Inflation - Quick Financial Update

So you remember when on November of last year I told you that I was out of deflationary positions and into reflationary ones? That’s it, out of bonds, out of gold and into specific sectors like Energy, Materials and Tech?

Well, here you can see the comparison of the move:

Now, I don’t know if the move is over, the FED finally recognizing inflation is something, but that’s not to say that this is hawkish enough to end the reflationary trade. However, if you have been long this things, it’s probably good to start taking some profits, personally I’ll start relocating some into Gold, incrementally that’s it, a bit today, a bit on the next down move and so on until I reach the sizing position that I want.

In terms of timing, I think there is still 4 to 6 weeks of “risk on” mentality to the market, then the Rate of Change of comparisons of Growth and Inflation reach a difficult point since the re-opening is done for in terms of benefits to the economy and that puts us on the “Deflationary” quadrant (where both Growth and Inflation decreases). Now, there is the deflationary shocks such as the GFC or the Covid-19 ones, and then there is deflation on which the CPI numbers goes lower than the previous one but still is far north of 3%... you will see some spikes on VIX and panic on wall street, but it’ll probably be brief.

Have the US reach MMT yet? I don’t know, what I do know is that it has injected 3 times more dollars into the economy that it has on the Global Financial Crisis, and that the fiscal deficit for next year doubles the total capitalization of all the cryptocurrencies on the market. To me that’s enough so that it doesn’t really matter, I won’t short in the coming regime, I’ll buy gold and perhaps bonds but I won’t short markets.

And Criptos? Well, it was fun while it lasted…

Where will the VaultAssets funds rotate?

I already got out of:

• GBTC (Bitcoin)
• USO (Oil)

I’ll sell most of my positions on the next weeks:

• XLE (Energy)
• XLK (Tech)
• IWM (Small Caps)
• DBC (Commodities, Broad)
• DBB (Basic metals)

I’ll sell and keep a small position on:

• XLB (Basic Materials)

I’ll slowly buy on the coming weeks:

• GLD (Gold)