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My Forecasts: PostscriptLet me say this from the outset; within the 2's5's curve is a manual, given that I do not have a great deal of time, it is not possible for me to go into great dimensions or detail I have chosen. Instead we will have to content ourselves with the revolutionary charts/diagrams both before and of the period where I have gone into more details. The same is true of the other important charts (VIX and Unemployment Claims) I refer to below. So now that we are all prepared and understand the knowledge, we must start to turn the dusty pages. Firstly lets review a chart on which I stack tremendous value: I would not wish to enter into conspiracies. There have been a handful of inversions in the manuscripts over the past three decades which all speak historical truth in advance of the crisis. The advance in the 5 year suggests salvation from the Fed can only come in the medium term as the 2 year lags behind. And now to the point around Alpha Protocol Seeking Immediate Extraction . The 2's5's is already under the nature in an impulsive form. The prior three inversions (Housing and Credit, Dot com, GFC) also suffered from a lagging Fed, that of being at least 10-12 months behind! This means that it is not uninteresting to highlight the totally overlooked inversion in 2019, it was a loud SOS signal that the economy was clearly running out of steam. I was the one who was able to properly understand that manoeuvre in both Unemployment Claims and Vix ahead of time, calling the move from 12 to 85; with complex inversions, always look to play against the crowd. See our opening in US Claims and VIX before the fact: Given we are facing both inflation via contractions in globalisation and deflation via advancements in technology etc all at the same time, it is causing a major paradox/dissonance across the board. It would serve no purpose to mention or not hint at what will happen next; my personal sense is that because the Fed ALWAYS lags behind, we will see another example of the long end of the curve driving the flows ( for those interested in bull steepening and bear flattening I have also omitted the exclamations in bold ). This would suggest that it is likely that we could be heading into an environment where you see nominal yields receiving a booster shot while real yields flatten causing further pressure on USD.
TVC:US05YLong
by ridethepig
8
Game, Set and Match!📌 ridethepig | Game, Set and Match! In order to inform ourselves about the dangers of this move, we shall in what follows point to a few live charts which we called live together from 2019 that the 2s5s was going to invert frantically , and was a bad sign. It enables occupation of the dominos, which for those following long enough will know the one thing we always through individually is our playbook . 1️⃣ Every other time this happened it ended badly for the global economy via recession. ✅ 2️⃣ A Fed that lags and finances the Whitehouse will only add fuel to the flames... "it's different this time". ✅ 3️⃣ The longer the delay in USD devaluation from Fed, the worst the blow is going to be in Equity markets. Assuming USD does not devalue materially into 2020 its repo will grow and continue expanding the balance sheet , one way or another eventually this is going to look like Fed has been financing the WhiteHouse and then the game is up. ✅ ✅ Powell's noble attempt to pick a fight with the end game in an economic cycle can be regarded as having come to nothing. The threat comes from confidence and credit . Aiming for a complete annihilation across risk assets later in 2021, the presence of the inversion was sufficient. Now this move is being made with momentum. Game Set ... & Match The simplest example is to explain the move with diagrams which was the wish here. To occupy a piece of tradingview real estate with a live walk through in the end of an economic cycle. This could be considered as a momentum move in the sense of the word. The rule is: I’m long vol for a very long time. Insane risks are palatable but you need to understand the game otherwise you have a very high likelihood of total destruction. Stay long vol short dollars. We are entering into a series of exchanges between public and private assets, the door is closing, like in the Star Wars movie when Chewy and Harrison Ford are running to the doors, we can see the door closing in China, and in Russia and yet we still have a chance to get out. An exchange towards a decentralised world is possibly into 2032.
