Trying to hear what's not being said
August 14, 2024 Leave a comment
I think that some publicly listed companies should use the monies spared from their newly reduced capex plans……and buy their own shares, while their prices are languishing.
If they don’t (in the absence of making an acquisition) they are telling me that they don’t believe in their own equity.
August 14, 2024
August 13, 2024 Leave a comment
One reason why I keep saying it is a dangerous equity market….
is because of the increasing marketing that I see from the funds management industry telling me how they are on a quest for ‘quality stocks’.
Hmmm……so prior to this declaration, have they have been peddling or investment peoples money in ideas which are rubbish and of low quality?
But now that the party is getting late and some are getting the yips…..perhaps they can go searching for ‘quality’ when stock market is trading toward the upper end of the pendulums arc and invariably ‘quality’ is seldom trading at cheap valuations.
Hey fund managers….your messaging is terrible and dubious.
Maybe their marketing should say, “well, you see we speculated for a while and it worked but we better move money into more recognisable ‘names’ and larger companies, in case that share prices decline, at least we can say we were investing in quality companies”.
My marketing currently says, in the absence of finding a bargain, I’ll hold cash until I find something of value to buy and own.
But ‘they’ can’t say that.
They have indexes to hug, jobs to keep, gravy trains to stay aboard, peers to mimic and fees to charge, all whilst being fully invested……no matter what !
I think that there is value to be found but ‘they’ cant be bothered looking for it or ‘their’ mandate doesn’t allow it or ‘they’ manage so much money that they can’t possibly buy enough of the asset to satisfy their size.
Many continue to be willingly fed BS.
August 13, 2024
August 12, 2024 Leave a comment
Last week’s palaver about unwinding Yen trades is old news.
The Yen has nearly swung to the other side of the pendulum.
The study below shows the 13 moments over the past 15 years when the AUD/JPY was trading (coinciding with a couple other metrics) at a weekly RSI reading of 36 or below.
I say ‘nearly swung’, for we are close but not there yet……for another such occurrence.
When they do occur, they bode well for listed equities risk appetite.
The Nasdaq 100 index appears within my study as a comparison.
August 12, 2024
by Rob Zdravevski
rob@karriasset.com.au
August 12, 2024 Leave a comment
To support a case for a tactical bounce in the equity markets,
I have used red to highlight the data when the AAII investor sentiment survey has had the narrowest spread between bullish and bearish respondents,
And I have circled those corresponding moment in the accompanying S&P 500 chart.
So that all looks lovely when many of the bulls disappear.
Although, ‘bounces’, by nature are short-term.
For the strategic equity allocators, this note supported the ‘grind’ higher for the S&P 500
But that was back then and we are now deeper into this grind.
My final line in that note said, “It’s not the safest of markets”.
August 12, 2024
by Rob Zdravevski
rob@karriasset.com.au
August 11, 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)
Belgian, Danish and Finnish 10 year government bond yields *
IEF & IEF *
SHY & TLT *
U.S. 10 year minus U.S. 2 year government bond yield spread *
U.S. 10 year minus U.S. 5 year government bond yield spread *
U.S. 30 year minus U.S. 10 year government bond yield spread *
Gold Volatility Index
Dutch TTF Gas
Gold in AUD
CHF/AUD *
CHF/USD *
CNH/USD *
EUR/AUD
EUR/USD
THB/USD *
USD/CAD *
USD/DKK
USD/INR
USD/MXN
Overbought (RSI > 70)
None
The Overbought Quinella (Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)
MYR/USD *
Extremes below the Mean (at least 2.5 standard deviations)
German 2, 5 and 10 year bond yields
Australian 2, 3, 5 & 10 year bond yields
British 2, 3, 5 & 10 year bond yields
5 year Japanese bond yields
10 year Austrian, Swiss, Czech, Spanish, South Korean, Dutch, Norwegian, New Zealand, Polish, Portuguese and Swedish government bond yields.
