The words of a haunted Lady MacBeth ripple through markets yet again today.
As we close out the month of Ground Hog Day we are once again near not only new highs in all risk assets but near all time highs in risk spreads in every major and minor asset class.
The canaries that were so loud in last week’s coal mine have either been kidnapped or were killed over the weekend in a mining disaster that and will not be uncovered for some time to come.
As we approach the “first day of the month” bump for equities we expect to see risk assets follow, IF equities bump.
We suspect they may not.
We will be waiting these mornings Chicago PMI with interest and also be watching the price of WTI Crude oil futures. It appears to us that the machines are now cuing off the price of oil/energy and have left the bond/USD correlation on the operating room floor. Why would you use a manipulated currency and market to measure your risk?
That’s right, you wouldn’t.
It appears that the global risk on for commodities too is set for a higher open. Food and clothing parts seem to have caught a bid over night and are heading toward either a double or triple top OR possibly new all time highs. Its probably just coincidence that we are in the middle of the longest ZIRP period in history and those price movements –right?
Finally, as we said Friday, “that said equities around the world are playing the end of the month dead cat bounce game. We think this may be a fool’s errand this month and are looking to be on the other side of that trade.”
“What We Are Expecting”
- Equities to have an uncharacteristically not good first day or the month
- Oil to rally north of $100 in WTI and north of $115 in Brent
- USD$ to rally
- USD Interest rates to rise
- Serious chaos to break out in middle east
- Commodities to make double tops and fall back