Editors' picks
TVC:US05YLong
by ridethepig
67
It's Different This Time... Right...📌 Endgame in the economic cycle and illustrating a painful recession Yields had the opportunity to move and successfully played the 'elastic band' rejection from the inversion in 2019, which despite the length of the global CB combination, can be expressed in no other terms than reckless. FED was obviously aiming for the ideal position (the frontal defence from Fiscal this time around) which is a well known counter when the issue comes from private debt, however they were forced to 'bend the knee'. Things proceed as follows: 1️⃣ Every other time this happened it ended badly for the global economy via recession. ✅ 2️⃣ A Fed that lags and finances the Whitehouse will only add fuel to the flames... "it's different this time". ✅ 3️⃣ The longer the delay in USD devaluation from Fed, the worst the blow is going to be in Equity markets. Assuming USD does not devalue materially into 2020 its repo will grow and continue expanding the balance sheet, one way or another eventually this is going to look like Fed has been financing the WhiteHouse and then the game is up. 👈 'we are currently here' The Whitehouse has decided to follow hyperinflation, Dem voters were naive in this sense and thought they could hold rates lower forever without any consequences. Now we must waste more time pursuing their distant dream that taxation is a solution. Wishful thinking if you ask me... the kind of overdrafts these governments have run up are several multiples beyond even Piketty's theoretical tax base. This ending of a cycle is a pragmatic demonstration of the lust to keep 'putting it on the card' and leaving private debt problems to future generations because of time being finite. Finally a notion which carries its own duties: In a debt crisis, as Japan have known for some 30 years a) you do not want an appreciating currency as the cost of servicing those debts will skyrocket in real terms and b) remain nimble...(get a peloton if necessary). Thanks as usual for keeping the feedback coming 👍 or 👎
Editors' picks
TVC:US05YLong
by ridethepig
127
ridethepig | 10Y Treasury Note📌 Yields are clearly hesitant to subscribe to the V shapers in Global Equities. An important observation in an extraordinarily difficult trading environment. The 0.90% - 0.50% range is clearly defined and from time to time we have had to get involved with a gentle grin and attempt to play both sides. The 0.50% lows are 🔑 for this battlefield, as long as they are holding there is nothing to see to the downside. Losing the lows creates a freedom manoeuvre towards 0.17%. Otherwise all sellers are to be viewed as sacrifices and necessary in the basing formation. Expecting an eventual solution to the topside with 1.0% and 1.45% targets into 2020/2021. Thanks as usual for keeping the feedback and charts coming 👍 or 👎
TVC:US10YLong
by ridethepig
2
ridethepig | Recession Strategy📍 This chart update comes from the ' Alpha Protocol - Seeking Immediate Extraction ' The cramped inversion should aways be considered the end game of an economic cycle. But of course we will get the v shapers and naysayers who obliges that stonks only go up. The space available to operate against the Robinhood army is becoming more flexible. Sharp speculators are seeing more of an advance in the 2's 5's curve and abandoning ship when it suits them. The threat of recession completely materialised and shows the importance of outguessing its weakness. You can learn from this inversion that: 1️⃣ Every other time this happened it ended badly for the global economy via recession. ✅ 2️⃣ A Fed that lags and finances the Whitehouse will only add fuel to the flames... "it's different this time". ✅ 3️⃣ The longer the delay in USD devaluation from Fed, the worst the blow is going to be in Equity markets. Assuming USD does not devalue materially into 2020 its repo will grow and continue expanding the balance sheet , one way or another eventually this is going to look like Fed has been financing the WhiteHouse and then the game is up. Powell's noble attempt to pick a fight with the end game in an economic cycle can be regarded as having come to nothing. The threat comes from confidence and credit. Aiming for a complete annihilation across risk assets into 2021, the presence of the inversion was sufficient. Now this move will be made with momentum.
