Mark Stoneweapon

Voltaire Newsletter July 12, 2024

Recession is on the horizon...the contraction trade. It’s probably a classic case buying the rumor of rate cut expectations, and selling the news when the Fed puts and reality sets in. —Government spending is out of control. —Gold signals currency debasement will drive up rates regardless of Fed cuts —The end of discipline builds a second wave of double digit inflation —Commercial bank credit for the real economy will tighten during a contraction unless perhaps the government unleashes liquidity via second mortgage guarantees. Buying the rumor and selling the news in pairs. https://schrts.co/muJFrDQf The criterion is ripening for equal weight/value to outperform market cap/growth, and this trade appears to have broken out today. When the 2000 bubble crashed, there was a budget surplus. However in 2025, there could be a surplus of tariffs that will favor US companies, but require additional liquidity. The geoeconomic strategy to contain China should be to reset US consumption with allied producers, coupled with localization initiatives. The Military Tech Mag7 leverage would be better gambled on not killing the real economy, besides they get a lion’s share of UST revenues anyway.

The pain trade is on... Short QQQ Nasdaq Long IWM Russell 2000/calls and call spreads