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State of the inflation/reflation trade - Focus on CommoditiesFor several months I've been talking about the issues with the reflation trade. First it was the Dollar and some stocks topping, then it was bonds going higher, then Crypto crashing and others markets topping a few weeks later. We saw the cracks on Copper, Oil and so on. But is it over? Will the Fed actually tapper and that create issues to the market? Will the inflation keep running hot? So far what we've had was markets getting really far ahead of themselves. The risk on trade made massive moves in just 8-14 months since the crash and so things started slowing down. Bonds fell a lot (25-30%), the USD fell a lot (10-15%), Global stocks rose a lot (~100%), Commodities (30-300%) and of course Crypto skyrocketed (1500-6000%). These moves came after a period of stagnation and from extreme lows after the crash, but they are massive moves nevertheless and a break is healthy. Personally I believe a bigger correction isn't far away, but I could be very wrong as my long term picture indicates much higher prices for many of these markets. I'd like to clarify that many of the reasons that have led to this huge expansion across all markets since March 2020, aren't what most people think they are. Passive investing, excessive speculation/gambling since lockdowns, evolution of technology, Fed narratives & low rates, eviction moratoriums - postponing debt repayments, supply constraints & underinvestment in key material/commodities which are coming out of a brutal bear market... are all way more important to me than what the Fed or Central banks are doing. First of all QE isn't money printing and the Fed doesn't create money. The treasury has created that in combination with the Fed, but it hasn't been as much as people think it is given how big the issues are globally, especially with banks not creating new loans. And the funny thing is that over the last few months banks are using the reverse repo facility indicating strong demand for safe and liquid instruments which is 1. Indicating QE isn't really working 2. Something isn't right in the markets. So are all the above stronger than the deflationary/disinflationary pressures? So far they have been and the truth is that the situation could remain the same for years. Actually I can easily see higher prices for 1-2 years, especially on Oil and Copper. These are the two commodities that will have steady or increasing demand despite all the environmental concerns. In reality its the environmental concerns that are the exact reasons why I am bullish on these two. Why? After a decade of underinvestment there won't be enough production to keep up with the demand. Even if demand goes down, if supply goes down even more that could create a very strong imbalance that could send oil much higher. For copper I can see an even more bullish case because it is actually needed in the ESG movement. Of course government spending also playing a role into this, but this doesn't mean we will get 1970s style of inflation. Now let's get into the charts. As you can see on the main chart of this idea (USOIL), you can see how bullish oil is. I don't believe this high will hold and it has actually found perfect support at the 64-66$ range. No idea how long it takes to break out, but I doubt the 77$ resistance will hold for much longer. Above 77$, 90$ will come easily in my opinion and later even higher prices with 100$/barrel not being out of question. OPEC announced that it would allow some production to come back, but no idea how much and how fast could it come back. Gasoline seems to be leading the way here and prices could go even higher, meaning oil will probably follow. Clearly after 1.5 year in this pandemic people have saved money and want to travel, so the pend up demand is playing a role (at least in the short term). When Copper reclaims the first red zone, it means it has reclaimed its 2011 ATH. That would be pretty bullish in my opinion and a very valuable signal overall. Copper is already showing a lot of strength after a significant pullback and consolidation and that could be the confirmation for more upside. Bonds even after such a rally, along with the USD haven't been able to do much damage. Bonds found resistance when retesting some key lows from below and they seem pretty weak at the moment. The DXY found resistance at its March top and is looking a lot weaker. Actually it has fully broken down. That makes me think this USD rally was potentially a bet on tapering (buy the rumor, sell the news) and the drop is normal as negative real yields in the US are getting very deep. One thing that might be playing a role on this dip for Bonds & USD is the announcement of some the new Repo facilities outside the US for foreigner Dealers and Central banks, with the potential to expand to others too in order to avoid stresses in the markets. Part of the drop in the USD might be attributed to this because many who are expecting the dollar shortage to get worse might be closing positions. So in the short term at least we might see bonds & the USD pullback, but this doesn't they will go much lower. For now most markets seem to be range bound and we are essentially waiting for some clarity as to which direction they will take next. Although we are waiting for some direction, such negative real rates are beneficial to several markets, and Gold could be one of them. Gold hasn't performed very well recently and technically it is neither bullish nor bearish, however if the current negative real rates persist I think gold could do well. Like with Copper, a reclaim of the 2011 ATH (1920$) would be very bullish for Gold. It's interesting how many markets are below some key highs and just chopping below, which could lead into a bullish expansion. Just to be clear again, the ones that look the best are Copper and Oil, while Gold and Silver aren't. The real shortages and real demand is more likely to come on the first two than the latter. Finally, overall stocks don't look bearish. They really don't. There are some bearish scenarios and I do think we might get a strong dip at some point soon, but before the dip we might get a 5% increase and then go lower.
