Just A Few Charts
Full Update Coming This Weekend
We will post a more detailed update this weekend which will have all our weekly data and usual analytics, if you aren’t a subscriber you won’t want to miss our analysis, the global chessboard is heating up and the ball that has been held under water for far too long, is quickly accelerating towards its breakout!
Here are a few quick charts as we near the end of the trading week that we are watching. First up the Nasdaq futures where the BB pivot if breached which should usher in systematic and program sellers. Everyone knows and sees this level and that makes it worthy of defending for the bulls. Geopolitically we feel that the equity markets can no longer ignore the deterioration of global economic fundamentals:
The other chart we are watching is Crude Oil. Too many are complacent here and feel that the US strike force capabilities will lead to a swift end to the Middle East conflict. Which will then lead to oil moving back down, however we do not see that as the most probabilistic scenario but rather believe that this conflict will brew into something much larger and longer in scope as things like this are never quite as easy as many claim them to be:
This energy spike is also leading the inept crowd to once again make the same mistake they did in 2008 when they thought the oil spikes would lead to a more prolonged inflation. Once again and just like in 2008 they will be proved quite wrong, however this doesn’t change the fact that some accounts will start to discount a more passive FRB when it comes to cutting rates. What this same crowd always seemingly gets wrong is that the oil spikes are nothing more than transitory, however their effects bleed into the real economy, weakening and already fragile consumer base. This is what ultimately leads to a massive wave of deflation as prices are no longer sustainable, demand plummets and consumers move to a more defensive posturing.
We see evidence of this movement within the U.S. Treasury market as yields have spiked. Many attribute this to the inflation theme, however we feel a lot of the selling is also capital being raised due to collateral haircuts and or to meet the massive redemption requests from big funds out there. Yes main stream media will not tell you this, because well, they just don’t know how the real system works. So combined oil inflation pressure, with massive collateral haircuts hitting funds at a time where they are also required to meet record redemptions, well that is your recipe for forced selling in the treasury markets. Nobody wants to part with treasuries, unless they absolutely have too! We can also see confirmation in the U.S. yield curve which flattened massively yesterday, confirming our thesis that the bulk of the selling was in shorter dated maturities:
Here is the U.S. Govt. 10Y yield chart:
Next week will confirm the next move, either yields pop and we breakout to the upside, or we get a resurgence in protectionism and risk off seeking the stability of treasuries forcing yields back down.
Ok this is the theme we will be elaborating on this weekend, have a great day everyone. We genuinely appreciate each and every one of you. Join us on this journey; we believe you will find real value in being part of our community. Wishing you an excellent day ahead!
— Team Magnelibra
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