Transcript
Hello, everybody, welcome to Monday, the S&P 500 was down .09% today, although the broad market when you look at all the stocks that are out there it was it was a very weak day, lots of red today, I want to talk about three main catalysts today. One is this hedge fund that unwound on Friday. The second thing is really what happened to Suez Canal and what that means, and then also what’s going on with the virus itself and the vaccines and such and how that might be affecting our portfolio.
So first of all, on Friday, there was a hedge fund that was unwound. And what happens is this hedge fund use a lot of leverage. So they were borrowing money and buying stock with that, and those stocks came down and the bank seized all of those stocks, and then sold them in a very chaotic fashion was was a really interesting concept altogether. And the banks ended up losing money, they got less money back than they borrowed than they’d lent out. And so that created a problem for banking stocks today. And so the news over the weekend was is, you know, is this done this particular hedge fund, it has no transparency, we can’t tell what they own. Normally, you can like even with Retirement Capital Strategies, we have to report to the SEC what we have, but this hedge fund was registered as a family office, and that one’s excluded from reporting. So there was just a lot of mystery as to what was going to go on. And a lot of caution came into this week because of that. And, and so that was the big issue there, it just a matter of selling some of those stocks.
And it seemed to have a little bit of contagion, a little bit like what we saw with the GameStop thing where things happened. I think that blows over, I think that’s okay, the Suez Canal, was really kind of an issue, because we’re having a supply problem right now, in all kinds of areas, semiconductors, they don’t have enough to make the cars for example, lumber, they’re having trouble with lumber shortages, and etc. So when you block off, you know, 12% of the world’s trade, for a long enough period of time, you’re going to end up with all kinds of other shortages, specifically plastics, that was one of the key things, which of course, is a part of so many products now. So it was a very good thing that they got that reopened today, and that should allow traffic to go. And it was probably not closed long enough to cause any significant problems. But I will say that shortages are going to be something we’re going to deal with. So many companies have cut back on production and all kinds of areas, and then the supply is down. And the demand i think is going to expand with all of this stimulus money and all this pent up demand that’s coming out. So shortages are going to continue.
You just didn’t want the Suez Canal to be closed for, you know, months on end, you know, to kind of exaggerate that. So it was very good that they got that ship out of there, and it didn’t break in half or any of those other crazy scenarios that I was reading about. So that was a good thing. That should help as far as that goes. The last thing is really the Coronavirus. So obviously, they’ve had a lot of spikes happening in Europe, and a lot of closures in Europe. None of those are very popular right now there’s a lot of problems going on Germany’s started a closure and then said to reverse it because it was so poorly received. We’re seeing some spikes here in the US. And so they’re obviously the investments that we have, are going to do the best when everything starts to reopen. And so if everything starts to close, because the virus really picks up, that would be an issue. But here’s what I see. Just on Friday, they inoculated 3.4 million people, which is 1% of the US population. I don’t think we’re that far away from getting a fair number of people vaccinated here as far as that goes and trying to get this under control. So that’s, that’s actually a really big deal.
And again, the idea here is that the companies like Walt Disney that we have in on this portfolio, are going to start to see some much better earnings come through, because of you know, I mean, AirBnB, airlines, travel companies, all of these things are going to start to really go here, especially as more and more people get vaccinated. I don’t think that there is the will here in this country. And certainly in some of these states to close things down, I’d like to go on the other way, which is creating some problems. But in terms of what might happen for these particular stocks, you know, the Federal Reserve, at the end of last year said that they expected the gross domestic product for 2021 to be about 4.3%, which is a big number, we’re usually around 2 to 3%. But then after this last set of meetings, they revise that to six and a half percent, which is a huge number.
The expectation here is that things are going to start to grow very, very quickly. And there’s obviously all kinds of potential roadblocks that we have in here and the bumps in the road and what have you, but that growth, as it comes through is going to cause inflation. We have inverse, you know, positions on the bonds because that’s what makes money when bonds go down. And then We also have all of these pieces positioned really well for this reopening, that’s coming our way. And so you know, in between times, we’re getting all these, you know, different pieces that are coming, and whatnot too.
So, but I think that, you know, obviously we’re in the right spot, as far as that goes. So, lots of catalysts today, lots of pieces that are going on a very, very interesting timeframe. In fact, this is one of the most interesting timeframes I’ve ever seen altogether. So, anyway, look forward to talking to you tomorrow. And let’s see what happens. Thank you.