TVC:USOILLong
by BitcoinMacro
1
Bonds - An Assured Negative Negative Return As M2 plateaued during 2006 / 2007 / 2008 - we saw an aggressive deflationary collapse. A far more insidious Deflationary Event is approaching. The absence of Collateral, A shortage of T-Bills, M1+M2's sudden reduction in May, Geo-Political Risks (Extreme), Budgetary Crisis, Stimulus Bill(s) Passage Risk, the End of the Moratorium on Mortgages, Rents, Subsidies - Jobless claims rising, Wages rising and many more crosscurrents creating an undertow the Federal Reserve suggests are "Transitory" with respect to "Inflation" with ZERO discussion of Health of their "System." None. Very ominous warnings appear and are ignored in this unusual environment. Protection is bought every day, even though the VIX is trading a Large Daily Sell, Intra-day there are clear signs there is a group whom is very concerned.
CBOT:ZB1!Short
by HK_L61
Mas But I Never Know Just Like You! 👍So what fun in the wonderful world🌎 of Bitcoin ETH and your favorite Alt... I highlighted this region because I find it a note worthy zone for many to remember. Many on one side of the fence vary few on the other, but much wow! Many now are "I told you so's" or no FUD allowed let me keep pounding this rock it feels sooo good when I stop. Point is the chop is the chop but if your chopping a tree with the intention to harvest well chopping brings the tree down... 🪓🌳 I haven't posted much my previous post speak for themselves and current sentiment. 🤷‍♂️ Never wrong to plant a trees though! 😉 What are your thoughts? Is it bad that people like to realize gains and say "Cool! More Dollars now!" Most will answer with an emphatic "YES!!!" LOL Or am I really the only person that's down to pull profit and even short a little??? LOL No Advice to give just thoughts that I can't shake after the last 6 years in the world of "CRYPTO" Things 🤷‍♂️ #Fixed IDK Protect Your Neck! 🙏FOR JUST A HEALTHLY PULLBACK! ""KEEP CALM AND MANAGE THY RISK!""
INDEX:BTCUSDShort
by BradySWilliams
2
OHM Targets and Short DD Well OHM is in the news because Mark Cuban has decided to stake a decent chunk. I think this one holds promise based on the fundamentals, especially during a possible correction or bearish continuation in the crypto markets. Why? It's basically poised to become the DAI version of the Federal Reserve. Also we can see some strong support at each correction point suggesting we might even test the 4 figure ATH if sentiment around crypto changes or even just as people are in search of yield which the project certainly boasts a great track record so far with. So why should you buy? Discount potentially down to 489 if support holds. Automatic compounding staking system saves your ETH. Bonding system can give you a discount as the price rises from local lows. Obvious enthusiasm with big FOMO candles. Limited supply becoming increasingly staked due to promising yield should push through resistance consistently. This is not an asset you should trade, it's one you should stake to weather the crypto sentiment storm. Near term targets and accumulation zone in chart, exercise caution below local support. This is not financial advice, only invest what you can afford to lose.
OLong
by Subterfugex
1
MARKET ALPHA WATCHLIST - TLTSymbol: NASDAQ:TLT Indicators Laguerre RSI 2 x Multi-Time Frame EMA Comments: The FED has been pumping a substantial amount of liquidity in the US economy via creation of and then purchasing of bonds. The problem became more complicated as Michael Burry revealed his massive short position against the bond market. Michael Burry was not the only one shorting the bonds. The decline of the dollar was a clear indication that the Fed efforts would lead to further decline in bond prices. The bonds look to be unraveling as the word "taper" has been a focal point of the fed and they are actively having meetings about having meetings... so that is definitely promising.
