Longer, Long Term – March/April 2023

Under the category of trying to get the big calls over the ‘longer, long term’ right,

I currently see the following macro ideas as actionable.

The prices & timing are nuanced for each of them.



Orange Juice


Gold in AUD


KBW Bank Index

U.S. 2 year and 5 year bonds

German 5 year bonds

Possibly Soon:




FTSE 100

CAC 40

Gold in USD

EUR / buy AUD

EUR / buy GBP

SGD / buy AUD

March 30, 2023

by Rob Zdravevski

Karri Asset Advisors


Brazil attacked inflation early

Brazil commenced raising interest rates in the 1st quarter of 2021. The central bank rate climbed from 2% to 13.75% which represents a 6-fold increase.

Brazil conducted 12 rate hikes.

The U.S. commenced hiking rates 12 months later year later, in the 1st quarter of 2022. The fed funds rate have risen by a factor of 9 (from 0.5% to 5%).

The U.S. has raised interest rates 9 consecutive times.

Brazilian’s carry a Household Debt to GDP ratio of 34%.

The Americans have 75%

Aussies are sitting on at 114%

The chart below shows the Brazilian 10 year bond yield compared to the Brazilian inflation rate.

Brazil addressed their rate hikes much earlier and when coupled with the halving of many commodity prices since their 2022 peak) has seen the Brazilian inflation fall from 12% to 5.6%

March 29, 2023

by Rob Zdravevski


What I saw in today’s headlines – March 29, 2023

Here are 5 headlines I saw today and my interpretation or comments about them below each one.

Note: There is an anti-trust tone in today’s news.

Headline 1: Apple (AAPL) introduces Apple Pay Later to allow consumers to pay for purchases over time

RZ: this extends my thinking that Apple (and a few others) can choose to do (or try) most anything and we collectively think that it’s a natural business line for them. i.e. Pfizer could never announce that they are building a car.

Headline 2: Disney (DIS) eliminated its Metaverse division

RZ: an incumbent content giant such as Disney can’t see how the Metaverse develops into anything commercial or serious.

Headline 3: Alibaba (BABA) aiming to split into six additional units

RZ: perhaps better to announce a break-up of your business divisions before the government makes you do it. It looks better that you are seen doing it on your terms. Whether the sum of pats is greater than the whole is a seperate topic.

Headline 4: Microsoft (MSFT) and others preparing to settle EU complaints, according to Bloomberg

RZ: Maybe heed the above commentary?

Headline 5: Google (GOOG) asks judge to dismiss antitrust suit, according to Bloomberg, a quote from article includes, “In an earlier statement, Google vowed to fight the DOJ attempts to break up its ad business.”

RZ: Google is going to fight this case hard….perhaps Alphabet should break up the business before “trust busters” do it for them?

March 29, 2023

by Rob Zdravevski


Preparing to increase allocation to Small Cap equities

My various signals and studies are prompting me to prepare to initiate/increase weightings towards Small Cap equities.

This will apply to Australian and U.S. small caps.

The chart below is a snippet showing the mimicry and correlation between weekly prices of the Copper/Gold Ratio and the Nasdaq Small Cap 700 Index.

Clients will separately receive supporting research, entry prices and the securities which I’ll use to express this view.

March 29, 2023

by Rob Zdravevski

Karri Asset Advisors


Oil – the bear is turning bullish

Whilst I have been bearish on the Oil price for the past year, there was a time when I was bullish.

That was way back in June 2020. The price of Brent Crude then tripled.

The circle in the chart below shows that June 2020 period.

In this article, dated June 12, 2022 I mentioned Brent Crude trading around $37 represented an attractive entry point and that it should hold the $32 level, which it did.


Today, (3 years later) I am preparing for a moment to accumulate Oil or oil-related securities again.

March 27, 2023

by Rob Zdravevski


Macro Extremes (week ending March 24, 2023)

A weekly Macro, Cross Asset review of prices trading at extremes which may generate future investment ideas and opportunities.

The following assets (on a weekly timeframe) registered an Overbought or Oversold reading and/or have traded more than 2.5 standard deviations above or below its rolling mean.

Extremes “above” the Mean (at least 2.5 standard deviations)


U.S. 10 year minus U.S. 2 year yield spread

U.S. 10 year minus U.S. 5 year yield spread

U.S. 30 year minus U.S. 10 year yield spread



MOEX Index

Overbought (RSI > 70)

Hot Rolled Coil Steel (HRC)


The Overbought Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)

Gold (in AUD and CAD)

Extremes “below” the Mean (at least 2.5 standard deviations)

U.S. 5 year yield minus U.S. 5 year breakeven inflation rate

Australian 3, 5 and 10 year bond yields

Copper/Gold Ratio

U.S. 5 & 7 year bond yield

S&P GSCI Index

Brent Crude Oil

WTI Crude Oil







ASX Small Caps Index

And the major equity indices in Norway, Finland, Switzerland, Singapore, Malaysia and Thailand

Oversold (RSI < 30)

U.S. 5 year minus U.S. 3 month yield spread

Urea (U.S. Gulf) 

Urea (Middle East)

KBW Banking Index


The Oversold Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)


Notes & Ideas:

Equities consolidated through the week and were mostly positive for the week, with Asian bourses posting solid weekly returns.

