TheMacroStrategist

TheMacroStrategist

The follow excerpts are from this week's Parallax note. For more information, please see bio. "Combining market volatility, tightening financial conditions and pressure from President Trump, Fed Chair Jerome Powell will have his work cut out for him." "It is imperative that it's understood that while dovish policy will initially hit the dollar negatively,...

TheMacroStrategist

Small caps are often used as a gauge for domestic growth because they are more sensitive to changes in economic conditions, such as input costs, wages, financial stress... Many were caught off guard by the equity rollover in early October, but few were paying attention to what was occurring. In late September, financial conditions began to tighten and credit...

TheMacroStrategist

With virtually no more hype around crypto, it looks like it's almost done. Utility is in the eye of the bag holder. Matter of time before it's below $2,000. ... I wonder on what show he'll eat is eggplant parm.

TheMacroStrategist

God bless the legacy financial media because their uselessness is a blessing. Headline to headline is no way to live through live whether you trade oil or bitcoin. The click du jour is how the 2s/5s yield curve is now inverting, and the 10s/2s are at a mere 11 bps. I have been one of the largest flat curve-ers out there. Why? Because my process shows why the...

TheMacroStrategist

I have been a huge component of growth slowing, and the cyclical/defensive proxy of XLI/XLU is a clear indicator that the growth outlook is mixed at best. Not only that, you might be a beta (probably the bad kind). When you see both growth and inflation slowing on a rate of change basis on the back drop of higher volatility, you must always look to long low beta,...

TheMacroStrategist

The USDJPY finished the day higher on a stronger dollar following continued trade turmoil. The structural dollar shortage China is facing is uber bullish for the DXY, but as euro-dollar 18/19 spread collapses we must risk manage with a quantitative overlay. The TACVOL intermediate range top/bottom for major FX pairs. Effectively buy/cover at the bottom or...

TheMacroStrategist

The DXY has been loitering around 96.50 as the Fed's third mandate (equities) is unable to gain any steam - SPX continuing to get sucked closer to the TACVOL range bottom 2614.97. What is TACVOL And How To Use it. It is quite clear that the market's view of Fed policy is weighing on the dollar along with euro-dollar spreads. This has a particular consequence - at...

TheMacroStrategist Updated 

FundStrat's Tom Lee revised his 2018 end-of-year forecast from $25,000 to $15,000. Bitcoin is now $5,646, and Lee waited for a 59 percent decline (YTD) to make that revision. Google Tom, and he's seem to have replaced James Altucher. Before the $25,000 2018 target was implemented, Lee was on Money Insider a little more than a year ago. His primary thesis was...

TheMacroStrategist Updated 

Before we start pulling out the stoic Game of Thrones memes, winter is coming. It's October, and seasonality is going to impact the price of crude oil. Historically, crude prices under-perform from September to January: -.04% (Sept.), -1% (Oct.), -1.2% (Nov), -.5% (Dec.) and -.7% (Jan.). If the 20-year historical seasonality holds true, oil bulls may be in...

TheMacroStrategist

The industrial proxy peaked in early 2018 along with silver prices. It has ebbed and flowed, but the trend is obvious. Much of this has to due with China's economy rapidly slowing down. Even the state-run manufacturing PMI is about to dip below 50 into contraction while data from SpaceKnow suggests China's manufacturing sector is already below that 50...

TheMacroStrategist

On October 30, I published "Stronger Dollar Themes To Continue" for my subscribers, which gave a unique approach to why the dollar is rallying even tho traders foresee Fed policy getting dovish: credit spreads. "Now, when comparing credit spreads to the financial crisis it doesn't seem to be "that big." Combine record U.S. corporate debt, a highly distorted...

TheMacroStrategist

One of the big themes to come from this week's midterm elections will be regulation in regards to data security. Over 4.5 billion records have been compromised this year, and six social media breeches account for 56% Facebook has admitted two highly significant breeches since the Cambridge Analytica scandal. Look for FB to see regulatory pressures along with...

TheMacroStrategist

Crude continues to crash, but that's no surprise to me. I've been warning of where oil would be heading as headline inflation and broader macro data continue to decelerate. "Global synchronized recovery" turns to "Global synchronized margin call." The real-time market commodities + FX components in are now down over 15 percent since early October with crude being...

TheMacroStrategist

On of the biggest calls leading into 2018 was to get ahead of the consensus and go bearish on emerging markets, particularly China, Turkey and Brazil. Typically, in higher inflation environments, money flows head to emerging market assets; and it's particularly why EEM has had such a great run since China induced the largest stimulus known to man in 2016. When...

TheMacroStrategist

Parity in play? Think so. Here's a small snippet from tonight's subscriber note: "Typically, U.S. corporations push dollars into Europe at the end of the month, and that is likely not going to happen. Stress will remain. I still believe the DXY could reach triple digits and EURUSD will retest 1.05. Potentially, I foresee a test of parity by mid-2019 unless...

TheMacroStrategist

When I was younger, there was a saying "don't be a momo." It was essentially slang pejorative for don't be silly, dumb, stupid etc. Over the recent sell-off, you've definitely not wanted to be a mo-mentum bag holder. Whether it's FB, AAPL, GOOGL, NFLX, it's all got smashed, and it's been a cause of concern. Q3-18 earnings from such household names have been good,...

TheMacroStrategist

The price action of BTCUSD is somewhat intriguing in terms of the massive consolidation period since earl September and then a larger, say $2000, range since May of this year. Although volatility has come down somewhat, it's still not as volatile as other currencies including gold. Aside from one hoping it's a lotto ticket, is there utility in owing it? Yes, but...

TheMacroStrategist

U.S. equities bounce from initially being down 15 handles, but volatility is expected. However, is recent move expected? Yes, in my opinion, as markets are ultimately forced to re-price growth and inflation . Step back from the earnings headlines because that's literally old news. Although Q3-18 earnings growth is up nearly 20 percent, over 60 percent of...