Flipping through The Wall Street Journal‘s business section Tuesday got me fired up about buying some cheap puts — perhaps even straddling them with a long position in gold. Talk about depressing! Moody’s cut Ford Motor’s bond rating to junk status; 48 states are going after Google for antitrust violations; steel manufacturers are getting hammered by, of all things, a dearth of vegetables suitable for canning; and investors were contemplating a downturn in the economy with three weeks remaining in September, statistically the worst month of the year for stocks.
Loading up on Puts
Trump will need to make nice with China, stepping up the pace of his bullish tweets, if he’s going to hold the stock market buoyant as the autumn equinox approaches. Mr. Market loves to scare the hell out of investors at this time of year, and they have plenty to worry about. As for loading up on put options, so far the bet has taxed the nerves and patience of traders looking for the right moment to get short. Every time things seem to be going their way, there’s the Trumpster with an encouraging word about the trade talks, or Fed Chairman Powell scuddling about in his knee pads, succoring Wall Street’s needy. Their little dog-and-pony show seems to be working, but how long will the distraction last?