NASDAQ:TLTLong
by jakelikesstocks
2
10Yr - A Very Clear Capital Return PanicSince January there has been a stealth accumulation out the Curve. In March it began to quietly accelerate. While Algo's drove ZN into the 131s, buyers were gobbling up each and every drive lower, building an outsized position which saw Volume peak in May from May 2nd to May 31st. Dark Pools began their acceleration in March. There is a clear trend deeply concerned with an "Event" - one which saw Volumes begin to accelerate June 16th. Volatility in Bonds should begin to pick up dramatically. Extreme Caution is warranted for Equity Complex, in particular Technology and Regional Banking. The VIX Curve, specifically SEP/OCT spread should be closely watched. We are seeing clear signs of Backwardation that could quickly invert.
CBOT:ZN1!
by HK_L61
5 Year T-Note Futures Heading Lower Towards 123Disclaimer The views expressed are mine and do not represent the views of my employers and business partners. Persons acting on these recommendations are doing so at their own risk. These recommendations are not a solicitation to buy or to sell but are for purely discussion purposes. At the time publishing, I have a position in 5-Year T-Note Futures (ZF1!) . Trend Analysis The main view of this trade idea is on the 2-Hour chart. zf1! has been channeling lower after making a high of 124’08 on July 8th. First low was observed on July 13th around the 123’18”5 price level and a lower high is seen around 124 on July 15th. ZF1! Is expected to make a lower low at 123’14”5 in the short term. Technical Indicators ZF1! is currently below its short (25-SMA), medium (75-SMA) and fractal moving averages and its RSI is trading below 50. Moreover, the KST recently had a negative crossover. Recommendation The recommendation will be to go short at market. At the time of publishing ZF1!is trading around 123’25”2. The medium-term target price is observed around the 123’14”5 price level. A stop loss is set at 124. This produces a risk reward ratio of 1.54.
CBOT:ZF1!Short
by Ceddy86
Black Swan - Transitory InflationIdea for Macro: - I present to you a counterargument for the media blaring inflation narrative. - Speculate that the interest rate hikes (Jackson Hole, etc.) are just red herrings. In fact rates may go negative. - The real shocker is that everybody is positioned for inflation when inflation is at its peak and is indeed transitory. The reflation trade was debt driven and is supported by nothing but hot air. “Inflation - A continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services” - Merriam-Webster Actually global credit impulse is rolling off. - There are 3 types of inflation that are relevant: Monetary, Consumer Price, Asset. (Lyn Alden, www.lynalden.com) Monetary Inflation: "In highly indebted economies, additional debt triggers the law of diminishing returns. This fact is confirmed when the marginal revenue product of debt (MRP) falls, where MRP is the amount of GDP created by an additional dollar of debt. In microeconomics, when debt is already at extreme levels, a further increase in debt leads to an increase in the risk premium on which a borrower will default suggesting that the bank or other lender will not be repaid. As the risk premium rises, banks are often unable to price this additional cost through to their private sector borrowers thus the loan to deposit ratio of the banks falls. Combining both the falling MRP with a declining loan to deposit (LD) ratio, results in a reduction in the velocity of money. In terms of the impact on monetary activities, a drop in the LD ratio means that more of bank deposits are being directed to the purchase of Federal, Agency and state and local securities in lieu of private sector loans. The macroeconomic result is that funds are shifted to sectors that are the least productive engines of economic growth and away from the high multiplier ones." - Too Much Debt, Hoisington Investment Management Co. - Yes, you have M2 skyrocketing, but compare it with Debt and adjust for inflation. Wow, It did nothing to debt levels. GDP adjusted for inflation barely recovered: - M2 doesn't exist in a vacuum, but needs to be balanced for deflationary forces. Debt is winning. - Yes, you have