Cut $PDD, miss on rev but beat on EPS.

I don’t get nor like the top line miss, since other operators were reporting improvements in top line. Limiting China positions to $BABA and $9880.HK for now

On $FIVE, I actually don’t understand why it’s up 10% off that earnings. Yes they beat by a small magnitude on all metrics and Q1 guidance, but all of the fundamental issues of the company still exist.

Their attempt to branch into >$5 products is not working, and store growth is also slowing. Leadership also sounds clueless and rambles on aimlessly when answering questions…

I may be wrong but I’m staying short. Risk case is market expectations are already so low, that even regaining some minor form of stability for the company is being perceived as “large improvements”.

Getting squeezed on these shorts is painful. We were right on the incoming ST bounce (catalyst path for longs had higher r/r, and trump did eventually walked back on tariffs as we expected), but wrong on the magnitude of the bounce; execution of the trade could have been so much better.

Additionally because of the bounce, some capital flow has also reversed from China, which led to pullbacks on our longs. Overall, I think areas of improvement is 1) better understanding what is my net exposure and key risks, as sometimes long + short exposure = risk^2 — e.g. being long China/short US momo stocks makes the portfolio very susceptible to flow reversal, and 2) when it comes to a “flows” reversal trade, the magnitude can be much more sizeable than my original expectation due to squeezes. We should have pared our shorts more cautiously as the market has already corrected significantly and given the long-favoured catalyst path, and been more aggressive in holding our $HOOD long.

Gave up some gains; now at +9% YTD. We live and learn! Reduced shorts across the board to manage risk but remain short on $TSLA $PLTR $FIVE, kept $BABA $9880.HK longs on as I think China still outperforms. Also added to $BLDR as one of my core US long positions as a beneficiary of lower interest rates, along with $INTC.

Still short on key positions ($TALA $PLTR $FIVE $NVDA). I don’t think the worst is over. Just like the catalyst path for long was better 2 weeks ago, the catalyst path for short now is significantly better. I think that the market will be very volatile going into the “event” day on Apr 2 for the announcement of tariffs.

30Y US Yield is back at 4.7%, the current market clearly does not believe in Trump’s ability to “pressure “the Fed to lower rates, in part driven by his campaign promise to eliminate the deficit (ie through tariffs revenue is one way, doge is another). He has to do more if he wants the market to believe, and it’s my current opinion that this admin is very incompetent and will end up doing too much.

On the other hand, 30Y JP Yield also back >2.6%. The yen carry trade unwinding will continue to be a headwind to global liquidity imo.

Without a doubt this is very macro based, but I think this is the theme of 2025.

TLDR: Short US exceptionalism/Long China underdog & Stimulus

Will also add a long on $AMD tonight, mainly to hedge the risk on the $NVDA short.

As we move to actually utilising AI in software and agents, inference demand (vs training) will prob be key in the next 2 years. AMD benefits disproportionately from inference, vs NVDA which benefits from training w its GPUs.

Shorted even more $NVDA @ $109.4

Short $CAVA @ $86.85

Play on US consumer being tapped out. High prices for a pseudo burrito, fast casual resto being valued on a 2030 store count at peak AUV & margins; very prone to consumer downgrade behaviour

They also have a significant % of stores in Washington DC; where DOGE is hitting federal employees hard w layoffs

Seems like $CRWV IPO won’t see a pop, underwriters trying to hold the line @ $39 but book is too heavy. Very telling of investors’ sentiments towards AI infrastructure. Let’s see if $NVDA sees sentiment contagion from this IPO given the significant linkage between the 2 cos

I think we are at 60% of experiencing a growth scare. ~75% pr is the point of no return, where if we cross that, probability of getting a growth scare accelerates due to the expectations trap (consumer expectations of a recession further reinforces the likelihood of a recession due to reduced spending).

IMO, we will likely get a growth scare sometime, and maybe even a stagflation scare (see pic above).

While I don’t think trump will let it transition into an actual economical recession, but as markets are forward looking, there is money to be made being long recession/stagflation probability now (for the next ~3-6 months) and then shorting that same basket when recession probability are at peak (~6-12 months).

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In the near term tho, with the frequent back and forth from Trump admin (oh there’s tariffs, oh wait there isn’t, oh wait there actually will be tariffs), market is also starting to believe his words less, and instead starting to price in the effect of prolonged uncertainty. Case in point: no significant sustained bounces during his numerous walk backs last week.

Base case now is he’s front running the pain, but will start pushing for green markets again a few months before US midterms.

