Very high correlation btw relative value of EM vs DM stocks and Gold price
At the moment, either EM is very cheap vs DM or Gold is very expensive. This should correct in coming weeks
Idea stolen from TickByTick_Team on Twitter. Sorry not allowed to paste links here
Business cycle still points to more downside in steel prices and treasury rates. Recent declines are too fast and such fast declines are usually followed by some bounce/consolidation before more downside.
DXY and inflation expectations are diverging once again, just like early 2017 and mid-2018. Divergence is not extreme yet but I fear we might be walking into another trap. DXY is once again showing the path imho, so oil and inflation expectations are once to high and should come down unless dollar reverses quickly.
Oil and DXY got in line in last several weeks. Inflation expectations are still high despite some decline lately. Slow Stochastic is oversold, so it may bounce a little here but it should keep declining unless oil and USD move significantly.
Copper / Gold ratio pointing to lower 10 year Treasury yields around 2.40%. US yields seem to high on many measures but improving CESI and too much safety bid lately can push yields even higher before the real downturn begins.
Slowing business cycle also points to further weakness in EM equities until end of 2019 or steel prices turn higher.
SPX may be more resilient but upside should be limited.
IF EM equities will be under pressure, it is likely that DXY will be strong in the coming months.
SHORT EEM bounces. Be cautious on SPX
Business cycle has turned down again as depicted by steel prices and long term treasury yields. Last time, it was Chinese money printing that kick started the cycle again. This time Chinese are still slow to inject meaningful liquidity to the system. Once they get going, it takes 9-12 months for the economy to feel the real impetus. Hence, business cycle is likely...