# (Bull) Market March 2021



## ducati916 (28 February 2021)

Seasonality for all 3 indices:

If seasonality is any indication, potentially another rocky month for stocks.













Plenty of new supply coming to market in the form of SPACS:









3 asset classes that are generally considered 'safe havens':






In fact, the 10yr is a strong conviction to move to 1.6% and possibly even higher. We know that foreigners have been dumping Treasuries for quite some time. There are (apart from the Fed.) no buyers currently. Hence the move lower. For the moment at least, that will continue. If/when the 10yr enters the 2%-3% range, I think the stock market has issues. We have seen already last week, just how quickly the stock market will react to negatives in the Bond market. Nothing in the Bond market currently is going to improve: therefore the stock market is likely to become very choppy and somewhat directionless, ie. the trend higher will become bogged down.

Gold is positioning for a comeback. It's not there yet, but it is getting close. I think 1 more decline and we will hit the inflection point for a bounce higher. I've been working on my 'gold' models, so we'll see if there is any validity to them. Generally, the miners outperform gold itself (up/down) and I would expect this to hold true due to their natural leverage. The smaller miners more than the majors. So I'm getting ready to take profits in the shorts and get long. Not there yet, but close. Obviously, this implies that 'something' will happen in Treasuries. I think it will. I don't think the Fed. can or will let rates across the longer end of the curve (10yr-30yr) continue to rise. They will increasingly cap them, whether covertly or overtly. If they do...gold will be the tell: it will reverse fast and hard.

Now assuming that the Fed. does cap rates, what about stocks? Well commodity based stocks should continue really strong, capping is highly inflationary. Growth stocks (Tech) should catch fire again. Financials will probably sell-off. Housing based stocks should catch fire.

Now this is pretty old news. Newer (stupid) investments constitute video clips of NBA games. Baseball cards have been collectible for decades and are again on fire, but this video clip thing is a few months old.






So in summary: I am less enamoured of stocks currently. I am preparing for gold.

jog on
duc


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## ducati916 (1 March 2021)

During the 4 years after 1982, two of the main supporting factors behind the stock market advance were: (a) falling commodity prices and (b) rising bond prices (falling yields). In 1986, both of these markets bottomed.

In the spring of 1987, commodity prices broke higher and bond prices started to fall. The market rally continued into August. The dollar, which had been falling, rallied in August, failed and rallied again into October, where it again failed.



















We have today, essentially the exact same inter-market scenario that existed in 1987: (a) rising commodity prices, (b) falling bond prices (rising yields), (c) falling DXY complete with a rally that will likely fail and a stock market that is narrowing in participation.










Do we see the same result? Who knows. None of the conditions currently favour a continued bull run in stocks. While stocks may rally as the BTD crowd, ignorant of market history and the forces from other markets arrayed against them currently, continue to BTD and rally prices for the moment, under the surface, the smart money has already taken profits and are out.

That spike in the curve last week was to me similar to the spike in the repo rates prior to the collapse in 2020. Yes the repo spike was a few months ahead of any collapse, but it was the early warning sign that something was seriously amiss. It was 'explained' off as a failed auction on the 7yr. Why exactly did the auction fail in such a spectacular fashion? WTF is going on behind the closed doors? I have no idea, but when prices in staid Treasuries spike in that manner, the duc takes note.

Why is it important? Because INSIDER TRADING is a real thing. Politicians have portfolios and trade on inside information or leak political information all of the time. Was COVID a wet market or a lab created virus? I have no idea, but someone knows (knew) and that information leaked into the markets and prices adjusted. I had no idea why prices adjusted, but when the collapse came I was 100% ready. Somewhere, somebody always knows and they adjust prices.

The rate of rise in the 10yr is faster than I have ever seen. That is information. Add to that commodities (oil) rise and the weak dollar, ask yourself why should stocks continue to rise? The economy re-opening? Pent-up demand? My bet, already priced in months ago.

Add in that gold is looking to bottom in the next few weeks. Coincidence? Maybe. I'm not a big believer in coincidences. The issue with using 'trends' as an indicator is that trends can end in a blow-up very fast. Currently all the safe haven trades are indicating via their trends all is well. That however is not the message of the markets on aggregate. The stock market in this regard is the laggard, the slowest or dumbest market.

Mr @gartley has a count that moves stocks higher for a time in price, before a (major) correction. That pretty much tallies exactly with the pattern being communicated in the various markets.


jog on
duc


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## Smurf1976 (1 March 2021)

ducati916 said:


> Mr @gartley has a count that moves stocks higher for a time in price, before a (major) correction. That pretty much tallies exactly with the pattern being communicated in the various markets.



Another observation - the S&P500 is within reach of a big round number, that being 4000. 

OK, it's just a number, but given it's a very widely watched index there may well be a psychological response (profit taking) once it's reached. Similar to the NASDAQ reaching 5000 back in the year 2000 followed by the crash.  

Just mentioning it as another thing which fits with the notion of the market going higher for a while then down.


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## ducati916 (2 March 2021)

Trading up hard off of the lows, primarily due to:
	

		
			
		

		
	












Unfortunately, it is a lull in the storm. The 10yr is heading to 1.6%. Unless the Fed. steps in with curve control.

Until we find out whether or not the Central Banks are going to initiate curve control, we can assume that Bonds will continue to fall if (a) commodities continue to rise and the (b) DXY remains weak.

Currently the DXY looks to be ready to put in a bounce higher. 






This may or may not blunt the advance of yields. I think it will. There has been a lot of movement in Bonds, which are normally staid. They will likely cool off for a period, helped by a bounce in DXY. 

The bounce in DXY may not however help commodities as much. Commodities usually means oil. Oil is tied to OPEC and the Shale drillers etc. Shale (say they are not expanding production) is stable, OPEC (less Russia) wants higher prices, so supply will not increase and economies are with the vaccine, starting to re-open. Sum total: oil could continue higher. Again, oil has had a big run. There could be some consolidation.






While Commodities, Bonds and DXY take a breather, stocks will very likely continue higher. We will probably see new highs in the various indices. What we also want to see is a return of breadth. New highs without participation (divergence) will be increasingly dangerous. I will also want to see the growth/value rotation reverse:






And a return to the offence based end of the market for the big Mutual Funds and Pension Funds.






I would also require a reverse in quality of credit, back to Junk:







Failures, indicate that the market is unstable. An unstable market is a very dangerous market, particularly with high leverage.

As can be seen from the charts, everything is somewhat over extended. Which means that (if we have a mean reversion) most asset classes could be consolidating, prior to either (a) continuing their original trend or (b) reversing (breaking) their trend. Which means a break, if it comes, might seemingly happen very fast, out of nowhere so to speak. 

The other issue with (potentially) a number of asset classes consolidating are (a) choppy, seemingly directionless markets, because (b) the correction takes place not in price, but in time.

If a correction in time, vol. will also move sideways for an extended time with failures on b/o:






We may be in for a period of very frustrating, boring markets, until they are not. Bright spots could be currencies and crypto, which could likely trend, divorced from stocks/bonds/commodities, but informing as to potential outcomes in them.

From Mr flippe-floppe-flye:






jog on
duc


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## peter2 (2 March 2021)

Interesting how one very bullish day can lessen bearish outlook. I'm still bullish and one large down day lessens my bullish outlook. There's no doubt that many of us are cautiously bullish but wary of a falling market that can start at any time. 

The number of positions in my portfolios are falling dramatically as I sell in response to falling prices. Even though I remain bullish the number of good opportunities are fewer and many of them that start well are showing no follow through. Prices are drifting back to their BO levels. Prices in companies that recently reported good results are falling. 

Our ASX is being held up due to the market cap dominance of the banks and large miners. I'm not seeing an underlying bullish breadth in the ASX at the moment. The ASX bullish rally (not a bull market until index gets above Feb20 high) is running out of energy.


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## qldfrog (2 March 2021)

peter2 said:


> Interesting how one very bullish day can lessen bearish outlook. I'm still bullish and one large down day lessens my bullish outlook. There's no doubt that many of us are cautiously bullish but wary of a falling market that can start at any time.
> 
> The number of positions in my portfolios are falling dramatically as I sell in response to falling prices. Even though I remain bullish the number of good opportunities are fewer and many of them that start well are showing no follow through. Prices are drifting back to their BO levels. Prices in companies that recently reported good results are falling.
> 
> Our ASX is being held up due to the market cap dominance of the banks and large miners. I'm not seeing an underlying bullish breadth in the ASX at the moment. The ASX bullish rally (not a bull market until index gets above Feb20 high) is running out of energy.



To be honest,i am fully bear minded now, we may have a couple of weeks even 1 or 2 months up but in the scale of things, i have the feeling we have reached a top and the reality is slowly sinking in.unless a play on currency crash or similar which push people into shares again, i think we can call the long bull over until at the very least a decent correction aka 20% at least time will tell


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## ducati916 (2 March 2021)

peter2 said:


> Interesting how one very bullish day can lessen bearish outlook. I'm still bullish and one large down day lessens my bullish outlook. There's no doubt that many of us are cautiously bullish but wary of a falling market that can start at any time.
> 
> The number of positions in my portfolios are falling dramatically as I sell in response to falling prices. Even though I remain bullish the number of good opportunities are fewer and many of them that start well are showing no follow through. Prices are drifting back to their BO levels. Prices in companies that recently reported good results are falling.
> 
> Our ASX is being held up due to the market cap dominance of the banks and large miners. I'm not seeing an underlying bullish breadth in the ASX at the moment. The ASX bullish rally (not a bull market until index gets above Feb20 high) is running out of energy.





The breadth in the US is a major concern:






It needs to pick up and follow the market higher. If the market trades back to its highs or new all time highs and breadth is still lagging, then there will be (obviously) a divergence, which is never a good thing in this situation.

Rates are going to 1.6%. Not today, probably not this week, but they are going there. Rising rates, lack of breadth, commodities bullish and a potentially falling dollar spelt doom in 1987/1990. I don't fancy this market's chances if that scenario plays out again.

jog on
duc


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## Smurf1976 (2 March 2021)

peter2 said:


> Our ASX is being held up due to the market cap dominance of the banks and large miners. I'm not seeing an underlying bullish breadth in the ASX at the moment.



Over the weekend I quickly looked at some charts. A chart of every large cap stock actually, took a brief look at each and every one of them just to build a mental picture of what's going on.

In short, some stocks are clearly in an uptrend but there's an awful lot that are going nowhere or which peaked quite some time ago and now clearly trending down.

There's enough that someone could, if they were particularly bad at stock selection, have put together a seemingly respectable portfolio of large caps and be in the red on every single one of them despite the index grinding higher if they didn't include a few key companies in that portfolio.

On the other hand, someone who picked the right stocks and excluded the rest will be doing extremely well at the moment.

It’s a market environment where stock selection is important, it’s not a case of pretty much everything going up.


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## qldfrog (2 March 2021)

Smurf1976 said:


> Over the weekend I quickly looked at some charts. A chart of every large cap stock actually, took a brief look at each and every one of them just to build a mental picture of what's going on.
> 
> In short, some stocks are clearly in an uptrend but there's an awful lot that are going nowhere or which peaked quite some time ago and now clearly trending down.
> 
> ...



More than picking, i believe sector and size are the keys right now.


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## ducati916 (3 March 2021)

Bit of a meh market currently:

Breadth is increasing as the market trades higher. Assuming the market makes new all time highs, we want to see where breadth sits at that point.






Sectors:






And in the materials sector:






In the Tech. sector:






In Renewable Energy:






Doesn't necessarily mean anything, it is just a snapshot. However, if you trade individual names in sectors, lots of work to do.

Crypto:











An issue?






What exactly is that?






Are the 2 related?

Oil news:


-    The volume of crude that went into Gulf Coast refineries declined by 2.7 mb/d for the week of February 19 as a result of the Texas grid crisis.

-    The drop in refinery processing of 2.4 mb/d, or 28%, was the largest weekly decline since Hurricane Harvey in 2017.

-    In total, an estimated 3.7 million b/d, or 20% of total U.S. refining capacity, was shut in as a result of the weather, according to the EIA.

*Market Movers*

-    Texas utility *Vistra (NYSE: VST)* sees a $1.3 billion hit from the Texas freeze.

-    *Atmos Energy (NYSE: ATO)* trimmed its expected loss from Texas grid crisis to $2.5 billion, down from $3.5 billion previously. 

-    *Baker Hughes (NYSE: BKR) *and *Akastor (OTCPK: AKKVF)* have announced a joint venture company to pursue offshore drilling solutions. 

*Tuesday, March 2, 2021 *

Oil prices pared gains at the start of the week, seemingly hitting a temporary high note. Traders are on edge as they away a decision from OPEC+ regarding the potential easing of production cuts. 

