My various topics in 1 page
May 9, 2021 Leave a comment
A summary (and links) to my writings over the past 6 weeks.
Macro Extremes (week ending May 7, 2021)
May 8, 2021 Leave a comment
The following assets (on a weekly timeframe) registered an Overbought reading or traded more than 2.5 standard deviations above its rolling mean.
Extremes “above” the Mean (at least 2.5 standard deviations)
Coffee (2nd consecutive week)
Italian Government 10 Year Bond Yields (2nd consecutive week)
Zinc
Overbought (RSI > 70)
French & Korean Government 10 year bond yields
The Commodities Indices (the CRB and Bloomberg’s)
Aluminium (for 11 consecutive weeks)
Tin
Lean Hogs (for the 12th consecutive week and its highest price since July 2014)
Heating Oil
S&P 500 Index (for the 5th consecutive week)
Dow Jones Industrial Average (for the 5th consecutive week)
S&P Mid Cap 400 (9th consecutive week)
U.S. KBW Banking Index (10th consecutive week)
Nasdaq Transportation Index (8th consecutive week)
Dow Jones Transport Index (9th consecutive week)
Sweden’s OMX 30 Equity Index (10th consecutive week)
France’s CAC-40 Equity Index (for the 4th consecutive week)
The Overbought Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)
Copper (now in its 21st consecutive week of being Overbought, has also moved to a standard deviation extreme)
Iron Ore (in its 4th week being Overbought, it too has registered the Quinella)
Corn (overbought for the 22nd consecutive week & trading 84% above its 200 Week Moving Average)
Soybeans (overbought for 9 consecutive weeks & 73%> its 200 Week Moving Average)
Lumber (having risen 55% in past 6 weeks)
Wheat (2nd consecutive week)
Cryptocurrencies – EOS, Ethereum, Litecoin, Dogecoin & Ripple (XRP)
Assets (securities) within my immediate universe which touched the other side of the extreme, being Oversold (where the RSI is < 30) or were at least 2.5 standard deviations below its mean are;
Extremes “below” the Mean (at least 2.5 standard deviations)
Cocoa
Oversold (RSI < 30)
Nil
The Oversold Quinella – Both Oversold and Traded at < 2.5 standard deviations above the weekly mean)
USD/CAD (meaning sell your strong Canadian Dollars against the weaker U.S. Dollar)
The rising CAD is also coinciding with the rise in commodities prices.
Notes & Ideas:
After 11 consecutive weeks, the Canadian 10 year bond yields have pulled back from their extreme highs,
and so have the German, French and U.S. bond yields.
The ‘softs’ continue their parabolic rise. Such moves aren’t sustainable.
Fun Fact: The ASX 200 is the same price as 3 weeks ago when it touched a 2.5 standard deviation high.
And I’m watching for these which are nearly entering Overbought territory;
Spain’s IBEX 30, Gasoil, AUD/JPY & AUD/USD.
May 8, 2021
by Rob Zdravevski
rob@karriasset.com.au
Coming next: The great Corn unwind
May 6, 2021 Leave a comment
The green line in lower chart tells us that number of ‘long’ positions held by financial speculators in Corn futures is at its highest since 1996.
Watch the correlation when the green line is barreling towards above than average heights and that of the highs being seen in the corn price…..and then see what happens to the corn price when the ‘great unwind’ occurs.
Incidentally, the red line in the lower chart show that producers (growers) are immensely net short. Meaning they are taking these forward prices as future payment. Of course they should.
If you a commercial participant in the corn market, it’ll be wise to wait a little longer before buying your corn. History and logic tells me you’ll get lower prices.
And today, Bloomberg have published this story;
May 6, 2021
by Rob Zdravevski
rob@karriasset.com.au
Currencies are in focus again
May 6, 2021 Leave a comment
I’m watching currencies a little more closely this week and their subsequent relationship to commodity prices.
Currently, the Canadian Dollar (vs the USD) is registering an Overbought extreme not seen since September 2017 and again in April of 2011.
Furthermore, the AUD/USD (0.7730) is showing trending signs of moving lower.
Today, the AUD/JPY (84.53) has posted a bearish outside reversal day.
Should the 2 latter currencies confirm their new downtrends, expect to see lower commodity prices.
