Flash Update – March 18, 2021

Published on: March 18th, 2021

There is a new Sheriff in town… and he is a paid up, die-hard social warrior. Frogs! Get ready to be boiled in the financial repression pot. What to think? What to do?

Comments

  • SG
    Soros G.
    19 March 2021 @ 03:18
    Question about the gold position (understanding it's half size and stops are tight around the channel): Isn't there a danger that inflation expectations have somewhat front run actual inflation? 5y5y divergence from breakevens, reflation commodities (copper, silver, platinum.. Etc), KOSPI/semi weakness and oil futures mild contango are showing a bit of toppiness Consensus says nominals are still expected to rise into the 2% (3%?) range in US10y - aren't this expectation out there mostly based on growth base effects that will kick in much stronger in Q2? These combined could lead to increased real yields, continuing the downtrend in gold until H2 where the base effects ease and we enter more of a stagflation scenario with lower real yields. Is this thought train a wreck?
    • HM
      Harry M. | Real Vision
      22 March 2021 @ 15:17
      Definitely a risk. I think JB thought there was a better than even chance at current prices that Gold would perform because the pace of bond sell off would slow. That has yet to be proven.
  • LH
    Luis H.
    19 March 2021 @ 01:17
    Can you please check the left scale os the two graphs on page 7? The scale is not inverted.
    • HM
      Harry M. | Real Vision
      22 March 2021 @ 15:15
      Will take a look. Apologies.
  • SN
    Sean N.
    19 March 2021 @ 00:14
    Nicely put Julian. Got to be in some of these trades, but it won't take much more in treasury rates rise to start a rout. (The risk is that a stock market rout here could be very hard to contain!) I feel like the FED must know this and is holding it's breath waiting to make more dovish noises... Perhaps SLR extension announcement??
    • HM
      Harry M. | Real Vision
      22 March 2021 @ 15:14
      Im increasingly of the view (for what little my opinion is worth) that the Fed wants to stealth tighten. Hence the SLR and hence the greenlight to higher bond yields. Fed should probably be more careful about what it wishes for.
  • MW
    Marco W.
    19 March 2021 @ 00:01
    Just like to point out that Nikkei is a price-weighted index dominated by Japan's FANG-style stocks (Fast Retailing @11.5%, Softbank @7.5% ...), with Financials at 1.98% and Energy at 0.2% weights. When growth or NDX underperform, Nikkei will underperform. To play value, it is better to go for Topix or DXJ or EWJ. Ref: https://siblisresearch.com/data/nikkei-225-sector-weights/, https://www.wisdomtree.com/etfs/equity/dxj, https://www.ishares.com/us/products/239665/ishares-msci-japan-etf
    • JL
      J L.
      19 March 2021 @ 05:27
      Well spotted, I had not realized how much EWJ has underperformed the Yen Nikkei for years. Some commentary on USDJPY would also be appreciated as it has gone from 102 to 109 since last trading the Nikkei but no recommendation is made to own Japan in Yen (compared to the UK in GBP)
    • sw
      stefan w.
      19 March 2021 @ 06:50
      I use FLJP... probably not most cost efficient... weightings are Industrial 22%, consumer 19%, IT 13%, Health 10%
  • CM
    Christopher M.
    18 March 2021 @ 19:51
    I took on Julian’s sell NDX trade in the form of SQQQ (3x leveraged short NDX) and FNGD (3x leveraged FAANG stocks). I don’t have any real trading experience so please defer to Julian on any differences, but just wanted to share my trade. So, that Julian and Raoul both wanted some form of short equities at the same time made me more confident in the principle, but the FAANGs-as-bonds theory, rising real rates, and rotation out of big tech into banks and consequent rotation out of NDX into Dow made me far more confident in Julian’s short NDX than Raoul’s puts on S&P. Despite Julian leaving the trade, I’m staying in for a few reasons. First, his stop was close above 13100, but he also emphasized watching the Fed meeting. It closes above the stop the day before the Fed meeting, but barely, so I waited. The Fed conference seemed to cause very bullish price action across the board and falling yields. However, the