While I don’t care about what an athlete is paid to execute their sporting obligations, I wonder if Mercedes Benz sells less AMG (performance) vehicles and Ferrari sells more, in light of Lewis Hamilton’s decision to change employers?
Below is an image of Lewis Hamilton featuring in a #marketing campaign to sell the 2024 Mercedes GT Coupe.
Nike may have sold more golfing apparel due to Tiger Woods modelling their wares, but they may not suffer now that their mutual association has ended.
The wedding announcement and subsequent marriage is fruitful while the divorce may not have a meaningful impact.
Many people offering investment advice are very good at telling you when to ‘buy’ and not so proficient when to ‘sell’.
More importantly, how about telling you when to ‘hide’ and ‘stay away’??
‘Noise’ in the absence of research and analysis is costing investors a lot of money.
Remember the ‘buying’ hype around;
Buy Now, Pay Later companies,
Non-Fungible Tokens (NFT’s),
Neo-Banks,
Copper and electrification,
anything else involving renewable energy
and food shortages and freezing Europeans (due to the Ukraine invasion, “they” were buying Wheat, Fertilizer and Natural Gas)
16 years ago it was hype surrounding CDO/CLO (sub-prime) investment opportunities.
Today, it’s Private Credit…..
and it could be East Coast Australian real estate……
and possibly the Magnificent 7 stocks of the Nasdaq….??
Avoiding losses and carnage doesn’t show up in any of your investment performance but for others, creating the feeling that you need to participate in something new or re-invented does help the promoter or seller either make a market or a dollar.
Germany’s main stockmarket has risen about 13% over the past few months, it has climbed about 60% over the last few years and soared 580% over the past 20 years.
Over 20 years, Australia’s ASX 200 has risen 170%.
In 1999, The Economist magazine called Germany the ‘sick man of Europe’…….and every year since, some other financial media pundit or publication has done the same.
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.
Extremes “above” the Mean (at least 2.5 standard deviations
Lean Hogs
KLSE – the Kuala Lumper Stock Exchange
Nikkei 225
Overbought (RSI > 70)
Cocoa
Rubber
Uranium
Dow Jones Industrial Average
Nasdaq 100
And the S&P 500 Index
The Overbought Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)
None
Extremes “below” the Mean (at least 2.5 standard deviations)
Shanghai Composite
Hang Seng China Enterprises Index (HSCEI)
Hang Seng (HSI)
Oversold (RSI < 30)
Chile 2 year government bond yield
China 10 year government bond yield
Nickel on India’s MCX Exchange
Lithium Hydroxide
JKM LNG
Corn
Soybean
The Oversold Quinella – Both Oversold and Traded at < 2.5 standard deviations below the weekly mean)
None
Notes & Ideas:
Government bond yields were mostly lower for the week, with the exception of the British, Japanese, Swedish and American yields.
Equities were clearly higher for the week.
The only loser of note was Indonesia on the back of upcoming general election gyrations.
The NIFTY, SOX and the CSI 300 have moved out of overbought territory
The Shanghai Composite performed an outside reversal week.
Amsterdam’s AEX is yet to reach a new all-time high.
Low and behold, Europe’s ‘sick man’, Germany closes at its all-time high while the Nasdaq has not.
And remarkably, the S&P 500 has risen 12 or the past 13 weeks.
Commodities were mostly higher.
Cattle is in a 4 week winning streak and has gained in 6 o the past 7 weeks.
Inversely, Newcastle Coal has declined for 7 consecutive weeks, while Soybeans have fallen for 6 straight weeks. The latter having fallen for 10 of the past 11 weeks.
Palladium and Corn broke their respective 4 and 6 week losing streaks.
Nickel on the LME isn’t oversold this week but remains so on India’s MCX exchange.
Lastly, JKM LNG is at its lowest close since December 20, 2020.
In last week’s edition, I alluded to Heating Oil “giving good bullish signals”. It rose 6.8% for the week.
Sugar is in a 4 week winning streak.
Gold (as priced in Australian Dollars) broke its 5 week winning streak.
Soybeans and Corn are registering oversold extremes.
Soybeans are in a 6 week losing streak and have fallen 10 of the past 11 weeks.
Cattle is still trading at extended percentages (38%) above its 200 week moving average.
And Lithium Hydroxide has now spent 30 consecutive weeks in weekly oversold territory.
Amongst currencies, the AUD has seen its 4th and 5th consecutive week of declines against many pairs, which sits proportionally within my published note on December 29, 2023 that the AUD was ‘full’.
Amidst the negative undertones within this The Australian Financial Review article, the is a luxury of being privately held and able to shutter an unprofitable mine. Many others are ‘forced’ to proceed and produce with the unfeasible because the market and shareholders expect them to.
It’s more concerning for those mining companies who are in the pre-capex dreams of becoming producers.
p.s. since when did a credit ratings agency start providing commodity pricing forecasts?
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.
Extremes “above” the Mean (at least 2.5 standard deviations
KLSE – the Kuala Lumper Stock Exchange
Nikkei 225
Overbought (RSI > 70)
Cocoa
Uranium
Dow Jones Industrial Average
Nasdaq 100
Philadelphia’s Semiconductor Index
And India’s NIFTY equity index
The Overbought Quinella – Both Overbought and Traded at > 2.5 standard deviations above the weekly mean)
None
Extremes “below” the Mean (at least 2.5 standard deviations)
USD/INR
Hang Seng China Enterprises Index (HSCEI)
Hang Seng (HSI)
Oversold (RSI < 30)
China 10 year government bond yields
Nickel on India’s MCX Exchange
Nickel on LME
Lithium Hydroxide
JKM LNG
CSI 300
The Oversold Quinella – Both Oversold and Traded at < 2.5 standard deviations below the weekly mean)
Soybeans
Corn
Shanghai Composite equity index
Notes & Ideas:
Government bond yields rose for the week, in back and forth weekly action over the past month, although yields are painting a picture of either consolidating the decline in yields seen since October 2023 or recovering part of the fade.
