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07May Macro Video: Echoes of 2013 loom large as market consolidates ahead of impending bond market volatility

07May Macro Video: Echoes of 2013 loom large as market consolidates ahead of impending bond market volatility

*The churn in bond markets is analogous to the 2013 pre Taper Tantrum price action, but eventually yields rose sharply.
*We see parallels and as such are content to remain cautious in terms of adding risk near term to the RadarScreen.
*USD weakness is playing through a rise in metals as tech struggles – the return to work trade is harming the stay at home stocks hard
*We see losses here being offset through liquidation of tech stocks more broadly, but recognise this is a patience trade now.

06May Chart Video: US tech at short term inflection point whilst bull case for Sterling grows

06May Chart Video: US tech at short term inflection point whilst bull case for Sterling grows

*The coordinated nature of the Fed speakers over inflation is totally at odds with real observable inflation in asset prices and in the real economy.
*Coupled with the reckless fiscal approach of the Biden Administration we remain convinced US policy makers are making a historic policy mistake.
*Real money US equity liquidation has met retail and buyback demand, but this brings the potential for short term volatility.
*Bank of England today expected to increase GDP forecasts but may wait in taper announcement; either way medium term our Sterling bullishness is growing.

04May Macro Video: Inflation data reality to meet Fed spin resulting in higher volatility

04May Macro Video: Inflation data reality to meet Fed spin resulting in higher volatility

*April rotation from equities to bonds looks to be over as underlying volatility starts to pick up.
*The Fed’s constant dialogue that inflation will be transitory flies in the face of inflation in real goods as companies increasing prices broadly.
*We increasingly view the risk of an inflation shock in the coming weeks and not months – this will bring a sharp pick up in volatility.
*Nasdaq remains negatively correlated with higher US rates and tighter financial conditions will see a pullback in the face of blowout earnings.

30Apr Macro Video: The “Goldilocks” April ends with prospect of higher rates – and higher volatility – ahead.

30Apr Macro Video: The “Goldilocks” April ends with prospect of higher rates – and higher volatility – ahead.

*A review shows a clear trend of Bonds down, Stocks up, Dollar down, volatility down.
*The surge in commodities is at odds with the pause in Bitcoin as the reflation narrative takes hold.
*The profligacy of the policy mix from Biden and the Fed is creating significant headwinds for bonds and we see the reflation theme reasserting.
*With Oil to play catch up, we add XLE Energy ETF calls to the Radar Screen as an outright play and a RV play against Nasdaq put spreads.

29Apr Chart Video: Jay Powell ….”Would you buy bonds from this man?!?”   No thanks….

29Apr Chart Video: Jay Powell ….”Would you buy bonds from this man?!?” No thanks….

*Biden and Powell move to new levels of “outcome control” policies which failing to acknowledge the consequences of their actions.
*The extraordinary dovish performance of Powell continues to diminish credibility in the FOMC: “Would you buy bonds from this man?!?!?”
*As US rates look set to continue to rise, Oil is breaking higher – we look to XLE and XOP ETF’s as upside plays.
*Apple and Facebook strong beats and buyback announcements – take note if this does NOT take the whole market higher”

28Apr Chart Video: Higher US rates point volatility ahead as FOMC meeting likely to remind market the Fed is “guessing” on inflation.

28Apr Chart Video: Higher US rates point volatility ahead as FOMC meeting likely to remind market the Fed is “guessing” on inflation.

*The rise in US rates signals the Goldilocks period risk markets have seen in April is coming to an end.
*The FOMC today may provide short term volatility, but the Fed is guessing over the transitory nature of inflation as fiscal discipline is abandoned in the US.
*The market is not positioned for higher rates in any asset – we see higher volatility and vulnerability in US tech in particular
*We have added to USDJPY upside, and look at ARKK, USDMXN, and Copper for signs of higher USD and volatility.

27Apr Macro Video: Upside pressure on US rates to resume as market signals and data all point to reflation theme reasserting in fixed income

27Apr Macro Video: Upside pressure on US rates to resume as market signals and data all point to reflation theme reasserting in fixed income

*The pause in US yields in April has been driven by significant rebalancing out of equities and into bonds from pension funds locking in gains to improve funding levels for liabilities.
*This has been helped by the Fed suppressing real yields through TIPS purchases whilst inflation breakevens remain above the Fed target of 2%.
*This is NOT sustainable and we are watching the FOMC statement and Powell press conference closely tomorrow for any signs of tapering plans.
*With US rates to resume moving higher, we look to past winners such as USDJPY upside and TLT bond ETF downside to express these themes.

26Apr Chart Video: April’s reflation theme “pause” running into high equity valuations and FOMC meeting expectations.

26Apr Chart Video: April’s reflation theme “pause” running into high equity valuations and FOMC meeting expectations.

*April has been a perfect “pause” in the reflation price action, but the theme has not gone away.
*The rotation from equities into bonds has kept bond yields suppressed in the US and so globally, but elevated breakevens point to inflation to come.
*This weakness in rates and the dollar has created “Goldilocks” for risk assets but this is not sustainable.
*FOMC Wednesday will see focus on signs of potential tapering in bond purchases as the data will continue to improve.

23Apr Macro Video: Bitcoin weakness highlights the vulnerability of all markets that have uncertain valuations but strong “narratives”!

23Apr Macro Video: Bitcoin weakness highlights the vulnerability of all markets that have uncertain valuations but strong “narratives”!

*As Goldilocks pauses we continue to view the pause in the rally in US rates as transitory.
*Portfolio rebalancing is a key reason for this rally in bonds, which has helped to fuel the April equity strength.
*We view this as unsustainable, and are happy to keep dry powder on the RadarScreen for now.
*The weakness in Bitcoin highlights the long term trend of owning assets with uncertain valuation.

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