Friday Chart Book

November 8, 2024

The election is now finally behind us. What I thought would be a Trump win was not only that but an absolute triumph. I stayed up all night watching things unfold. Surprisingly markets moved and never looked back, not giving me much of an opportunity to fade or re-engage. The moves pretty much were as expected once it became clear who would win. USD bid, bonds down, curves steeper, stocks, and crypto bid. The playbook went just as most had expected yet the daily moves underperformed the implied vol on the day, which seems to have caught a few people overexposed and caused a bit of a reversal day on Thursday with massive moves in rates (aside from European bonds) and FX crosses.

With all the fear surrounding Trump’s protective and tariff policies, I was surprised to see USDMXN down after the fact (see chart below). That makes me think. Of course, this could be just a simple positioning squeeze, but is this telling us that either positioning was pretty much already there or the market doesn’t see him delivering those policies after all?

Similarly, the squeeze in bonds ahead of the Fed resulted in lower 10-year yields (see chart below) than the one we saw on Tuesday’s pre-election sell-off. That’s strange, but again could speak to the fact that positioning was pretty much already in place.

What is going on and I think it’s too early to speculate is my thesis that Trump is not going to be as fiscally imprudent as people expect him to be. He has been voted in because people are fed up with inflation and feeling poorer. While he was firmly looking for growth back 8 years ago, this time around he needs to focus on better economic outcomes for everyone. Ironically, his policies might be disinflationary (think of Musk coming in and sorting stuff out) and possibly also slightly a tax on growth as fiscal prudence dominates. Long way to go but that’s certainly a macro theme I’m following into next year. I am preparing to buy bonds again and will elaborate on it in a separate post.

As for the models, they nailed the move on election day being short bonds, long the USD, and long equities and BTC. Let’s see further below in the charts whether anything has shifted since then.

As for the FOMC itself, not much drama, they cut as expected but removed the sentence about getting greater confidence that inflation is moving towards 2 percent. I think this is logical as it was previously used to describe what is necessary to start the cutting process. Powell also confirmed this which then set off the rally in bond yields to new lows on the day. Poor Jay, can’t himself be dovish, and if not dovish, it’s super dovish. Some interesting developments in bonds in the charts. Looks like the momentum model took off some shorts on US bonds on Thursday. See the chart pack below.

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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. I am also in the process of making an intra-day model available soon. It’s in the works.

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.

This is a reminder that you can now also use my models in TradingView scripts, which I made available for subscribers to use on their charts. This is not for free and incurs an additional cost. If you are interested, ping me an email with your TV username. Note that only paying subscribers will be granted access. No exceptions. It’s taking time to set everyone up so I will limit the amount of users going forward.

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.