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CommoditiesCredit MarketFXGaugesGlobal AssetsInterest RatesMacroVolatility

MODELS – GAUGES – THEMES

by K P 22nd December 2022
Reading Time: 27 minutes

Our Dashboard displays various economic and market datasets at a glance to help you monitor the momentum, trends and possible inflection points near extreme levels as well as anomalies.

In the Macro section, you will find all US and European leading indicators from the business and consumer perspective, which are helpful to identify the likely direction of growth and inflation, enabling you to better anticipate interest rates market movements and with that other market chain reactions.

In the Technicals section, we provide a price action monitor, credit and some volatility tools to visualise the sentiment, momentum and trends, which may alert you to extreme optimism / pessimism / overcrowded positioning.

We are sure this dashboard will supplement your market strategies. Let’s “connect the dots” !

  • MACRO
    • Economic Sentiment & Cycles 
      • GLOBAL
        • Global Economic Surprise Indices Heatmap & Graphs
        • Global 2Y + 10Y Govt Bonds + Yieldcurves
        • Global CPI heatmap & charts 36 regions
        • Global Central Bank Rates (28 DM vs EM regions, 3yrs hike/cut cycle table overview)
        • Global Central Banks balance sheet
        • Global Manufacturing Confidence (39 regions Heatmap, Breadth, Cycle/Mkt Correlation)
        • Global Services Confidence (15 regions Heatmap) 
      • REGIONS
        • USA
          • US Macro Model, leading indicators heatmap
          • US CPI proxy model
          • US Treasuries Cash Yield Curves vs Recessions (2s5s,2s10s,5s30s,10Y-3M)
          • US CESI vs US10Y Bond correlation
          • US Employment Situation (Jobless claims, JOLTS)
          • US Consumer Confidence 
          • Fed’s “Fair Value” FF model
          • Implied STIR FF probabilities
          • FOMC “dot-plot” table
          • US Yield Curve Cycles
        • EUROZONE
          • EZ Macro Model, leading indicators heatmap
          • EU ESI heatmap, Momentum & Trend Scoreboard, Graphs
          • German IFO & sub components 
          • EU & DE ZEW table and cycles vs EURUSD, 10Y Bunds, STOXX
    • TECHNICALS
        • FICC – Fixed Income, Currencies, Commodities and Equities Section
        • Fixed Income
          • STIR Term Structures (Fed, ECB, BoE)
          • Global 2,5,10,30Y Govt Bonds Yield Momentum Monitor (levels, 1wk, 1M)
          • Global 10Y Govt Bonds last 3M Heatmap 
        • Cross Assets Monitors (Bonds/Credits/Commodities/FX/Equities)
          • Global Cross Assets Performance Heatmaps (1wk, 4wks, YTD, and more)
          • Global Cross Assets Momentum/Trend/Exhaustion Scores
        • Risk Gauges
          • US / EU Risk Gauge Model (Credit Spreads/Volatility/VIX TermStructure)
          • US Credit vs Equity Correlation Model
        • Commodities
          • Global Commodities Heatmap
          • Commodities Cycles 


 



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22nd December 2022
CommoditiesCredit MarketFXGaugesGlobal AssetsInterest RatesMacroNatGasStocksVolatilityWeekly

Lights Out – 2022wk35

by K P 4th September 2022
Reading Time: 10 minutes

This Week

  • Lights Out !
  • MACRO
    • Global Macro update
    • US Macro update
    • Europe / UK update
  • TECHNICALS
    • US, European Rates / Bonds
    • Credit market
    • Major FX
    • US / Europe major stock indices
    • Global cross-asset performance heatmaps
    • Momentum / Trend / Exhaustion scores
  • “…one more thing…” :

@MacroTechnicals 2022wk35


 


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4th September 2022
CommoditiesCredit MarketFXGaugesGlobal AssetsInterest RatesMacroStocksVolatilityWeekly

Inflection Point – 2022wk32

by K P 14th August 2022
Reading Time: 10 minutes

This Week

  • Inflection Point
  • MACRO
    • US macro update
    • EU macro update
    • Global CB action update
  • TECHNICALS
    • Rates/ Bonds
    • Credit market
    • Stock market Indices
    • Cross assets performance heatmaps
    • Momentum, Trend, Exhaustion scores
  • “…one more thing…” :

@MacroTechnicals 2022wk32

* this is not a trade recommendation and for educational purpose only. please do your own research.


Inflection Point

The whole financial world is looking at the Fed, the US$, the US interest rates, and the US stock market. That’s old news. Correlations are very high, if US bonds move in either direction, so do most of the other global bonds. If the NDX or SPX moves up or down, so do most global local indices in tandem.

