Play Turner’s Take Ag Marketing Podcast Episode 264

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New Podcast

This week we go over the GameStop story in the equity markets, the possible bull market in energy for 2021, and how we are positioning ourselves in the grain markets.  Make sure you take a listen to this week’s Turner’s Take Podcast!

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GME Short Squeeze

The big story this week in the financial press is GameStop and the short squeeze retail traders are putting on professional hedge fund mangers. I’ll be shocked if this event is not made into a documentary or movie some day.  If you are not up to speed on the story please click here for a good summary from CNBC.

I think the GameStop situation is a good reminder that even the pros need to have a good risk management strategy.  If you are going to sell calls or short the futures, a stop or farther out long call is a good strategy against a black swan event.  The same goes for long positions and short puts in leveraged markets. I have been talking a lot about replacing long futures with long calls or call spreads and short put spreads.  It just makes the risk management a lot easier when you know you have a fixed risk on a position.

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Energy Outlook

When a new president and administration comes in to the presidency, policies are expected to change.  Energy is a great example.  Keystone has been cancelled, energy production leasing on public land will be stopped, and the government is going to get tougher on fracking.  Green energy policies will try to make up for the difference in production but I highly doubt it will be 1:1 for replacement.  Crude was in the mid to high 40s around the election and now it is trading in the low $50s.

Supply and production capacity is likely to take a hit on the new energy policy.  Economic growth and energy demand is likely to expand this spring and summer.