Dear Subscriber,

Stay Calm But BE SMART HERE

Once again, our hedge was very timely and profitable.  Personally, I sold into the hedge into the open assuming the SELL orders were market panic sell orders and the woosh down was overdone.  IF you kept the hedge on, KEEP IT ON.  The support here is 3150 in the SP 500 then around 3030--the market is barfing up stocks as traders and algos do NOT want to be long Monday IF China gets worse (and it IS GOING TO GET MUCH WORSE). 



Here is the rumor going around social media on the Wuhan coronavirus--that it's "manmade bioweapon"
""This virus was taken from a Canadian lab in April of 2019, and smuggled to Wuhan by a now fired Epedimiologosit and her husband. He happens to specialize in coronavirus, this was mishandled and is now rapidly growing: FACT: the mere notions that it cannot be treated and ..." blah blah blah

From Dr Feigl-Ding
Evidence suggests that 2 different HIV genes are present in the #coronarvirus S gene region (that didn’t map to any other coronavirus, according to other studies). The implications are direct and simple. If this and the other study are replicated and true, this was indeed a designer virus. A bioweapon." 

I AM NOT saying this is a "bioweapon." What I AM saying is this rumor on social media is skyrocketing. I reloaded our S&P 500 hedge for my own portfolio on the melt-up relief rally simply because it appears the overall market did NOT read our intel on the REAL infection rate in China--it's basically doubling every 2-3 days. If you remember from earlier this week this message from our virus epidemic expert in China

Dr. Eric Feigl-Ding
@DrEricDing

1) We estimate that only 5.1% (95%CI, 4.8-5.5) of infections in Wuhan are identified, and by 21 January a total of 11,341 people (prediction interval, 9,217-14,245) had been infected in Wuhan since the start of the year. Should the epidemic continue unabated in Wuhan....

2) we predict the epidemic in Wuhan will be substantially larger by 4 February (191,529 infections; prediction interval, 132,751-273,649), the infection will be established in other Chinese cities, and importations to other countries will be more frequent.

Our model suggests that travel restrictions from and to Wuhan city are unlikely to be effective in halting transmission across China; with a 99% effective reduction in travel, the size of the epidemic outside of Wuhan may only be reduced by 24.9% on 4 February."

Where We Are Now

Here's what I think is important here to keep our wits about and not panic. #1 China stocks have been closed--they open Monday. They have circuit breakers at 10%--we should expect the retail investors to panic--because that is what retail Chinese investors. IF you want to take a gamble on this likely outcome, TRADE the YANG ETF--3X BEAR China Index fund. 

IF you don't care about hedging, don't do anything.

If you DO care, my option guru Kevin Blaine aka "Malibu Private" is telling his option traders to"ADD Feb 3rd $310Puts around 85c.

PS--we are working on a special offer with Kevin for his option trading service for our subscribers--I and others who follow him as daily option traders have made some amazing KILLINGS in the last 30 days in names like BYND TSLA SDC --IF you like to trade options and are like me around a PC during the trading day, I HIGHLY recommend Kevin. Special Offer to be out soon!) 


ACTIONs TO TAKE: IF you are nervous--BUY OUR Rock of Gibraltor Preferred Stocks fund PFFA--load up until you feel calm! 10% yield and steady as a rock! AMZA is going to be another winner as soon as oil finds a bottom. BUY AMZA UNDER $3.90 with 18% yield when oil drips under $50.

Toby