ThinkGlobalMacro Weekly

Congrats Market Player, you have leveled up another week.

As you know by now ThinkGlobalMacro avoids trading on market opinions. We have rather dramatic and uncharitable views of arguments made against Madam Market. The wide world is filled with folly and we must be as cautious as a professor of epistemology. One need not have opinions. The market self-evaluates with implacable efficiency. One only needs intellectual humility, patience, and an ability to measure.

Relative markets:

Relative summation strength. Momentum remains in NDX.


Look at that parabolic curve. Beautiful and nerve-racking.


However, beta-rotation model votes utilities. Makes one jumpy…

Look at the neck-snapping reversion of the Nikkei and the Russell.

A few international markets here. Brazil is discounted of course. (There are other international markets with liquid futures contracts, but these markets are what we focus on due the correlation constrains of our portfolio construction)

Yield Curves:

(most yield curve charts are from investing.com)

USA:

No inversion. But clustering at the shorter maturites

 

China:

Notice the small 7y to 10y inversion



India: 

similar 7y to 10y invert, but also a small 15y to 20y

Europe (We use Italy and Spain as canaries in the coal mine)
No inversion. No need to chart. About 300 basis points of arc.

Brazil: short rates inversion.


Other whimsical charts. The metals complex thinks that there is a greater chance of economical growth than inflation…

Here is the market’s opinion of risk:

Here is the Cleveland Fed Yield Curve GDP predictor:

And the non-existent inflation that the Fed is tightening into… also from the Cleveland Fed

The Exponential Race(AI, Cloud, Big Data, Quantum):

The biggest fight for the future is the race for AI, or machine-learning. This race includes sub-races (Big Data is needed for AI training, cloud-computing, transportation as a service  or “Taas”,  robotics, internet of things or “Iot”, drones, smart-devices, AI in practical uses such as biotech and security, and even quantum computing).  The interesting thing is (and the reason the Nasdaq is shooting for the moon is) this race is being ran by just a handful of companies. Here is overview of the position of the racers while still in very early laps.

Finally, I will end with some great articles from around the web.

Seers:

https://www.nytimes.com/2017/06/02/opinion/donald-trump-poisons-the-world.html?

hpw&rref=opinion&action=click&pgtype=Homepage&module=well-region®ion=bottom-well&WT.nav=bottom-well&_r=0
Reflections:

http://www.zerohedge.com/news/2017-05-28/after-47-years-stephen-lewis-calls-it-quits-scathing-critique-modern-markets

http://www.zerohedge.com/news/2017-05-29/market-crazy-hedge-fund-returns-hundreds-millions-clients-citing-imminent-calamity

https://www.ft.com/content/6563efaa-467c-11e7-8519-9f94ee97d996

Wall of worry:

https://www.bloomberg.com/news/articles/2017-05-30/new-warning-sign-as-fewer-subprime-auto-borrowers-pay-off-early
Hopeium: (could it be different now?)

https://www.ft.com/content/cd516726-46d8-11e7-8d27-59b4dd6296b8

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