A happy Monday to all and I do hope you are enjoying this bullish extension of this wave five impressive bull market in risk assets. Its been a water shed week with the final breakdown of the 38 year secular bull market for world interest rates. (Where US rates go world rates follow pretty quickly). Whilst inflation expectations remain surprisingly low (TIPs), the US$ is in breakdown and the risk bull mkt rally has broadened nicely to the commodity space.
This is starting to look and feel more like an inflationary wave 5 picking up all assets, US$ aside of course. For long time readers here you will recall the metaphor of the battle between the inflationary dragon and the deflationary gorilla that we have used over the last few years since the credit crisis. Well we can say 2017 was the year that the gorilla was overcome. He is on the ropes but he is not out of the fight as Tips show us and indicator wise we need to watch carefully the yield curve very carefully to check for his counter attack. A bond bear market is not necessarily bearish in itself so long as the yield curve can stay healthy. Its when the 2/10 spread compresses to zero that we have a serious problem Houston.
I’ve been holding off publishing an update whilst we run through various loops with UBS and others. Almost daily we have been promised the report but digital water marks and total paranoia at mifi2 fines etc have meant we have been seriously delayed in receiving. In the end we got the report from a couple of sources almost simultaneously and for both my deepest thanks! (You know who you are).
So without delay, I’m very happy to be able to finally bring you the brilliant 2018 Outlook from the award winning, Swiss team;
Some of the headline takeaways :
*Bull Mkt top pushed out to 2019
*Bond Mkt breakdown early signal of weakness. But q2 a buy for rally to 2020.
*US$ come back in H2 2018
*Precious metals surprise to upside H1, then weakness on the US$ inverse H2.
I leave the detail to the guys great annual outlook but this is a document we can come back to again and again as a blue print for how the correlations might well play out over the year ahead.
Here GS:
Note, as this doesn’t happen too often, the only conviction 3 trade GS advocate this week was long Gold!
On a non technical and longer term fundamental point here, I want to say please take a moment to understand and think through how block chain technology could be applied to fractional physical gold. Think through the steps to enable that process. Think about physical gold being held in a repository, being logged and fractionally block chained. It would then be the ultimate crypto fractional block chained international monetary unit of exchange. Its a very logical application of block chain tech to the oldest monetary method of exchange known to mankind.
Here CS:
And here CS with a very special look at the UK and GBP:
The eurgbp pair continues this chop and the loss of any direction here demands a lower position size.
And here Fitzpatrick with his usual excellent technical run through:
Euro strength and US$ general weakness which is good news for the inverse asset classes.
Monthly here for the eurusd:
Its been a crazy start to the year on all fronts. We have immense liquidity that is flowing nicely into risk here. Wave 5 certainly but we have plenty of fun to come before the hangover is also my own view. I’m happy to run through the various sector tech charts and world tech shortly. Its strong stuff.
I’m continue to broker large over the counter BTC deals for institutions and high net worth individuals. If you would like discuss any aspect of this service do please get in touch. Minimum deal sizes are high at 1000 BTC but this is the nature of over the counter.
All the best guys, enjoy.
Rich