The question everyone is asking: was June the bottom of the correction or are we still in a bear market rally ?

In June, markets were clearly very oversold, everyone “and his barber” was short or flat and sentiment was literally 0. Typically, this was followed by short covering, some bargain hunting, CTA systematic momentum trend followers, corporate buyback programs, gamma short squeeze, it was all there.

Let’s take a quick look at how cross-asset global markets were 14 June 2022 (the then US yield peak): here is the old version of my overview with momentum, trend, and exhaustion scores separated: technically a rebound/retracement had the best odds. Bonds, stocks, credits oversold, crude oil/ energy sector overbought.

And here is the same overview for last Friday 14 August 2022, two months later: certainly an interesting reversal and rotation since mid-June, and while momentum is obviously very strong (short-term indicators), the trend is now flat (of course, because prices reverted to the long term mean).

As usual, risk-on or risk-off is near correlation 1.

VIX implied volatility coming off sharply, went from backwardation to normal contango curve, “leading” the risk-on-rally across assets. Bond yields and credit spreads reversed too, cyclical vs defensive sector rotation, growth vs value as yields got lower. So, it’s all the same trade.

S&P500 vs various indicators, US$, relative value pairs:

So far, so good. Previous blogs always mentioned the rebound, the “bear-market-rally”.

And now, we are at this inflection point.

Bulls vs bears.

I have the impression, 50% of the market is currently still underlying bearish (“hey, stocks now back to mean, touching the down-sloping long term trendlines and moving averages, and yield curve is extremely inverted, ISM keeps falling, Fed not done etc”) and the other 50% are bullish, because they are always bullish.

One reason could be they are different generations.

I wouldn’t be surprised if there was a survey of bull/bear in age groups, it would skew towards bearish with traders/investors experience since 1990s, having gone through Asian crisis, dot-com bubble and burst, housing bubble and burst, Eu debt crisis and bailout. True bear markets. After excessive risk taking, a very aggressive Fed to “cool down and trying to soft-land the economy”, then reversed to aggressive rate cuts as recession kicks in. Over and over and over again. The CV19 global lockdown was a different kind of beast, unprecedented and a shock, resulting in the gigantic fiscal and monetary rescue policies, but that was not a bear market, that was a market crash. Very different actions, reactions, risk management. But that’s why there is this old saying: “there are bold traders and old traders, but no bold old traders”. They all learned their lessons, tried all tools, but experienced all different upswing and downswing economic and market cycles.

Where I have the impression, the post-GFC generation, a new breed of traders grown up only with the fast internet and trading platforms, leveraged accounts to hop into call options, can move markets wilder with today’s retail aggregated size and the resulting gamma squeezes. That generation either had zero or low interest rates for a very long time, and if there was some market panic (2018, 2020) the Fed reversed gear, stopped QT, started cut cycle and QE again or the latest emergency package.

Anyone actively trading since June 2009 never experienced a true bear market which lasted years. So, of course, they tend to be perma-bullish. There is simply no reason for a bear market. Small corrections (excluding the unprecedented CV19 shock, where the stock market immediately found the bottom, so, by nature they grew up BTFD syndrome.

The stock market is a leading indicator, and apparently everything is always already priced in.

Really ? Was everything priced in the stock market in 1998 ? 1999 ? 2006 ? 2007 ? So, now, the market has priced in the Fed hiking and to what level, priced in the QT program, priced in rising jobless claims, falling inflation, sanctions on Russia, energy crisis in Europe. And that’s that. June S&P500 low supposed to be the bottom and now to the moon.

  • How often did inverted yield curves signal recession within 12-18 months ?
  • For how long was a very restrictive monetary policy supportive for the stock market ?
  • How long did an overheated low unemployment rate last before reversal and recession started ?
  • How long can the business and consumer really work well-oiled with high interest rates given todays debt sizes ?
  • Why are longer term bond yields trading through shorter term ? Inflation vs growth outlook improving ?
  • How often did the stock market ignored underlying problems and kept going up ?
  • Time will tell, if this time it will finally be different !

For now, I will stay with my opinion: stock market rally may continue, I certainly never ignore momentum and strength, but I also believe, there will be a time for long term investors to pick up stocks a lot cheaper.

The only thing what’s missing right now is a catalyst. 9/11 2001 wasn’t the reason for the 2000-2003 bear market, that sad event was one of a few catalysts. Lehman default Sep2008 was not the reason for the 2007-2009 bear market, but huge catalysts on top. The downturn so far was due to re-opening mismanagement bottlenecks, global supply chain disruption, very high inflation, gigantic money supply, and extremely high energy prices. There will be a catalyst in 2023 which is not known yet. China ? Taiwan ? Something else ? I wouldn’t be surprised with the current situation and long lasting problems, the stock market will see a proper better valuation in 2023 or 2024. I wish I have a crystal ball.

