Weekend Update Russian Coup or Diversion?

SP Toppy, Bitcoin, Nat Gas, FRB Deferred Asset

What a crazy start to the weekend as word out of Russia that there was a potential coup attempt. Magnelibra is well versed in the conflicts facts and this new event was something that has been eluded too in certain ways over the last few weeks. We say this because we saw numerous videos of Prigozhin head of Wagner upset that the Russian MOD wasn’t doing their part in regards to sending certain troops and munitions to the front lines in Ukraine.

We know Moscow will not take to kindly to outright criticism and this seemed to have come to a head yesterday. We aren’t really sure if this was legit, or if it was part of the chess game Putin is playing with the West. Maybe this was orchestrated to see if NATO would make certain active responses to any Russian/Wagner troop movements. We can never really know for certain but one thing is true, the social media sphere is full of new conflict experts! Many long time readers know Magnelibra denounces any war and conflict due to the general human destruction element and would rather see diplomatic relations take precedent. This conflict is far from over and we continue to hope for a more peaceful type of resolution.

We aren’t sure how markets are going to take all of this, but one thing we posted last Friday, well actually last Thursday night was the fact that the Nikkei is starting to wobble and the Japanese inflation numbers may lead to BOJ movements. We know the carry trade is a massive reason for equity outperformance and we know if and when the time comes for some of this to reverse, well, markets will fall. Maybe this whole 2023 run up was a bear market rally.

We know liquidity is still solid, but that is not changing the fundamental economic weakness that is plaguing main street. We await our two other pillars to fall before going full short on equities. Those two pillars left are first the negative payroll print, and the second is the FRB pivot from skip, to full out reversal of their economic outlook and actually cut rates. Till then we believe equity markets can buy dips and stay sideways to higher…

With all that let’s take a look at how Friday settled out on our educational trackers. Here is the Magnelibra MEGA8s where this week the options hedges truly showed their worth as the MEGA8 lost some ground but the options more than made up for the decline. One Friday doesn’t make a trend, but Fridays are usually well bid in equity land but this time not so much, they tried and failed in the Nasdaq. META moved up the ladder to take over the 7th spot from the Berkshire conglomerate: