Macro Extremes (week ending October 18, 2024)

October 20, 2024 Leave a comment

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) either registered an Overbought or Oversold reading and/or have traded more than 2.5 standard deviations above or below its rolling mean.

* denotes multiple week inclusion

Extremes above the Mean (at least 2.5 standard deviations)

Brazilian 10 year government bond yield *

GBP/EUR

Dow Jones Transports

Nasdaq Transports *

And Australia’s ASX Small Caps *

Overbought (RSI > 70)

Gold as priced in AUD, CAD, ZAR, GBP & USD *

Dow Jones Industrials *

Thailand’s SET 

And Toronto’s TSX *

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

Gold as priced in CHF & EUR

Pakistan’s KSE *

Extremes below the Mean (at least 2.5 standard deviations)

None

Oversold (RSI < 30)

U.S. 3 month government bill yield *

Australian Coking Coal *

U.S. Midwest Hot Rolled Coil Steel *

North European Hot Rolled Coil Steel *

Lithium Carbonate *

Lithium Hydroxide *

The Oversold Quinella (Both Oversold and Traded at < 2.5 standard deviations below the weekly mean)

None

Notes & Ideas:

Global government bond yields mostly fell,

This seems logical as the EU announced interest rate cuts, this past week.

This also meant that yield across the British curve broke their 4 week rising streak.

Japanese and Australian yields bucked the falling trend. 

U.S. 20 and 30 year yields also broke their 4 winning streak.

The US minus German 10 year spread has risen for 5 consecutive weeks.

U.S. 2’s are their highest weekly close in 2 months.

Equities were mixed, with a bias towards higher prices.

The SOX and AEX has bearish outside weeks.

The U.S. Transports indices are notable entrants this week.

Chinese equites continued their weakness following recent visits to the overbought extreme category.

The KBW Banking Index is near to posting an overbought quinella extreme. 

While Italy’s MIB is trading at stretched levels, it remains miles below it all-time high.

The ASX Financial have risen 6% in the past fortnight, recovering the 6% decline in the prior fortnight.

Toronto’s TSX and the Nasdaq 100 have risen 8.7% and 10% respectively over the past 6 weeks.

The Dow Jones Industrials, Nasdaq Composite, S&P MidCap 400 and the S&P 500 have all put together 6 week winning streaks.

And the Tel Aviv 25 Index is at an all-time high…….

Commodities were broadly weaker, again.

The main drag were prices across the energy complex.

Base Metals and Grains were also weaker.

Inversely, Precious Metals had a good week and various prices appear in overbought territory.

Incidentally, many commodity prices are also establishing 3 week streaks on either side of the ledger.

The Baltic Dry Index has fallen 27% over the past 3 weeks.

Lean Hogs are in a 6 week winning streak.

Cattle broke its 5 week winning streak.

Coffee prices saw an anomaly. Arabica rose while Robusta fell.

Natural Gas has sunk 24% in the past 3 weeks.

U.S.Midwest Hot Rolled Coil Steel has spent 21 weeks being oversold.

And Lithium Hydroxide has now spent 66 consecutive weeks in weekly oversold territory.

Currencies action was dominated by U.S. strength, again; again.

The DXY Index is at its highest close in 3 months and is in a 3 week rising streak.

The Aussie weakened, again.

The BRL/USD is nearing an oversold quinella. 

The loonie mainly rose.

The Euro was slightly weaker.

And the British Pound was slight stringer

And the Philippine Peso has fallen for 4 consecutive weeks versus the USD.

