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The Fed Pulls The Punchbowl

Arun S. Chopra CFA CMT 

November 2018

  • Markets come under pressure as the Fed pulls the punchbowl.
  • A look at how to monitor liquidity across equity markets.
  • Why and how I shorted NVIDIA and Netflix near their peaks.

A deeper dive into credit and dollar dynamics.

After calling for major breakout last year in "The Melt Up", I switched to a much more cautious stance as the calendar turned over. There were four major factors coming into the year I was most concerned about. I often see laundry lists of concerns; I have found that somewhere between pointless, redundant, and confusing. The following four however lined up perfectly and were powerfully simple (no particular order).

  • Proprietary exhaustion indicator fired in Jan., first time since 2014
  • Election Year Seasonality
  • Fed Policy
  • Trade War

It was these four reasons that I stayed balanced in 2018, with 65% equity exposure on average all year, with much of that long/short. As the year has progressed, the above framework...

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