_*Oil up, but bearish forces remain. *_Oil prices have posted substantial gains in recent weeks, and most recently after fully pricing in the impacts of U.S. economic stimulus, combined with more positive vaccine news with the approval of the one-shot Johnson & Johnson vaccine. However, Rystad Energy points to some caveats and potential pitfalls for crude prices: OPEC+ could add more supply this week; refinery maintenance season is upon us, and Chinese demand has run into a bit of a soft patch. 

_*Rystad: Energy transition to cut oil by $10. *_The downside risk that the energy transition can bring to oil prices is calculated to as much as $10 per barrel in the long term, meaning oil prices could end up $10 lower in the future than they otherwise would if the transition to cleaner energy speeds up, according to Rystad Energy.

_*Texas utility files for bankruptcy. *_Brazos Electric Power Cooperative, Texas’ largest and oldest electric power cooperative, filed for bankruptcy after getting hit with a $1.8 billion bill from the grid crisis last month.

_*Oil titans unsure about the energy transition.*_ At CERAWeek, oil executives grappled with how aggressively to pursue energy transition. Some urged faster movement, others talked up the need for more fossil fuels. “We don’t think peak oil is around the corner - we see oil demand growing for the next 10 years,” said John Hess, CEO of *Hess Corp. (NYSE: HES)*. “We’re not investing enough to grow oil and gas in the future.”

_*UAE signals easing supply cuts in April. *_Abu Dhabi’s *ADNOC* has told Asian oil buyers that it plans to increase crude allocations in April, sources close to the matter told Reuters. The news comes just ahead of the OPEC+ meeting.

_*U.S. cold snap leads to a record gas drawdown.*_ Natural gas inventories plunged during the extraordinarily cold weather that hit much of the continent in February. Weekly stocks fell by 338 billion cubic feet (Bcf) in the week ending February 19, 2021, nearly three times the average withdrawal for mid-February, according to the EIA. A record amount of natural gas, 156 Bcf, was withdrawn during that week in the South Central region, which includes Texas.

_*DOE to tap $40 billion in clean energy funding.*_ U.S. Secretary of Energy Jennifer Granholm said she plans to revive a $40 billion loan program for energy projects. The program was authorized by Congress but went unused during the Trump era.

_*Private shale step up drilling. *_Private shale drillers are leading the charge on new drilling as publicly-listed companies face pressure from investors. As Bloomberg reports, privately-held *DoublePoint Energy* has more rigs in the Permian basin than *Chevron (NYSE: CVX).*

_*SEC says Exxon has to let shareholders vote on resolutions. *_In an early sign that a shift in direction is underway at the Securities and Exchange Commission, the SEC shot down a request from *ExxonMobil (NYSE: XOM) *to exclude a shareholder resolution. Major institutional investors, including BNP Paribas, pushed a resolution that would require Exxon to release more information on its lobbying activities and its climate risk. Exxon wanted it tossed out, but the SEC declined. 

_*U.S. gasoline demand surge. *_U.S. gasoline demand surged by 1 mb/d last week to nearly 8.8 mb/d. “Last week was pretty eye-popping indeed,” Patrick DeHaan, head of petroleum analysis at GasBuddy, told Bloomberg. “We’ve seen a continued recovery as Covid-19 slowed, on the warmer weather, and basically a big bounce since the Texas cold weather hampered numbers.”

_*Texas PUC Chair resigns. *_The head of the Texas Public Utility Commission resigned on Monday in the wake of the grid crisis. 

_*API considers carbon tax.*_ The oil industry’s most powerful lobby group is preparing to endorse a carbon tax. The Wall Street Journal reports that the decision has been highly divisive internally. 

_*Deep cuts put African oil at risk.*_ Five of OPEC’s 13 member states are from Africa. Angola has gone from being Africa’s top crude producer just five years ago to barely pumping more than war-torn Libya while Nigeria--another key OPEC member--is in grave danger of suffering Angola’s fate as Big Oil makes yet another round of deep CAPEX cuts.

_*Can abandoned oil wells be used for geothermal? *_Some companies have been researching and testing something that could expand geothermal’s reach and benefit oil companies: turning abandoned oil wells into geothermal wells.

_*Petaluma, CA first city to ban new gas stations.*_ Petaluma, California became the first U.S. city to outlaw new gasoline stations. Activists hope that it becomes a trend, not unlike the proliferation of bans of natural gas hookups in new buildings that started in California just a few years ago.

_*Asia LNG price falls. *_The price of spot LNG in Asia has retreated almost as fast as it surged during a cold winter snap, leaving a market grappling with how best to deal with the recent extreme volatility.

_*China plans a power grid upgrade. *_China’s utility giant State Grid Corp of China has big plans to build ultra-high voltage transmission lines over the next few years to help shift the country away from coal.

_*Electrification requires new mines.*_ Can the U.S. build them? You can’t have green energy without mining,” Mark Senti, chief executive of Florida-based rare earth magnet company Advanced Magnet Lab Inc. “That’s just the reality.” Reuters explores the challenges of building new mines for lithium and other metals critical for batteries.

_*Carbon emissions top pre-pandemic levels. *_Global CO2 emissions have surpassed pre-pandemic levels.

jog on
duc


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## ducati916 (3 March 2021)

Some are turning bullish on gold:

Given their underperformance recently, time for a rally?






The miners:






I tend to agree, I'm also starting to get a little bullish on gold, but not yet.

Interest rates (10yr) are signalling 1.6%. If they hit that, then 2% is just around the corner. It is unlikely that gold (apart from an oversold bounce) is trading higher. 






Banks are rallying due to the steepness and steepening curve. The big Tech. simply ran too far too fast to keep running. With banks at new all time highs, surpassing 2008, well you just know that there will be issues at some point. There is nothing more reliable than the greed of bankers to f**k everything up.






The SPACS. Tons of new supply. Not what you want to see. Most of these will be utter shite.






jog on
duc


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## ducati916 (4 March 2021)

Sooooooo, this chart appeared:

The market that I'm going to concentrate on today is the 2000 market.






In late '98 we had the Asian crisis, LTCM, Russia defaulting and the market crashed. Only to come back strong in 1999.






In that 1999 stock market we had:

Rising 10yr yields:






Commodities rising after a long bear market:











Just like we have now. Even the COVID crash in 2020 has an eerie echo.

What we didn't have was this:









Is housing inflationary or disinflationary or deflationary? It can be any one of the above. But those charts indicate that currently, it is very much inflationary, along with commodities.

Now as in 1999, the bear waited all year before biting in 2000. Assuming the above trends continue, our current market could well have legs right through to 2022+, particularly if we get an economic re-opening.

Things to pay attention to: sectors. Sectors react differently to rising rates: utilities hate them, financials (to a point) love them, the point being, pay closer attention to where an individual stock might sit, if you are buying individual names. Interest sensitive (sectors) and their stocks will have (if they are bouncing) a much shorter holding period: ie. they are unlikely to enter a trend, rather, it is a short term fluctuation on news etc.

Gold:

Again, which is where I think we sit. Gold isn't quite there yet, but it is getting close.






And Mr flippe-floppe-flye:






jog on
duc


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## ducati916 (4 March 2021)

We have this:






From the full article: https://www.marketwatch.com/story/t...le-isnt-anywhere-close-to-turning-11614793308

Is he right?







And from ZeroHedge: https://www.zerohedge.com/markets/w...the+survival+rate+for+everyone+drops+to+zero)

Interesting, particularly for gold.

jog on
duc


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## qldfrog (4 March 2021)

ducati916 said:


> We have this:
> 
> View attachment 120869
> 
> ...



Do i misread your chart: to me, discretionary stocks have peaked,clearing done and dusted, and that should indicate time to get out..
Or is it my bias.
While i also moved..too early it seems to gold, for a conservative,crash ready approach, i still remember the gfc..and the actual initial crash of pog.
Everything but cash was going down at fast speed .even PM.
So should we not touch gold until the actual crash starts?


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## gartley (4 March 2021)

Don't really  like to trade by feel and gut instincts only the facts, but something just does not look right for the bullish at the moment for the All Ords.  Looks like it's lost  steam for more upside momentum at the moment. Having said that I have overhead projections that have not been met at 7800. That does not mean they must be met now and can be invalidated. 
Don't beleive the BS the Central Banks will always have the markets back....


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## ducati916 (4 March 2021)

qldfrog said:


> Do i misread your chart: to me, discretionary stocks have peaked,clearing done and dusted, and that should indicate time to get out..
> Or is it my bias.
> While i also moved..too early it seems to gold, for a conservative,crash ready approach, i still remember the gfc..and the actual initial crash of pog.
> Everything but cash was going down at fast speed .even PM.
> So should we not touch gold until the actual crash starts?





So if you look at the breadth chart:






We see that breadth is an issue.

We know that interest rates are (yield) rising and DXY falling:






Which is going to have an effect (negative) on interest rate sensitive sectors:






Tech. is an interest rate sensitive sector (remember Schiller and his new valuation metric).






As are Discretionary (consumer debt)






Here are the sub-sectors of discretionary:






Break down 1 sub-sector: Autos:











Just from those, and their market cap. you can see why the breadth is having (currently) such an impact on the market, as opposed to Energy which while roaring higher as a % market cap. of the S&P is far smaller.

Add to that that energy is also inflationary, which is not (eventually) good for the overall market.

jog on
duc


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## ducati916 (5 March 2021)

Bit of a wild one today with the Fed. basically trying to jawbone the market, which hasn't gone down that well.

The 10yr is up 5%.






Oil continues higher.







Stocks on the way down.






Mr flippe-floppe-flye:






Well not really the stock gods, more the Bond market:






Essentially we are having another Taper Tantrum. Will the Fed. collapse again, as they did in 2019 and step in with curve control?  I'm guessing at some point yes...it just wasn't today.

If the Fed. does not step in, then the 10yr continues towards 1.6% and likely 2% (although my model does not indicate that currently) and possibly even 3%. If that occurs, the stock market is very likely headed lower.

jog on
duc


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## ducati916 (5 March 2021)

So let's take a deep dive into gold and gold miners:

So not quite 1 week but close enough. Materials as a sector has held up reasonably well.






Gold mining is part of that sector. Again, has held up reasonably well.






The gold miners themselves. 

















Gold miners as a chart: In part they could be holding up because they never really went up. Certainly nowhere near their previous levels.






Gold itself:






Gold as against the 10yr: so with the 10yr approaching a potential resistance point, although I don't think the 50EMA will contain it, I do think the 200EMA will at least for a first test, gold could soon experience a bounce.

A bounce is a very different thing to a new trend. The chart above will inform as to a trend change. But the chart below will give us the initial bounce.






Now the Miners as to the 10yr: 









Which? Gold? or the Miners?

There isn't much in it, but the Miners might have the edge.






jog on
duc


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## ducati916 (6 March 2021)

So at the end of the 1'st week of March:

Start with the Oil news:

*Friday, March 5th, 2021*

Oil skyrocketed on Thursday after OPEC+ decided to hold off on easing production cuts for another month, surprising the oil market. WTI and Brent shot up more than 4%. During early trading on Friday, Brent surpassed $69 per barrel, 

_*OPEC+ extends cuts, surprising market. *_OPEC+ extended the cuts through April, aside from a slight increase allowed for Russia and Kazakhstan, due to seasonal consumption patterns. Even Saudi Arabia decided to keep its 1 mb/d of voluntary cuts in place. The surprise news led to a price surge. “One of the reasons the market is continuing to react positively today could be that OPEC’s own balances suggest very steep draws,” Rystad Energy said in a statement.

_*Oil majors expect record cash flow. *_Big Oil is looking at 2021 with increased optimism, mostly because oil prices have rallied in recent weeks. Moreover, the ultra-conservative capital spending plans and the huge cost cuts have allowed international oil companies (IOCs) to materially lower their cash flow breakevens. These factors are set to result in a record cash flow for the biggest oil firms this year if oil prices average $55 per barrel, Wood Mackenzie said in new research.
_* 
Oil majors going green?*_ Speaking from the annual CERAWeek by IHS Markit energy conference, Big Oil chief executives from *Exxon Mobil (NYSE:XOM)*, *Chevron Corp.(NYSE:CVX)*, *Occidental Petroleum (NYSE:OXY)* and* ConocoPhillips (NYSE:COP) *have all spoken about the industry’s transition to a lower-carbon world, with OXY even branding itself a ‘carbon management’ company that wants to set the industry standard for the production of net-zero carbon oil. But are they really going green?

_*Oil market tighter with 500,000 bpd offline. *_Maintenance at three oil sands upgraders in Canada will take off some 500,000 bpd in production offline, helping tighten supply amid a price rally, Bloomberg reports.

_*IHS Markit: Shale discipline likely to stay.*_ U.S. shale is unlikely to return to aggressive spending, but rising oil prices could tempt drillers to get off the sidelines. “At any given price growth will be less than in years past but if you get into the $70-$75 per barrel oil range, you can both return money to investors and have strong growth ... so there is a point at which the temptation becomes too strong,” Raoul LeBlanc of IHS Markit said at CERAWeek.