The larger advancers over the past week comprised of;

Coffee 2.1%, Platinum 3%, Silver in AUD 7.6%, Silver in USD 6.9%, Gold in AUD 3.1%, Gold in CAD 2.7%, Gold in CHF 3.3%, Gold in EUR 3.1%, Gold in GBP 2.6%, Gold in USD 2.4%, Gold in ZAR 3.6%, KBW Bank Index 2.8%, DAX 1.5%, MIB 2.6%, IBEX 1.8%, IDX 2.9%, S&P Small Cap 600 1.7%, Russell 2000 2%, TAIEX 2.6%, KRE Regional Banks 2.8%, FTSE 250 1.9%, PX 2.1%, STI 1.9%, TA25 2.1%, Nasdaq Transports 2% and the ASX Financial rose 4.1%. 

The group of largest decliners from the week included;

Australian Coking Coal (4%), Bloomberg Commodity Index (2.6%), Baltic Dry Index (12.9%), Cocoa (3.7%), WTI Crude Oil (8.4%), Copper (2.4%), Heating Oil (8.2%), JKM LNG (3.2%), Lithium Carbonate (1.9%), Tin (3.7%), Newcastle Coal (2.3%), Natural Gas (14.1%), Nickel (4.2%), Gasoline (7.2%), Robusta Coffee (2.6%), S&P GSCI (4.9%), CRB Index (3.9%), Dutch TTF Gas (1.7%), Brent Crude Oil (7.2%), Gasoil (8.6%), Corn (2.7%), Soybeans (3.2%), Wheat (4.4%), China A50 (2%), Egypt (2%), HSCEI (2%), Hang Seng (2.1%), Nikkei 225 (1.6%) and the Philadelphia Semiconductor (SOX) Index fell 2.4%.

October 20, 2024

by Rob Zdravevski

rob@karriasset.com.au

Filed under Finance & Investment Tagged with , , , ,

Gravity sucks – ASML

October 17, 2024 Leave a comment

Yesterday, the ASML share price completed a reversion to its 200 week moving average.

Soon, I’ll be re-buying it.

Why I was selling semiconductor stocks

October 17, 2024

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All time highs doesn’t mean bubble

October 14, 2024 Leave a comment

The Nasdaq 100 is stretched but not bubbly

October 14, 2024

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Macro Extremes (week ending October 11, 2024)

October 13, 2024 Leave a comment

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) either registered an Overbought or Oversold reading and/or have traded more than 2.5 standard deviations above or below its rolling mean.

* denotes multiple week inclusion

Extremes above the Mean (at least 2.5 standard deviations)

Brazilian and Turkish 10 year government bond yield

U.S. 5 year bond yield minus the U.S. inflation rate (YoY) spread

U.S. 10 year bond yield minus the U.S. inflation rate (YoY) spread

Shanghai Composite *

CSI 300 *

HSCEI *

Hang Seng *

Nasdaq Transports

And Australia’s ASX Small Caps *

Overbought (RSI > 70)

Middle East Urea *

Gold as priced in AUD, CAD, CHF, EUR, GBP & USD *

Dow Jones Industrials

And Toronto’s TSX *

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

Pakistan’s KSE *

Extremes below the Mean (at least 2.5 standard deviations)

None

Oversold (RSI < 30)

U.S. 3 month government bill yield *

Australian Coking Coal

U.S. Midwest Hot Rolled Coil Steel *

North European Hot Rolled Coil Steel *

Lithium Carbonate *

Lithium Hydroxide *

The Oversold Quinella (Both Oversold and Traded at < 2.5 standard deviations below the weekly mean)

None

Notes & Ideas:

Broadly, it was a week to ‘leave the bat on the shoulder’ and there was nothing to do.

Global government bond yields mildly rise, adding to last week’s move.

Yields across the UK and U.S. curve are in a 4 week rising streak.

The US minus German 10 year spread has also risen for 4 consecutive weeks.

While the US 5 year breakeven inflation rate and and the US 5 year yield minus US 3 month bill spread have both risen for 5 weeks.

U.S. 2’s are their highest weekly close in 2 months.

Equities were mixed.

Understandably, Chinese and Hong Kong indices gave up some of the previous weeks gains.

Last week, I wrote that around July 2020 – February 2021 was the last time we saw Chinese A50, CSI 300 and Shanghai Composite register an overbought quinella. 