They have all bounced from their oversold extremes seen 4-6 weeks ago.
The only bond market to see yields fall was China’s 10 year paper.
Equities saw a 2-speed environment.
Most global equity indices saw weakness while the ‘larger’ U.S. indices continued their rise.
For example, the Nasdaq has risen 5.5% over the past 2 weeks, although it did fall 3.1% in the week prior to the most immediate fortnight.
The smaller U.S indices didn’t see the aforementioned strength. The banking and small cap indices were flat while the Russell 2000 was down 0.4% and the MidCaps were up 0.4%.
However, some indices are now trading at stretched levels above their 200 week moving average.
The SOX (closed at its all-time high) is 46% above it, while the Nasdaq 100, the Nikkei 225 and the Nasdaq Composite are 31%, 29.5% and 21% respectively above that measure.
Incidentally, the S&P 500 is trading at 20% above its 200 week moving average and we may start to see money shifting and broadening to the Small and Mid Caps, the further that percentage spread rises.
Taiwan’s TAEIX rose 1% following an election return of the incumbent political party.
On the other side of the ledger, most European markets fell, lead by the Nordics but also including the 1% declines in the DAX and the CAC.
This week saw the Hang Seng and the HSCEI close at their lowest levels since October 24, 2022, while some mainland China markets were mute.
The CSI 300 fell 0.4% while the China A50 rose 0.6%.
India’s SENSEX fell 1.2% and isn’t overbought this week.
Copenhagen snaps its 10 week winning streak and the Nasdaq Biotechnology Index has broken its run of 9 consecutive weekly gains.
The Dow Jones Index had a bullish outside reversal week while Indonesia (snapping its 5 week winning streak) and India’s NIFTY performed outside bearish reversals.
Chile’s main index has fallen 5.3% over the past 3 weeks, yet still remains 21% above its 200 week moving average suggesting a reasonable probability that mean reversion (convergence) lays ahead.
The ASX Materials Index has sunk 9% in the past fortnight and the Hang Seng China Enterprises Index (HSCEI) has tanked 11.5% over the same time. The latter now appears in this week’s oversold category.
And Brazil’s BOVESPA has declined 5% over the past 3 weeks. 4 weeks ago, it was overbought.
Commodities were mixed.
The notable movers either side of the ledger broadly offset the week ending results for the various commodity indices.
Large advances were seen in Sugar, Cocoa & Cotton which saw advances compound to 11.5%, 9%, 4.5% respectively over the past fortnight.
For trend followers, Heating Oil is giving good bullish signals, while Palladium has sunk 25% over the past 4 weeks.
Natural Gas broke its 4 week winning streak as it collapsed 24% over the past week in wicked price action. It rose 30% in the prior 2 weeks.
Other gas contracts such as Dutch TTF and JKM LNG also saw weakness.
Gold (as priced in Australian Dollars) is in a 5 week winning streak.
Soybeans and Corn are registering oversold extremes.
Soybeans are in a 5 week losing streak and have fallen 9 of the past 10 weeks.
While Corn is also nearing a major mean reversion. Some may recall my warnings of not chasing parabolic moves in grain prices at the commencement of the Ukraine invasion.
Cattle is still trading at extended percentages (35%) above its 200 week moving average.
And Lithium Hydroxide has now spent 29 consecutive weeks in weekly oversold territory.
Amongst currencies, the AUD has seen its 4th consecutive week of declines against many pairs (except against the Yen), which sits proportionally within my published note on December 29, 2023 that the AUD was ‘full’.
The U.S. Dollar has risen for the past 3 weeks against most pairs.
The only currency pair trading at an extreme this week is the overbought Indian Rupee versus the U.S. Dollar. Although this occurrence shouldn’t be taken at face value for there are some nuances about it.
I see a dichotomy in the direction of the rising CHF/AUD and the ‘risk-on’ sentiment or more particularly, the strengthening Nasdaq.
This requires more work and some rationalising because the weaker Yen is emphasising ‘risk-on’ in equities.
The Euro was mixed.
The British Pound was firmer.
And the SEK/USD has fallen for 4 consecutive weeks resulting in a tumble of 5%.
This January 7th, 2024 note mentioned something about that.
Each Sunday I publish a note titled ‘Macro Extremes’ which observes and notes prices of various assets or markets trading at the extended part of their ‘pendulum’ for the week that just ended.
Here is a review of some selected price action of those appearing in the publication over the past couple months.
On December 19, 2023, the British 10 year bond yields were at their lowest since May 2023. They have since moved from 3.50% to 3.92%.
The October 22, 2023 edition saw Mexico’s IPC equity index register a ‘quinella’ of oversold readings when it was at 47,800 points. By December 20th, it rallied (21%) to 58,000 points when it reached an overbought quinella.
That same edition mentioned the extreme oversold of the Nasdaq Biotech Index when it was trading around the 3,650 point mark. 3 weeks ago, its was overbought when it hit 4,430 points, which is a stupendous 21% run within 9 weeks.
A week later, the ASX Industrials Index triggered its own oversold quinella at 6,150 points. it soon lifted (12%) to 6,900 points by New Years Day.
And the October 6, 2023 edition warned to not chase the overbought Orange Juice price which was then trading at $3.90. Its current price is $3.08.
The next edition of Macro Extremes is published tomorrow.
rob zdravevski's blog 