_*Pioneer: very little shale growth. *_U.S. oil production will likely see “very little growth” in the future after remaining largely flat in 2021 at around 11 million barrels a day, Scott Sheffield, *Pioneer Natural Resources (NYSE: PXD) *chief executive officer, said at CERAWeek.

_*ExxonMobil offers a new strategy. *_At* ExxonMobil’s (NYSE: XOM)* Investor Day, it outlined plans to keep production flat and return excess cash to shareholders, and/or cut debt. The new strategy is an about-face from previous aggressive production growth plans. Exxon also detailed more significant investments in carbon capture.

_*Exxon to cut 300 jobs in Singapore. *_*ExxonMobil (NYSE: XOM)* expects to cut about 300 jobs in the Asian oil-trading hub of Singapore by the end of 2021, part of a global retrenchment that was announced last year.

_*India urges OPEC+ to boost production. *_India, one of the largest and fast-growing oil consumers, wants OPEC+ to increase production to keep a lid on prices. 

_*Volvo to go all-electric by 2030. *_Volvo will become a “fully electric car company” by 2030, the latest major automaker to promise an electric transition.  

_*U.S.-Iran thaw?*_ Iran has given encouraging signs about returning to the table with the U.S. regarding the potential revival of the 2015 nuclear deal. 

_*Natural gas withdrawal tightens the market. *_The Texas freeze led to the second-largest natural gas inventory withdrawal on record for the week ending on Feb. 19. The drawdown tightens the market and sets the stage for higher prices later this year.  

_*Biden federal lands moratorium could cut production. *_Closing off federal lands to new drilling won’t have an immediate impact on Permian production, given the thousands of permits and leases the industry has already stockpiled. By the end of 2025, however, the drilling ban could curb production by between 230,000 and 490,000 bpd, according to the Dallas Fed.

*Chevron to build a carbon capture plant with Microsoft. Chevron (NYSE: CVX) *said it would partner with *Schlumberger (NYSE: SLB)*, *Microsoft (NASDAQ: MSFT),* and Clean Energy Systems to build a carbon capture plant in California.

_*Exxon drills a third dry hole in Guyana.*_ *ExxonMobil (NYSE: XOM) *hit a third dry hole in four months in Guyana, a string of setbacks in an otherwise successful campaign. “Our exploration success in Guyana is 80pc with 18 discoveries on the Stabroek block,” the company said.

_*Pentagon tests solar in space. *_The Pentagon has successfully tested a solar panel in low-earth orbit as a prototype of potential future power-generating systems capturing light from the Sun and beaming it back as energy to earth.











And, no surprises, oil has been a good place to be this week.






From yesterday's Fed.:






So no capping in sight currently. The 10yr has set off a rally in the DXY or possibly it was set for a bounce in any case. Either way DXY is on the move higher. 

The 10yr is headed towards 1.6%.






Given that the 10yr is moving higher, is it safe to go back into the water?

VIX suggests not. This is not a BTD moment. In fact, this is starting to look less like BTD to BTB.






Mr flippe-floppe-flye:






jog on
duc


----------



## ducati916 (6 March 2021)

Re. Gold:

The line in the sand. The $31 level needs to hold. If it does, then the Miners catch the bounce. Is it a bounce or a trend? I think a bounce, but it may develop into a trend as there are some interesting issues for Bonds.






Which is most easily observed on the 30yr






That resistance has been in place for quite some time. If it breaks, it is curtains for gold and their miners. If it holds, or the Fed. steps in, or whatever, then gold and the miners will have another day in the sun.

jog on
duc


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## qldfrog (6 March 2021)

ducati916 said:


> In fact, this is starting to look less like BTD to BTB.



BTD Buy the dip 
and BTB? Buy the bond??


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## ducati916 (6 March 2021)

qldfrog said:


> BTD Buy the dip
> and BTB? Buy the bond??





Buy-the-bounce!

jog on
duc


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## qldfrog (6 March 2021)

Thanks did not have that in mind with market jumping last night


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## ducati916 (7 March 2021)

Market leadership reveals the business/economic cycle that the market is discounting.







And currently:










When energy and financials are leaders, the market is in a late stage expansion. If the defensive sectors (Staples, RE) start to outperform, we'll know the big Mutual Funds/Pensions have become very defensive. Discretionary will underperform.

Arguably, it is already occurring. It could simply be a pullback. Place it in context with other sectors of the market and the evidence supports more of a late market expansion.






We'll know soon enough.

In the short term (1-2 weeks) the DXY will play an important role in the markets. DXY is a wild card. It is not a consistent market re. the other financial markets. For the moment: a strong DXY is a strong(er) stock market. That is a best guess. Not fact.


jog on
duc


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## qldfrog (7 March 2021)

Not sure if you want to discuss DXY further but going further into its importance
Dxy rising, the average US citizen is richer as imports, energy etc are cheaper.US companies making a killing.
NYSE climbs .
O/S stocks follow just because if US is up, they follow .. but rest of world (ROW) is poorer, the average George in ROW is poorer: imports, gas bill higher etc except for China, primary producers..Oz..

ROW slows down, reduces US import,ROW stocks start slowing down, ROW money gets scared and gets into USD safety.aka US bonds, USD currency.
As a result of the flight to USD, DXY levels /does not fall enough to rebalance with UD export reduction.
US market has peaked and now on the way down

So i see DXY as a short term plus for US market, even more for ROW investing in the US market and a sign of trouble to come short term wise for ROW market, except maybe exporting markets like China and oz sending more crap to US customers,then medium term a crash in US,followed world wide.
A few variables are important there: is USD still seen as a refuge, to what level?
Is China now powerful enough to compensate its exports with its domestic consumption?
I am not pretending to play in the same level as mr Ducati, so is my simplistic view realistic? A short term ongoing bull in the US riding the DXY, then the dreaded ... crash in markets all over..knowing that markets want to anticipate.

Mr Duc, please PM me if you think i am adding noise to your thread


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## ducati916 (7 March 2021)

qldfrog said:


> Not sure if you want to discuss DXY further but going further into its importance
> Dxy rising, the average US citizen is richer as imports, energy etc are cheaper.US companies making a killing.
> NYSE climbs .
> O/S stocks follow just because if US is up, they follow .. but rest of world (ROW) is poorer, the average George in ROW is poorer: imports, gas bill higher etc except for China, primary producers..Oz..
> ...





Here is a longer term chart:

For the most part, DXY & SPY trade opposite to each other as a very general observation. There are times, seen below, where they trade together (2014 - 2016). There will be other examples if you look closely enough.

What type of environment was 2014 -2016: deflationary, disinflationary, inflationary? Will that have any bearing or impact on how the market might respond to current conditions?






Re. Monsieur Frog's analysis: this is the stuff of economists. There are simply too many variables to enable what might seem to be a rational analysis. It is simply too much work unless you particularly enjoy it. I admit I do. However, I don't trade on it. I no more trust my analysis than anyone else's.

The thing is this: are markets efficient? Historically, yes. In the moment, no. What that means is that the market in the moment could be right or wrong, eventually, through self-correction, markets get it right. This is Ben Graham's maxim, in the short run markets are voting machines, in the long run, weighing machines.

A market 'edge' lies in exploiting short term inefficiency. The key is recognising inefficiency and second, structuring the correct trade to profit.

jog on
duc


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## qldfrog (7 March 2021)

ducati916 said:


> I no more trust my analysis than anyone else's.



As true as can be 👍


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## ducati916 (8 March 2021)

So continuing on the DXY theme:

It has been advanced that stocks can rise in a rising rate environment. The following was provided as evidence. I'm guessing (not really) that there is a long list of occasions where rising rates hurt stocks.

Currently and that all is that matters, rising rates are not good for stocks. The reason is that the $14 Trillion in Corporate debt, much of it Junk, will not be helped by rising rates which increase payment burdens on these stocks. At some point, increasing debt burdens crush a swathe of marginal stocks, which just isn't a good thing.







The DXY also has the support of the Commercials currently.







The Commercials are selling the SPY, but:






Buying the NASDAQ. Given that it is Tech. stocks hurt the most by rising rates, we could see a bounce in Tech.






The Commercials are also leaning against rising rates: given the speed of their rise, it is conceivable that we get a retracement, which would help stocks, particularly Tech.






Any falling of rates, helps Gold. The Commercials are also supporting gold. Potentially look to the Miners for a trade long.






So, if we get a pause in rising yields, we may see a bounce in the DXY, Tech and Gold.

So the current weakness, a correction, and the Bull intact or something more serious?

I'm leaning towards the latter. The reason is that this is a Bull market measured from 2003. The Bear of 2008 was an interruption, the Bear of 2020 was an interruption. None of the excesses were cleared. Bonds continued to decline, debt build higher. Potentially this gets increasingly serious, which forces the Fed. to yield curve control. Which, in the short term might fix the immediate issue of rising rates.

While I don't think the DXY collapses, it certainly will get weaker. Commodities and Gold will (obviously) move higher. What might stocks do? The big international stocks benefit from a weaker DXY. The smaller domestic stocks with foreign supply chains do not. Pharmaceuticals can benefit from a weak DXY. I would be pretty much out of small caps.

It is at this point in time that markets get choppy. No one actually knows what will happen. There will be false starts, retracements, and trends will simply not play out or be of short duration. I anticipate a very tough market to trade in the next 6 months. Speed in changing direction quickly and not holding too sacred any beliefs, will be key to success.

China and the US are in a cold war. It is economic. Oil, to date, has been central in any number of economic conflicts. The Arabs just (pretty much) destroyed the US fracking industry and the US independence in oil. They once again hold the marginal supply. To date, they are pushing the POO higher. How much higher? If economies re-open, which looks increasingly likely and oil demand rebounds in a big way, which it will, where is the POO? Probably higher, a lot higher. With a falling DXY and two tailwinds behind POO, what happens to US inflation if the Fed have (already) stepped in with YCC? Or, if no YCC, where are rates going to?

GDP has not yet recovered from 2020. Without growth (nominal or real) and a pernicious inflation, you enter a stagflation scenario, of which the last one under President Carter in the 1970's, was caused by rising POO.

The point is this: we are entering a potential inflection point. No one knows what will happen nor how it may work out. Markets in the short term will be wrong many times, until, eventually, in the long term (history) we can look back and say, XYZ happened caused by ABC. But to get through the short term chaos that might be on its way, we will have to be very nimble and open to flippe-flopping 100% on a dime.

jog on
duc


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## qldfrog (9 March 2021)

Mr Ducati is getting some mainstream media followers:
https://finance.yahoo.com/m/84cd75f8-70d8-34dc-8b4b-01edcbcb153d/tech-stocks-are-under.html
Sell the bounce on tech, and the 1.6% for bond is now a reality.
Well done👍
where to now


----------



## ducati916 (10 March 2021)

So we have respite from rising rates and Tech. is bouncing, with commodities taking a break, ironically as the DXY also takes a break.












What we do have is a rotation out of growth into value.






Which continues with potentially a rotation out of Discretionary into Staples, which are the big funds getting defensive. If this is the case, they anticipate difficult markets ahead.






And the (bounce) in Tech. Tech. is predominantly 'growth' and this looks more to be a bounce than a dip.











Gold also catching a bid: very oversold as against the market.






And as against the DXY.







A very interesting article:









						The Fed Isn’t Printing As Much Money As You Think
					

The risk of rising inflation over the next few years is probably the highest it’s been in decades.




					www.collaborativefund.com
				




The highlight:









Which certainly explains the muted inflation, which while gathering steam, is far from the doomsday predictions of Schiff et al. Gold never responded to these claims: clearly the market already knew (knows) that a 'hyper-inflation' is (currently) a fallacy.

The issue is that the markets are balanced between an outright deflation if $14T of debt starts to implode and an inflation with the level of monetary and fiscal policy stimulation. Without the stimulation, we get deflation, with the stimulation we get inflation. Of the 2, the Fed. would rather inflation, so, that policy will predominate.

Fed. Coin:

Are coming. Why?

For the simple reason that a Fed. Coin allows negative interest rates. The banking system as we know it today cannot sustain negative interest rates. It gets destroyed. The Fed Coin eliminates the banking system. The Fed Coin allows a set rate of depreciation (negative rates) to the coins. No one panics, you still have the same number of nominal coins in your account. Their real value is simply depreciated by the negative rate.

Now that is a case for gold/silver.


Meanwhile, Mr flippe-floppe-flye:







jog on
duc


----------



## ducati916 (11 March 2021)

So magazine covers:







I would highly recommend that nobody draw inferences from what happened in the 1920s, for the following reasons (there is no global boom coming once we get past this crisis — a lot of time and effort will be spent cleaning up all these debt excesses). 


For one, coming out of WWI, which was ending as the Spanish flu was starting, the U.S. had come to account for half of global manufacturing production. That’s because the war savaged the entire European economy and gave U.S. industry the opportunity to grab global market share in exports and industrial production. 