Are we honestly back again to FOMO ?


MACRO

US

The Good, The Bad and The Ugly…

  • Inflation peaked, NFIB small uptick, UoM (flash) rebound
  • Inflation is still extremely high, jobless claims going up, Fed continues to hike + QT
  • The inverted yield curves, still ultra low consumer confidence

The two data points (literally the whole world) everyone is watching: US inflation and employment reports.

At last ! Inflation has peaked ! This was not only a short term relief for the market (even slightly lower than the lower expected number), but certainly for the lagging-reacting economists and policy makers at the Fed. Some components like used cars already dropped like a stone since months, but shelter remains another factor. But overall all leading indicators have been screaming lower CPI print for a while. The recent gap is highly unusual and calls for an anomaly. Business surveys and commodities pointing to an average of ~3.0%. And as PPI falls, so does CPI, and then PCE. It’s written on every wall…

The other data “dependency” point of the dual mandate – the employment situation – is more of a mixed bag. NFP was strong, although, with a very high number of part-time workers, the unemployment rate moved to a new low 3.5%, which remains a sign of overheating. But these are lagging indicators, ISM/NMI surveys show the weakening trend, and jobless claims are slowly going up for months now.

Together, this leaves my own interpretation of the not-working-Taylor-rule at a fair value of ~3.5% Fed Funds rate. STIR FF curve moved slightly less aggressive for the next FOMC meeting in September after the better-than-expected CPI report, but clearly is pricing in a lot more hikes, restrictions, plus the QT, which they may or may not even increase.


EUROPE

On top of the existing and very harsh energy crisis, importing fewer NatGas or Oil from Russia due to the sanctions comes the heatwave and drought. The Rhine is one of the most important rivers to transport goods (including coal) through Europe. Shallow rivers make it difficult for barges and there are estimates 400,000 barrels a day of oil products could be disrupted, Uniper has warned it may cut output at two key coal-fired power plants in Germany. (The left pic seen via @SStapczynski on Twitter).

In other words, “the German Green party famously fighting to switch off nuclear power plants are now finding out the alternative is dirty coal power plants can’t be supplied the coal shipped by barges via the Rhine due to low river levels. ( via @MichaelAArouet) .

The heatwave and drought obviously isn’t just risky to have wildfires, but it could damage wheat, rapeseed, maize crop in Europe. As if the Ukraine “Europe’s bread basket” disruption wasn’t enough.

That makes you wonder, when does the recession start and how deep and how long will that last?


Central Banks action

  • Thailand finally joined the hike cycle, BoT raised +25bp to 0.75%. Amazingly, CPI is at 7.6%
  • Mexico hiked for the 10th time, another +75bp to 8.50%. That’s a total of +450bp since the start, Current CPI stands at 8.15%

TECHNICALS

“Watch every tick, trade like a d*ck”.

Every data release creates a lot of noise, it’s an algo party and mostly, there is one winner: the broker getting commission. Either you have the correct position beforehand, otherwise, trading the data vs algos is impossible, the trading gaps are so fast and so large, manual trading against this is pure speculation and adrenaline push.

Here a good example since the last FOMC, including Powell presser, GDP, ISM, NMI, NFP, CPI reports.


RATES

US

The US yield curves (2s5s, 2s10s etc) are still heavily inverted, we all know what historically that means. While there is always room to go (“records are there to be broken!”), it is getting tough. IMHO, the deeper the inversion, the higher the chance of a bad recession 2023.


The US yield curves (2s5s, 2s10s etc) are still heavily inverted, we all know what historically that means. While there is always room to go (“records are there to be broken!”), it is getting tough


Credit Market Bond ETF

Oversold, risk-on, revert to mean and now at inflection points.


FX

Quick overview of main themes, Risk-on or off, commodities-driven etc.


CREDIT and VOLA gauges

After market being so oversold and peak vola:


VIX from backwardation in June to currently in steep contango:


STOCKS

Oversold markets, risk-on, revert to mean and now at inflection points…


GLOBAL CROSS ASSET PERFORMANCE TABLES

performance snapshot wk32


weekly performance snapshot wk32


14 June 2022-to-date (US10Y yld peak) performance snapshot wk32


YTD snapshot wk32


outright Momentum/Trend/Exhaustion snapshot wk32


spread/ratio Momentum/Trend/Exhaustion snapshot wk32


…oh, One More Thing…

Gonna have a break for a couple of weeks until the next blog… have a great time ahead, happy trading !

Cheers !