consumer price inflation and asset price inflation, but these are largely driven by speculative bubbles. They are not driven by fundamental factors nor underlying conditions. They will regress to the mean by Reflexivity. - Yes, there are supply chain issues due to COVID + political tensions, but how long will it last? Are the political tensions even necessary? What happened to lumber even with supply chain issues? - What is even the reason for continued asset purchases by CBs? IMO, asset purchase tapering is done to engineer a crash in the speculative asset bubbles, so that more extreme monetary policies can be enacted to try to stop the tidal wave of debt. Once the speculative asset bubble collapses, consumer price inflation will be controlled as well. In fact there will be a dollar shortage, as each dollar is leveraged 50x+ vs. debt. - CBs don't care about speculative asset inflation okay? Not a big deal. Bubbles even pop by themselves. Price of Big Mac and used car goes up a little bit, boohoo. - Evidence to support my thesis is falling inflation expectations. Inflation expectations are what drives asset prices up. If inflation is expected to decrease, then the prices of assets are expected to decrease. Why would anyone hold an asset expected to depreciate in price? Signals of falling inflation expectations: Inflationary yields: Inflationary currency pairs: FRED inflation expectation rate: fred.stlouisfed.org Gold - you might see something crazy happen here. This can be the end of a distribution pattern: Inflationary Commodities: - The stock market is one of the last markets to receive liquidity trickling down from the source. Currencies, bonds, commodities lead them and stocks should not be used as an indicator for future inflation expectations over them. - Right now, the world is positioned for inflation and are looking for interest rate hikes as the signal, but that won't be catalyst. - Inflation and liquidity flows have been cut off at the source, and now we are at the cliff of the debt driven sugar rush. There must be great suffering in order to justify more extreme monetary policies. Then and only then will you have sticky inflation in a stagflationary environment. "Inflation is transitory" - Jerome Powell GLHF - DPT P.S. Disclaimer - I am relentlessly selling risk assets, long volatility and bonds.
FRED:WM2NS
by UnknownUnicorn1043646
2
10Yr Note - When the Levy BreaksThe important Context of "Pristine Collateral" as we have addressed repeatedly is the Salient Issue - The Return of Capital. The availability of T-Bills remains in an extremely short supply. The Federal Reserve - $230 Billion at last disclosure. The United States Treasury - $0. T-Bill terms of 4, 8, 13, 26, and 52 weeks for issuance have seen the highest percentage of issuance @ present — 91-day, 182-day and 364-day. UST's schedule: www.treasury.gov UST Direct, place your offer - www.treasurydirect.gov * Please let us know how you fared, we did not. Powell, by nature - points the finger and blame @ Sec. Of Treasury - Janet Yellen. Yellen is suppressing "Pristine Collateral" according to Jerome Powell. Is She though... If Banks are not lending... They need to be paid to hold the abundance of CASH. But, wait a minute... Money Center Banks / Primary Broker Dealers do not want CASH. They prefer you place your CASH in Money Market Funds. Say what, Banks don't want CASH? Yes, it is serious LIABILITY on their balance sheets at this point in time as their balance sheets are DEBT Laden. WTF Mate, what are you talkin bout? J.Dude, seriously - you are delusional... This is simply a series compounding errors by ALGOs trading in the Treasury market. IF you believe this - please consider the following: We pointed out this is or LTCM / Lehman moment on an exponential Scale more than a few times. So let's clear the decks with respect as to why Mate. When the lowest yielding Treasury is in Demand - exponential Demand. WE have a problem, one in which everyone loses a Hand. Credit simply gives way to Crisis - Crisis is all that results. And we are all seeing this presently - Inflation is at the highest rate in REAL TERMS while Yields on the Treasury Curve in Real Terms are at the Lowest on Record. Convergence, it a nasty Bitch.