Editors' picks
TVC:US05YLong
by ridethepig
41
ridethepig | End Game in the Cycle📌 This diagram portrays the final stages in the economic cycle which I called in 2019. The position arose after Equities began extending beyond reality; all sellers needed was an intending cause. The construct of the ingredients here are clear and simple, after Fed cleared the runway till 2022 you can see the risk coming out of bonds. Of course now it creates the "following subtle trap" where the belly of the curve begins to move towards the front end which then brings the 30Y with it. It is worth pointing out where other countries in the world are as there is little divergence on the rates differentials now: 📍 Spain 📍 Singapore 📍 Canada 📍 UK 📍 Japan 📍 Germany There is no reason why the US cannot see a retracement back to 0.9% / 0.8% levels ... Watch for the next dominos in Equities and Gold based on deep knowledge of the flows as we can call it. More risk to come.
TVC:US30YShort
by ridethepig
1
ridethepig | US Yields Breaking Higher!So much for the 5th wave... the formulation has truncated after the payrolls report. This is an example of an erroneous freeing. In similar patterns, the rebound will translate in a 5 wave impulsive sequence which is somewhat cramped after the knee-jerk reaction from covid. The appropriate positional response to the lows here is to ride the pig , what we are talking about is taking measures outguessing the road to normalisation of rates which we have not yet recognised as such. Now we turn to the analysis of play in unemployment claims, despite how the media are selling business as usual we have a long (and likely sluggish) road to recovery, because of the poor handling of lockdowns and closures. The one who is playing the macro data always has the upper hand, but this is especially the case once we clear the 'knee-jerk reaction' from the virus. The recurring bankruptcies, layoffs, social unrest and shutdowns have been forgotten about after politicians promising diversions! Smart money will not move so easily. Retail will pay their tribute in the form of horrible losses to an unconditional truth. Vix has completed the round trip, first prize to all those riding it from 85! Of course the swing from 85 was no less imaginative than the swing from +/- 11 lows: We are entering into a new development for volatility, my models are forecasting a dramatic expansion into year-end which will make it very difficult for manual or emotional players. 2022/2023 looks like the start of the next bull run in global equities, expectations are for advanced conditions to remain with us for 12-18 months.
TVC:US10YLong
by ridethepig
ridethepig | US10Y Market Commentary 2020.04.10An important chart update for all early and late cycle players, the lows in US10Y Yields are not yet locked and this is holding the window open for a final leg to the downside cooking in Global Equities and risk markets. A lot of buying interest in bonds towards 0.85 / 1.00 highs which will be enough to keep the downtrend in pay. I am looking for a full ABC completion from a strictly technical sense to complete the pattern. It will make things a lot easier for later in the year / into 2021 (and beyond). On the map a very simple area to track: Steel Resistance 0.89 <=> Strong Resistance 0.77 <=> Soft Resistance 0.69 <=> Mid-Point FLIP 0.6 0 <=> Soft Support 0.48 <=> Strong Support 0.39 <=> Steel Support 0.30 Thanks as usual for keeping the support coming with likes, comments, charts and etc... jump in with your questions and views!
TVC:US10YShort
by ridethepig
2
ridethepig | One For The History Books...Negative US Rates !!!Negative rates are finally here for the US with the 6mo t-bill ticking below -2bps (feed is slightly delayed here). Simply meaning that you will now need to pay the US government for 6mo cash deposits. This is the only way they can continue in the "end game" strategy. It is a well known phenomenon that the US 2's 5's was ringing alarm bells last year , those who were able to conduct their middle-game carefully were able to build credible trading ideas that leave the opposition hopeless in the endgame. One of the main requisites for BTC to succeed in the endgame is based on the ability that FED can continue to confiscate while the "People vs Establishment" narrative deteriorates via lack of confidence in monetary policy. The endgame is much more the part of trading in which advantages are needed from economics. Now, the realisation of advantages, specifically advantages in Volatility . In order to understand the flows across the entire board, you must learn about the endgame by starting from its individual elements, because it has such elements, just like the opens and middle-game strategies. We have previously already dug into these in detail that allow you to form ideas like this for the crash in German Equities. Thanks as usual for keeping the support coming with likes, comments, charts and etc!