This week, they only appear in the overbought category because they traded up to their 2.5 standard deviation mark early in the week.

In addition, the China A50, HSCEI, Hang Seng and Egyptian indices had bearish outside reversal weeks.

DJ Industrials notable entrant in overbought this week.

The Nasdaq Composite has put together a 5 week winning streak as have the S&P MidCap 400, Nasdaq 100, S&P 500 and the TSX.

The Philippines PSE winning run ended at 5 weeks.

And Thailand’s SET is closing in on a overbought quinella reading.

Commodities were the busiest of the 4 assets classes featured in Macro Extremes.

The bia was slightly tilted to weakness.

Gold across various currencies remains overbought.

Silver and Sugar aren’t overbought this week.

Coking Coal joins Steel prices in oversold territory.

The Baltic Dry Index has fallen 15% over the past fortnight.

Lean Hogs are in a 5 week winning streak.

Sugar, Tin, Nickel and CRB Index all broke their 4 week winning streaks.

U.S.Midwest Hot Rolled Coil Steel has spent 20 weeks being oversold.

And Lithium Hydroxide has now spent 65 consecutive weeks in weekly oversold territory.

Currencies action was dominated by U.S. strength, again.

The DXY Index is at its highest close in 2 months.

All currency pairs which are appeared in last week’s edition no longer appear.

The Aussie fell while the Swiss rose.

The Yen also rose, albeit slightly.

CHF/AUD broke its 4 week losing streak and AUD/EUR broke its 4 week rising run.

And the British Pound was flat to slightly lower.

The larger advancers over the past week comprised of;

Cocoa 9.5%, WTI Crude Oil 1.6%, Heating Oil 1.4%, Lithium Hydroxide 1.7%, Orange Juice 2.3%, Palladium 7.1%, Gasoline 2.7%, Rubber 1.6%, Gold in CAD 1.5%, Wheat 1.6%, KBW Bank Index 4%, Dow Jones Transports 2.7%, MIB 2.1%, TAIEX 2.7%, KRE Regional Banks 3.9%, KSE 2.3%, S&P Midcap 400 1.2%, Nikkei 225 2.5%, Copenhagen 1.4%, SET 1.8%, SOX 2.5%, Nasdaq Transports 2.7%, WIG 1.8%, ASX Financials 2.4% and the ASX Small Caps rose 2.5%.

The group of largest decliners from the week included;

Australian Coking Coal (4.5%), Rotterdam Coal (2.1%), Bloomberg Commodity Index (1.3%), Baltic Dry Index (6.2%), China Coking Coal (4.3%), North European Hot Rolled Coiled Steel (1.8%), Copper (1.8%), US Midwest Hot Rolled Coiled Steel (2.6%), Arabica Coffee (2.1%), Tin (4.1%), Natural Gas (7.8%), Nickel (2.9%), Shanghai Rebar (1.9%), Robusta Coffee (4.7%), Sugar (3.4%), Dutch TTF Gas (2.7%), Middle East Urea (2%), Silver in AUD (1.4%), Silver in USD (2.1%), Corn (2.1%), Oats (2.2%), Soybeans (3.1%), Shanghai Composite (3.6%), CSI 300 (3.3%), China A50 (10.6%), Egypt (3%), HSCEI (6.6%), Hang Seng (6.5%), MOEX (1.8%), PSE (2.1%), BIST (2.6%) and the ASX Materials Index fell 1.4%.

October 13, 2024

by Rob Zdravevski

rob@karriasset.com.au

Filed under Finance & Investment Tagged with , , , ,

A dangerous market which can rip higher

October 9, 2024 Leave a comment

My latest newsletter discusses how a stretched, full valued equities market can still ‘rip’ higher.

“shenanigans in the late hours of this current party (cycle) is when things become dangerous.

It’s also often when the most fun is had.”