Second, the U.S. dealt with the Spanish flu totally differently. The economy never went into full lockdown. People just learned to live with the disease, which ultimately vanished on herd immunity. Back then, nobody turned to the government for help; it was all about community and charity. These were the days before welfare and unemployment insurance benefits and company bailouts. Public attitudes toward illness and death were far different and there was no internet or social media to try and influence people’s perceptions and stir up emotions. 


The economy did collapse back then, but the government did not blow its brains out on fiscal largesse. So, we went into the 1920s with tremendous pent-up demand once the crisis ended, and balance sheets were in far greater shape. Government debt-to-GDP was 10% — not over 100%. And that better public sector balance sheet allowed the federal government to CUT taxes by the mid-1920s — top marginal rates for corporations were initially raised from 10% in 1920 to 13.5% by 1926 but cut to 11% by the end of the decade; for individuals, the rate went from 58% after the war to 24% by 1929. Does anyone think taxes are going to be coming down in the U.S. any time soon? 


Meanwhile:






Tech. is muted, which largely explains the shift into value out of growth. This is not really sudden, this has occurred already over a period of time. It is going to continue while rates continue to rise.

That being said, my model calls for 1.5%, which is down on the 1.6%.






All however is not well. It looks as if Junk is ready to rollover. That could (would) explain the lowering of the Treasury (10yr) rate down to 1.5% and possibly lower still if we have a run back to safety.

ATM, I have no idea why Junk might be ready to rollover, but, shoot first ask questions later. Just in case you are in any doubt, Junk rolling over is a very bad thing for the market.






And Mr flippe-floppe-flye:






News from the oil patch:

-    U.S. exports of propane reached record highs in 2020, up 13%. 

-    Propane became the largest source of refined product exports, surpassing distillate fuel oil.

-    The increase is the result of strong petrochemical and heating demand in Asia.

*Market Movers*

-    *Eni (NYSE: E) *may spin off its new retail and renewable energy business next year, while taking a minority stake in the company, in an effort to raise money for the energy transition. Reuters reports that the company could be worth around 10 billion euros.

-    The oil majors are moving into “overbought” territory, according to Seeking Alpha.

-    Vineyard Wind may soon receive a greenlight from the Biden administration. The $2.8 billion 800-MW offshore wind farm off the coast of Massachusetts would be the first major offshore wind project in federal waters. 

*Tuesday, March 9, 2021 *

Oil prices took a breather after a huge rally last week. Brent dipped back below $68 per barrel in early trading on Tuesday. While analysts broadly see the oil market as tight and potentially moving tighter following the OPEC+ cuts, the flip side is that high prices could start to eat into demand. 

_*$70 oil could slow demand. *_While the unexpected rollover of the OPEC+ production cuts sent Brent Crude prices up to $70 a barrel, the highest oil prices in more than a year could dampen global oil demand recovery, which the OPEC+ group itself still sees as fragile.

_*Vitol: “OPEC+ is in control.”*_ One of the world’s top oil traders says that OPEC+ decision-making is the key factor driving the oil market this year. “The market is telling us that OPEC+ have control,” Mike Muller, Vitol’s head of Asia, said Sunday in an online forum hosted by consultant Gulf Intelligence. “We’re going to get a stock-draw that is going to accelerate through the second quarter and that’s why the market is doing what it’s doing.”

_*OPEC+ leans towards over-tightening.*_ The surprise OPEC+ extension signals an “overtightening of the market is likely, and is only likely to be corrected after a significant lag,” Standard Chartered said in a note. The investment bank hiked its oil price forecast by $14, with Brent averaging $66 per barrel this year. But higher prices hit 2022 demand, and the bank sees Brent averaging $59. 

_*Refiners’ fortunes rebound.*_ Seven of 18 refineries affected by the Texas grid crisis -- making up over 2 million barrels a day of crude processing capacity -- were operating normally as of Monday. U.S. sour crudes have seen margins shoot up as OPEC+ extended cuts and demand globally looks healthy.

_*Houthis hit Aramco.*_ Houthi forces in Yemen fired drones and missiles at Saudi Arabia, including a Saudi Aramco facility at Ras Tanura that is vital to petroleum exports. But Saudi Aramco said there was no loss of property.

_*Chevron keeps spending restraint.*_ *Chevron (NYSE: CVX)* will keep CAPEX at $14 billion for the next few years, while still hoping to grow Permian production to 1 mb/d by 2025. Chevron also promised improved returns and a modest reduction in carbon intensity, although not a reduction in absolute emissions. 

_*Saudi Arabia doubts demand strength. *_Last week, Saudi oil minister Prince Abdulaziz bin Salman Al-Saud expressed some skepticism that the global economy would roar back to life imminently, a sentiment that appears to have bolstered the OPEC+ extension. “I will believe it when I see it,” he said multiple times.

_*Iran reaches out to Asian buyers.*_ Iran has reached out to refiners in Asia, suggesting that it hopes to soon step up oil exports. The overtures are perhaps an indication that Iran expects a thaw in relations with the U.S. in the coming months.

_*China leaves climate plans vague. *_Analysts expected China to add more meat on the bones to its strategy of ratcheting down greenhouse gas emissions last week when it released details of its latest 5-year plan, but analysts were disappointed with the lack of information. China said Friday it plans to lower emissions per unit of gross domestic product by 18% by 2025—the same level it targeted in the previous five-plan. Meanwhile, analysts see the size of China’s carbon market growing to $25 billion by 2030.

_*Goldman ups Imperial Oil to Buy.*_ Goldman Sachs upgraded *Imperial Oil (TSE: IMO)* to a Buy rating from Sell, with a price target of C$36. Goldman sees earnings improving due to both better operations and costs, and the bank sees positive revisions to cash flow and earnings and now sees 23% total return for the shares.

*Tesla is building a secret energy storage project in Texas. Tesla (NASDAQ: TSLA) *is building a gigantic battery storage project in southern Texas, one that has been literally under wraps until Bloomberg discovered it. 

_*Qatar’s massive LNG buildout moves it closer to China. *_Qatar has plans to expand its LNG footprint with a $29 billion buildout, which will increase export capacity by a third to 110 mtpa. A string of recent deals also suggest that Qatar may be shifting a bit closer towards China’s sphere of influence.

_*Energy transition leads to surging metals prices. *_Three billion tons: this is how much metals and minerals the energy transition will require, according to a World Bank report. Demand for some of these, such as copper, lithium, cobalt, and graphite, is set to increase 500 percent by 2050.

_*California drilling moves ahead. *_Kern County approved a plan to allow 40,500 new oil and gas wells in the county over the next 15 years. 

_*Shell to sell some Egypt assets.*_* Royal Dutch Shell (NYSE: RDS.A) *plans on selling upstream assets in Egypt worth up to $926 million.

_*Rystad: Oil employment more resilient in China. *_The job losses in the oil and gas industry from the pandemic were not as bad in China as they were elsewhere. A Rystad Energy analysis shows that the world’s top oil and gas employer, China, lost only 5.3% of its massive workforce. The toll in the US was more devastating, estimated at 11.1%, worse than its European peers and Russia.

_*India wants to cut Mideast dependence. *_Following the OPEC+ decision to roll over the production cuts into April, India is asking its state-owned refiners to aggressively look to diversify imports away from the Middle East, as the world’s third-largest oil importer isn’t happy with the tighter oil market and higher oil prices.


jog on
duc


----------



## Garpal Gumnut (11 March 2021)

I have to say, and apologies to the sensitive, that the markets at present resemble a flock of winky wanky birds, every time they w....

gg


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## Smurf1976 (11 March 2021)

ducati916 said:


> So magazine covers:



Particularly concerning is that one has the words "new era".

That sort of "it's different this time" language and thinking is always around at major tops indeed "new era" is pretty much spot on with the exact words to look out for.

Even without that, optimism about the stock market on the front page of magazines is itself an alarm bell.....


----------



## qldfrog (11 March 2021)

Smurf1976 said:


> Particularly concerning is that one has the words "new era".
> 
> That sort of "it's different this time" language and thinking is always around at major tops indeed "new era" is pretty much spot on with the exact words to look out for.
> 
> Even without that, optimism about the stock market on the front page of magazines is itself an alarm bell.....



But this time, it is different...😊


----------



## Dark1975 (11 March 2021)

Altho it's been a volatile week trading , alot of open / closed trades this week, stops triggered, I'm feeling bullish this short cycle, 
Pitty the XAO isn't 😅,
Attached is Me day trading the Xao last 3 days 😂


----------



## ducati916 (12 March 2021)

So today is a day of contrasts.

Here we have the various sectors:






Tech. on top, Financials on the bottom. The intra-day picture contrasted with:

(a) Tech. trying to recover; and
(b) Financials possibly to pullback/consolidate; and
(c) 10yr.














Where would you rather be? Probabilistically, where would you prefer to be?

Growth v Value:






Probabilistically what could happen? Which sector (above) falls into which category?

My model has the 10yr back at 1.6%.

The overall tone of the market is currently defensive. That (should) mean that the 'Bull' is intact, simply that the leadership has changed. Those employing mechanical means to select stocks, should start to see an ever increasing selection of defensive/value stocks, less growth. Interest rates do not hurt value anywhere near as much as growth, especially where the valuations had become so stretched.

Mr flippe-floppe-flye:








jog on
duc


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## qldfrog (12 March 2021)

ducati916 said:


> So today is a day of contrasts.
> 
> Here we have the various sectors:
> 
> ...



For what it is worth,on the XAO, my systems entries start popping stocks more like s32, boral, incitec,ridley even small banks which were never around in the past year , and indeed less afterpay and micro Techs.
Knowing we have A LOT of miners/explorer and few techs on the ASX.
Anecdotal but confirming your analysis


----------



## qldfrog (12 March 2021)

If you have a bit of time, i agree this shift is happening/has happened even if reported by a less than trusted newspaper:
https://www.smh.com.au/business/the...ls-with-economic-turmoil-20210310-p5799e.html
In a nutshell, what i see here is what the socialist European countries started in the 1980-90 with both obvious short term and long term effects.
And there is no return in so called democracies until oblivion, however will win the next elections.

The cash flowing to the people will have immediate effects on consumer consumption : Bull market to carry on, inflation ? very soon outch...just because income will keep raising in nominal $
and this will decimate the US and the USD currency status within 10 y with zillions deficits.
Time to look at Asia.


----------



## ducati916 (13 March 2021)

Starting with oil news:

*Friday, March 12th, 2021*

Oil prices regained lost ground towards the end of the week, as tight supplies are forcing a global drain in inventories. “Overall, we are bullish on oil demand continuing its upward trajectory in tandem with vaccine programs and the resumption of economic activities,” Bjornar Tonhaugen of Rystad Energy said in a statement.

_*OPEC downgrades demand forecast.*_ OPEC cut its demand forecast for the next two quarters, with second-quarter demand down 690,000 bpd compared to a prior forecast. “Ongoing lockdown measures, voluntary social distancing and other pandemic-related developments” continue to weigh on economic activity, OPEC said in its monthly report.

_*Saudi voluntary cut smaller than stated. *_Saudi Arabia promised to voluntarily cut its output by an additional 1 mb/d in February and March, but new data suggests the cuts were smaller than expected. “According to Petro-Logistics’ assessment and following discussions with sources and contacts in the market, our estimate for Saudi supply in February is a cut of around 600,000 bpd month on month,” Daniel Gerber, chief executive of Petro-Logistics, told Reuters.

_*Analysts warn OPEC+ is overtightening.*_ U.S. shale drillers promised restraint, but prices have risen to such a degree that they may be tempted off the sidelines. Analysts warn OPEC+ that they are playing with fire. “Withholding barrels as a means of sustaining the price rally will work,” Bill Farren-Price, a director at research firm Enverus, told Bloomberg. “But in doing so, the table is being laid for a feast at which the U.S. short-cycle operator will be the guest of honor.”

_*BP and Shell earn billions in trading. *_*BP (NYSE: BP) *earned nearly $4 billion from its energy trading unit in 2020, cushioning the blow to earnings from the pandemic. *Royal Dutch Shell (NYSE: RDS.A)* said its trading profits doubled to $2.6 billion.

_*Iran’s oil exports to China surge.*_ China’s imports of Iranian oil are on track to more than double in March, compared to February. Iran’s oil sells for a $3 to $5 per barrel discount relative to Brent, due to sanctions. At the same time, Saudi Arabia’s exports to Asian buyers for April are set to fall by 15%.

_*U.S. refinery gas flaring at an 18-month high. *_Natural gas flaring at US non-upstream onshore oil and gas facilities reached an 18-month high in February, at 180.9 million cubic feet per day (MMcfd), a Rystad Energy report shows.

_*Biden admin approves drilling permits. *_After an initial pause, the Interior Department approved 200 drilling permits in the past two weeks, mostly in Wyoming and North Dakota. While leases on federal lands have been temporarily suspended, approval of drilling permits appears to be resuming. 

_*Biden lease report by summer; Congress looks at reforms. *_The Biden administration said that it would publish an interim report on its suspension of lease sales on federal lands by the summer. At the same time, a bipartisan group of Senators is looking at reforms to hike the royalty rates paid by oil, gas, and mining companies. 

