👀 Liquidity issues at True Forex Funds plus the latest investment bank research

Hey guys, it’s Kieran! Another week is upon us so let’s get ourselves prepared to make it a profitable one. I’m trying to tighten the newsletter up a bit, keeping it brief, but keeping the value level high. So let’s get straight into it.

📢 Prop Firm Industry News

The biggest industry news of the week was True Forex Funds, one of the oldest and most reliable firms, has announced serious liquidity issues and a backlog of payouts that they currently cannot cover. Their CEO Richard Nagy posted a lengthy announcement on X outlining the issues, as well as stating that they are looking to implement tighter rules. The key points regarding payout delays is quoted below.

This is a great shame, as True Forex Funds have been very reliable over the past few years. I myself have been funded with them for a long time and I’ve had no issues with payouts myself up until now. The storm that is currently engulfing the industry is crazy and a bit confusing, with so many firms coming under pressure at exactly the same time. New rules, new types of programs and profit caps are being introduced on a weekly basis to hopefully give the operating models of these firms at least some chance of profitability. Fingers crossed that they can weather the storm and return back to sustainability, and crucially honor all payouts!

🕜 Economic calendar

Here are this week’s red folder news events. US inflation data on Wednesday is the key event to look out for, as it could be the deciding factor on the near-term direction for interest rates and for markets. Tuesday also has the potential for volatility when US PPI numbers drop, and J Powell is due to speak 90 minutes later.

📈 The Macro View

S&P500 Positioning now ‘Streched’. More longs added last week in the Goldman Sachs Prime book and overall market positioning is now stretched. Statistically we would expect some type of pullback here to test these new longs. However markets, particularly the current US markets can remain streched for a long time, and we have seen much more extreme levels in recent times.

If not the US, then where can we put money to work? Europe is starting to look more investable, with fund flows posting 2 big positive months in a row. Might be worth pulling up that DAX chart. You will see that it is currently pushing all time highs, outpacing the US markets.

The mother of all catch up trades. Long US equities v Short Chinese equities has opened up a monster jaws gap. Fundamentally it is unclear what could change the trajectory of this relationship but we’ve seen a big pop in Chinese equities these past few weeks and with most participants long US indices already, this one could be a nice medium term mean reversion play. Most prop firms offer exposure to this trade through the HK50 market.

There is no doubt that inflation is falling across the world. This chart includes a basket of 45 countries, both Developed and Emerging. Interest rates are being cut by most central banks and if inflation continues to fall they will likely cut more. Lower interest rates likely means more money going into risk markets. News cycle narratives aside, on a macro level, interest rates should be on a downward trajectory across the world.

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OK guys, I hope you enjoyed this week’s newsletter. Like I said, I tried to keep it a bit more brief to make it easier to digest. Do you prefer it a bit shorter like this? Or do you prefer a longer read? Reply to this email and let me know. Otherwise, have a great week and i’ll speak to you next Monday!

Kieran

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