Friday Chart Book
The sequence of events is currently more interesting than the observed levels. Many asset markets have been exhibiting simultaneous regime shifts over the past few weeks. It is hard to remember a month where we ran a recession and then a reflation script but that’s where we find ourselves in. This opens the door for many various opportunities, while we are walking into another potentially contentious election cycle.
The Chinese stimulus, while still observed by many with scepticism, is, in my view, more meaningful than people currently give it credit for. While many are dissecting the numbers and arguing their meagre potency, I am looking at the intention and signalling as a key policy tool, which in many ways has more effect than numbers themselves. Not too long ago, many argued that the BoJ intervention wouldn’t lift the JPY. They were right in the first few iterations and then spectacularly wrong when they intervened back in July. Draghi’s “Whatever it Takes” was at first dismissed by many, but it was used as the blueprint of the perfect Bazooka a few years later. We are all smarter after the fact, so don’t be fooled at the moment and take critical voices as a good indication that there is probably more room to run.
Observing all moving elements at the current juncture leads me to believe that it’s a great time to buy protection against unwanted tail risks in the months ahead. It’s always a great time when things look just too perfectly priced. Buying hedges when you can not when you must has always been a good mantra. As such, it's important to look at the historical context and conclude that in times of significant monetary and government intervention, volatility tends to increase rather than the opposite. A lot of things can happen, and I would be the first to admit that I have little edge in knowing how things will move.
As a little thank you for reaching 10k followers on Twitter, I spent time finishing the “Bondfire” article which looks at various historical events where monetary and government interventions lead to unintended long-term consequences. You will find the full article below.
As I concluded in the article:
“The notion of "non sine periculo" aptly captures the current economic landscape. There are no easy solutions, and every policy decision carries its risks. The key lies in understanding and mitigating these risks while striving for sustainable economic growth. As history has shown, the failure to respect the delicate balance between stimulus and stability can lead to dire consequences. As we move forward, it is imperative that policymakers remain vigilant, considering both the immediate needs and the long-term health of the global economy.”
this was applicable in the past and is now more important than ever.
By now, most of you will be familiar with the models and their signals. If not, please study the guide I have published. I would highly recommend you go through these notes and guides if you are new to the pack.
Further below, the full book of 250+ charts covers the whole asset spectrum from equities, bonds, commodities, FX, and Crypto to give you the most extensive view. On average, it will generally provide a good 5-10 set-ups on a weekly basis.
A reminder that you can now also use my models in TradingView scripts, which I made available for subscribers to use on their charts for a fee. If you are interested, ping me an email with your TV username. Note that only paying subscribers will be granted access. No exceptions.
Let’s also read my friend Macro D’s recent thoughts on markets before engaging our scanning eyes across the multitude of charts that I have updated for you below. But first, let’s dive in a bit more on where bonds and curves are likely headed next.