Market Notes, 2nd July 2020

Morning

Nearly everything up, a teeny bit. Dollar down, similarly. Dollar assets essentially flat. Independence Day holiday coming up. The short sellers have made a packet on Wirecard, but are probably not rushing back to short anything else. $TSLA makes headlines by overtaking Toyota in terms of market cap, if not enterprise value (Toyota has more debt financing). Nobody can explain why $TSLA can be worth so much, but nobody is going to risk their capital by shorting it. I guess that’s all the explanation you need. More detail in: Double-WTF Chart of the Year Update: Tesla Becomes Most Valuable Automaker, Blows by Toyota by Wolf. Its hard to believe there are any bears left to squeeze. My understanding is that at this point the stock will start trading at some kind of rational valuation. It’d be exceedingly dangerous to put money on that!

I created a Google alert to look out for news items mentioning shorts by well known asset managers. Unfortunately, by the time you read that (e.g.) Crispin Odey is shorting Stock $X, you sort of know he’s just written the press release to make it cheaper for him to cover. Not that I’m cynical like that, or anything.

This is definitely the time to be delta (equity) neutral, and probably pretty much theta neutral too. So you might as well go to the beach!

Afternoon

Jobs number and Presidential press conference gave an adrenaline shot to the stockmarket (although it left bonds unimpressed). $TSLA jumped some insane amount, on the usual hopium.

Ghislaine Maxwell got arrested! Hope her life insurance premiums are up to date.

Wrap

I discovered Interactive Brokers Options Strategy Lab. What a wonderful piece of software! I’ve been selling a bit of vol for a while, but this is such a neat way of crafting a ‘combination’. I’ll probably write some more when I’ve had more chance to do experiments in the lab.

The markets are stubbornly up on employment being down only 26% since the start of the year. I can’t imagine the highs we’d get if it were down only 20%.


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