The ‘data dependent’ Federal Reserve appears to now be resorting to managing market expectations via leaks to favored Wall Street Journal reporters. Ironically, this has resulted in a perfect ‘coin flip’ scenario as we come into the weekend (according to the CME’s FedWatch tool).
I think we now know where this is potentially headed…
Is that a lower high that the 🐿️ spies? iShares SOXX ETF’s daily chart is battling hard with its 200-day SMA.
SOFR futures continue to pencil in 4+ rate cuts by year end. I still think that the market is getting way over-excited about fixed income. The 🐿️’s whiskers are sensing that some of these cuts need to be priced back out fast.
USDJPY daily chart with (the brutal) weekly chart from September 1998 inset.
US/Japan 30-Year yield differentials (blue) versus USDJPY (red). Weekly charts.
However, we should never forget that Yen adjustments have a history of violence! 1998 saw the Yen appreciate by over 20% in less than 2 months.
Dollar Index ($DX) futures, daily chart.
Last week’s futures leaderboard (from Finviz) would certainly seem to suggest that this could be the case.
These assets tend to have a vocal fan base, and the excitement appears to be brewing. No shade on my pal Brandon or the great folk at Macro-Ops but their glee makes me a bit nervous! To be fair, while pretending to be highly objective, the 🐿️ must confess to being pretty biased in that department too and I love Marin’s chart!
My word for the day is Kintsukuroi. Euonia translates this Japanese word as follows: ‘To repair with gold. Understanding that a piece is more beautiful for having broken and been repaired.’
Going back to those candles, it is interesting to see that all recent Dojis have been resolved subsequently with a higher gold price. The ‘East’ appears to remain on the hunt for sellers in the ‘West’!
Does that slight uptick in $GLD SPDR Gold Trust shares outstanding finally indicate a pulse of Western retail interest after 4 years of outflows?
The recent takeover of Osisko is a case in point. This brutal tweet says it all! Have patient investors truly been rewarded for their patience by that takeover premium? PM mining is a very tough investment category.
Based on shares outstanding of XME 0.00%↑ iShares Metals and Mining ETF, investors have been fleeing from the sector in their droves since the Ukraine invasion highs.
Yet last week, the mining stocks were running like they had stolen something!
OptionStrat (do try it if you have an interest in options) worksheet for one structure that is already working is available via image above.
Gold in Yen (blue), CNH (red), INR (orange) and USD (green).
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Pod: A mental Doji candle for the 🐿️
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Blind Squirrel Macro - The Pod
Macro for Civilians. Sharing successes and failures in the 30-year hunt for acorns in the markets. Finance observations are hit and miss.
Macro for Civilians. Sharing successes and failures in the 30-year hunt for acorns in the markets. Finance observations are hit and miss.
Pod: A mental Doji candle for the 🐿️