Good news is based on how “bad” or “good” liberation day is vs market expectations, will inform us on how serious Trump is; which will help greatly in navigating the markets over the next 6 months. Bad news is midterms is in Nov26; so there’s still some time for him to sink the markets — and the more he sinks it from “inheriting a Biden economy”, the more he can claim to resuscitate it.

Hence our bearish view for the short term. While we might make tactical trades around key catalysts to manage risks, such as possibly closing some shorts on Monday before “liberation day” on Apr 2, we remain structurally bearish, as incentives of all forces (Trump admin, Fed) is in pushing equity prices lower in the short term. Gonna occam razor this.

Also to note, as this short trade moves from being essentially “long # of times Trump goes on TV to yap” to “long recession probability”, I feel more comfy in holding shorts for longer periods, as a growth scare will see more sustained downtrends and are likely less volatile in nature, vs tariff talks which may see walk backs.

Trade idea: SHORT 85th - 97th Percentile Wealth Spending.

Key drivers: 1) feedback loop between equity prices and spending, 2) AI displacement of white collar jobs

Short: $CAVA $CMG $SBUX $LULU $IBKR $BMW $EL
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As explained in the Ouroboros thread, the American economy consists of 2 parallel economies (driven by income inequality), with divergent realities and spending habits. Chart related below. This impending recession scare will likely impact high-income earners/wealthy people more — due to the feedback loop between their exposure to the stock market <> equity prices. This group is also responsible for a disproportionate amount of spending in U.S.

There is also another tailwind for this idea not previously explained here. AI displacement. It is my base case that the incoming AI displacement is underpriced by the market. I’ve been thinking for the longest time that we will see extreme waves of layoffs that may result even in societal chaos — and I don’t think many really understand the true extent of this incoming AI <> humans displacement trend. I have also been scratching my head on how to express this view accurately in the market.

I think this trade idea is a good way to do so. Basically, I think the white collar jobs are more at risk for AI displacement, vs the blue collar jobs.

By being short 85th - 97th Percentile, we are basically short the spending power of these white collar earners. Notice we are not shorting the top 98th percentile through ideas like RACE US, as I think the billionaires’ spending won’t be even slightly impaired by a recession.

I’m starting out by building a short basket consisting of mostly consumer names first as these are the easiest for the market to understand wrt lower high-income spending, and thus easiest for us to get paid. Will branch out to other names over time

Related links:
https://salesforcedevops.net/index.php/2025/02/28/the-white-collar-recession-of-2025/#:~:text=Because%20AI%20tools%2C%20which%20rapidly,legal%20tasks%20becomes%20increasingly%20unnecessary

Not adding much gross short exposure for this trade, but instead shifting most of my $FIVE short to this basket.

While I still dislike $FIVE business model, I think low-income companies are “relatively” sheltered in this recession, as their customers have already been squeezed hard LTM, and valuation is already at trough levels (see $DLTR). $FIVE is also back at pre-print levels, so feels better in taking the win here.

Trimmed some $NVDA short @ $105.5 for a small ~4%.

Also longed some $HOOD @ $41 to bring down net short exposure — mainly to manage risk as I don’t want to be caught offside by short squeezes going into Liberation Day, like the previous time.

As expected we are seeing some squeezing today. Net L/S portfolio should still be green today.

I’m concerned on why the market is squeezing up before the event day. In fact I would be even more bullish for post-liberation day if the market was dumping the day before event day. This all seems to me as the market getting ahead of itself thinking tariffs won’t be as bad, another sign that the market still thinks that Trump 2.0 is same as the Trump 1.0, and still does not believe in the sincerity of his words.

I’d fade personally, adding back shorts on $NVDA @ $109 $CAVA @ $87.68 $LULU @ $282.

Let’s see; hopefully we are not liberated from our monies tmr.

Not completely hedged as portfolio still susceptible to momo driven reversal, given shorts on high momo names like $PLTR $TSLA $NVDA. Momo shorts only hedged by the $HOOD long (a momo stock too).

But given my bearish bias, I think it’s fine. Willing to take a little risk here and will cut momo shorts quickly if incremental info proves me wrong.

https://x.com/bobeunlimited/status/1907377416286122417?s=46

Pretty good thread; my view aligns w it

10% flat on all countries
20% on EU
34% on China
>20% for major allies

30Y US Yield falls to 4.5%

First glance, market likely worried about trade war spurring a recession. Flat rate lower than expectations, but China is surprisingly high. EU & allies may cave to a certain extent, but China.. maybe not.

Will have to see move from China & major allies/trading partners next, but what’s impt is that this creates another short catalyst (China & Other’s retaliation) rather than making Liberation Day a clearing event for uncertainty.. staying bearish for now. Revisit in the AM