Hi Again,
I sent out my last newsletter on Sunday 8/4/24. Next day, Monday (8/5/24), the market opened
with a mini crash and for a couple of hours, no one was able to get in to their accounts at
Fidelity and Charles Schwabs. What is the VIX or the volatility index? VIX is the ticker
symbol and the popular name for the Chicago Board Options Exchange's CBOE Volatility
Index, a popular measure of the stock market's expectation of volatility based on S&P 500 index
options. Prior to 8/2/24, On 7/10/24, VIX was at 13. I bought some call options on VIX on
8/2/24 with a strike price of 50. On 8/5/24, market opened with the VIX hiking up to 65 but I
could not sell my options as Fidelity and Schwabs were both down due to heavy volume. This
all happened due to the unwinding of the “Yen Carry Trade” (mostly shorting the Yen, and
going long the NASDAQ via QQQ) as the Japanese central bank surprised the world with an
interest rate hike due to inflation in Japan. The Japanese market (Nekei) had its biggest drop
since “black Monday” in 1987. I do not believe that this story is over yet. After the Lehman
Brother went down in 2008, it took another 6 months or so for the “next shoe” to drop. Per
some experts, this event killed 3 financial institutions in the US. Per former Fed President of
Dallas, 1987 crash also was started in Asia. From 7/3/24 to 8/5/24, NASDAQ fell $2 Trillion.
8/5/24 was the worst day for S&P500 since 2022. On 7/29/24, Bitcoin was at 69,351 but on
8/5/24, it fell to 54,237. This too was a direct result of the unwinding of the “Yen Carry Trade”.
I do not believe in the Bitcoin concept (US should have banned it years ago) but on 8/5/24, I
bought some Bitcoin through an ETF. Joe Brusuelas has over 20 years of experience in finance
and economics. He specializes in analyzing U.S. monetary policy, labor markets, fiscal policy,
economic indicators and the condition of the U.S. consumer. Brusuelas provides a
macroeconomic perspective to help clients address unique issues and challenges facing their
businesses and the industries in which they operate. On 8/9/24, Joe Brusuelas stated that the
total “Yen Carry Trade” was worth $4.4 Trillion but with the leverage used, it would have a $28
Trillion impact on the global economy. For years, most experts were saying that gold and
bitcoin would act as a hedge against market crashes but we did not see this on 8/5/24. The
physical gold ETF, “GLD” was 225 on 8/1/24 and on 8/5/24, it was at 220.
September is the worst month for the market so do not be surprised to see volatility in the
market. That volatility could run for the next few months as we get closer to elections. It is
nothing more than a buying opportunity. Carter Braxton Worth is an American financial analyst
and stock market strategist. Each year since 2008, he has appeared on institutional investor's All
America Research Team, ranked as one of the Top 3 technical analysts on Wall Street. On
8/9/24, Carter Worth stated that we do not have volatility in Bull or Bear markets and when we
do have volatility, that is a sign that the market is in transition. He believes that we are
transitioning in to a bear market.