The consensus and herd are all long commodities at the moment and not many think they can go lower.
An unwinding of some historically ‘long’ contract positions being seen in the futures markets could turn ugly, especially if the Loonie (CAD) trades below 0.7950.
May 6, 2021
by Rob Zdravevski
rob@karriasset.com.au
What if rates double?
May 5, 2021 Leave a comment
The $1.2 trillion of household deposits held in Australian banks doesn’t seem like it could move the needle, should all be deployed into the Australian residential real estate market, which has a cumulative value of approx. $8 trillion.
This assumption means all of the deposits are spent and leaving none for a rainy day, and what if a further $1 trillion is borrowed…..
then $2 trillion (in this sudden and assumed acquisition wave) could make an impact although Australia(ns) rank perilously high amongst the global rankings of;
a) personal household debt as a percentage of disposable income and
b) personal household debt versus GDP.
So, then……what if mortgage interest rates double from 2% to 4%?
May 5, 2021
by Rob Zdravevski
rob@karriasset.com.au
And so it has reverted to the mean
May 5, 2021 Leave a comment
To follow up to the immediately previous post and with a focus on Spain’s IBEX 35.
I also ask readers to reference this link to a post from October 2020, where in amongst my Buy recommendation I made mention that I’ll watch or expect the IBEX to mean revert to its longer-term 200 Month Moving Average.
Well, the 2 charts attached show the IBEX 35 in a Weekly and a Monthly form and my profit-taking senses are heightened today as the IBEX is touching its 200 Week Moving Average, while the Monthly equivalent is still 11% higher.
This is when you need to think about how to manage this investment position.
And so I ponder, after seeing a 33% return in 7 months, how much risk do I take in trying to squeeze out a further 11% ?
And then compared to an increased probability of an equal 11% decline from today’s price.
May 5, 2021
by Rob Zdravevski
rob@karriasset.com.au
An adequate return for the risk taken
May 5, 2021 Leave a comment
7 months ago I made these macro Buy calls on Spain’s IBEX and U.K.’s FTSE 100 equity indices.
Since then they have risen 33% and 19% respectively.
Although you can always dig around to find better comparative returns, when adjusting for the risk taken, I’m quite pleased.
In other words, it’s more than an adequate return for the risk taken.
In fact, there is probably too much complacency and expectation about what is considered an adequate return.
Incidentally, they are nearing my ‘sell’ signal.
May 5, 2021
by Rob Zdravevski
Up via the stairs
May 4, 2021 Leave a comment
I love a good corporate spin-off.
PayPal’ spin-off from eBay was a tremendous investment for clients.
Last year, in the midst of a market meltdown, United Technologies (UTX:US) spun off their Otis (the escalator and elevator business) and Carrier Global (the heating, ventilation, and air conditioning company).
Carrier shares have tripled in the past 12 months and Otis’ have nearly doubled.
Market conditions presented an opportune moment to accumulate the stocks especially when combined with ETF managers divesting their newly assigned stock holdings as they didn’t meet their index weighting criterium etc etc.
Who would of thought that the shares of an elevator business would climb in value in amongst a pandemic which disrupted the commercial office real estate market?
Today, I’m trimming the Otis Worldwide position.
May 4, 2021
by Rob Zdravevski
rob@karriasset.com.au
Investment Theme – the anti ESG theme
May 4, 2021 Leave a comment
My latest newsletter is brief and not climate change friendly.
May 4, 2021
by Rob Zdravevski
rob@karriasset.com.au
More about the Copper/Gold Ratio
May 2, 2021 Leave a comment
In an earlier post covering the Copper/Gold Ratio, I mentioned how the ratio is helpful in taking the ‘temperature’ of the economy but it is most correlated to the U.S. Government 10 Year Bond Yield, as the chart below shows.
In the chart below, the Copper/Gold Ratio is represented by the red line.
A sharp rise in this ratio is often driven by outsized price rises in copper when compared to the gold price, which is the case presently.
It’s difficult to discern who leads who but I can tell you that the Copper/Gold Ratio and the 10 Year Bond Yield are both Overbought on a longer term weekly basis’.
May 2, 2021
by Rob Zdravevski
rob@karriasset.com
rob zdravevski's blog 