Macro Edge #36 Originally posted on: thepensivenugget.com Note: We will be taking a short break. Regular posting of Macro Edge will resume in May. Thank you for reading! The Dollar is moving broadly higher, which indicates tighter USD funding conditions globally. It is also the last thing the world needs at the moment. Also in this week’s Macro Edge: charts of JPY weakness and US 10y yields trading above their30 year bearish channel ! If You Haven’t Been Watching The USD, Start Now Most European markets were closed on Monday, meaning another shortened trading week, but pay close attention to the USD The Dollar is strengthening broadly against other major currencies It has broken out decisively vs JPY, and is trading at key technical levels vs EUR, GBP, CNY Global USD funding conditions are
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Not A Time To Get Complacent. Macro Trading Opportunities
Macro Edge #35Originally posted on thepensivenugget.comMarkets have seemingly calmed down, with the US yield curve moving out of inversion, and commodities along with the USD off their highs.But, traders and investors need to avoid falling into complacency.Global conditions are fragile, and under increasing pressure with each passing day.Not A Time To Be Complacent The US yield curve managed to steepen out of its inversion in both the 2s-10s and 5s-10s, but: The curve is still very flat, and the financial stress it signaled by inverting should not be ignored; inversions tend to happen months in advance of a recession Recession risk is now real, compounded by high levels of inflation in food and energy globally Commodities prices remain high even as they start to stabilize WTI continues to
Not A Time To Get Complacent. Macro Trading Opportunities
Silicon Valley Bank: The Big Problem That You Need To Know
Originally posted on thepensivenugget.com The recent failure of Silicon Valley Bank (SVB) has driven markets into a frenzy of trying to understand why it happened, and what broader systemic implications it may have. The US government has stepped in to backstop depositors in an attempt to prevent further bank runs, but mainstream narratives continue to miss a broader point — bank runs are symptoms of a much more troublesome problem. One large enough to potentially trouble the entire global financial system. The Repo Lurking Behind The Narrative Popular narratives that have been used to explain SVB’s blowup run along similar lines: Banks took in cheap deposits when rates were low and couldn’t lend all of it out, which led them to invest in
Silicon Valley Bank: The Big Problem That You Need To Know
Macro Trading Opportunities: Strong Dollar, Global Problems
Macro Trading Opportunities: Strong Dollar, Global Problems
ETF Trading Opportunities: Profit From Crashing Markets
ETF Edge #17Originally posted on: thepensivenugget.comMarkets are crashing all over the world, with levels of risk and volatility rising sharply.Times like these, while scary, provide rich opportunities for those who are well prepared.Markets Finally Breakout… Look Out Below! 2 weeks of carnage in global markets have pushed major markets to break below key support levels SPY, QQQ, and IWM are looking very bearish XLRE turned from bullish to bearish in a little over 2 weeks IWM’s underperformance vs the major US indices, and XLP’s outperformance vs XLY, has proved to be prescient in signaling the lack of conviction in the broader Mid-March to April rally Energy stocks (XLE) are still elevated, but with macro conditions deteriorating all over the world, how long can demand for oil remain at
ETF Trading Opportunities: Profit From Crashing Markets
Watch For Decisive Moves In ETFs. ETF Trade Ideas
ETF Edge #14 Originally posted on thepensivenugget.com Some ETFs are showing signs of wanting to breakout, but have yet to do so decisively. It is best to wait for the market to give us direction at this point, considering the deteriorating macro backdrop, and the potential for a resurgence in volatility from war headlines. Waiting For Decisive Moves Most ETFs are hovering around key levels Watch for SPY$SPDR S&P 500 ETF Trust(SPY)$, QQQ$Invesco QQQ Trust(QQQ)$, XLY$Consumer Discretionary Select Sector SPDR Fund(XLY)$, XLRE$Real Estate Select Sector SPDR Fund(X
Watch For Decisive Moves In ETFs. ETF Trade Ideas
ETF Trading Opportunities: Be Prepared For Breakouts
