「待てば海路の日和あり」
Mateba kairo no hiyori ari.
“If you wait, fair weather will come for the voyage.”
— Japanese proverb
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Could it be? Could it really be true? Is the Japanese Yen suddenly rallying meaningfully without help of mother Japan or Daddy Yankee?
The chart of the USD/JPY would make us indeed believe so:
So, are we now suddenly looking at The House of the Rising Sun Yen?
Perhaps.
As we outlined in Monday’s Quotedian “And Then There Were (N)One” (click here) a second (or first) order effect may be that the Swiss Franc (CHF) is now the only real global funding currency left. This in turn, could lead to some more Swiss Franc selling. The purest way of expressing this view would of course be shorting the CHF/JPY cross:
Let’s keep an eye on the chart over the coming months to quarters…
In other markets, stocks had a weak day again yesterday, which according to this little statistic is apparently ‘normal’:
Hence we deduct from the table above that today, on average, should be more positive for (US) equity market returns.
Perhaps.
In any case, we keep an eagle’s eye on that 7,630 support level (mini futures ‘ES1’):
In any case, the ignorance resilience of stock markets to higher bond yields remains astonishing. The chart of the US 10-year Treasury yield below is screaming for an imminent break higher:
Couple that with an again ‘soaring’ oil price, where Brent is flirting with the $100 level, and it makes equities’ incognizant behaviour even more … hhmm…. interesting:
Gold, which we like, is attempting to break out of that short-term consolidation pattern as I type:
Zooming out on the same chart, we note the danger of a shoulder-head-shoulder pattern developing, with a break of the neckline at 3,980 having VERY bearish implications (PT 2,600!):
However, this is clearly our low-probability outcome scenario.
Last, but definitely not least, Dr. Copper is breaking out to new all-time highs:
Which is probably a combination of a strong economy (see UST yields) and a supply-side issue. Stay long.
The chart below argues that “in theory” low capex, hyperscaling Tech companies are now spending more on capex than those very capital-intensive mining companies:
The lines are built from the 10 largest stocks in each sector and of course are tech stock muuuuch bigger than mining companies, but still …
Not too much excitment on the agenda today - everybody and his mother (except Warsh) waiting for tomorrow’s PPI and Friday’s CPI.
May the Trend be with You.
André
Everything in this document is for educational purposes only (FEPO)
Nothing in this document should be considered investment advice
Investing real money can be costly; don’t do stupid shit
Leave politics at the door—markets don’t care.
Past performance is hopefully no indication of future performance
The views expressed in this document may differ from the views published by NPB Neue Privat Bank AG