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How Arming Ukraine Has Made America Weaker

Portfolio Armor's Photo
by Portfolio Armor
Friday, Jan 13, 2023 - 13:31
An American 155mm howitzer in Ukraine.
An American 155mm howitzer in Ukraine.

Submitted via Portfolio Armor

This Isn't FDR's America Anymore 

As the independent journalist Michael Tracey has pointed out, a "fairy tale version of World War II" has been used to justify America's involvement in the Ukraine War. The rhetorical parallels are frequent, including using "lend-lease" to describe weapons donations to the Ukrainian government which will never be paid back. At the end of last year, I noted some problems with this ("Revisiting The Rationale For Pouring Money Into Ukraine"). This week, Pedro Gonzalez of Chronicles Magazine went a step further, arguing that America's support is actually weakening America. We simply aren't the industrial power we were relative to the rest of the world in FDR's day. I have included Pedro's thread on this below, followed by a brief market note about trading the post-CPI market. 

Trading The Post-CPI Market

I made one short trade on Thursday, and I plan to make one long trade today. Let's start with the long one first, since it's related to the Ukraine War discussion above, and Zoltan Pozsar's suggested positioning in commodities in the face of war and inflation ("after years of underinvestment, supply became extraordinarily tight, just as we re-arm, re-shore, re-stock, and re-wire the grid"). Portfolio Armor's top name on Thursday was a commodity producer that will benefit from the armaments demand in the Ukraine War along with civilian demand.

The Portfolio Armor Substack's core strategy is to hold equal dollar amounts of our website's top ten names with 10% trailing stops, and add a new stock when we get stopped out of one. Replacing my stopped out stock with the commodity producer will be my long trade Friday. 

The short trade Thursday was buying puts on one of the trash stocks that's been rallying for no reason this year. It's hard to pick the top in these crazy rallies, but seeing that it's only up single digits in the pre-market Friday is encouraging. As a reminder, I share all these trades on the Substack as or before I make them. 

Afternoon Update

The trash stock we bet against yesterday was Bed Bath & Beyond (BBBY). Looks like we might have actually timed the top in it. 

 

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