U.S. 2, 5, 7, 10, 20 and 30 year government bond yields
TBT & TBX *
U.S. 5 year bond yield minus the 5 year break-even inflation rate *
U.S. 5 year bond yield minus the 3 month break-even inflation rate *
U.S. 5 year bond yield minus the U.S. inflation rate *
U.S. 10 year bond yield minus the 10 year break-even inflation rate *
U.S. 10 year bond yield minus the U.S. inflation rate *
Bloomberg Commodity Index
S&P GSCI Index
Brent Crude Oil
AUD/INR
AUD/JPY
AUD/SGD
AUD/THB *
CAD/EUR *
EUR/JPY
GBP/JPY
USD/CHF
DXY (USD) Index
Chile’s IPSA Index
Tel Aviv 35
Poland’s WIG
ASX Materials
AEX
Austria’s ATX
CAC
DAX
MIB *
IBEX
KOSPI
S&P MidCap 400
Copenhagen
Helsinki
Stockholm
Russell 2000 Index
Oversold (RSI < 30)
Cotton *
North European Hot Rolled Coil Steel *
U.S. Midwest Hot Rolled Coil Steel *
Shanghai Rebar *
Lithium Hydroxide *
Corn *
Soybeans *
BRL/USD *
The Oversold Quinella (Both Oversold and Traded at < 2.5 standard deviations below the weekly mean)
Australian Coking Coal
China Coking Coal
Notes & Ideas:
Government bond yields rose, which broke many declining streaks.
The exception were Finnish, Japanese, Chilean and Brazilian yields.
The misnomer in this weeks edition is that intra-week yields did trade to oversold extremes before reversing higher and many closing above last weeks close.
U.S. inflation breakeven inflation rates also rose.
The Copper/Gold ratio is in a 5 week losing streak.
And we are seeing divergence in Chilean yields. The 2 year yield has risen for 8 straight weeks while the 10 year yield has fallen for 6 consecutive weeks.
Amazingly, most equity indices closed either flat or rose for the week.
There are no equity indices in overbought territory this week, however of the many appearing in the oversold category, did so due to their intra-week swoons.
The major Indian indices are no longer overbought.
Australian indices were amongst the rare losers for the week as were selected Asian markets.
The Nasdaq 100 rose 0.4% for the week which was enough to break its 4 week long streak.
The KOSPI is in a 5 week losing streaks.
And the Nikkei 225 has declined 17% over the past 4 weeks, keeping it in a 4 week losing streak.
Commodities were mixed, although generally posting gains which is change of a few weeks of broader weakness.
Oil, Cocoa, Lumber Thermal (again) Tin, Gasoline and Gases had a good week.
All things steel related are in a trough.
Coking Coal prices are unloved.
Silver, Grains, Copper, Platinum and Lean Hogs were weaker.
I’m very happy to see cheaper bacon prices.
Sugar broke its 5 week losing streak.
Copper and Iron Ore prices have fallen for 5 and 6 straight weeks, respectively.
Copper has declined 15% over the past 6 weeks.
While Crude Oil and Palladium broke their 4 week losing streaks.
Worthy of note, is the forward contract month for Henry Hub Natural Gas bounced out of oversold territory.
And Lithium Hydroxide has now spent 56 consecutive weeks in weekly oversold territory.
Currencies continue to provide action, again and again.
The Aussie was mostly higher thus breaking its losing streak against most currencies.
The anomaly is its 4 week losing streak versus the Loonie.
The ‘mid-week’ Aussie strength was commensurate with the rising fortunes for equities and an analogy for ‘risk-on’.
In the meantime, the AUD mean reverted against the Yen.
The Loonie saw strength and as a result it broke its 6 week losing streak agains the Euro.
In fact, many streaks were broken this week.
The British Pound fell and extended its losing streak against the USD to 4 weeks.
Brazil’s Real bounced out its stay in oversold land
The GBP/JPY have fallen for 5 straight weeks.
And as pre-empted in last weeks edition, the DXY Index did trade to 2.5 standard deviations below its 20 week average.
