Markets have begun to come to grips with the reality of the new coronavirus. It is bad enough, sure, but not the end of the world. Thus, we saw a strong rebound yesterday, which helped us gain quite a handsome amount on our long position (which remains in force for today, too). Of course, at least in part, the "comeback" was fueled by the expectations that the Fed will step in and cut interest rates to help the economy cope with the crisis. Which, in our view, would be a big mistake on the part of the Fed. After all, it likes to reiterate time and again that its mandate consists in maintaining low inflation and unemployment. Well, those two indicators are at historical lows right now, which means there is no reason for the Fed to interfere. If it does, though, surrendering to the pressure of the markets and President Trump, it will lose its credibility as an independent entity in its own right, and moreover, expend its most valuable and efficient ammunition (interest rates) leaving almost nothing (with the rates as low as they already are) for the future times when it may really need it.
Last week, we announced that we were going to base our calculations on a capital of $80K instead of $70K. I'd like to retract that announcement in view of our strong results, because now we have a sufficient cushion of recent gains which will protect us from downturns. Still, if need be, we retain the right to do so in the future.
Good luck and take care,