The link to read and subscribe is below.

https://mailchi.mp/karriasset/market-can-rip-higher-1

Filed under Finance & Investment

Macro Extremes (week ending October 4th, 2024)

October 6, 2024 Leave a comment

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) either registered an Overbought or Oversold reading and/or have traded more than 2.5 standard deviations above or below its rolling mean.

* denotes multiple week inclusion

Extremes above the Mean (at least 2.5 standard deviations)

Turkish 10 year government bond yield

U.S. 10 year bond yield minus the U.S. inflation rate (YoY) spread

Silver in AUD & USD *

AUD/CAD *

AUD/INR *

AUD/USD *

BIST

And Australia’s ASX Small Caps *

Overbought (RSI > 70)

Sugar *

Urea (Middle East and U.S. Gulf)

Gold as priced in AUD, CAD & USD *

MYR/USD *

Egypt

Karachi *

Philippines PSE *

And Toronto’s TSX

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

Gold in CHF, EUR & GBP

Shanghai Composite 

CSI 300 

HSCEI *

Hang Seng *

Extremes below the Mean (at least 2.5 standard deviations)

CAD/AUD *

EUR/GBP *

Oversold (RSI < 30)

U.S. 3 month government bill yield *

U.S. Midwest Hot Rolled Coil Steel *

North European Hot Rolled Coil Steel *

Lithium Carbonate *

Lithium Hydroxide *

The Oversold Quinella (Both Oversold and Traded at < 2.5 standard deviations below the weekly mean)

None

Notes & Ideas:

Broadly, many things that were trading at ‘extremes’ last week, are no longer so, this week.

Global government bond yields rose.

Yields across the UK curve are in a 3 week rising streak.

Japanese yields rose strongly, recovering last weeks decline.

Commensurate to bond yields being oversold recently, inversely, this publication listed iShares 1-3 year Bond ETF (SHY) being overbought. It was implying to consider the antithesis of being long bonds. This past week, SHY fell 1%. This gave up 33% of the capital gain seen over the past 6 months. 

U.S. 2’s are their highest weekly close in 2 months.

The U.S. 5 year yield minus the 3 month bill spread has climbed for 4 straight weeks.

And various U.S. yield spreads listed last week have broken their 6 week rising streak.

Equities were mainly lower, contrary to any bullish feelings being felt.

The pocket of strength was contained to Chinese and Hong Kong indices.

In fact, the Chinese market was only open on Monday.

The July 2020 – February 2021 period was the last time we saw Chinese A50, CSI 300 and Shanghai Composite register an overbought quinella. 

The Nasdaq Composite has put together a 4 week winning streak.

The Philippines PSE is in a 5 week winning run.

The ASX Financials Index has fallen 6.5% in the past fortnight after being overbought in the week prior.

And Toronto’s TSX makes a return to overbought territory.

Commodities were mixed, although the indices strength due to their weighting to energy contracts.

The Bloomberg Commodity Index has risen 8.6% over the past 4 weeks.

Gold across various currencies remains overbought as does Silver.

Urea is a new overbought entrant.

Coffee isn’t overbought anymore.

Cocoa and Shipping Rates took a shellacking.
While Coking Coal prices bounced out from oversold territory.

Sugar, Tin, Nickel and CRB Index are in 4 week winning streaks, while Natural Gas its.

Shanghai Rebar prices have soared 15% over the past 2 weeks.

Soybeans broke its 6 consecutive weeks of positive closes.

U.S.Midwest Hot Rolled Coil Steel has spent 19 weeks being oversold.

And Lithium Hydroxide has now spent 64 consecutive weeks in weekly oversold territory.

Currencies action was dominated by U.S. strength.

The DXY Index broke its 4 week losing streak and rose 2%.

Hence I had a confusing read of currencies during the week.

Risk-off was seen in equities but the AUD and CAD rose.

And the Yen fell.

CHF/AUD has fallen for 4 consecutive weeks.

