Mid-Week Update

November 12, 2024

The new week has started with another push higher in risk assets following the weekend’s crypto exploits. Similarly, the US Dollar rally, which took hold on Friday, continued unabated, sinking the EUR/USD exchange back to Q1 levels (see chart below).

Bonds continued a bit stronger in Europe, whereas they continued on the back foot in the US, where the proposed policy changes of a new presidency are still being digested. Gold saw a break below key support, which is now challenging the bulls as our momentum model (see chart updates below) has now turned short.

This all seems like Santa, indeed, has come early while we still have plenty of runway until actual Christmas. This very much feels like the euphoria of 2021 when stocks just ramped, regardless of their value proposition. Similarly, we are seeing ARK explode higher after being down on the year pre-election (see chart below).

We all know how this ends, so enjoy it while it lasts. Similarly, this will put a spanner in the Fed’s plans to reduce rates markedly from here. Financial conditions are easy and getting easier. Animal spirits at work. I wouldn’t exclude a blow-off top in the coming weeks as people will chase their year-end bonuses and retail piles into risk and leverage. Irrational exuberance? Yeah, maybe, but we know that the guys on the FOMC won’t do anything about it until it’s too late.

Let’s now hear from Macro D and then check the latest chart updates and alerts.