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Market Outlook Q4 2023

Our outlook is that that the combination of over-priced markets, AI-hype, and geo-political risk will mean a correction sometime in September or October.  This is  is based on the recent escalation of geo-political risk between China and the US on the technology front – Apple plus pending steel tarrifs on China by both the EU and the USA.

In addition, there are several other triggers that could cause the bubble to pop.  One is the upcoming ARM IPO which had to pare back valuation significantly.  Add in rising oil prices and the implications for monetary policy uncertainty leading to caution right before the end of the rate-cycle.

In short, we see better entry points into the market sometime in the next few months.  Thus, we are staying risk-off for the moment.

Our market positions include shorting Apple and NVDIA as we think both stocks have downside risk.  In addition, the recent rise in oil prices is normal as both Saudi Arabia and Russia have agreed to limit supply.  This is because demand will fall off soon due to economic recession and expect countries to cheat on this agreement as the price stays in the $90 to $100 price range.   Thus, look at oil as the calm before the storm and expect it to fall off when economic demand falls off due to monetary tightening.  Our position on this is to short BP since of the major oil companies it is most closely tied to the price of oil.