictive laws in the US on crypto mining last month with a two-year moratorium on new permits from the miners that are powered by fossil fuel.
How private markets became an escape from reality
Thanks to a subscriber for this article in the Financial Times. Here is a section:
Yet private equity funds raised more than $1tn last year, up a record 20 per cent, according to the most recent data. Investor Cliff Asness wrote recently of the “mind blowing” possibility that investors now knowingly accept lower returns “for the privilege of not being told the prices”.
Hiding from reality creates an illusion that private investments are less risky than their debts clearly demonstrate, which draws in more money, raising risk further. The moment of reckoning likely comes when and if the downturn drags on, and private markets have to finally reveal losses in a down market. The shock could trigger a stampede toward the exits. While some private managers will continue to provide long-term capital to help build companies, many others will be exposed as financial engineers who built careers on a thin foundation of easy money.
In the end, there will be nowhere to hide in a tight money era. And private markets, which largely built returns on heavy and loose borrowing, are more vulnerable than public markets in this new age.
Video commentary for December 19th 2022
Email of the day on holding cash
Good morning, Eoin I would welcome your perspective if I may. I have been long only forever, 40 years and counting. In view of the current global challenges, I am thinking of taking the remaining 60% (40% currently in cash or cash equivalents) off the table and holding all in cash for the time being. I would welcome any observations you may have. I look forward to hearing from you.
National Bank of Canada Neutral On i-80 Gold's Assays From Hilltop Corridor Discovery
This article from MT Newswires may be of interest. Here it is in full
National Bank of Canada said Monday that it ascribed a neutral bias on i-80 Gold Corp. (IAU.TO)'s Hilltop corridor discovery at the Ruby Hill property that showed elevated zinc mineralization.
Drill highlights include 12.3% zinc over 39.6 meters, adding to the high-grade polymetallic discovery in the Hilltop zone announced in November.
The bank said the results were limited to a single hole although it reinforces Ruby Hill's optionality as well as potential host to oxide and sulfide gold as well as skarn base metal mineralization, all within proximity of the underground infrastructure planned in 2023.
"Results add a high-grade datapoint to the broader Hilltop area, while expanding the region of prospectivity, still open in all directions," the bank said.
National Bank gave i-80 an outperform rating with a $4.25 price target. Price: 3.58, Change: -0.18, Percent Change: -4.79
Yen Traders' Nerves Jangle on Growing Signs of BOJ Hawkish Pivot
This article from Bloomberg may be of interest to subscribers. Here is a section:
The yen whipsawed in Monday trade after reports on a potential change to a key agreement between the government and central bank fueled speculation policy makers are moving closer to a hawkish pivot.
Japan’s currency jumped as much as 0.6% after Kyodo said on Saturday that Prime Minister Fumio Kishida may seek to revise a decade-old accord with the Bank of Japan and consider adding flexibility to the 2% inflation goal, potentially paving the way for an end to its ultra-dovish policy. The yen pared gains after a top government spokesman denied the report.
The existing agreement commits the government and the BOJ to achieving its 2% inflation goal as early as possible.
The BOJ has long since missed Kuroda’s original timeline of around two years. Still, removal of the phrase would go a step further in recognizing that achieving stable inflation is a longer term goal while implying that factors other than time also need to be considered.