TVC:US06MYShort
by ridethepig
3
ridethepig | US 2s10s Curve Breaking HigherI have been talking about the curve steepening for some time after we cemented the lows. From a technical perspective, the breakout is implying a test of 60 over the coming weeks and months. The US 2s 5s Bond Curve also looks to be triggering a major break up: This will reflect a medium term breakout with large forces clashing against each other and diverging at the prior lows in a long-term swing. A mixture of profit taking and momentum tiring. A break above is triggering the flows, with next key levels in play at 35.5bps, 49bps and 60bps as the final target. US10Y DE10Y As usual thanks for keeping the support coming with likes, comments, questions and etc! Feel free to jump into the conversation in the comments with your views/charts.
TVC:US10YLong
by ridethepig
ridethepig | US 2s5s Curve Screaming Recession in 2020A timely update to the 2s5s US Curve which is breaking higher with the resteepening after flattening from 2016. This breakout indicated we have marked a meaningful base with the next target in play at 29bps which is the measured target from a breakout. (1) Every other time this happened it ended badly for the global economy via recession. (2) A Fed that lags and finances the Whitehouse will only add fuel to the flames... "it's different this time". (3) The longer the delay in USD devaluation from Fed, the worst the blow is going to be in Equity markets. Assuming USD does not devalue materially into 2020 its repo will grow and continue expanding the balance sheet , one way or another eventually this is going to look like Fed has been financing the WhiteHouse and then the game is up. For those tracking the renewed steepening there are plenty of opportunities if you know how to capture the symmetry; for example Banks outperforming was a no-brainer: Defensives outperforming: Rotation in full swing: End of the Cycle? Smells like it... Recession is calling... Thanks for keeping all the support coming with likes, comments, charts, questions and etc! Best of luck those tracking for the end of the cycle... this chart will be one for the history books.
TVC:US05YLong
by ridethepig
2
ALPHA PROTOCOL: SEEKING IMMEDIATE EXTRACTIONYou have opened the grave of an economic cycle. Before we dig deeper into the nature and consequences of our discovery, we will discuss the background to the thesis and consider first what we know from history a few lessons; (1) Every other time this happened it ended badly for the global economy via recession. A (2) A Fed that lags and finances the Whitehouse will only add fuel to the flames... "it's different this time". (3) The longer the delay in USD devaluation from Fed, the worst the blow is going to be in Equity markets. Assuming USD does not devalue materially into 2020 its repo will grow and continue expanding the balance sheet, one way or another eventually this is going to look like Fed has been financing the WhiteHouse and then the game is up. Protectionism is a serious error. There is no yellow brick road to success with protectionism, and it is no surprise the US via media manipulation have the masses deluded. This is a necessary component to the makeup of the next economic cycle; but it must be in balance, any overshoots or undershoots will destroy the effectiveness in manipulation. Central Banks have been buying 20% of Gold supplies, expressing a view on global risk at rates we have not seen since the Nixon era when mortgage rates were surpassed by wages and no surprises this is also happening again now! Those with a background in fixed income will know alarm bells are ringing louder than usual in bond markets with wages ticking higher than mortgage rates. This is not sustainable and when danger threatens and the crowd does not smell it, don't stand like a sheep, rather run like a deer. Now that Pandora's Box has been opened, it is equally important to understand the consequences and have a pulse to guide us on how to proceed: Utilities starting to form a top: Consumer Staples in the decade long chart: For those with a background in waves you will know this is a typical example of a 5 wave count. This is time to start paying attention for any signs of a meaningful top forming. We know that once this final wave is completed a corrective chapter will begin. This chapter down is only a third of the pages compared with the rally and we can 'read' through it quickly. Rotation in full swing: Cyclicals vs Defensives : Tracking Unemployment closely : Vol sitting on the launch pad Use this chart to good advantage, time to start paying close attention for early signs of a turn. As usual thanks for keeping the support coming with likes and we can open the conversation in the comments for all to share ideas and questions.
TVC:US05YLong
by ridethepig
8