ETF Edge #16Originally posted on thepensivenugget.comNote: We will be taking a short break. Regular posting of ETF Edge will resume in May. Thank you for reading!The long weekend in most markets left many of them trading sideways, with some still hovering around major support levels.Watch for breakouts of these levels, and the opportunities that they present.Watching For Breakouts Instead Of Easter Bunnies Easter holidays in a number of major markets made for a shortened trading week, and lots of sideways trading. Will we see some breakouts this week? SPY, QQQ, XLY are consolidating after their selloffs, but have not yet moved to retest their post invasion lows IWM’s underperformance looks to have been prescient (at this point) in signaling the lack of conviction in the broader Mid-March t
ETF Trading Opportunities: Be Prepared For Breakouts
Macro Trading Opportunities: Strong Dollar, More Pain
Macro Edge #37Originally posted on thepensivenugget.comRisk assets beware! Global USD shortages have begun, signaling a turn in the global economic cycle. Stagflation, if not outright deflation, is now likely.Risk Assets Beware: Global USD Shortages Have Begun The USD is broadly stronger against a whole host of currencies, with global USD funding conditions clearly tightening Global USD funding conditions are critical to how far financial contagion spreads, and how deep the recession gets USDCNY is crashing, having moved from 6.4 to 6.75 in just 3 weeks. Stress levels in USD funding markets are obviously high, and are still increasing CNY’s shift, and it being one of the last to weaken vs the USD, heralds a shift in the global cycle - this does not bode well for economic growth and risk as
Macro Trading Opportunities: Strong Dollar, More Pain
ETF Trading Opportunities: More Pain Incoming
ETF Edge #22Originally posted on thepensivenugget.comThe recent market bounce is clearly over, and the bloodbath across all markets continues.Naturally, this means that most trading opportunities are biased to the short side.More Pain Incoming, a.k.a The Bounce Is Over The markets are done bouncing and have moved into the second leg of their selloff, which has been brutal, with everything falling together High beta, low beta, and the SPY itself have all seen dramatic falls XLF is telling us something interesting — financials are “supposed” to do well in rising rate environments, like now, but they aren’t. The economy clearly isn’t doing well, at least from the market’s perspective Even Energy stocks (XLE) took a tumble, and are off their highs. Oil prices remain elevated ~$120, but wi
ETF Trading Opportunities: More Pain Incoming
As Recession Looms, Watch The Dollar! Macro Trading Ideas
Macro Edge #34Originally posted on thepensivenugget.comThe US yield curve has inverted, indicating that recession risks are very real.Pay special attention to the USD in the coming weeks and months. A stronger USD will indicate growing risks of global financial problems, as will US nominal yields turning down.Yield Curve Inverts, Time To Watch The USD Closely The US yield curve between the 2s and 10s inverted last week, and remains inverted between the 5s and 10s Recession risk is now real, compounded by high levels of inflation in food and energy globally Commodities prices remain high even as they start to stabilize WTI is back below $100, but is still too high for a world contending with high inflation and growing recession risks Wheat is still expensive, although it has come back down
As Recession Looms, Watch The Dollar! Macro Trading Ideas
Have US Long Yields Made A Top? Macro Trading Ideas
Macro Edge #33Originally posted on thepensivenugget.comThe US yield curve continues to flash huge warning signals to anyone willing to listen.As the potential for deflationary outcomes increases, smart traders/investors need to position themselves accordingly.If you would prefer to read this article in a slideshow format, you can do so at: https://bit.ly/Macro_Edge_33The Yield Curve Is Flashing A Huge Warning Signal The US yield curve between the 2s and 10s is very close to inverting, and remains inverted between the 5s and 10s Indicating much reduced potential for long term growth-driven inflation, even as US breakevens stay elevated Volatility in Commodities remains high even as prices of the most affected commodities pull back a bit WTI has fallen back to ~$100, which is still too high
Have US Long Yields Made A Top? Macro Trading Ideas
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