July twenty-eighth, two thousand twenty-five
《Venezuela’ s Ticket In》
“Venezuela’s Ticket In”
For details on the US-EU agreement, see:https://mp.weixin.qq.com/s/CEzkY3S78afLLrO6E1xh1Q; it will not materially correct the market’s original pricing too much, Notes250725The logic mentioned in “The Great Reversal” remains unchanged, The high-short and short-momentum ends will continue to see a recovery in value; this is a relatively stable source of returns(the European market’s Low Mom and High Short baskets).
Chart: Short basket and short-momentum basket
More details on shorting oil prices: a new license for Venezuela
For oil trading, we have started looking at the intraday chart again. The market is in the volatility-contraction phase discussed earlier. At this point, the expected decisive breakdown looks likely to occur early in 8, with the downside target above 55.
Trump is preparing to grant new licenses to oil companies with assets in Venezuela, allowing them to operate under restricted conditions and exchange the crude oil they produce. This is a rare policy shift. One possible conjecture is that he is releasing new supply in advance of impending sanctions on Russia.
In any case, once Trump truly reopens the Venezuelan market to U.S. major oil companies and operators, he will not be able to reverse course again at any moment; once this money starts flowing, it will be very difficult to shut it off.
Therefore, this means a durable new supply, this new supply is unrelated to whatever response Russia may make later or whether there will be further U.S.-Russia negotiations. Of course, Russia will not sit idly by; the central direction is downward.
Chart: Volatility is contracting; the downside target for a decisive breakdown is above 55
Additionally, the oil price spike in 6 triggered by war news cleared out the few remaining short positions and, in turn, made the oil market more vulnerable in the current environment.
Chart: The attempt to move higher ultimately failed
One-quarter of the world’s oil is under the threat of sanctions, punitive tariffs, or war. Imagine what the price of oil would be without these artificial factors.
To wrap up, here are a few more interesting charts:
1) On the left: Trade policy and US growth are driving risk sentiment; on the right: Investors are not looking to shift their risk allocations for the rest of the summer
Economic growth and trade policy are the two sentiment drivers receiving the most attention from institutions. At this point, investors generally have no intention of adjusting their risk allocations for the rest of this summer.
Our friends on the planet and we know more about the details of this part, For the former, we have to wait until 10/11 for the macro data to come out, so until then the focus will remain micro.. that is, driven by data and information from earnings reports and corporate conference calls，Including incremental developments and things that are changing, such as the Capex matter mentioned in the weekend edition AI. Reading earnings reports, listening to calls, and trading rotations are our own trading focus for these two months.The latter means news-driven moves + repricing of uncertainty + details that no one knows(neither side to the agreement knows them, This is certain to happen; there will only be a framework, not details. By the time the details emerge, the data will already be out, and the details will naturally no longer matter.）, and what we are doing was stated at the beginning of the article: the high-short and short-momentum ends will continue to see a recovery in value.
2) The dashed line in the chart below marks the start of the previous round of “supply-side reform1.0”
During the previous “supply-side1.0” period in 16-18, output fell in some industrial sectors, PPI inflation surged, and Treasury yields also rebounded significantly, Compared with last time, the 2.0 currently being pursued may have a more limited impact on economic growth, inflation, and bond yields.
Some thoughts from within Ganglong:
The substance of price caps is the forced redistribution of social gains, Some of the profits transferred to households during price wars will return to companies, and profit distribution among upstream and downstream businesses will also change within the corporate sector.。
Another chart we are watching...
One more thing: many reports are still using rising market concentration, or what they call Market breadth, to demonstrate how bad the market is, but in fact Historically, this indicator has had no value as a guide to either direction or timing.
We ask the traders on our own trading desk to produce a single-market note about every 2 days, covering U.S. equities, A-shares and Hong Kong stocks, and commodities. We select the better ones for the corresponding small planets (some also include our own commentary, which we do anonymize to some extent).
Those interested can subscribe as needed (subscribe only if you need it; don’t waste money):
U.S. equities:https://www.meridianresearch.app/home?product=us-strategies（Xingzhi）
A-shares / Hong Kong stocks:https://www.meridianresearch.app/home?product=asia-strategies（Ganglong）
Commodities:https://www.meridianresearch.app/home?product=commodity-strategies（Dixin）
In terms of level of detail, we will probably get down to the industry level. For mainland China, we will try to avoid crowded trades; if we write too specifically, someone may front-run us. We may be able to be more specific on U.S. equities, but readers will still need to think through and fill in the details themselves, There are no trades that can be followed directly!。
The overall win rate has been pretty good lately.
We don’t know whether everyone likes this new format for Notes. If you think it is better, you can also leave a like to let us know. We will decide, based on subsequent feedback, whether to continue with this type of content or return to the previous column format.
Wishing you all the best.
2025.07.28
Note: All content in this article is for reference only and does not constitute investment advice or a basis for any laws, regulations, or regulatory policies. Investors should not use or rely on this information as a basis for their decisions.