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Comments of the Day
10 March 2021
Video commentary for March 9th 2021
Eoin Treacy's view
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: bond price decline pauses, risk assets rebound on stimulus and global reflation hopes. solar, wind, innovation, follow bitcoin's rebound. Dollar eases back, Asia rebounding, China lagging in the rebound so far.
'Reddit Raider' Favorite GameStop Soars After Latest Cohen Push
This article by Bailey Lipschultz for Bloomberg may be of interest to subscribers. Here is a section:
Monday’s rally came despite short interest being near the lowest level in at least a year. Roughly one-quarter of shares available for trading are currently sold short, according to data compiled by S3 Partners. That compares to a peak of more than 140% in January.
“Shorts will continue to be squeezed out of their positions as GameStop’s stock price continues to trend upwards,” said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.
Shorts sellers are down nearly $6 billion in year-to-date mark-to-market losses, including $609 million in Monday’s trading alone, Dusaniwsky said by email.
Eoin Treacy's view
The rebound of reflation plays and retail investor favourites is partly a response to short-term oversold conditions. It is also because $1.9 trillion is still a lot of money, even after a decade of printing.
$1400 for individuals and each child as well as extended benefits the unemployed means many families will see bumps of several thousand dollars in the nest month. According to this calculator a family of four with an income of $70,000 per annum would receive a payment of $5,600 or 8% of income.
Email of the day on whether technical analysis has predicative qualities
I’m confident that most subscribers admire your courage in publishing the uncomplimentary letter extoling the benefits of Bitcoin. Ten years ago, an early teenage, nerd neighbour, who was a Bitcoin investor gave me and some other local adults an introduction with the promise that Bitcoin was the money of the future. At that time, one calculated the number of Bitcoins required to buy a cup of coffee. Its usefulness seemed apparent. My partner was keen. My reticence won-out because I could see how easy it was to buy but I was not confident that I could get my money back.
Today, Bitcoin is obviously not money nor a substitute for money and will never become one. See attached article. How long it will continue to be an investible asset is also an open question. Your critic may be disappointed. Bitcoin may be a store of value; and its liquidity has improved but there will be similar and more convenient options. Unlike art it has no attraction other than its relatively unattractive store of value. It is purely a speculative venture dependent upon an increasing number of bigger fools while at the same time there is a diminishing number of potential buyers. One could never say the same about gold.
You politely ignored the correspondent’s criticism of your technical analysis that remains the principal reason for my subscription. Do you believe that T.A. has predictive characteristics?
Eoin Treacy's view
Thank you for the associated article and your kind words. The best way to think about bitcoin or the other cryptocurrencies is as venture capital. Whatever portion of your portfolio you would normally devote to “make or break” opportunities, where you are willing to lose everything that is what you should think about investing in cryptocurrencies. That also fits the technical definition of gambling. The idiosyncrasy of the sector is that they are open to retail investors. Most venture deals, in the technology sector for example, are only available to much wealthier individuals.
Email of the day on oil prices
Oil price is in the news and as a holder of a leveraged position I was very happy with the price spike. Here's an article that is arguing it's a sellers’ market, will remain so, and that shale production will not drive prices back down. What are your thoughts.
Eoin Treacy's view
Thank you for this article. Here is a section:
The big players are consolidating the shale field now. And if you think that they want to pump barrels of oil at a loss, then you’ve got another think coming. They don’t have to do that. And once the land grab ends and the conservation of capital game begins, suddenly everyone is Opec.
The shale guys would be quite happy to see oil sustainably higher than it is now, especially given that competition within that area is now calming down. Everyone can make a profit as long as no one gets too greedy. That’s not going to upset them.
On top of that, Saudi Arabia has US president Joe Biden backing its hunches on this one. The president’s focus on “green” policies could make it tougher to develop shale fields and so it’ll be tougher to expand supply and so prices will go up. It’s another illustration of how regulation very often is exactly what any big incumbent player in a market wants. It keeps the competition at bay.
​The low return on invested capital has been a major challenge for the oil and gas sector over the last few years. Unconventional supply is extremely capital intensive. With prices below $60 large portions of the market are not economically viable. That reality led to the lower for longer mantra gaining traction. The lack of additional investment created the conditions for the current rebound and the massive decline in drilling during the pandemic exaggerated the effect.
Eoin's personal portfolio: from March 4th 2021
Eoin Treacy's view
One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change.
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