TVC:US10YShort
by HK_L61
1
Credit - US10Y to DeclineIdea for US10Y: - US10Y will decline - institutional fear > buy safe bonds. - Positive correlation in yields/equities right now (extreme periods) - Markets are topped, this will cause a decline in equities. - UST signaling deflationary shock. Yes, you will have inflation win out in the end, but you can have deflationary shock to get Fed to enact more extreme monetary policies. You can have negative growth during price inflation. Reminder that major crashes are preceded by capitulation in yields: GLHF - DPT
TVC:US10YShort
by UnknownUnicorn1043646
4
US10Y Medium-term sellThe US10Y has confirmed the shift from bullish to long-term bearish as last week it broke below the Higher Lows Zone that has been holding since the August 07, 2020 bottom. The bounce however on the 1D MA200 (orange trend-line on the left chart) is something to keep an eye on, but for the moment that is viewed as a Lower Lows rebound within a Channel Down (right chart). The last Lower Highs were made at or close to the 4H MA200 (orange trend-line on the right chart). Since the 4H RSI has just entered its Resistance Zone, it may be a good time to start selling the US10Y. The target is 1.1600, above the 0.5 Fibonacci retracement level (as seen on the left chart). Most recent US10Y idea: ** Please support this idea with your likes and comments, it is the best way to keep it relevant and support me. ** -------------------------------------------------------------------------------------------------------- !! Donations via TradingView coins also help me a great deal at posting more free trading content and signals here !! 🎉 👍 Shout-out to TradingShot's 💰 top TradingView Coin donor 💰 this week ==> Ether2020 --------------------------------------------------------------------------------------------------------
TVC:US10YShort
by TradingShot
5
Lookout! The Wealthy Are Shorting The Economy20 year yields appear to be breaking out of a long downtrend which has witnessed a boom in the stock market since this asset's crash back in March of last year. But now the winds seem to be shifting possibly again as now the TLT has started July with fireworks and yields appear to be flipping bullish. This would be very bad for stocks.. however please keep in mind that this is a lagging indicator. Sometimes it plays out in perfect sync, sometimes it takes months to come into effect. Which means, the remainder of the year should be safe for equities. 2022 however, if 20 year yields confirm bullish, would be fair game to see the real crash in the stock market that many have been waiting for. A play on bonds could be the potential bet/hedge in the distant future. If you enjoyed this post please leave a like :)
NASDAQ:TLTLong
by TradeVibez
Bitcoin & Traditional marketsBitcoin is in a weird situation which looks like strong accumulation, while Bitcoin is cheap based on various models and indicators... However across all timeframes it is bearish. It hasn't managed to close above the Monthly + Weekly pivot, it is still below the main Volume Profile PoC (if we include the January area too) and it is below the all major daily moving averages (50-200-300), except the 350 DMA. Some reasons why Bitcoin and Crypto took such a hit, was that everything got really high really fast, excess leverage & speculations, too many coins, too many new entrants, institutions and most importantly global liquidity was shrinking. The inflation story was overstretched and the reflation/inflation trade was peaking, at least in the short term and the inflation story was driven by speculation and supply shortages, not by monetary expansion and real growth. Those exhaustion signs have been around since early 2021 and in Q2 things started getting more serious. Here I will examine where we are at the moment with tons of graphs. Will try to make it as simple and short as possible, but also describe all major asset classes as I do think that having a clear macro picture will help everyone make better decisions both in crypto and outside crypto. Stocks as a whole grew substantially over the last year, and we did see several indices go up 10-20% from the beginning of the year. The Nasdaq has been the best performer lately, while smaller stocks and stocks outside the US have been suffering. Asian stocks have performed very poorly although up until a few months ago their performance was incredible. Small caps in the US also a very similar story, but ones yields peaked, they peaked too and as the deflation/disinflation story was slowly taking over US behemoths started rising again as they are acting as 50+ year bonds. Currently the trend is benefiting US tech giants which however have grown quite a bit over the last few months and might eventually get a significant correction. If they correct hard, I can't see how small caps won't be affected, as the Russell 2000 has also been showing signs of exhaustion. Hasn't broken down yet and still looking ok for the long term, but until we get a clear breakout being a little more cautious isn't bad. In my opinion stocks will really go parabolic at some point, but I also can't ignore the fact that as a whole they are up 30% from their Feb 2020 peak and the financial system is very fragile. So for stocks the best