ridethepig | SPX Market Commentary 2019.13.12
Aggiornato
An end of year update for US Equities with valuation targets at 3240/54 I am tracking for an overshoot into the 3200 handle to sell into. For those tracking the current flows, the most important chart I have been showing to all clients is the 2s 5s curve:
The major top in USD will help for a few months at most, as soon as we enter into the next chapter in the economic cycle it will be too little too late. With tail risks making positioning very tricky, here we have a very good macro chart showing the high bar for any growth shock and how it weighs heavy on risk appetite.
All year long expectations around monetary policy easing have been in the driving seat while geopolitics shouts loudly from the sidelines. The protectionism we are seeing is already starting to show effects on global growth and with a soft backdrop the exposure to these shocks enhance.
Rotation is in full swing as we see large large hands move from equities to bonds, and from higher risk credit to lower risk, we naturally are seeing a rotation from cyclicals to defensives and finally into safe havens like Gold, Yen and Swiss Franc to a lesser extent.
The map is clear that we are still yet to have a relative breakout in Cyclicals vs defensives as shown below:
With Yields miles ahead of the moves lately we are approaching a major breakout in US banks, a relative breakout here of the downtrend will be significant going into year-end.
On the FX side, USD devaluation will help and yields finding a floor indicate smart money is turning the titanic. It should now be a matter of 'when' rather than 'if' Utilities are going to breakout assuming we do not get any major updates on the impeachment front. Defensives still look relatively strong, despite technical patterns starting to top in things like Consumer Staples:
Lastly the infamous Long Term Consumer Staples Chart:
Thanks all for supporting these ideas with likes and jumping into the conversation with your ideas and charts in the comments. Good luck those trading US Equities into year-end and positioning for 2020, we will update the chart as we go through the coming weeks with a technical dissection of 2020 flows and targets.
The major top in USD will help for a few months at most, as soon as we enter into the next chapter in the economic cycle it will be too little too late. With tail risks making positioning very tricky, here we have a very good macro chart showing the high bar for any growth shock and how it weighs heavy on risk appetite.
All year long expectations around monetary policy easing have been in the driving seat while geopolitics shouts loudly from the sidelines. The protectionism we are seeing is already starting to show effects on global growth and with a soft backdrop the exposure to these shocks enhance.
Rotation is in full swing as we see large large hands move from equities to bonds, and from higher risk credit to lower risk, we naturally are seeing a rotation from cyclicals to defensives and finally into safe havens like Gold, Yen and Swiss Franc to a lesser extent.
The map is clear that we are still yet to have a relative breakout in Cyclicals vs defensives as shown below:
With Yields miles ahead of the moves lately we are approaching a major breakout in US banks, a relative breakout here of the downtrend will be significant going into year-end.
On the FX side, USD devaluation will help and yields finding a floor indicate smart money is turning the titanic. It should now be a matter of 'when' rather than 'if' Utilities are going to breakout assuming we do not get any major updates on the impeachment front. Defensives still look relatively strong, despite technical patterns starting to top in things like Consumer Staples:
Lastly the infamous Long Term Consumer Staples Chart:
Thanks all for supporting these ideas with likes and jumping into the conversation with your ideas and charts in the comments. Good luck those trading US Equities into year-end and positioning for 2020, we will update the chart as we go through the coming weeks with a technical dissection of 2020 flows and targets.
Nota
Tracking the highs today.
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