_*Shell taps mining exec as new chairman.*_ *Royal Dutch Shell (NYSE: RDS.A)* appointed Andrew Mackenzie to be its new chairman. Mackenzie is the former CEO of BHP Group Ltd., and replaces outgoing Shell chairman Chad Holliday.

_*India looks at alternatives amid high prices.*_ India called on OPEC+ to increase production in order to dampen crude prices. India’s oil minister Dharmendra Pradhan said his country would look to diversify away from the Middle East as a source of supply.

_*BP exits Kazakh oil projects.*_ *BP (NYSE: BP) *abandoned three oil projects in Kazakhstan amid a strategy shift to focus on renewables.

_*Why are investors turning against fossil fuels?*_ Over the next five years, oil and gas companies will definitely see less investment as the world’s biggest institutional investors are increasingly looking at the environmental credentials of the companies in their portfolios.

_*U.S. Senate floats methane tax.*_ Three Democratic senators are supporting a bill that would tax methane emissions. 

_*Vaca Muerta poised for a comeback. *_Drilling activity collapsed in Argentina’s Vaca Muerta last year, but soared to a 17-month high in January 2021. Higher prices and government subsidies are helping bring the Dead Cow back to life. 

_*Biden’s DOE Secretary tells oil industry to adapt or die. *_“I’m not going to sugarcoat how hard transitions are,” new United States Energy Secretary Jennifer Granholm stated at the CERAWeek Conference. “The bottom line is this particular growth of clean energy and reduction of carbon provides a huge opportunity and I’m extending a hand of partnership,” Granholm said.

_*U.S. air travel starting to rise.*_ Aviation will be the last sector to rebound from the pandemic, but there is some evidence to suggest that it is picking up. The volume of passengers passing through airports is now flirting with the highest levels since the pandemic began.

_*Canoo, EV startup, joins an all-electric pick-up race. *_Canoo, a U.S. EV startup, said it plans to launch an all-electric pod-like pickup truck in 2023, adding to a fast-growing choice of electric vehicles available to American buyers.

The following due to the number of charts etc, will have to be completed in 2 posts:

Market Overview:












The 'speed' of the market (seems) to have increased. This has ramifications for us as traders. Less thinking time, less decision time, which requires greater exactitude in our systems and methodologies.






For a brief moment in time Zoom was worth more than Exxon.






A lagging indicator. The flow has already happened. 






Crunch time: are the Big Boys going to resume into discretionary or will staples start to outperform? The answer is very important.






Junk says the Bull is alive and well. Let us hope they are correct.






Tech. continues to remain in Bear territory.






As do Semi's. Which is surprising as the 'news' has them in shortage.











Move to part deux.


----------



## ducati916 (13 March 2021)

And part deux:

This week in summary:

We have bounces in a number of sectors. Will they hold?






The market is overvalued. Does it matter? It will when it does.






Inflation is increasingly a thing. If you are concerned, here is the easy way to hedge:









Thing is, what if inflation isn't a thing? Mr flippe-floppe-flye on the issue.






This weeks action described:












The market and in particular certain sectors, were ahead of themselves. Prima facie it simply could be a correction and all is well. The problem is that we all know that the market is horribly overvalued and could really 'correct', which makes everyone very nervous and stocks etc. very twitchy, hence the 'speed' chart at the start.

The various currencies have all reached 'parity' with DXY (pretty much) which likely means DXY's bounce is (pretty much) finished. All except 1 pair: DXY:Yen. This remains at an undervaluation. What does that mean? I have no idea. I mention it because it might be important. Any currency traders who know, feel free to chime in.

However, that 1 pair aside, we can expect the resumption of a weaker DXY. That will reinforce the 'inflation' trend, which will continue to drive the 10yr (and other rates) higher, which, is a bad thing for certain sectors of the market. 

DXY weakness can lead the market by quite significant time periods. Look at the 'faster' chart. That time lag may not be as long as it once was. We are also actually in a DXY 'bounce', so that lag may well have already been discounted.

The other major will be oil. 






Not far off from breaking out into a Bull market. 


jog on
duc


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## ducati916 (14 March 2021)

Gold.

The Bullish case from SPROTT:

Money managers have their lowest allocation. At some point (one might assume) they will start to buy again. Looking at this chart, you want them to be negative or short before you fade them. Still far too bullish.







Banks have reduced their short positions.







Open interest is low.






Reaching a technical area of support with a positive divergence. (I have to say that is not the strongest divergence I have ever seen).







Now my charts:

Interest rates are still moving higher. Rates need to stop going up. They don't necessarily need to go down, just stop going up.






Gold is still lagging the SPY. Stocks are (perceived) to be better.






Gold is rallying against DXY.






The Miners are outperforming gold. If you must be in gold atm. at least be in the Miners.






Silver has outperformed in the recent past.







But in the longer time frame, still lagging gold.






The Commercials are (have) propped up gold in the last week or so.







All-in-all, gold is not really the place to be currently. Is it bottoming? It doesn't look like it currently. At some point it will return to favour.

jog on
duc


----------



## ducati916 (16 March 2021)

The start of a new week:

Stock sectors:






The all important Bond market






Commodities:

Gold & silver enjoying a bounce with a slide in rates.






And the 'Crypto':






Looking at the VIX: we are back down to the lower levels, but still elevated by comparison to earlier in the year. Will we stay there? Not so sure about that. I think that there is a higher expectancy that we have another bounce higher, than we continue much lower. The trend atm is lower, probability favours lower, but only marginally lower. Although the probability for higher, is lower, if we go higher, I think it will be a lot higher.






The reason: we are starting to get higher readings. Now this is Friday's close.






Mr flippe-floppe-flye:






Are we going to get lower trending rates? 

No.

New supply:














Meanwhile Junk debt:






Currently, a more defensive posture overall is required, however you implement that.


jog on
duc


----------



## Skate (16 March 2021)

ducati916 said:


> The trend atm is lower, probability favours lower, but only marginally lower. Although the probability for higher, is lower, if we go higher, I think it will be a lot higher.



 The best summation I've ever read.

Skate.


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## ducati916 (17 March 2021)

Some interesting machinations afoot:

So we have the VIX trending lower:






But a divergence within:










Which both indicate underlying weakness in the market.

The big boys are also moving 'defensive': although very early and may rotate back, given the nature of the current market, something to keep a close eye on.






The 10yr is yielding 1.62%. The Fed. sit tomorrow and my model indicates that the 10yr should be at 1.54%. Is the difference material? Probably not. I mention it merely as a curiosity.

Mr flippe-floppe-flye:






jog on
duc


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## ducati916 (18 March 2021)

So the Fed. met. The news of the day is all 'inflation' based.

So this is essentially where the Fed. sits.






The big boys, who we have seen turn somewhat defensive:






Mr flippe-floppe-flye:






But the 10yr is about to take a breather. My model has 1.5%, currently as of yesterday's close, it was 1.62%. It's going to pullback:






Is inflation a 'thing' yet?






Probably not. Will it become a thing? We'll see.

With the 10yr pulling back (assuming for the moment that it does) then stocks will have a good run into the w/e. That should see Tech. which has the biggest issue with rising rates, outperforming into the w/e and making up some ground. As you can see, after the Fed. we had that spike higher.











jog on
duc


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## martyjames (18 March 2021)

Thanks for the ongoing insights Duc


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## ducati916 (19 March 2021)

So today's story is the 10yr at 1.75%






Mr flippe-floppe-flye:











And Commodities are off across the board:






Stocks: Tech. down, financials up.






My model has the 10yr at 1.58%, which is 17 basis pts. lower.

What is DXY doing?

Worldwide, yields are anaemic to zero to negative. An approaching 2% safe yield, will I suspect be very attractive to Pension Funds etc worldwide. To buy that yield, they would have to buy the DXY.

You can see that the relationship, while far from exact or settled, does support the notion of a stronger DXY to rising yields.

So a rallying dollar, reduces 'inflation' via POO (priced in DXY) which are concurrently buying the 10yr and reducing yield. A virtuous circle.






Now today, with the media screaming Tech. wreck, the VIX:

Has hardly budged. It looks the same on the QQQs.






Which doesn't mean it can't or won't, but it looks possible that the larger macro forces are going to start moving against the 'inflation' trade, which means that the slide in Tech. is approaching a bottom of sorts:






Meanwhile NFTs and Crypto Art are also bubblicious:






jog on
duc


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## qldfrog (19 March 2021)

is this just me or : when I looked around 6ish this morning, POO was -6.something %, Mr Duc got it at -4% in his day state and when I just looked less than 1% fall, talk about a fast rebound; isnt this still very bullish for oil?


----------



## ducati916 (19 March 2021)

So some charts to ponder:

BTC: with a divergence in (possible) play.






Then, consider this chart:






Staples at an inflection point?






I would say so:






Conclusion?

The markets are turning defensive. Tech. needs rates to fall. If they fall, it could well be due to DXY strength. Does DXY have anything to do with BTC?


jog on
duc


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## qldfrog (19 March 2021)

ducati916 said:


> Does DXY have anything to do with BTC?



an interesting data would be: where do the buyers of BTC come from?;
will be a bit twisted to analyse as initial purchasers who spent $1 a BTC and are now swinging in gold coin baths were mostly americans so probably twisting the overall ownership toward US then founders are Chinese/russians..
But what about the *new *buyers? This could be where the answer is..but for each buyer, you need a seller...who might be majority US based..why isnt it easy 
I buy BTC with my AUD, so look at the AUD price only;in AUD no falling price..
View attachment 121566

I messed up, sold 20% at 71k and missed the buy back by less than a $1k so still willing to buy to get back at least 1 BTC
The above  the position of one among many small players outside the US i think. anecdotal  I know..


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## ducati916 (19 March 2021)

EOD charts:

From Mr flippe-floppe-flye:






Not so sure about that:















As previously mentioned, my 10yr model is indicating 1.53%. This doesn't happen overnight. This usually takes a little while to play out. That being said, the 10yr has run hard. I would expect a breather.

The falling 50EMA number should be a concern. We are not bouncing back into bull territory, rather we are failing at resistance points, indicating further pain.

NYMO is pretty self explanatory. In a lower VIX environment, we use the narrower bounds, which indicates that we (should) be closer to a bounce area for stocks.

The problem is when you start to get headlines in Barron's like this:










Now this is Wall St. This magazine along with the Wall St Journal carries weight. The Fed. is engaged in a psychological battle as much as anything tangible: I'm not sure they (Fed. Chair etc) want a return of or even a hint of a return of the Bond Vigilantes. The risk is (for a truly dangerous inflation) that the Fed. is prompted (through these types of headlines) to suppress the yield curve. If they do, all-in-gold.

Now Gold itself is getting spanked, but the Miners have been exhibiting a little strength into the maelstrom of the 10yr.






Even gold itself is fighting. Why?

jog on
duc


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## ducati916 (20 March 2021)

The end of another week.






Pretty flat. Market went essentially nowhere.






Top sub-sector:






Bottom sub-sector:






Mr flippe-floppe-flye:










And some psychology:






Potentially we sell-off into the close for the w/e, which, with this week's market wouldn't surprise me at all.






The market that requires a close eye is the 10yr. Whether you call it inflation, or it's a risk to over leveraged corporates, the reason or causation is unimportant to us as traders, what is important will be the ramifications.






A rising DXY does no particular damage to stocks:






The effect of rising rates and DXY is less clear, the time lags involved make the relationship difficult to really see. However (generally, with a lag) rising rates, lead to a rising DXY.

In the past it could be argued that that inflow, flowed into stocks. This time, I think that the yield hogs are so starved of yield, that DXY inflows could tamp down the 10yr.

That will happen IF the world economy remains disinflationary. A rising DXY will tamp down POO, after all the Arabs have plenty currently and throw in Venezuela and there is more than enough until TSLA consumes the world.

Therefore, potentially, as the media ramps up the inflation meme, inflation could well (as far as markets are concerned) be yesterday's news, which would potentially signal a rotation (back) out of value and defensive stocks and a return to growth and bubblicious.

If it does occur, it will take a little time to develop. The question is: do (re) entries into growth names get you a great entry or get you killed? These names are not names you can just 'hold', if they break, they'll break badly and possibly take years to come back.






jog on
duc


----------



## ducati916 (20 March 2021)

And Oil News:

*Friday, March 19th, 2021*

Crude oil plunged by more than 7% on Thursday, the worst single-day loss since April 2020, and is set to close out the week down by the most since October. The decline is the result of a combination of bearish factors – profit-taking by overly long speculators, a stronger dollar, and diminished hopes surrounding vaccinations in Europe. “There have been some bearish headlines over the last two weeks,” Helge Andre Martinsen, senior oil analyst at DNB Bank ASA, told Bloomberg. “But it’s surprising that it happened in just one day.”

