Tuesday morning insight

There are a few ways to gamble on a market recovery or a market decline that are efficient, lower cost and relatively easy. There are some ETFs that deliver multiples of the underlying index on a daily basis. You can buy and sell them like stocks (they are exchange traded funds), and they tend to behave well on a one-day basis.

$TNA - for up days
$TZA - for down days

Are we in a recession? We don't know. There is no confirmation. However, credit quality will give clues:

• Watch for changes in credit quality. It needs to impact US banks, US commercial lenders (e.g., energy and construction), and US consumers (credit cards, mortgages and auto loans).
• Chinese credit quality declines are not as relevant here unless they threaten the stability of the US or European banking system.

Game theory suggests you should sell stocks before a recession is confirmed (tweet below).

A properly constructed game theory problem has an answer.

If we sell, stocks go down, we both lose
If we hold, stocks stay up, no losses
If you sell & I hold: you win and I lose
If I sell & you hold: I win and you lose

solution: sell first

— Chicago Quantum (@chicago_quantum) June 21, 2022

US Equity Futures: still green