The larger advancers over the past week comprised of;
Cocoa 24.2%, WTI Crude Oil 4.5%, Coffee 2.5%, Lumber 4.2%, JKM LNG 3.2%, Tin 2.5%, Newcastle Coal 3.3%, Natural Gas 9%, Palladium 1.6%, Gasoline 3.1%, Robusta Coffee 2.3%, Sugar 2.1%, LME Tin 3.9%, S&P GSCI 1.7%, CRB 2.2%, Dutch TTF Gas 10.2%, Brent Crude 3%, BOVESPA 3.8%, Mexico 1.6% and Philadelphia’s SOX Index rose 2.2%.
The group of largest decliners from the week included;
Australian Coking Coal (5.5%), China Coking Coal (5.4%), Lean Hogs (2.6%), Copper (2.7%), Lithium (2%), Platinum (3.9%), Silver in AUD (4.8%), Silver in USD (3.9%), Corn (2.5%), Oats (2%), Soybeans (2.4%), Egypt (2.1%), KRE Regional Bank Index (1.9%), KOSPI (3.3%), Nikkei 225 (2.5%), Russell 2000 (1.4%), SENSEX (1.6%), Strait Times (3.5%), WIG (2.5%), ASX Financials (2.6%), ASX 200 (2.1%), ASX Materials (2.5%), ASX Small Caps (3.5%) and Turkiye’s BIST fell 5.4%.
August 11, 2024
by Rob Zdravevski
rob@karriasset.com.au
August 9, 2024 Leave a comment
If readers only remember one thing that I repeatedly write about, is that parabolic price moves have a greater propensity of mean reverting quicker than ‘others’.
Here is the stock price of ‘energy’ drinks company, Celsius.
August 9, 2024
August 9, 2024 Leave a comment
If I think Glencore’s stock price can trade a further 28% below today’s level, (down to 289p) is this an analogy for the S&P GSCI Index and the price of Copper?
That may equate to a copper price somewhere near US$3.05
The weekly chart below overlays the prices of all three.
However, my view on commodities is bifurcated.
There are some which I am currently constructively bullish on.
August 9, 2024
by Rob Zdravevski
rob@karriasset.com.au
August 8, 2024 Leave a comment
In the near-term, I think that the decline in U.S. bond yields should take a little pause.
They are now trading 2.5 standard deviations below their rolling 20 week moving average.
This will be mentioned in this week’s edition of my Macro Extremes newsletter.
In the April 19, 2024 edition of Macro Extremes, the U.S. 20 year bond yield appeared in the overbought extreme list and inversely, the iShares 20+ year treasury bond ETF (TLT) was in the oversold category.
The mid point for trading in the TLT around the last 2 weeks of April 2024 was ~ $88.46.
This week, the TLT is trading at 2.5 standard deviations above its 20 week moving average.
This week’s mid point price is $97.92.
Over the past 4 months……………that represents a capital return of 10.7% and when adding $1.22 per share of dividends received, the total return is a handsome 12%.
Who said bonds are boring.
Over the mid-term, I think bond yields will continue to fall.
August 8, 2024
by Rob Zdravevski
rob@karriasset.com.au
August 8, 2024 Leave a comment
See how declining #corn and #wheat prices are good for the share price of Mexican based food company, Gruma.
They are negatively correlated.
Cheaper ‘inputs’ equates to lower ‘cost of goods sold’ for Gruma.
#Gruma makes corn flour, both wheat and corn tortillas, snacks along with flatbreads and pitas.
Mission is one of their most known brands.
Today, Corn and Wheat are ‘troughing’ while Gruma’s stock price is approaching overbought levels.
Readers may also be interested to note the correlation which the #inflation rate has with price of corn and wheat.
August 8, 2024
by Rob Zdravevski
rob@karriasset.com.au
August 7, 2024 Leave a comment
It’s been 16 years since the stock price of LVMH simultaneously traded below its 200 week moving average and registering a weekly oversold reading.
August 7, 2024
by Rob Zdravevski
rob@karriasset.com.au
#luxury
rob zdravevski's blog 