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ridethepig | End Game in the Cycle📌 This diagram portrays the final stages in the economic cycle which I called in 2019. The position arose after Equities began extending beyond reality; all sellers needed was an intending cause. The construct of the ingredients here are clear and simple, after Fed cleared the runway till 2022 you can see the risk coming out of bonds. Of course now it creates the "following subtle trap" where the belly of the curve begins to move towards the front end which then brings the 30Y with it. It is worth pointing out where other countries in the world are as there is little divergence on the rates differentials now: 📍 Spain 📍 Singapore 📍 Canada 📍 UK 📍 Japan 📍 Germany There is no reason why the US cannot see a retracement back to 0.9% / 0.8% levels ... Watch for the next dominos in Equities and Gold based on deep knowledge of the flows as we can call it. More risk to come.
TVC:US30YShort
by ridethepig
1
ridethepig | US 2s10s Curve Breaking HigherI have been talking about the curve steepening for some time after we cemented the lows. From a technical perspective, the breakout is implying a test of 60 over the coming weeks and months. The US 2s 5s Bond Curve also looks to be triggering a major break up: This will reflect a medium term breakout with large forces clashing against each other and diverging at the prior lows in a long-term swing. A mixture of profit taking and momentum tiring. A break above is triggering the flows, with next key levels in play at 35.5bps, 49bps and 60bps as the final target. US10Y DE10Y As usual thanks for keeping the support coming with likes, comments, questions and etc! Feel free to jump into the conversation in the comments with your views/charts.
TVC:US10YLong
by ridethepig
ridethepig | US 2s5s Curve Screaming Recession in 2020A timely update to the 2s5s US Curve which is breaking higher with the resteepening after flattening from 2016. This breakout indicated we have marked a meaningful base with the next target in play at 29bps which is the measured target from a breakout. (1) Every other time this happened it ended badly for the global economy via recession. (2) A Fed that lags and finances the Whitehouse will only add fuel to the flames... "it's different this time". (3) The longer the delay in USD devaluation from Fed, the worst the blow is going to be in Equity markets. Assuming USD does not devalue materially into 2020 its repo will grow and continue expanding the balance sheet , one way or another eventually this is going to look like Fed has been financing the WhiteHouse and then the game is up. For those tracking the renewed steepening there are plenty of opportunities if you know how to capture the symmetry; for example Banks outperforming was a no-brainer: Defensives outperforming: Rotation in full swing: End of the Cycle? Smells like it... Recession is calling... Thanks for keeping all the support coming with likes, comments, charts, questions and etc! Best of luck those tracking for the end of the cycle... this chart will be one for the history books.
TVC:US05YLong
by ridethepig
2
ALPHA PROTOCOL: SEEKING IMMEDIATE EXTRACTIONYou have opened the grave of an economic cycle. Before we dig deeper into the nature and consequences of our discovery, we will discuss the background to the thesis and consider first what we know from history a few lessons; (1) Every other time this happened it ended badly for the global economy via recession. A (2) A Fed that lags and finances the Whitehouse will only add fuel to the flames... "it's different this time". (3) The longer the delay in USD devaluation from Fed, the worst the blow is going to be in Equity markets. Assuming USD does not devalue materially into 2020 its repo will grow and continue expanding the balance sheet, one way or another eventually this is going to look like Fed has been financing the WhiteHouse and then the game is up. Protectionism is a serious error. There is no yellow brick road to success with protectionism, and it is no surprise the US via media manipulation have the masses deluded. This is a necessary component to the makeup of the next economic cycle; but it must be in balance, any overshoots or undershoots will destroy the effectiveness in manipulation. Central Banks have been buying 20% of Gold supplies, expressing a view on global risk at rates we have not seen since the Nixon era when mortgage rates were surpassed by wages and no surprises this is also happening again now! Those with a background in fixed income will know alarm bells are ringing louder than usual in bond markets with wages ticking higher than mortgage rates. This is not sustainable and when danger threatens and the crowd does not smell it, don't stand like a sheep, rather run like a deer. Now that Pandora's Box has been opened, it is equally important to understand the consequences and have a pulse to guide us on how to proceed: Utilities starting to form a top: Consumer Staples in the decade long chart: For those with a background in waves you will know this is a typical example of a 5 wave count. This is time to start paying attention for any signs of a meaningful top forming. We know that once this final wave is completed a corrective chapter will begin. This chapter down is only a third of the pages compared with the rally and we can 'read' through it quickly. Rotation in full swing: Cyclicals vs Defensives : Tracking Unemployment closely : Vol sitting on the launch pad Use this chart to good advantage, time to start paying close attention for early signs of a turn. As usual thanks for keeping the support coming with likes and we can open the conversation in the comments for all to share ideas and questions.
TVC:US05YLong
by ridethepig
8