_*Vaccine hiccups could prevent 1 mb/d of oil demand. *_According to Rystad Energy, a lengthier vaccine campaign in Europe – due to delays and increased hesitancy – could delay the recovery of 1 mb/d of oil demand this year.

_*China buys more Iranian and Venezuelan oil.*_ China is expected to import 918,000 bpd of oil from Iran in March, the highest since U.S. sanctions went into place two years ago. The purchases have reduced the incentive for Iran to negotiate analysts say. Imports from Venezuela are also on the rise. 

_*U.S. coal generation falls below nuclear.*_ U.S. coal plants generated 774 million MWh in 2020, less than natural gas (1.6 billion MWh) and even nuclear (790 million MWh). Coal slipped into third place last year for the first time since at least 1949.

_*U.S. refining capacity still not fully restored.*_ U.S. refining capacity is sitting at about 80% of levels seen before the Texas grid crisis in February. An estimated 1.2 mb/d of refining capacity remains offline, according to IHS Markit, due to spring maintenance and ongoing repairs.

_*U.S. government wants EV metals mined in Canada. *_The U.S. Department of Commerce held a closed-door virtual meeting with miners and battery manufacturers to discuss ways to boost Canadian production of EV materials, according to documents seen by Reuters.

_*Automaker shares surge on EV excitement.*_ *Tesla (NASDAQ: TSLA) *surged this year, but now traditional automakers are seeing their share prices rise as well. *Ford (NYSE: F) *and *GM (NYSE: GM) *are up more than 40% this year. *VW (ETR: VOW3)* saw its shares spike nearly 30% on a single-day this week after its Power Day event (more below). Analysts see Tesla’s premium wearing off as old school automakers plunge deeper into the EV race.

_*Texas freeze leads to plastics shortage.*_ Prices for polyethylene and polypropylene and other chemicals are rising due to the outage of multiple petrochemical plants in Texas. That could lead to cost increases and delays for automakers. Honda Motor Co. said Wednesday it would halt production at most of its U.S. and Canadian car factories next week.

_*VW soars 29%. *_*VW (ETR: VOW3) *soared 29% on Tuesday after the company announced detailed plans to scale up EV manufacturing. VW wants to become the global EV leader by 2025. “Volkswagen is turning electric, poised to overtake Tesla’s battery-electric vehicle crown in 2023 and catch up on software by 2025, a view the market is only now developing,” Michael Dean, a Bloomberg Intelligence analyst, wrote in a report

_*Biden weighs new Nord Stream 2 sanctions. *_Under pressure from Republicans in Congress to stiffen penalties on Nord Stream 2, the Biden administration says it is formulating new sanctions. 

_*IEA: Gasoline demand peaked, but not crude oil. *_Despite speculation that oil demand peaked in 2019, before the global pandemic hit the industry hard, a new IEA report suggests this assumption may have been overstated as demand is set to continue increasing until 2026.

_*3 commodities set to boom. *_Wall Street is now predicting a new commodity bull market that will rival the oil price spikes of the 1970s or the China-driven boom of the 2000s. Here are 3 key commodities that can act as an inflation hedge and also as a nice play in the emerging commodity supercycle. 

_*Rystad: Renewables spending hits record. *_Global CAPEX on renewables will hit a record of around $243 billion this year, according to Rystad Energy, closing the gap with oil and gas, which is expected to remain flat at $311 billion.

_*First shale IPO flops. *_The first U.S. shale public offering in five years was launched this week, and judging by the result, investors are still largely steering clear of the sector.* Vine Energy (NYSE: VEI)* raised around $300 million, short of its goal of $360 million.

_*India considers a net-zero goal. *_Top Indian government officials are mulling a net-zero mid-century goal. India is expected to account for the largest source of new oil demand in the coming decades, so policies to curtail fossil fuel use would have global implications. 

_*Cenovus announces layoffs. *_*Cenovus (TSE: CVE)* is laying off 1,000 workers, the second round of layoffs after taking over Husky Energy.

_*China busts $770 million smuggling ring.*_ China foiled criminals seeking to smuggle nearly 1 million tonnes of refined oil worth 5 billion yuan ($770 million), according to Reuters.

_*The U.S. to step up climate finance scrutiny. *_The Commodity Futures Trading Commission said it would establish a Climate Risk Unit to scrutinize complex financial derivatives and their exposure to climate-related disasters. The Securities and Exchange Commission also is seeking input on potential new rules for requiring companies to disclose of climate risk.

_*Schlumberger to launch a Nevada lithium plant. *_*Schlumberger’s (NYSE: SLB) *New Energy division said it would launch a lithium extraction plant in Nevada.

jog on
duc


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## ducati916 (21 March 2021)

A survey of Hedge Fund managers found:






That inflation is their bete noir currently.

They could be looking at this:






Which implies a 4% inflation rate 4 months from now. 4% on the CPI. That is higher prices for us, higher profits for Corps. assuming that the PPI doesn't jump more (or more than expected).

That this is their assessment of risk (right or wrong), that is an indication that rates on the 10yr could continue to climb. There is plently of selling pressure:






And only the Fed. buying.

As previously argued, I think the rally in the DXY signals are momentary reversal of that trend and foreign buyers of yield come back to the market while the 10yr sits at 1.7%.

The big risk in the fixed income market (to date) has been duration.

As to consumer driven inflation:

Nil.






The unemployment numbers are misleading. Recurring claims are in recession figures. Not that it will make much if any difference to the markets.







So Gold is catching a bid from the Commercials:






And the Miners are turning the corner?






The thing with having many balls in the air concurrently, is that the market can chop and change rapidly. Trends appear and disappear very quickly. Holding positions becomes harder to do. The impact on trader psychology is to increasingly grab quick profits. It becomes habit forming and that much harder to sit in a trade for the big(ger) gains that are available in catching a good trend.











Whatever the reason, the Miners look as if they could be entering a sustained trend higher. ATM it is a bounce from basically oversold (in the shorter time frame charts). The longer term chart will, if a trend develops, let us know.

jog on
duc


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## Skate (21 March 2021)

ducati916 said:


> The thing with having many balls in the air concurrently, is that the market can chop and change rapidly. Trends appear and disappear very quickly. Holding positions becomes harder to do. The impact on trader psychology is to increasingly grab quick profits. It becomes habit forming and that much harder to sit in a trade for the big(ger) gains that are available in catching a good trend.




*Perfect* (this grab is off to the "Dump it here" thread)
This sums up trading not only in "general terms" but adds special meaning, especially with the current market conditions. This calendar year trading has been a tough gig. Meaning, with current trading conditions, sticking with your trading plan becomes difficult if not impossible for most.

Skate.


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## ducati916 (21 March 2021)

So the 'Repo' market is again showing signs of stress:






A negative rate, which implies too low a supply of Treasuries of long duration because someone (the banks) have been selling them short, which accounts for the really rapid rise in Treasury yields:

Now this is the 30yr. The 30yr (apart from the 1970's) has probably never moved like this.






The Fed. is not and has not been active in the Repo market for some time, not since mid 2020.






The Fed has been purchasing 120B/month in Treasuries. So if the Fed. has been purchasing and yields have risen to such an extent and the Repo rate is negative, the only conclusion is that someone (the banks) are active in short selling Treasuries (or Hedge Funds).

So you remember GME and the short squeeze?

So the rest of the world has negative rates. The 10yr and 30yr are yielding (by comparison) a mouthwatering risk free rate. To get them, they buy DXY, which brings DXY higher and pushes down rates. Possibly, the lack of Treasury collateral in the Eurodollar market, creates a short squeeze not only in Treasury paper, but DXY as well.

Either way, we potentially have a short squeeze building in the long duration market: 10yr and longer as the crazy rates (by comparison to the rest of the world) are very attractive to yield hogs everywhere.

So why is Gold and the Gold Miners signalling a buy in the face of rising yields? Because that market (Treasury) is potentially getting ready to blow the f**k up with dislocations and imbalances creating a powder keg.

This is a strange, mad, bad and dangerous market currently. The disconnect could be explained by the number of new retail traders who have been conditioned into BTD as opposed to more savvy traders who are rotating out of high risk into low(er) risk defensives, counter cyclical (gold) or simply exiting the market.

This is another one of those unique instances, as when oil traded into negative numbers. That was a buy signal. This could well be the buy signal for the 30yr and DXY. The problem is that a short squeeze into the Treasury market could have some really serious repercussions for all other markets.

jog on
duc


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## peter2 (21 March 2021)

ducati916 said:


> The thing with having many balls in the air concurrently, is that the market can chop and change rapidly. Trends appear and disappear very quickly. Holding positions becomes harder to do. The impact on trader psychology is to increasingly grab quick profits. It becomes habit forming and that much harder to sit in a trade for the big(ger) gains that are available in catching a good trend.




Reading through @ducati916 comments and charts, the quoted comment resonated with me. This is a significant observation that I've been considering with my trading. There's nothing wrong with moving to a shorter time frame trading style as it suits my risk tolerance. However it is habit forming. Also, short term trading requires more work and becomes tiring. Mistakes happen when tired, bored or frustrated leading to the observation that it would have been better to have held the initial position or be more patient and wait for better conditions.

All my equity portfolios are in a holding pattern (lower activity) as the markets continue sideways or drift down.

  Had a chuckle seeing that @Skate also thought the Duc's comment was significant.


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## Value Hunter (21 March 2021)

Personally although I find the thread very interesting to read, personally as a primarily long-term bottom up investor most of this type of stuff is all short-term noise to me and has little impact on the intrinsic value of individual companies (i.e. what I am interested in).


----------



## basilio (21 March 2021)

I think Monday will see some pretty sharp movements across currency markets and stock exchanges as financial analysts digest what is happening in Turkey. Knock on effects could be interesting as well.

Reserve Bank governor sacked. Reversal of policy decisions by government appointee.









						'As bad as Brexit': Turkey faces currency crisis after Erdoğan sacks bank chief
					

Lira could plunge 15%, analysts warn, after Turkey’s president risks destabilising fragile economy with removal of governor




					www.theguardian.com


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## ducati916 (22 March 2021)

Value Hunter said:


> Personally although I find the thread very interesting to read, personally as a primarily long-term bottom up investor most of this type of stuff is all short-term noise to me and has little impact on the intrinsic value of individual companies (i.e. what I am interested in).





Markets always generate a significant amount of noise. The trick is to (try) filter the signal from the noise. So we certainly agree on that.

Re. 'intrinsic value': there are a number of methods of calculating intrinsic value. You don't mention which methodology (ies) that you favour, however: (a) interest rates will have an impact on valuations under whichever method that you employ. Further, depending on the industry and the company capitalisation, whether its business includes a significant volume of exports, (b) currency movements can have a significant effect on earning power or realised profits. Finally, again dependent on its industry, manufacturers can be impacted by (c) commodity prices as (this can) impact significantly the 'Cost of Goods' line. Finally (again industry dependent) (d) transport costs are a factor. I had a chart showing container costs (shipping) are through the roof, rail rates, trucking etc are costs that can impact the bottom line. From an accounting (GAAP) point of view, some of these may be recorded in the unusual/non-recurring costs line, but, are they?

My point, is that even if you are undertaking a micro (bottom-up) analysis, a macro (top down) analysis provides the comparator as to whether your calculations are realistic moving forward, as your numbers are always historical. The basic premise of value investing is that the future will resemble the past.

Is that still true when taking into consideration the effects of:

(i) network effects (AMZN);
(ii) globalisation (China + emerging economies);
(iii) increased government intervention, (where huge corps buy favour);
(iv) other

jog on
duc


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## ducati916 (23 March 2021)

So the start of a new week:

Let's start with Mr flippe-floppe-flye, as his comments seem particularly relevant currently:







So defensives in two time frames.

The rotation into the defensives remains (currently) the thing. We are having a bounce today in Tech. with falling rates, but, while I think we have another few days of respite from rising rates, we need to confirm that rising rates are a thing of the past. I don't think so.

We need to keep eyes on this.










We also in the same vein have the rotation from growth to value: this looks altogether more ominous. So far, both sets are confirming one another.









So while Bonds are off today and potentially for the next few days, it will be important to observe the relationships. If the market 'thinks' the sell-off in Bonds is simply a STD opportunity, I would not expect much of a rotation back into risker stocks. The bounce, at some point, will be sold.






Just some info. on GDX:









I'm liking GDX (the leveraged version) currently. Time will tell.

I don't think gold is one of these necessarily, but copper etc. probably are.






Although, whether that continues unabated, again, time will tell. I think ultimately, if the world does transition to EV, then the metals will be in heavy demand for a very long period.






This then is very much a watch and wait type of market. The commodity area, long dominated by POO may have an addition in the metals markets to drive commodity based pricing, which, would increase the inflationary pressures and drive the 10yr higher in yield, irrespective of POO.

We also have a massive (again) real estate boom, which is starting to make some noise in the media. Now while POO and houses are excluded from the CPI and housing doesn't make the PPI, the market will certainly watch.