thing is to be bullish but potentially reduce risk. As the VIX is at such low levels during a pandemic, preparing for higher volatility is the right thing to do. We haven't had a big move on the VIX since the Covid crash and before that we'd get one every 12-24 months. Now that the VIX is down 84% from its peak, completed a full cycle and is sitting at support... It is prudent to have less risk on. The major Meme stocks have had major corrections, but they might not be done yet. At least GME has found perfect support at 180 (talked about it recently). As long as it stays above 160 in my opinion there is hope. Above 220 it could really moon once again. For AMC things looked way more rough but the bounce yesterday really took me by surprise. It was really strong and managed to bounce hard after sweeping a key low. The 50-55$ area is an area of strong resistance, but if it manages to close above it we could see another major squeeze up. The last squeeze was a fomo rally + gamma squeeze + short squeeze and for now I don't know what this one could be like. I have a feeling that the one that will really squeeze this time around while AMC chops around 30-70$ is GME. Why? Double tops usually break and the one at 340 really looks ready to be broken. GME has consolidated for much longer than AMC too. One of the most important markets to look at, are US treasuries. Long dated bonds have been going up (yields down) and that's a deflationary move. What we have seen with the Reverse Repo from the Fed, is that the demand for these assets has been quite high and that the bond market isn't buying the strong reflation story. Just to be clear, both bonds and stocks can go higher, but as bonds fall or rise, certain types of stocks benefit from that. For example the 30Y bond goes down in price, small caps benefit, when it goes up, large caps benefit. The rate of change is also very important as big moves in bonds in either direction can create some short term panic in stocks. From their ATHs bonds fell about 28% which over the last 12 years has been a pretty good place for a long term bottom. However right now bonds have found some resistance and haven't broken out to the upside yet which means their downtrend might resume, which would benefit the inflation/reflation assets (people selling safe assets to get into risk assets). Next most important is the US Dollar. When the USD and Bonds go up together, it's a sign of trouble. Something isn't right... Of course both got significantly oversold and hit key support levels, so this might just be a technical bounce. Neither the USD or bonds have broken out yet. Will show several pairs here like EURUSD, GBPUSD, USDCAD, USDCNH, USDZAR. EURUSD hasn't broken down yet, but below 1.17 I easily see it go to 1.14-1.15 where it could potentially bottom. Until then EURUSD is in choppy waters as it is flirting with the 300 DMA. It's long term trend is up, medium term sideways and short term down... but the bounce of support so far is quite promising. GBPUSD has broken a key diagonal, however the long term structure is quite bullish. It has formed a massive base and could eventually break higher, but until I see a close above 1.46 I'd play this level by level. Why? Because the 1.35-1.45 was multi decade support, so I'd like to see it fully reclaimed. On the USD pairs I do believe the USD has shown some extra strength, but nothing is clear there either. For USDCAD looks like a real strong reversal rally but it could just be a dead cat bounce. For USDCNH we have a similar situation, but with a higher chance that this is a real reversal. USDZAR fell so much that it finally bounced, but has so far found resistance on some previous key support levels. Both that and USDMXN have been getting slammed every single time and for now we haven't had a full confirmation of a reversal for those either. Looking just at EURUSD or DXY isn't the right way to evaluate dollar strength. Finally let's get into the most important commodities. Oil after sweeping its 2018 high by a little bit had an 8% correction and hit some really important support levels. It was a very healthy correction after a very huge rally and it might be over. Oil breaking above 77 again would be very bullish and its current structure is already quite bullish. Getting down to 64-66 would be a very nice buying opportunity. There are huge supply issues for oil and this could take the price much higher over the next few months or years. Copper failed to sustain above its 2011 ATH and the R3 Yearly, which is quite bearish. In the short term it has formed a bearish trend, but the long term trend is up and Copper has both high demand and supply issues. It's sitting above support and looking more and more bullish by the minute, so going long here isn't a bad idea, with a stop below the current lows. Otherwise wait for a break of the ATHs and buy any dips after that. Gold had a similar situation with Copper, but at different times. The truth is that the current macro situation is more bullish for Copper if governments start spending on building/creating stuff, especially for technological stuff or regarding renewable energy. We might have a disinflationary backdrop, but the demand for Copper might be much larger than its supply.
by BitcoinMacro
1