The second half of the year starts today, and look out above!
The Fly, the anonymous wordsmith who left Wall Street decades ago and now runs the iBankCoin blog, says we’re about to witness the “total decapitation of the shorts” thanks to the announced pause in the U.S./China trade war.
At this point, he’s not wrong. One glance at the bubbly premarket action (see “the market” below) will tell you that. “You’d be dumb to bet against this sojourn into depravity,” he wrote. “How can you short stocks when all there is is upside surprises?”
By shorting, investors borrow shares of a stock or asset they think will fall in value, but sell them immediately at today’s price. If all goes to plan, that stock then drops and then they have the option to buy them at a the cheaper price, and profit from the difference. But that bet can backfire if the asset goes the other way.
His advice: Load up on tech, biotech and new IPOs.
Either way, getting caught on the short side when this rally takes off could get nasty, especially as the wounds of June’s huge performance are still raw.
However, while the bulls have the upper hand, Morgan Stanley’s Chetan Ahya is convinced there isn’t much meat to the recent developments.
There is “no immediate escalation, but still no clear path towards a comprehensive deal,” he said in our call of the day. “We lack clarity on whether real progress was achieved on the sticking points that caused talks to break down in the first place.”
Not just that, in a note on Sunday he said trade tensions are becoming more of a problem for business confidence and predicted global growth will slow to a six-year low of 2.9% by the end of the