This market has the 'feel' of a market testing some big macro-trends. They may or may not transition, but until they do or don't, this is likely to remain an unsettled market.


jog on
duc


----------



## Beaches (23 March 2021)

(Bloomberg) -- Hedge funds have capitulated on their short-dollar bets after surging Treasury yields upended a favorite global macro strategy.

Leveraged funds flipped to become net buyers of the world’s reserve currency during the week to March 16 -- a tumultuous period that saw Treasury yields breaching key levels on feverish inflation fears. They added bearish bets on the yen and euro, and switched from bullish positions on the New Zealand dollar, data from Commodity Futures Trading Commission show.

An intensifying debate over the pace of inflation gains has split investors, with some seeing Treasury yields soaring to 2% amid a global recovery spurred by vaccine rollouts and stimulus spending. That in turn is trouncing one of Wall Street’s most popular macro calls of 2021.

The great unwind may just be gaining traction, some strategists said.

“It is the bond market that has been driving the U.S. dollar in the past couple of months, and it appears to be intensifying,” said Alvin T. Tan, head of Asia foreign-exchange strategy at RBC Capital Markets. “I would expect further short-covering versus the U.S. dollar.”

Holding dollar shorts would have served traders a 1.8% loss this year after being a profitable strategy in eight of the nine months through to December, Bloomberg data shows.

Dollar buying by hedge funds rose to the most since August 2014, according to an analysis by Australia & New Zealand Banking Group Ltd. strategists including Khoon Goh. “With U.S. 10-year bond yields poised to rise further, expect financial market volatility to increase,” he said.

Hedge funds’ long dollar positions climbed to 2,414 contracts, compared with shorts of 62,781 a week earlier, according to CFTC data on seven major currencies aggregated by Bloomberg. It is the first time they are bullish on the greenback since November.









						Hedge Funds Capitulate on Dollar Short Bets as Losses Mount
					

(Bloomberg) -- Hedge funds have capitulated on their short-dollar bets after surging Treasury yields upended a favorite global macro strategy.Leveraged funds flipped to become net buyers of the world’s reserve currency during the week to March 16 -- a tumultuous period that saw Treasury yields...




					au.finance.yahoo.com


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## qldfrog (23 March 2021)

ducati916 said:


> So the start of a new week:
> 
> Let's start with Mr flippe-floppe-flye, as his comments seem particularly relevant currently:
> 
> ...



Maybe anecdotal but i could not NOT SEE a  fact on your gold miners chart: 
Australian miners are shockingly negative vs the others?? USD/AUD play? But i would expect such a chart to be currency adjusted?


----------



## ducati916 (24 March 2021)

Well we have lots of chop.

Pretty much everything is off other than DXY/10yr and Crypto. 












Since my first coffee vol. picked up:










Stocks across the board are meh.






Breadth of declines a concern. This is yesterday's EOD chart, but it will look a little worse today at EOD I suspect.






Mr flippe-floppe-flye:






Essentially what seems to be happening is that two major macro trends are bumping into each other via investors/traders. One of these in the fullness of time will be proven wrong and one right. History (backtesting) will record the winner. Currently in the present, it cannot be said with any certainty, which thesis will win.

So we have (in no particular order) a declining DXY, which is inflationary, but by how much?
Rising commodities, but not yet a threat.
The 'pent-up demand' theory.
The lack of supply and badly disrupted supply chains.
Rising 10yr, which will cap. inflationary pressures, unless the Fed. caps it.

That is 1 macro trend, which is the inflationary trend.

The second is/are:

The re-opening of global trade.
Supply chains ready and able to re-supply.
Demographics.
Abundant supply of commodities.
A resumption of significant US trade deficits predominantly with China and China accumulating US Treasuries.


Some observations:

China has been diversifying away from DXY. I don't think that they will return any time soon, if ever, to the re-accumulation of US Treasuries. China is looking to grow internal consumption and create increased demand and assets across the globe. Add in the current cold war that exists and the former cosy relationship looks to be over. Thus, a weaker DXY over time looks inevitable.

A weaker DXY will be inflationary to commodity pricing for the US. This will impact in many industries, their COG line, potentially reducing profits and creating where possible a passing on of that cost to consumers. All inflationary.

We'll find out re. supply chains going forward, as we will re. the pent-up demand theory.

The Fed. will cap the yield curve. It's just a matter of how high will it go before they do. With rates still negative elsewhere, yield hogs will find US rates attractive and there may be no need to cap. That will keep the 10yr in bounds and DXY stronger, inflation lower.

Caught up in all of this are stocks.

The bottom line is: no-one really knows where any of this will end up. We probably drift higher, but with far more frequent minor declines and lots of rotation into and out of sectors.


jog on
duc


----------



## ducati916 (25 March 2021)

More chop and churn:

Yields down, DXY up. 

As for stocks, marginally up, but sectors more or less reversing on yesterday as commodities come back.
















But underneath, stocks weakening. As this is an EOD chart, this is the situation as of yesterday. So a little bounce, but hardly convincing yet.






Airlines:

Hideous amounts of debt. This though has been a sector that has ripped higher.










We'll see how they go come re-opening. This was a sector that I didn't buy at the lows last year. The fundamentals made no sense, yet, they ripped higher. Will the fundamentals catch up when reality (re-opening) happens? 

And Mr flippe-floppe-flye:






I'll probably have a post on gold later. There is all sorts of weird and contradictory prices in the gold markets currently. I still have a major Miners trade on, so some skin-in-the-game with the gold market. I also have some contingent orders sitting in the market waiting to execute if price reaches.

jog on
duc


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## qldfrog (25 March 2021)

A general comment for Mr Ducati:
Another proof of the chopping market: i read @ducati916  daily analysis when i wake up after looking at the US market figures and noticed recently a bit of difference in the couple of hours between the NZ post and my wake up in Oz check.
For example, today, market is down with Nasdaq at -1.9% so not insignificant.with only DJ 30 slightly green so a back to fundamentals rotation sign
we are in instable conditions indeed, and hard to see clearly.


----------



## ducati916 (25 March 2021)

qldfrog said:


> A general comment for Mr Ducati:
> Another proof of the chopping market: i read @ducati916  daily analysis when i wake up after looking at the US market figures and noticed recently a bit of difference in the couple of hours between the NZ post and my wake up in Oz check.
> For example, today, market is down with Nasdaq at -1.9% so not insignificant.with only DJ 30 slightly green so a back to fundamentals rotation sign
> we are in instable conditions indeed, and hard to see clearly.





Very unstable:

The signals for 'risk off' trades:






The small caps:






Now I don't actually agree with this chart, but an interesting idea. I think the signal would be too late.






Energy had either a vicious bounce, or that dip was aggressively bought. The below chart suggests BTD.






Oil news:

*Market Movers*

•    *ConocoPhillips (NYSE: COP) *and *Occidental Petroleum (NYSE: OXY)* have to hold shareholder votes on greenhouse gas emissions, according to an SEC ruling.

•    *Eni (NYSE: E)* will acquire biogas producer *FRI-EL *in another move towards decarbonization.

•    *NextDecade Corp. *will develop carbon capture and storage at its proposed Rio Grande LNG project in Texas. The move is intended to attract sufficient interest in the plant’s LNG capacity to greenlight the project. 

_*Tuesday, March 23, 2021 *_

Oil prices appeared to find their footing at the start of the week, after a huge selloff last week. “Oil (had) its worst week this year as concerns grow over a flaring up in COVID-19 cases across Europe,” Dutch bank ING said in a note. “This comes at a time when there are clear signs of weakness in the physical oil market.”

Oil prices resumed their slide on Tuesday after Covid-related restrictions in Europe multiplied. The price plunge was likely magnified by the rush by net-long investors to exit their positions. Long bets on futures had begun to look overstretched. WTI crashed as low as $58.60 on Tuesday morning.

_*Saudi Aramco to supply China for 50 years.*_ *Saudi Aramco (TADAWUL: 2222) *will ensure China’s energy security is a top priority for the next half-century. “Ensuring the continuing security of China’s energy needs remains our highest priority – not just for the next five years but for the next 50 and beyond,” CEO Amin Nasser told the China Development Forum on Sunday.

_*Aramco’s profit tumbles.*_ Aramco said its net profit fell by 44% to $49 billion in 2020. The company will spend $35 billion this year, down from a previous estimate of $40-$45 billion.

_*Biden sidelines Saudi Arabia.*_ The U.S.’s new cornerstone strategy to counter growing Chinese influence in the Middle East’s oil and gas sector appears to barely involve Saudi Arabia at all.

_*U.S. gasoline demand nearing pre-pandemic levels. *_Gasoline demand last week was 1.8% above the year-ago level on the eve of the lockdown. “It’s been an impressive rebound in the last few weeks of demand and I continue to be surprised every day,” noted Patrick De Haan, head of petroleum analysis at GasBuddy.

_*Alberta’s oil workers wrestle with layoffs. *_CBC looks at contracting employment in Alberta’s oil industry and how it is coping.

_*California Senators press for ICE phase-out deadline. *_California’s two U.S. Senators are pressing the Biden administration to set a firm date for a phase-out of gasoline and diesel-powered vehicles. They urged the federal government to “follow California’s lead.”

_*The oil industry supports a carbon tax.*_ In a meeting with the White House, top oil executives from *ExxonMobil (NYSE: XOM)* and *Royal Dutch Shell (NYSE: RDS.A)*, as well as industry lobbyists, voiced support for a carbon tax. The meeting comes as the Biden administration is working on a $3 trillion infrastructure bill that could include a long list of climate provisions.

_*U.S. refiners hope for summer rebound. *_Refiners are betting on improving margins in the next few months. “Certainly by summer, we would expect that a good portion of the American public is able to get out and burn the fuels that we make, and that should lead to a more normal-type summer level,” Phillips 66 executive vice-president of refining Bob Herman said, according to Argus.

_*EIA: Jet fuel demand rebound will be slow. *_The EIA expects U.S. airline passenger demand to return to pre-pandemic levels by 2025, but jet fuel demand won’t rise in concert. Jet fuel demand won’t return to pre-pandemic levels until 2030 due to improved operational and fuel efficiency.

_*Struggling shale fortunes see renewed optimism.*_ Energy and power companies have raised more than $20 billion in high-yield bonds so far this year, a record going back to 1996, according to Refinitiv. “At these levels a lot of companies can hedge future production and survive,” said John Dixon, a high-yield bond trader at Dinosaur Financial Group. “It’s the oil-linked names in high yield that have been among the best performers recently.”

_*Shale debt gets cheap again. *_More high-yield debt offerings demonstrate a renewed appetite for shale financing, despite years of red ink. “Many may not be able to resist the siren song of historically low-interest rates,” Spencer Cutter, an analyst at Bloomberg Intelligence, wrote Monday in a report. “As market conditions started to improve from the shock of negative oil prices in April, companies jumped at the chance to refinance debt.”

_*A natural gas pipeline in Venezuela explodes.*_ A section of a natural gas pipeline in Venezuela exploded on Saturday, which the country’s energy minister blamed on an attack, Reuters reports, citing a document produced by state energy company PDVSA.

_*Clean energy resource war?*_ What will the world look like when oil is no longer a leading force in global geopolitics? Many countries are sure to be left behind in the new green world order.

_*Annova LNG cancels the South Texas export project.*_ Annova LNG canceled a proposed 6.5 mtpa export project in Brownsville, TX, which would have exported Eagle Ford and Permian gas. The company cited “changes in the global LNG market."

_*BP drops reserve-replacement ratio. *_The ratio of oil and gas reserve replacement has become the latest radical change UK supermajor* BP (NYSE: BP) *has made on its road to a net-zero future.

jog on
duc


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## frugal.rock (25 March 2021)

ducati916 said:


> I'll probably have a post on gold later. There is all sorts of weird and contradictory prices in the gold markets currently. I still have a major Miners trade on, so some skin-in-the-game with the gold market.



Gold has me feeling like a flounder out of water flip flopping on a sandbank.

Eagerly awaiting an update on gold.
Currently sitting on the fence after going from bear to neutral very recently, but am hesitant either way as yet.


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## ducati916 (26 March 2021)

So many charts today I may have to split them into 3 separate posts.

The first set of posts addresses how a stealth bear market operates.










Individual names currently:






Many of these were the darlings of the market coming off of the lows last year.






Look at the outliers. Those tails are very dangerous.

Mr flippe-floppe-flye










We have chop.

But that chop isn't really taking us higher. It is just chopping positions.This is not a market that you can be aggressive with for swing trades long or short. This has almost become a day trader market. If you know how to day trade or that you have a day trade strategy, then this is your market.

Why do we have chop? To be addressed in post #2.

Meanwhile BTC:

Looking dangerous. You Hodlers really don't want to see a break of the 50 day. I think in this market that could unleash some panic selling.






Some news:






Maybe this time.






This cold war is not a good thing. Some (a lot) of that Treasury selling, I'm sure is coming from China, although Japan is also a big seller.






