Vox Wave Count
EWT is a handy tool to give some context of where a share price is within a certain structure. Fundamentals will always win out over Technical Analysis and with good fortune, the fundamentals for Vox Royalty Corp will exponentially improve.
Cross-currents are keeping industrial metals tightly bound to a narrow trading range. Of course, peak reflation is in the rearview, but the lagged impact of Chinese deleveraging will soon join forces with a US fiscal drag, which could weigh on commodity demand growth into 2022. While China's Central Economic Work Conference reiterated its objectives of "stability", opening the door to more growth-supportive policies in the short-term,
we expect an only slightly easier fiscal stance, while credit growth has also likely bottomed but is unlikely to rise substantially. Notwithstanding, rising metals supply risks are insulating base metals for the time being, particularly as surging power prices in Europe once again support the market. While a substantial increase in LME aluminium stockpiles has eroded signals of scarcity in the term structure, aluminium and zinc are particularly prone to risks associated with power shortages, particularly in winter months and as Chinese officials seek clean skies ahead of Beijing 2022. Copper prices have remained supported despite waning demand, as disruptions to transportation and logistics keep metal stranded overseas at ports, inhibiting trade. Nickel faces further supply risks from Indonesian policy, but concerns are waning as a sizable plant delivered on its pledge to produce nickel matte.
Precious metals participants remain on the sidelines ahead of the Fed meeting which is set to announce a more aggressive tapering schedule, affording the central bank with optionality to embark on a hiking cycle as early as May 2022. Chair Powell will also likely reiterate a different hurdle for hikes, but the market will link hikes to the end of quantitative easing. Our rates strategists also note that the dot plot could be market moving, if the median 2022 dot shows more than 2 hikes. Certainly, while the above suggests a hawkish tone from the Fed, the market is already pricing the first hike in May 2022, which leaves a balance of risks tilted towards the upside for the near-term precious metals outlook, particularly as our macro strategists expect enough slowing in inflation and growth to delay rate the start of the hiking cycle. And, while precious metals have underperformed against historical analogs, in contrast to other markets for inflation-protection such as breakevens, it is worth highlighting that inflation breakevens may have been supported by inflation risk premium, without a commensurate rise in inflation expectations. The liquidity premium in TIPS could overwhelmingly be driving the price action in breakevens markets, potentially pointing to price distortions driven by quantitative easing. In this context, a reversal in liquidity premium driven by tapering could also catalyze a change in sentiment across precious metals, particularly as its impact ripples through into market pricing for Fed hikes.
When we have the Fed out of the way and the Omicron virus has been fully tested with regards to the current vaccines that are available we should return to some market normalisation.
Cross-currents are keeping industrial metals tightly bound to a narrow trading range. Of course, peak reflation is in the rearview, but the lagged impact of Chinese deleveraging will soon join forces with a US fiscal drag, which could weigh on commodity demand growth into 2022. While China's Central Economic Work Conference reiterated its objectives of "stability", opening the door to more growth-supportive policies in the short-term,
we expect an only slightly easier fiscal stance, while credit growth has also likely bottomed but is unlikely to rise substantially. Notwithstanding, rising metals supply risks are insulating base metals for the time being, particularly as surging power prices in Europe once again support the market. While a substantial increase in LME aluminium stockpiles has eroded signals of scarcity in the term structure, aluminium and zinc are particularly prone to risks associated with power shortages, particularly in winter months and as Chinese officials seek clean skies ahead of Beijing 2022. Copper prices have remained supported despite waning demand, as disruptions to transportation and logistics keep metal stranded overseas at ports, inhibiting trade. Nickel faces further supply risks from Indonesian policy, but concerns are waning as a sizable plant delivered on its pledge to produce nickel matte.
Precious metals participants remain on the sidelines ahead of the Fed meeting which is set to announce a more aggressive tapering schedule, affording the central bank with optionality to embark on a hiking cycle as early as May 2022. Chair Powell will also likely reiterate a different hurdle for hikes, but the market will link hikes to the end of quantitative easing. Our rates strategists also note that the dot plot could be market moving, if the median 2022 dot shows more than 2 hikes. Certainly, while the above suggests a hawkish tone from the Fed, the market is already pricing the first hike in May 2022, which leaves a balance of risks tilted towards the upside for the near-term precious metals outlook, particularly as our macro strategists expect enough slowing in inflation and growth to delay rate the start of the hiking cycle. And, while precious metals have underperformed against historical analogs, in contrast to other markets for inflation-protection such as breakevens, it is worth highlighting that inflation breakevens may have been supported by inflation risk premium, without a commensurate rise in inflation expectations. The liquidity premium in TIPS could overwhelmingly be driving the price action in breakevens markets, potentially pointing to price distortions driven by quantitative easing. In this context, a reversal in liquidity premium driven by tapering could also catalyze a change in sentiment across precious metals, particularly as its impact ripples through into market pricing for Fed hikes.
When we have the Fed out of the way and the Omicron virus has been fully tested with regards to the current vaccines that are available we should return to some market normalisation.
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