Carbonwolf Alpha

Carbonwolf Alpha

Headwinds or Tailwinds ("HoT") Weekly Market Updates 2024

Fund Performance and Recent Trades



Happy Tuesday!

20 AUG 24

Headwinds or Tailwinds Update (HoT Weeklies): 24w34**: Fund Updates + Market Outlook + Question of the Week:


Carbonwolf Alpha, Fund Alpha: 

$QALM #Fund Alpha (Futures Algo Scalping) 2024 YTD Stats:

Total Portfolio Performance for 2023: +167%

Total Portfolio Performance 2024 YTD:  +61.68%

(Risk Level 3 -recently unlocked at 60%+ YTD)

Major Indices:

2024 YTD Performance:

$DJI (Dow Jones)

~+8.35%

SPX (S&P 500)

~+17.34%

COMP (Nasdaq Composite)

~+18.69%

GDOW (Global Dow)

~+11.21%

/CL (Crude Oil Futures)

$73.21


QALM = Quantitative Algorithmic Leveraged Momentum

TD = Trading Days

Winners and Losers Recent ~3 QALM Trades:

240820 /NQ, SHORT, WIN: +27.5% (Closed, +0TD)



$Amarok #Amarok II: 2024 YTD Stats:

2023 Closed Trade Win Rate: 2/2, 100%

Total Portfolio Performance for 2024:

*Reopening Soon under Amarok II*



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Market Observations

Chart1

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Observations:

Tailwinds:

+MegaCap and Semis Momo. Megatech companies bounce sharply up from mid-August swing low pivot (05 AUG 24). Last week represented the best week of the year for the Nasdaq 100, S&P 500 and the Dow Jones. SPX highest close since 23 July. The Magnificent 7 reclaims ~+356 Billion in Market Cap. See Chart1.


Megacap Momo from week of 05 AUG intraday lows:

NVDA

~+35%

META

~+17%

AMZN

~+17%


Sector Leaders Last Week

Semis (SMH)

~+9%

Technology

~+7%

Discretionary

~+5%

Financials

~+3%


Q3 Index Leaders

Russell 2000

~+4.3%

S&P 500 Equal Weight

~+3.7%

S&P 500

~+1.5%

NASDAQ 100

~-1.5%


Webbush's Managing Director, Dan Ives: "…tech earnings coupled by our recent checks in the field/Asia has only bolstered and validated this bullish view of tech stocks heading into year-end and 2025."


+Fed Watch and Consumer Outlook. CPI came in largely around expectations last week lifting the broader markets higher. Zip Recruiter's Chief Economist, Julia Pollak: "It is time for the Federal Reserve to declare 'mission accomplished' in its war against inflation, stop fighting the economy, and turn its focus to the employment part of its mandate."


July Consumer Price Index:

Metric

July

June

Headline Month-over-Month

+0.2%

-0.1%

Core Month-over-Month

+0.2%

+0.1%

Headline Year-over-Year

+2.9%

+3.0%

Core Year-over-Year

+3.2%

+3.3%


July CPI Month-over-Month Changes

Food

+0.2%

Energy

+0.0%

Shelter

+0.4%

Transportation Services

+0.4%

Medical Care Services

-0.3%

Apparel

-0.4%

Used Cars

-2.3%


Mortgage refinancing jumps ~+35% on 30-Year Fixed Rate mortgage rates falling from ~6.8% to ~6.4% -representing a surge of ~+118% Year-over-Year in mortgage refinance demand. See Chart2.


Consumer Indicators

Metric

Actual

Estimate

Jobless Claims

227k

235k

Retail Sales

+1.0%

+0.3%

Retail Sales ex. Autos

+0.4%

+0.1%



Fed Funds Futures

Month

Change from Current

Probability

Implied Rate

September

-50bps

54%

4.88%

November

-75bps

89%

4.63%

December

-100bps

79%

4.38%



Headwinds:

-Mixed Macro Signals. The U.S. Economic Signals are increasingly overlapping -suggesting consolidation before powering higher or sharper move lower if larger exogenous downside catalyst presents itself (ex: increased war footprint in Israel, Ukraine, etc., Election Surprise, Jackson Hole Negative Outlook Speech, etc.).


Mixed Macroeconomic Signals

Metric

Current Status

Jobs & Unemployment

Weak

Housing

Weak

Jobless Claims

Moderate

Retail Sales

Strong (+1% MoM, biggest gain since Jan 2023)

Q3 U.S. GDP estimate

+/-2.4%


Single-Family Starts down ~-14% Monthly.


Bearish Housing Starts

Actual

Estimated

1.24 Million

1.34 Million


Top Small Business Concerns, source: Chase Business Banking Survey

  • Inflation remains top concern
  • 20% Uncertain economic conditions
  • 17% Rising taxes
  • 47% AI and its impact on business



-Consumer Caution. Auto Loan Defaults rising slightly above 2019 levels, but still below 2009 highs. Consumer Sentiment continues slightly lower. See Chart3.


Auto Loan Defaults

Year

High

2024

~3.06% (current)

2019

2.9%

2009

4.1%


New Auto Prices/Rates

Avg. Transaction Price

$48,401

Avg. Loan Rate

9.84%

Avg. Monthly Payment

$767


Home Depot CEO, Edward Decker: "Higher interest rates and greater macroeconomic uncertainty pressured consumer demand more broadly resulting in weaker spend across home improvement projects. Additionally, we saw continued softness in spring projects…"


Retail giant Macy's to close ~150 stores. Macy's plans to invest in ~350 stores that are still open and plan to open new locations of Bloomingdale's and Bluemercury.



Sentiment. Investor Sentiment ending 14 AUG 24: Bullish: ~42.5%, Neutral: ~28.6%, Bearish: ~28.9%. Chicago Fed President, Austan Goolsbee: "You don't want to tighten any longer than you have to… and the reason you'd want to tighten is if you're afraid the economy is overheating economy looks like to me."


Stifel Chief Equity Strategist, Barry Bannister: "Stay defensive. It's too soon to jump back in… Expect an S&P 500 correction to ~5,000 by October… There is a risk of a bear market if the slowdown becomes a recession."


St. Louis Fed President, Alberto Musalem: "Data does not support recession concerns… Time may be nearing for change in policy rate."


SPX Technicals. Close: 5,240.03. VIX: +18.04 = “Neutral.” Fear/Greed Index: 24, "EXTREME Fear." Key Long support level to hold above this week is ~5,461. VIX has shrunk from above 40 during 05 Aug intraday low to currently below 16 handle -implying short term volatility is stabilizing over the very short-term. SPX turns positive for August last week. Gold ("/GC") rises above $2500 handle. Copper rises above $4.1 per pound handle after a strike in BHP's Escondida copper mine in Chile threatened to disrupt more than ~5% of global supply. See Chart4.


 All-important Fed Summit at Jackson Hole, Wyoming this week. Fed Chief Powell's speech on Friday will likely set the tone through to the next FOMC decision.



Chart2

Chart2

Chart3

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Chart4

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Question of the Week:


Question of the Week:

Will Fed Chair Powell give the all-clear signal for first September Rate Cut on Friday?


Disciplined Alpha,

MFA


**These two CLOSED proprietary Hedge Fund Updates are for informational purposes only. Our past performance does not guarantee your future results. Always do your own due diligence, research and suitability before investing or trading.

**These two CLOSED proprietary Hedge Fund Updates are for informational purposes only. Our past performance does not guarantee your future results. Always do your own due diligence, research and suitability before investing or trading.
If you have any questions or concerns about these Terms, please contact us at gobig@carbonwolfenergy.com

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