BBOZ Share Price Waits in the Wings (ASX:BBOZ)

The share price of BetaShares Australian Equities Strong Bear Hedge Fund [ASX:BBOZ] is down 3.5% today, trading at $8.82, on a day when the ASX 200 [XJO] was up 1.5% to 5,902.4, at time of writing.

You can see that BBOZ versus the ASX 200 has a very strong and consistent negative correlation, meaning that the fund is doing what it’s intended to do:

ASX BBOZ Share Price Chart - ASX Beta Shares Bear Fund

Source: tradingview.com

We look at the factors that could cause the BBOZ share price to rise in the coming weeks and months.

An ocean of money…surely at some point it could unwind? What about Japan?

You can see the Federal Reserve’s balance sheet below:

Federal Reserve Balance Sheet - The Fed Printing Money

Source: federalreserve.gov

The chart shows you how an ocean of money was pumped into the system in the last few months.

An amount that dwarfs the amount put in during the GFC.

And you can see the interest rates in major economies below:

Global Interest Rates - Central Bank Interest Rates

Source: https://au.investing.com/

Many bets on BBOZ are likely based on the numbers coming out of central banks.

The rationale is that at some point, this debt-funded growth will unwind in a financial crisis.

If there is one place that could be the kindling for this kind of fire, it’s Japan.

Japan’s government debt-to-GDP ratio stands at a staggering 200% or more prior to the coronavirus.

Japan first implemented Yield Curve Control in 2016.

This kind of tinkering is in turn putting pressure on many regional banks in the country.

If you can’t make money lending money, then why bother you might ask?

BBOZ waits in the wings

If you are convinced a second crash is going to happen, the BBOZ is the natural vehicle for this event.

BBOZ magnifies gains on market losses.

Our editor, Vern Gowdie has two great resources if you want to learn more about bear scenarios.

These are:

They are both free, too.

Regards,

Lachlann Tierney
For The Rum Rebellion


Lachlann Tierney is a writer for The Rum Rebellion and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. 


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