GFBP Changes + Settles and Charts
5y5y Forward Inflation on the Move
When we look at yesterday’s settles two things in particular stand out,
US Treasuries particularly the long end were smacked hard
Silver with a big move up
Here is how the day settled out yesterday:
Here is the US Treasury curve and you can see a big bear steepening move as the long end was hit hard. the 2s30 was steeper by 8.6 basis points:
The fundamental practitioners are most likely taking their cues from the 5y5y forward inflation chart, here is that chart:
Is this a precursor move to a stimulus, global stimulus or UBI? Perhaps, but long time readers know that Magnelibra Econemotions are strict Austrian’s and QE will always lead to massive deflationary debt burdens until the ultimate hyperinflation.
Now we aren’t ruling out short term inflationary spikes and one look at the copper chart should make that case very obvious. However with the election and Covid still wreaking havoc on fiscal budgets everywhere from small business, to states, to municipalities, we can’t help but think any inflation will be short lived and that repudiation and bankruptcy, the ultimate destroyers of asset value are lurking just around the corner.
For now the inflationista’s may be on to something, but we would use any back up in rates to pile back into US Govt Treasuries in particular the middle of the curve like 10s.
We also can’t help but look at the overall equity markets which are clearly the largest asymmetric beneficiaries of QE, one look at this chart should tell you that, all of this during a global shutdown and pandemic to boot:
Historically, equity investors have been taken out to the woodshed at levels like this and yes as value players at heart, buyers here longer term, better be doing so knowing full well they better have some bullets saved for later!
Speaking of equities here are two charts, the Nasdaq and Russell2k Futures. The NQ is pretty obvious in regards to bull/bear sentiment levels:
As far as the R2k, well let’s just say the 50eMA keeps lurking and tracking like ninja in the night ready to strike quick and take this thing out, a trade or settle below this moving average will bring in sellers:
Finally we are sharing with the subscriber base the Magnelibra Global Futures Benchmark Positions Tracker. This is our flagship offering to those that want to emulate our CTA proprietary methodology. (Founding Subscribers) We noted yesterday the liquidation in the Nasdaq on the close and a purchase to hedge long equity exposure via 2 units of the Week 1, 3650 puts in the SP500 futures. We apologize for stating Week 2 puts, but in either case we will most likely be rolling to those as well given the current market structure:
Our goal with the GFBP is to gain subscribers to emulate our model. We have put in thousands of hours, analytics and retooling into trying to create an overall uncorrelated alternative asset program. We know many readers may not be able to emulate it on their own, and as always our founding subscribers have full access to us directly with any questions or any help they need to up their futures game.
Stay safe and good luck out there.
As always, please share our work and subscribe if you haven’t already, your continued support allows us to bring you relevant and important market analysis and content. We are underpriced with the free tier, way underpriced with a 2 latte a month style and about just right for the Founders which has access to our Global Futures Benchmark Program positions tracker daily. We hope you enjoy our work and we hope you continue to support us.
-Magnelibra Econemotions
DISCLAIMER: For educational purposes only. This is not a solicitation to buy or sell commodity futures or options on neither commodity futures. The risk of trading securities, futures and options can be substantial and is not for everyone. Such investments may not be appropriate for the recipient. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. Nothing contained in this message may be construed as an express or an implied promise, guarantee or implication by, of, or from the author Michael Agne owner of Magnelibra Capital Advisors. All rights are reserved. We will never claim that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Although care has been taken to assure the accuracy, completeness and reliability of the information contained herein, we make no warranty, express or implied, or assume any legal liability or responsibility for the accuracy, completeness, reliability or usefulness of any information, product, service or process disclosed.