TikTok drama and Robinhood cartel

Abraham George Macro View

I will be putting out a special report on TikTok and all the recent drama surrounding it. India has practically banned all apps coming from China and they are a lot. Meanwhile Facebook has launched its own clone version of TikTok called ‘Reels’ in more than 50 countries including US.

China is upset about the upcoming trip of US health Secretary Alex Azar to Taiwan. He is the highest ranking US official to visit the island since 1979.

India became a net exporter for the first time in 18 years. Not exactly a great achievement as it was not due to surging exports. Weak domestic demand and low global oil prices contributed to the net positive export figures.

It is reported that by the turn off the year we will have vaccines for COVID-19. The question is if it does, will it turn out to be an anti-climax?Many business are closing by the day and many will not last until then. Many also have changed their businesses to suit the new world order. So in what way will the vaccine change economic conditions? We think there could be a sugar-high following the vaccine launch and economic conditions will start to deteriorate again.

The ‘Robinhooders’ constitutes about 25% of market trading. That’s a big number. They are mostly momentum traders. Traders who are creating this bubble with government support.

The stock market was supposed to be a reflection of the general economy but think the authorities are of the belief if they support the stock markets the economy should find its way back up.

One good thing going with the ‘Robinhooders’ is that by large their actions are collective in the same direction. They are not hugely leveraged. They are playing with money that they can lose. Collectively, they are a force. So, the markets are like a villain in a superhero movie. Every time you try to punch him down, he comes back more stronger.

Equities

There is increasing evidence that the recent subsequent rallies are weaker in breadth and momentum. Looks like the S&P 500 is all set to fill the gap extending to 3338.

Bonds:

Markets made a shot at 183 and it could still exceed it slightly higher but it is not required. The pattern is almost complete. A close below 179^30 will be the first confirmation for the move down.

Euro

While the Euro can make one more high above 1.1910. The odds are strong for a turn around.

Gold

Gold is unbelievably strong. Do we need to be cautious? Think we should. The daily sentiment index has jumped to 93% which is probably an all time high or close to it by a point or two. Market vane’s bullish consensus view has ticked a point higher to 88% while the all time high was at 89% when gold peaked on Aug 22 , 2011. Given the current momentum we cannot be long nor short the gold.

Abraham George is a seasoned investment manager with more than 40 years of experience in trading & investment and portfolio management spanning diverse environments like banks (HSBC, ADCB), sovereign wealth fund (ADIA), a royal family office and a hedge fund.