Australian indices were amongst the few to post a negative week. 

The U.S. he KBW Bank Index only fell 0.5% for the week.

The ASX 200 fell 0.6% for the week while the ASX Small Caps index declined 1.1%. It’s worthy to note that the former has registered its 7th consecutive losing week amounting to a cumulative decline of 8.3%.

Incidentally, the Nasdaq 100 has climbed 8% over the past 2 weeks which is notable outperformance compared to the 3% decline seen in the ASX 200 over the past fortnight.

Amongst bonds, yields fell again except for the Germans.

More of those government bond yields are starting to appear on the oversold extremes list.

Last week, I commented about a most dramatic observation seen in the U.S. 10 year minus 2 year bond spread (yield curve) where it moved from a ‘negative’ 2.5 standard deviation to a ‘positive’ 2.5 standard deviation reading within 1 week.

This is its first visit to +2.5 standard deviation (SD) land since March 1st, 2021 

What’s more, other U.S. yield curves joined the same +2.5 SD club this week.

While Japanese yields closed at levels resembling where it mostly traded over the past year.

And the U.S. 5 year inflation break-even rate completed its mean reverted to its 200 week moving average.

In commodities, we saw support across the energy complex except for the Gases.

Intra-week saw both Brent and WTI Crude trade down to 2.5 standard deviations below their weekly mean. The former also mean reverted to its 200 week moving average, a week after WTI Crude did the same. 

The significance of long term mean revision is being felt across many commodity prices whose preceding parabolic price rises were connected to the cause of inflationary pressures.

Today, Aluminium, Rotterdam Coal and many others are experiencing the gravitational pull of those means.

Meanwhile, Cocoa registered an oversold extreme when it traded 2.5 standard deviations (sd) below its weekly mean in September 2022 and now its 2.5 standard deviations above that same benchmark. In between this round trip, Cocoa’s price has risen 30%.

Silver added to last week’s performance, Copper had good week while Soybeans and Wheat eased towards oversold levels.

Gold continues to be overbought in various currencies and the JKM LNG price is creeping lower towards a possible buy target.

And I’ll remind myself that the Copper/Gold Ratio is ‘oversold’.

In currencies, the AUD continues to be weak against everyone with those extreme weakness listed this week.

The larger advancers over the past week comprised of;

Aluminium 3.5%, Cocoa 5.3%, WTI Crude 3.5%, China Coal 5.7%, Copper 4.7%, Tin 4.4%, Orange Juice 4.7%,Palladium 2%,Gasoline 3.5%, Brent Crude 2.7%, Silver in AUD 3.7%, Silver 2.8%, Oats 5.9%, Rice 4%, CSI300 1.7%, HSCEI 2.7%, HSI 2%, MOEX 3%, Nasdaq Composite 1.7%, Nasdaq 100 2%, Copenhagen 1.8%, S&P 500 1.5%, TAIEX 3%, SET 1.8% and Chile rose 2.7%.

The group of decliners included;

Baltic Dry Index (3%), Lean Hogs (3.4%), JKM LNG (3.7%), Lumber (8.4%), Natural Gas (5.2%), Nickel (1.8%), Cotton (1.7%), Dutch TTF Gas (4.1%), Soybeans (3.3%), Wheat (3.1%) and Brazil’s BOVESPA fell 3.1%

March 26, 2023

by Rob Zdravevski


Sell AUD Gold exposure

Gold in AUD is trading at ‘extreme’ highs.

It is overbought on a weekly basis and has traded to 2.5 standard deviations above its weekly mean.

Furthermore, the percentages show the amount which AUD Gold is trading above its 200 week moving average.

It makes for a difficult case to initiate new ‘long’ positions.

On another note, if you are an Australian gold explorer who has established their resources and/or reserves but you are at the stage of being pre-production plant construction……I think it may be prudent and clever to sell your project to an eager incumbent producer (seeking resource replacement) in light of the high AUD Gold prices and more so when coupled with the higher capex costs, let alone higher financing costs that you will be facing.

March 25, 2023

by Rob Zdravevski


Wheat’s 2nd and 3rd derivative relationships

I don’t think that the low in Wheat’s has been seen yet.

Here is the wheat price overlaid with Urea……

March 24, 2023

by Rob Zdravevski


Oversold Commodity Indices signal a trough in the ASX 200

This study shows a correlation that when the S&P Goldman Sachs Commodity Index (SPGSCI) which is plotted in blue, hits a weekly oversold reading and simultaneously mean reverts to its 200 week moving average, the ASX 200 (the orange line) sees a notable low.

Notwithstanding, a buy signal for the SPGSCI also appears at this time.

March 23, 2023

by Rob Zdravevski


Correlation: Oil, Inflation, GDP & Interest Rates

Crude Oil tends to lead inflation and interest rates.

On most occasions it also leads GDP too.

In the chart below;

WTI Crude Oil (blue)
U.S. Inflation (orange)
U.S.GDP (light blue)
U.S. 10 year bond yield (green)

March 23, 2023
by Rob Zdravevski

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