The AUD has risen for 4 weeks against the Euro.

The GBP was generally weaker.

And the THB/USD is no longer overbought as the Thai Baht broke its 4 weeks rising trend, falling 3% against the USD.

The larger advancers over the past week comprised of;

Australian Coking Coal 19.7%, Rotterdam Coal 3.2%, Bloomberg Commodity Index 1.8%, WTI Crude Oil 9.1%, DXY Index 2.1%, Lean Hogs 2.4%, Heating Oil 7.5%, Tin 4.1%, Newcastle Coal 2.3%, Nickel 5.7%, Gasoline 8.8%, Shanghai Rebar 12.1%, S&P GSCI 4.6%, CRB Index 2%, Dutch TTF Gas 6.2%, Urea U.S. Gulf 3.9%, Brent Crude Oil 8.5%, Gasoil 8.4%, Urea Middle East 5.3%, Silver in AUD 3.4%, Silver in USD 1.8%, Gold in CHF 1.9%, Gold in GBP 1.7%, Gold in ZAR 2%, Corn 1.6%, Wheat 1.7%, Shanghai Composite 8.1%, CSI 300 8.5%, China A50 16.3%, HSCEI 11.7%, Hang Seng 10.7%, KSE 2.8% and Oslo rose 3%.

The group of largest decliners from the week included;

Baltic Dry Index (8.6%), Cocoa (14.6%), Arabica Coffee (4.4%), Lumber (1.9%), Lithium Carbonate (5.6%), Lithium Hydroxide (5.1%), Natural Gas (1.7%), Palladium (2.4%), Platinum (2%), Robusta Coffee (7.6%), Rubber (1.6%), Soybeans (2.6%), All World Developed ex USA (3.5%), Budapest (1.5%), CAC (3.2%), DAX (1.8%), DJ Transports (2.3%), MIB (3.3%), IBEX (2.6%), IDX (2.8%), MOEX (1.9%), TAEIX (2.3%), KLSE (1.8%), KOSPI (3%), FTSE 250 (1.6%), Nikkei 225 (3%), NIFTY (4.5%), Copenhagen (2.3%), SENSEX (4.5%), SMI (1.9%), Vietnam (1.6%), BIST (6.8%) and the ASX Financials fell 2%.

October 6, 2024

by Rob Zdravevski

rob@karriasset.com.au

Filed under Finance & Investment Tagged with , , , ,

Out of Chinese stocks

October 5, 2024 Leave a comment

I have now exited all (except for one) Chinese related equities.

Years ago, when equity markets were in the doldrums, I would hear people tell me how they would gladly accept a 7% return in a given year.

Over the past 3 weeks, some Chinese/HK stocks and indices have risen 30%.

I bet if many or any caught one-third of that gain, they wouldn’t pack up for the next 12 months and stay away from the markets…….

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Extremes in the real cash rate

October 2, 2024 Leave a comment

Watching when the spread in the study below trades at extremes can assist validating the continuation or waning of a trend in the S&P 500.

That spread is nearing oversold territory.

October 2, 2024

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The robots won’t take away jobs

October 2, 2024 Leave a comment

On the topic that new technologies (or AI, perhaps) will take away jobs….

Approximately 85% of employment growth in the last 80 years can be attributed to new technologies.

Today, nearly 60% of workers are engaged in jobs that did not exist in 194

source: The Labor Market Impacts of Technological Change: From Unbridled Enthusiasm to Qualified Optimism to Vast Uncertainty (David Autor, 2022).

https://www.nber.org/papers/w30074

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Interest Rates nearing their lows

October 1, 2024 Leave a comment

Broadly, interest rates (2 year government bond yields) are now between 20% and 25% below their peaks and are trading at levels last seen 18-24 months ago.

I think it’s near time for many to re-finance their debt.

From here on in, those companies still carrying much debt, better be seen to pay lower interest expenses over the coming years.

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