Caution!

Published on: March 20th, 2018

Raoul looks at the increasing probabilities of volatility contagion in these fast-moving markets, seeing dangerous linkages from equities to dollars, to oil, emerging markets, and bonds.

Comments

  • AD
    Anthony D.
    20 March 2018 @ 16:23
    3 0
    Raoul, Do you have any conviction of how gold will react if the dollar rips higher? Is a reflexive sell off baked in? Or does gold finally move independently as a currency in its own right and move higher?
    • RP
      Raoul P. | Founder
      20 March 2018 @ 18:48
      2 0
      I think in this phase, gold falls. When economic weakness is on the radar then gold can rally, with or without the dollar.
    • CS
      C S.
      20 March 2018 @ 16:47
      2 0
      Good question. Will bonds rally; will they drop (with stocks)? Will gold drop as USD rises; or will they rise together? Domestic political turmoil, as well as financial, could very well be gold positive. The only trouble with 'gold' is, paper isnt physical if there are true issues emerging.
  • CS
    C S.
    20 March 2018 @ 16:42
    2 0
    Raoul, On page 6 you note: 'I am also getting worried that the dollar is getting close to its final sell-off before the face ripping rally that Julian and I discussed..' Can you give an example price-action-wise as to what you mean? Do you mean you expect another dollar dip and then rally; or do you mean, whatever dollar weakness remains will likely be over soon (whether further retracement, or not) and a rally expected soon/next? Thanks.
    • RP
      Raoul P. | Founder
      20 March 2018 @ 18:47
      3 0
      As you know, there is no science here but shifting probabilities based on evidence at hand. I see a 50/50 chance of the DXY making a new low for this move and then rallying vs just rallying from here. Not the best odds, but the next 10% move is more likely to be higher, than lower.
  • JL
    J L.
    20 March 2018 @ 18:26
    8 1
    Tuesday release much appreciated, as others have said it would be great if you could provide snap one page updates if things start to move either way.
  • JJ
    Josh J.
    21 March 2018 @ 20:14
    2 0
    Hi Raoul and Julian, In short words, what do you make today fed statement - hawkish hike or dovish hike and implications/updates to MI thesis? Thx.
    • JB
      Julian B. | Contributor
      23 March 2018 @ 16:47
      2 1
      Well on balance it was slightly hawkish, because while people obsessed about 3 vs 4 hikes in 2018 the real story was 2019 and beyond. There thanks to the budget the average dot rose 50bps. Now as Powell suggested whether we get there or not is at this stage conjecture but unless something calamitous happens that's the plan.
  • DP
    Devraj P.
    22 March 2018 @ 19:53
    3 0
    Absolutely on time predictions and caution. Saved multiple times of the subscription costs 😊
  • CG
    Craig G.
    25 March 2018 @ 15:02
    1 0
    Can you please define the GMI Crash Pattern? Thank you.
    • RP
      Raoul P. | Founder
      26 March 2018 @ 17:56
      1 0
      It is a sharp fall, followed by a rally that fails to take out the high, turns sharply lower and then takes out the low from the initial fall. It is a very typical pattern that appeared in 1987, 1929, Bitcoin and most other sharp declines.
  • cc
    carlos c.
    31 March 2018 @ 18:13
    0 0
    Great call. What would be your target on the downside of S and P for a reversal of this pattern.