MarketsMuse.com global macro trading snapshot is courtesy of excerpt from 7 April edition of macro strategy commentary from “Sight Beyond Sight”, a publication of Rareview Macro LLC and authored by 20-year industry expert, Neil Azous.
Over the past two trading days, three major trends that have been the backbone of asset markets over the past 9 to 15 months have come under attack. As highlighted in yesterday’s edition of Sight Beyond Sight, and despite our call for an immediate reaction lower in risk assets turning out to be wrong, we are now working under the assumption that a larger corrective event in key investment themes is underway.
To be clear, just because we are working under this assumption does not make us feel comfortable about going against the grain as trend-following pays better and is more scalable than counter-trend trading
The first, and most prominent, trend shock is the shift in the US dollar. The uptrend that has been in place for the last nine months is in jeopardy.
The second is the US Treasury curve.
The third is the downtrend in crude oil. Whether it is the trades of commodity exporters against importers, problems surrounding capital account deficit countries with large levels of commodity-dependent debt, or the shale oil-based capital expenditures decline in the United States, there are quite a few negative narratives linked to the decline in crude oil prices.
What we are now considering is this: If crude oil is able to sustain a rally or has finally “found a bottom” then what the consequences are of all of these release valves being opened at once?
To read the finer points of this morning’s edition of Rareview Macro LLC’s “Sight Beyond Sight” inclusive of a detailed distillation of the above talking points and a view of Rareview’s model portfolio, please visit this global macro strategy think tank’s website via this link