Reopening. Keep that thought in mind as we move to post #2

jog on
duc


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## ducati916 (26 March 2021)

Moving right along.

Why the chop?

DXY.






Global recessions/crises create safe-haven demand for the dollar. This is plainly visible in the grey 2008 – 2009 recession bar to the left (dollar peak in March 2009, right as global equity markets troughed) and again in March 2020 (again at a low for global equities).

The chart above also shows that global economic recoveries do see the dollar decline as capital goes off looking for better returns outside the US but this is a multiyear process, and the greenback can stage rallies over that time. Where are we currently? Are we at a reopening? Is it back to business as usual? Well if you know the answer to that, be sure to let me know.

If DXY does decline (for whatever reason) then pricing in DXY of commodities goes up. For the US that is inflation. When commodities go up, yield goes up (Bonds go down) and eventually, the stock market goes down. Why? Well there are a number of reasons, but here is the primary reason:







The ultra defensives, Utilities and Real Estate. Their earnings are in the US. A weak DXY impacts them only in so much as what they need to purchase from commodity markets where a weak DXY hurts them.

The dollar weakened by 11.8 percent from the March 2020 high through year end; that’s eerily close to the 12.3 percent 2010 drop noted above. Now, it’s been rallying since January 5th, 2021 and is up 1.8 percent from then. It should surprise no one if it adds another 3 percent in Trade Weighted Value Index terms, matching the 2010 move.

Just as in 2010, markets are reevaluating the pace of non-US global economic recovery. No other major country is spending what the US is shelling out to recover from the pandemic, and America’s vaccine rollout has been solid. A further move higher for the dollar in coming weeks would be logical. Or not.

Will it rather continue to lose value?

So while DXY sorts itself out, markets are roiling.






Commodities: reopening or not? Economic growth or not?

Stocks are shooting first asking questions later. We are in 'bounce' or BTD territory (this is yesterday's EOD chart) and into the w/e we may get some clarity, but I very much doubt it.






Interesting is the VIX.










2 time frames. We have this chop with the longer term VIX suggesting that at current vol. levels, we should be trading gently higher. The short term VIX rather indicates that there might well be an explosive move higher coming.

The thing is, it could go either way. My money is on an explosion higher. If the DXY starts to trade lower, commodities and rates will rip higher and stocks could collapse. 

This scenario is eerily similar to 1987.

Big boys are in no doubt. Defensive all the way.






The interesting case of the dog that didn't bark, or known to us as gold, coming next.

jog on
duc


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## ducati916 (27 March 2021)

frugal.rock said:


> Gold has me feeling like a flounder out of water flip flopping on a sandbank.
> 
> Eagerly awaiting an update on gold.
> Currently sitting on the fence after going from bear to neutral very recently, but am hesitant either way as yet.





Gold.

To fully understand Commodities and DXY, it is necessary to understand the role that the gold market plays. This is true for primarily 2 reasons: first, of the 21 or more commodity markets in the CRB index, gold is the most sensitive (historically) to DXY trends. Second, the gold market leads trends in the CRB. Historically, a trend change in DXY will produce a trend change in gold, historically, in the opposite direction. As we will see, since 2019, this relationship has changed, which may be accounting for some of the weirdness in the gold market. This original relationship prior to 2019, goes back to the 1960's.

So let's look at this in chart form: (again this will likely have to be spread across 2 posts)

In this 15yr chart, you can see the opposite nature of DXY/Gold. All the way to 2019.







And zooming in:







Closer still:






And still closer:






So before moving on to DXY/CRB...what happened in 2019 that might account for the change? We had the Taper Tantrum. Was that sufficient?  Nothing else of any note seems to jog my memory, so unless anyone has any other suggestions, I'll keep interest rates in mind.

Moving to DXY/CRB. They move opposite to one another. Hence a weak DXY correlates with strong CRB and a prima facie, inflationary environment.






Zooming in closer:






Closer still and we can see that (it looks like) commodities lead DXY. That commodities turned higher, after a long downtrend, after which DXY topped and headed lower.






So now we come to Gold/CRB. We know that historically, gold leads the CRB. That (below) is true. The thing that is confusing (well it was to me) is that gold led the CRB by such a huge margin in 2018 (and into the pandemic) that it seemed that this relationship had been lost. No. It is simply that the lead time and trend was magnified, to such an extent, it seemed to be broken.







Zooming out a bit further and the lead time from 2019 becomes clearer.







So far, we have a common year of 2019 for both GLD/DXY and GLD/CRB. 

Zooming into the last year, GLD peaked in Aug. 2020 and the CRB motored forward, only weakening this month, March 2021.







Now we move onto our third relationship: Interest rates (TNX) and the CRB.

As can be seen, they mirror one another, even in the truly bizarre QE world. Which one leads, which one follows?






To find out, you'll have to go to post #2.

jog on
duc


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## ducati916 (27 March 2021)

Which brings us directly to the question of inflation, which was topping the list in Hedge Fund Managers surveys.

Higher rates of interest, specifically, higher than the rate of inflation as measured by the CRB (not CPI), and we do not have an inflationary environment. Lower rates of interest than the inflationary rate of CRB and we have an inflationary environment.

This ratio chart measures the two variables in question:

The answer is clear: rates are now rising faster than the rate of inflation. Currently, there is no inflation. The system is working (as long as the FED doesn't f**k it up) at least at the long end. The short end of the curve is seriously broken.






So the takeaways:

(i) Gold, traditionally, is held as a store of value as against inflation. Currently there is no inflation and gold is declining, as should be expected. All the talk of Bullion Banks suppressing the price etc. would seem to be hyperbole or traders talking their book.

(ii) We should (unless things change, ie. the FED jump in at the long end) expect continued strength in DXY. Gold is currently the canary-in-the-coal-mine and is reacting faster than any other asset class. Remember all fiat currencies have been expanded. Therefore strength in DXY is not weird.

(iii) My rates model has stabilised at 1.5%. It was at one point going up almost every week. It topped out at 1.64%. 

(iv) If rates have topped (at least for the moment) then CRB is set to decline. Therefore POO a significant commodity, has probably, for the moment topped out or will slow down in its rise. 

(v) From all of the above, the market is saying that the global re-opening of trade will continue to see a disinflationary environment re-establish itself. The inflationary forces that existed going into 2020 are now not strong enough to overcome the forces of globalisation.

(vI) Markets (looking backwards into history) are always correct. This can be a trap. Things could change and change quickly if the FED jumps in. So while this is potentially the trend, it could end and we move to an inflationary environment, in which case, this would probably show up first in the inter-market relationships (a) GLD trend higher, (b) CRB outperform TNX, (c) DXY fall.


This might, should it occur, be referred to as a Black Swan.

A Black Swan is defined as:

(i) an unforeseen event, an outlier (a very low probability event); 
(ii) that has non-linear effects (huge); 
(iii) can be explained post hoc, ergo propter hoc.


This would not be a Black Swan event.

Summary:

Gold currently, is not going to resume its upwards trajectory. If things change (isn't that always true) then yes, it could well do. The GLD Miners are (obviously) tied to POG. With POG falling (predicted) than the Miners will decline. They will likely decline far more than POG. The reason is leverage (debt). That leverage pushes them down further in a declining market and higher in a rising market.


jog on
duc


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## ducati916 (27 March 2021)

So for the week:

The market stayed defensive. Now here's the thing: if inflation isn't a thing atm. then growth is where you want to be positioned. This is a BTD in Tech etc. and take profits in the defensives. Rotate.






A bit of schadenfreude from this chart, although for the most part he is probably right.






US debt/GDP is always a macro-issue: suggesting it is manageable (at least currently).






BTC:

Looks to have held that 50EMA, which was very important to do.






And finally Mr flippe-floppe-flye:






jog on
duc


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## ducati916 (31 March 2021)

Oil News:

*Market Movers*

-   * Chevron (NYSE: CVX) *is the leading contender to purchase the 145,000-bpd Puget Sound refinery in Washington State from *Royal Dutch Shell (NYSE: RDS.A)*.

-   * Devon Energy (NYSE: DVN)* said its first-quarter production would decline by 8% due to the Texas freeze.   

-    *Vine Energy (NYSE: VEI)* announced a bond sale to raise $950 million in senior unsecured notes due in 2029. Vine Energy recently launched an IPO and raised less money than it had hoped.

*Tuesday, March 30, 2021 *

Oil prices fell on Tuesday as the Suez Canal was cleared and concerns about global bottlenecks eased. Traders are now focused on the upcoming OPEC+ meeting, which most observers believe will result in an extension of cuts, and the impact of Covid-19 on oil demand in Europe.

_*OPEC+ poised to extend cuts.*_ Saudi Arabia wants OPEC+ cuts extended through June. Russia, the leader of the non-OPEC group in OPEC+, favors a rollover of the alliance's oil production cuts while seeking a slight increase for itself to meet higher seasonal demand.

_*Total evacuates staff from Mozambique.*_ *Total (NYSE: TOT) *and other international contractors evacuated some staff from Mozambique over the weekend as insurgents advanced to the coastal town of Palma, a hub for the country’s nascent LNG industry. Total’s $20 billion project is the largest foreign investment on the African continent but now appears to be at grave risk. 

_*Iran and China sign an economic and security agreement. *_Iran and China signed a wide-ranging economic and security agreement, billed as a “strategic partnership” that will last 25 years. Details remain sparse, but the move likely paves the way for more Chinese investment in Iran’s oil sector and also open up more room for exports. The WSJ also says that the two countries could set up a joint bank that would help Iran evade U.S. sanctions. Reuters reports that Iranian oil exports are expected to continue to rise in March.

_*Sinopec to ramp up hydrogen investment.*_ Sinopec, the largest oil refiner in Asia, announced plans to shift towards carbon neutrality by 2050, a plan that leans heavily on hydrogen. 

_*Abu Dhabi debuts Murban contract.*_ Abu Dhabi allowed trading in its futures contract, Murban, on the Intercontinental Exchange (ICE). The move is aimed at bolstering the emirate as an international oil trading hub.

_*Biden invites China and Russia to climate summit. *_President Joe Biden is including rivals Vladimir Putin of Russia and Xi Jinping of China among the invitees to the first big climate talks of his administration, according to the AP. The event will be held virtually April 22 and 23.

_*Exxon and Chevron cautious on shale drilling. *_*ExxonMobil (NYSE: XOM)* and *Chevron (NYSE: CVX)* have dramatically scaled back drilling in the Permian compared to a year ago. According to Rystad, the two majors accounted for 28% of Permian drilling activity in the spring of 2020, a share that is now down to less than 5%. “We essentially hit a pause button,” said Chevron Chief Financial Officer Pierre Breber, according to Reuters.

_*Will U.S. shale exploration surge?*_ Cheap financing and higher crude oil prices could kick off another round of drilling in U.S. shale, despite promises to exercise restraint.

_*Questions on Shell’s bet on LNG.*_ The Wall Street Journal reports that massive billion-dollar bets on LNG appear riskier as the energy transition gains momentum. *Royal Dutch Shell (NYSE: RDS.A)* spent over $50 billion to purchase BG Group in 2015, a large wager on the future of LNG. But the gas era could be short-lived as countries leap frog to renewables. Shell has written down gas assets and lowered its forecast for demand growth.     

_*Shell links executive pay to climate.*_* Royal Dutch Shell (NYSE: RDS.A) *has proposed linking director’s pay more closely to its climate performance, while also severing the link between LNG production. 

_*Vanguard and BlackRock make net-zero emissions plans.*_ *BlackRock (NYSE: BLK) *and Vanguard Group are among 43 investment firms managing more than $22 trillion in assets that are joining Net Zero Asset Managers initiative.

_*Natural gas prices are stuck.*_ The U.S. natural gas benchmark is set for several months of below $3 MMBtu price analysts and EIA forecasters say. The agency cited declining demand for heating in the spring along with rising American dry natural gas production.

_*New Mexico adopts flaring regulations. *_New Mexico regulators adopted new regulations that end routine flaring from Permian drillers. They can still flare in the event of an emergency, but no longer simply as a fact of doing business. 

_*Biden announces offshore wind push. *_The White House announced Monday an ambitious plan to expand wind farms along the East Coast and jumpstart the country’s nascent offshore wind industry. The Biden administration is targeting 30 GW of offshore wind by 2030.

_*Biden infrastructure plan to include orphan wells. *_One aspect of President Biden’s forthcoming $3-$4 trillion infrastructure proposal (to be unveiled Wednesday) is a big push to clean up abandoned oil and gas wells. 

_*EIA: Battery boom on U.S. grid. *_The EIA laid out a long-term forecast for energy storage in the U.S., and in its reference case, the U.S. sees 59 GW of battery storage by 2050, a figure that could be much higher if renewables accelerate.

_*Aramco resists dividend cut. *_Despite a 44 percent drop in its 2020 profits, the Saudi Arabian government has instructed majority-state-owned Saudi Aramco to stick to the US$75 billion per year dividend payout for shareholders that it pledged at the time of its IPO.

jog on
duc


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