*  as always, please check the DashBoard for the bigger Macro picture and connect the dots

Das war’s , thanks for reading, vielen Dank und good luck, Kai

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14th August 2022
CommoditiesCredit MarketFXGaugesGlobal AssetsInterest RatesMacroStocksVolatilityWeekly

Fake Recession ? – 2022wk30

by K P 31st July 2022
Reading Time: 10 minutes

This Week

  • Fake Recession ?
  • MACRO
    • US, Europe update
  • TECHNICALS
    • Rates, US and Europe
    • Credit market
    • US Stock indices, VIX
  • “…one more thing…” :

@MacroTechnicals 2022wk30


 


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31st July 2022
CommoditiesCredit MarketCrude OilFXGaugesGlobal AssetsInterest RatesMacroNatGasStocksVolatilityWeekly

Central Banks Vibe – 2022wk29

by K P 24th July 2022
Reading Time: 13 minutes

This Week

  • The ECB woke up
  • MACRO
    • Global central banks update
    • US sentiment update, FOMC week
    • Euro area sentiment update
  • TECHNICALS
    • US, European rates/bond market update
    • Credit market update
    • FX update
    • WTI, NG update
    • VIX, US major stock benchmarks update, sectors
    • Global Cross asset performance tables/ heatmaps
    • Outright and relative value scores
  • “…one more thing…” :

@MacroTechnicals 2022wk29


 


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24th July 2022
CommoditiesCopperCredit MarketCrude OilFXGaugesGlobal AssetsInterest RatesMacroStocksVolatilityWeekly

The R-Word – 2022wk27

by K P 10th July 2022
Reading Time: 12 minutes

This Week

  • The R-Word
  • MACRO
    • US and Europe recap / view
  • TECHNICALS
    • US and European Bond / rates market view
    • Credit view
    • FX view
    • Commodities view
    • US / European stocks / sector benchmark view
  • “…one more thing…” :

@MacroTechnicals 2022wk27


 


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10th July 2022
CommoditiesCredit MarketCrude OilFXGaugesGlobal AssetsInterest RatesMacroStocksVolatilityWeekly

Fed Throwing The Towel – 2022wk24

by K P 19th June 2022
Reading Time: 12 minutes

This Week

  • Fed throws the towel. 
  • MACRO
    • Global central banks
    • US Business confidence
    • US housing market
    • EU analysts confidence
  • TECHNICALS
    • US and EU rates/bonds
    • Credit markets and volatilities
    • CHF
    • Energy complex and Copper
    • US stock indices and sector view
    • Crypto back to earth
  • “…one more thing…” :

@MacroTechnicals 2022wk24


 


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19th June 2022
CommoditiesCredit MarketFXGaugesGlobal AssetsInterest RatesMacroStocksVolatilityWeekly

The Financial Autumn – 2022wk23

by K P 12th June 2022
Reading Time: 12 minutes

This Week

  • The Financial Autumn
  • MACRO
    • US Mortgage mkt, Jobless claims, CPI, UoM recap, Fed hike next week
    • European inflation and ECB recap
    • Australia hikes again
    • Russia cuts again
  • TECHNICALS
    • US and EU rates/view
    • Credit markets
    • FX majors
    • US and EU major stock indices
  • “…one more thing…” :

@MacroTechnicals 2022wk23


 


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12th June 2022
CommoditiesCredit MarketCrude OilFXGaugesGlobal AssetsInterest RatesMacroStocksVolatilityWeekly

Out Of The Woods Yet ? – 2022wk22

by K P 5th June 2022
Reading Time: 12 minutes

This Week

  • Out of the woods yet ?
  • MACRO
    • US Business and Consumer confidence May surveys recap
    • EU Business and consumer confidence May surveys recap
  • TECHNICALS
    • US and EU Rates / Bonds view
    • Credit markets
    • FX majors, RUB, TRY
    • Crude Oil
    • US Stock indices, sector rotation
  • “…one more thing…” :

@MacroTechnicals 2022wk22


 


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5th June 2022
CommoditiesCredit MarketFXGaugesGlobal AssetsInterest RatesMacroStocksVolatilityWeekly

Catch Me If You Can – 2022wk20

by K P 22nd May 2022
Reading Time: 9 minutes

This Week

  • The Real Fear Chart
  • MACRO
    • Geopolitical view
    • US Leading indicators update
    • Eurozone CPI landscape
    • Germany’s new fiscal help
    • UK eyewatering Inflation
  • TECHNICALS
    • US & EU rates / bonds view
    • Credit markets
    • FX markets
    • US Stock market
  • “…one more thing…” :

@MacroTechnicals 2022wk20


 


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22nd May 2022
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