US10Y had hit an hourly TD 9 earlier in the day and could easily be seen as taking a 4-candle correction that would bounce. Further, news could easily cause a head fake. So yesterday I exited half the trade and decided to watch what happened today. US10Y spiked overnight. Its on a TD5 daily and the weekly chart is restarting a bullish up sequence on a 2 trading higher than a 1. Seems like this thing is on a tear and doesn’t care what Powell said. NDX is trading below Julian’s target for the second entry of 12880 right now. So had his trade not stopped out we would be at the point to freshly enter the second half of it! NDX was poised to hit a TD9 sell signal on the daily chart while under the 20D moving average, which recently crossed the 50D and has no indication of turning back. The last time it traded under the 20D after the 20D crossed the 50D was March 2020. This really makes me wonder about the passive algorithms. Are we getting an automatic repeat now that we have hit March 17 again? The TD count broke and went to a red 1 today. NDX might generate a fresh bearish downcount tomorrow. The last time it dropped it was saved by the 20W moving average. As I’m writing it is starting to cross it. Seems to me this trade has life left so I’m sticking to it unless US10Y does a surprising reversal or NDX looks like it could hold the 20D MA.
    • CM
      Christopher M.
      18 March 2021 @ 19:58
      Here's the report where Vincent Deluard argued that passive whales are creating crashes that consistently end on the 23rd day of the last month of the quarter, unless that falls on a weekend in which case the 24th: https://www.realvision.com/issues/passive-whales-and-the-math-of-secular-slowdown?source_collection=1c85a7e546194180b5c665d81abd2215 So it would be nuts if we get an NDX crash that bottoms out on March 23 that would be nuts and align quite well!
    • HM
      Harry M. | Real Vision
      18 March 2021 @ 23:07
      Really useful thoughts and much appreciated. I know JB remains cautious about US equity risk. But a stop is a stop. Respect them and go again.
    • CM
      Christopher M.
      19 March 2021 @ 04:46
      I agree a stop is a stop. I just chose to modify Julian’s stop to fit my own view. A bit dangerous given Julian’s an expert and I’m an idiot, but I think I also have a higher risk profile as I’m 97% BTC.
  • BT
    Billy T.
    18 March 2021 @ 20:11
    Are there any recommended nikkei etf, ftse etf and mib etf's?
    • ly
      lena y.
      19 March 2021 @ 00:24
      EWJ EWU EWI
  • ly
    lena y.
    19 March 2021 @ 00:22
    Logically lay out the reasons for each trade! Thank you Julian!
  • CC
    Christopher C.
    18 March 2021 @ 23:57
    I'm assuming Julian saw this (https://asia.nikkei.com/Economy/BOJ-to-widen-interest-rate-target-range-to-support-bank-profits), or perhaps it came out after this update was written. I'm curious if it changes his opinion on buying the Nikkei? Thanks.
  • SC
    Sanjeev C.
    18 March 2021 @ 19:58
    Hi JB - Does China not benefit from the reflation trade? like Japan, FTSE or Italy? & what about a broad commodities exposure like GUNR Thanks
    • HM
      Harry M. | Real Vision
      18 March 2021 @ 23:35
      Yes of course. Its just a little harder to say its cheap.
  • af
    andrew f.
    18 March 2021 @ 23:14
    The NDX vanity trade is slippery. Julian tweeted an excellent chart comparing Nasdaq and Treasury futures; https://twitter.com/JulianMI2/status/1372529863895130125 Still some downside to come?
  • RL
    Robert L.
    18 March 2021 @ 19:53
    Thanks for the timely perspective, this market is bonkers.
  • CM
    Christopher M.
    18 March 2021 @ 19:33
    Testing
    • CM
      Christopher M.
      18 March 2021 @ 19:34
      I had trouble commenting in the app before. Sorry! You can delete this comment thread. I can’t seem to do it in the app.
    • CM
      Christopher M.
      18 March 2021 @ 19:52
      Actually I was unable to post my large comment on the app. I had to come to my laptop to do it. I've had this for the past year of being a member. Can someone look into trouble commenting from the app in IOS? It seems to only allow me to write very short comments.

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