Trish’s Market Notes: $530M Short Position Against Tesla Revealed; Gold Rush Continues

U.S. stocks searched for direction in early trading on Tuesday as investors digested slower retail sales numbers out of Walmart and an escalating number of cases COVID-19 cases in Asia.

Investors are increasingly also worried about inflation expectations. That’s why investors will be very much interested in the Fed minutes from its April meeting, which will be published on Wednesday.

And as inflation concerns rise, so does gold.

Gold Rally Continues – $2000 an Ounce Could Be Next 

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Gold increased to $1,870 per ounce, the highest it has been since January. The rally is fueled by the weak ​dollar, inflation concerns, and an underperforming economy. I predicted it would breeze past $1800…then I predicted $2000….and I’m sticking with that. Because, prices are still going up.

Lumber Prices Likely Staying High Amid Supply Constraints

The handful of companies that control a large portion of the lumber industry are not in any rush to open new mills, as prices of lumber soar.

Increased production capacity could help alleviate the shortage, but it would also eat into the record profits of the lumber industry.

Lumber prices are currently at $1327 per 1,000 bd ft. Prices dropped from an all-time high of $1670, but are still well above the pre-pandemic average of $400.

The consumers are left with the bill, as soaring lumber prices added nearly $36k to the cost of building a new home in less than one year.

Buffet Cuts Stakes In Financial, Energy, Drug Stocks

Today was the deadline for 13F filings. This is the opportunity for the public to see what the largest hedge funds are doing. In particular, how their positions have changed. And there were many surprises.

Warren Buffett’s Berkshire Hathaway cut its positions in several financial, energy and drug stocks in the first quarter. Buffett’s hedge fund sold 98% of its shares of Wells Fargo, 51% in Chevron and 37% of Merck, among others.

The company bought more than 4 million shares in insurance brokerage Aon.

Burry Reveals Massive Short Position In Tesla

A particularly interesting filing was one of Michael Burry of Scion Asset Management. Burry, also known as “big short,” was one of the first investors which called the subprime mortgage crisis.

The filings revealed that he has a massive short position on Tesla, roughly equivalent to $530 million. Burry’s Tesla puts correspond to roughly 40% of his portfolio in nominal terms.

Tesla’s stock has had a rough year, amid slumping sales in China, supply concerns and Musk’s Twitter escapades.

The safety of Tesla self-driving vehicles also raises concern, as a Tesla reportedly ran over more people, this time two policemen in Zhejiang, China.

Dollar Drops, Oil Hitting $70 Mark

10-year Treasury yields were little changed at 1.65%.

The Dollar Spot Index fell 0.4%. Brent crude rose 1%, above $70 a barrel.

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