Pro Macro: In Focus – Groupthink Fumbles

Published on: February 14th, 2022

US CPI printed 7.5% YoY this week. At what may be a local peak, CB attention has now turned to inflation only weeks after we were assured it was all transitory. In this new framework, the risks are rising of pro-cyclical policy manoeuvres. Grist to the mill of the oscillation thesis and threatening an era of boom/bust.


  • FK
    Firoze K.
    14 February 2022 @ 22:31
    Thanks for the report Julian, a great read as always. As you'll have seen, oil has been on a tear recently. How do you see it behaving going forward?
    • HM
      Harry M. | Real Vision
      15 February 2022 @ 12:31
      Spoke to JB to get his take. Some part of the oil price has a premium for a RF invasion of Ukraine, and the disruption to international energy markets. But if you ignore that, rig counts in the US (and globally) remain well below where you would expect them to be given the oil price. Past poor performance from the US shale patch has really restricted the ability of that sector to raise money. Generally ESG considerations have impacted the attractiveness of new drilling. Yes, DUCs (Drilled but uncompleted wells) will be opened, but new drilling is not picking up. Without new supply, the only thing which can get oil down is less demand. Julian suggests it would be unwise to hold your breath while waiting for demand to moderate.
  • JK
    James K.
    15 February 2022 @ 01:31
    Gold closed this last week above $1,850- So assume buy signal is based on this week closing above the $1,850- Correct …. ? TIA
    • WM
      William M.
      16 February 2022 @ 17:16
      Thanks Harry M thats how I understood the reco. James I cant tell you how long now I have been waiting for a 2nd weekly confirmation above 1850 .....AND then a weekly above around 1875. The latter will signify to me that we are off to the races........ I have been long the metals for 4 the miners for 2 years now. Currently up only 15-20% on the metals and still down about 10% on my miner average. Have not lost faith in the least.
    • HM
      Harry M. | Real Vision
      15 February 2022 @ 12:47
      Yes it did. But one might fear that the Ukraine scare could have triggered a false break. If you haven't already put it on, wait for a second move above 1850. If you have it on then yes we thought it did break out but at time of writing its currently below the break out level.
    • JK
      James K.
      15 February 2022 @ 01:34
      Somewhat concerned if there is war, Fed uses that to stall raising rates … if no war, stocks pop, metals tank …Anyway …will see …
  • AA
    Alberto A.
    15 February 2022 @ 02:03
    Thanks Julian. Great recommendations. I know gold has been tough to trade and the 'big short' :) in these markets is always risky but it looks like a good set up this time. I'm also surprise you don't have any trades in 'energy' or natural resources?; I guess energy is already a crowded trade? Eager to listen to Macro Insiders this month!
  • LK
    Lana K.
    15 February 2022 @ 03:12
    Haha, an entertaining take on a hair-raising situation. Watching for the train wreck moment when the bubble pops, and being unable to fully get out of the way (short of going all to cash) is nerve-wracking. No wonder the sentiment of us regular folk is the lowest it's been since the GFC. We all fear something will break this year.
  • ly
    lena y.
    15 February 2022 @ 16:09
    Julian! If gold is a buy, is BTC, e-gold, a buy?
    • HM
      Harry M. | Real Vision
      16 February 2022 @ 11:51
      See answer below Lena. It did look like it was breaking out but its just a little more ambiguous now, although it is above 1850. Yes we like it, but there is a lot of noise around Ukraine which may be messing up price signals. If it is breaking out, it says a lot about the environment. Bottom line is that its something Julian is biased towards trying to avoid missing it. Easy to see how it could move a long way when it moves. But that bias means its easy to get whipsawed. Just the cost of doing business Im afraid.
  • SS
    Shanthi S.
    15 February 2022 @ 22:55
    Great report. Thanks Julian!
  • BT
    Bill T.
    16 February 2022 @ 18:14
    Curious what Julian thinks of the EU carbon trade. Seems like it should be rate hike insensitive/immune, not too correlated to anything in particular, with caveat that correlations go to 1 in liquidations.
    • HM
      Harry M. | Real Vision
      17 February 2022 @ 14:28
      Exactly that! Its been a great trade and there is no serious case for saying its done yet. But if we have a tough enough market all correlations go to 1.
  • HB
    Henning B.
    17 February 2022 @ 15:58
    In his interview with moneyweek julian mentioned that he would like to scoop up some silver below 20 or in the very low 20s and is now recommending to buy silver at above 24.50 - how does that fit together?
    • HM
      Harry M. | Real Vision
      18 February 2022 @ 13:35
      Cos thats the most recent technical resistance. Consider it a bayesian conditional. JB likes silver, and is biased to thinking it has to go up., Partly cos of inflation pressures, but also partly cos of reflation - it has industrial uses, and in particular uses in solar. So there is a chance of quite a sustained rally, if we have this right. Thing is, nobody gets everything right, hence stops etc...
    • PT
      Pradeep T.
      18 February 2022 @ 11:57
      >> okay, but then why wait for a weekly close above 24.50 and not go in right now? The theory here is that it could go below 20 unless it breaks the 24.5 price on a weekly close. Nothings set in stone. Its just technicals.
    • HB
      Henning B.
      18 February 2022 @ 08:31
      okay, but then why wait for a weekly close above 24.50 and not go in right now?
    • HM
      Harry M. | Real Vision
      18 February 2022 @ 00:42
      I dont know about you, but Im a married middle age man with 3 kids. I definitely do not always get what I want. In the same way, while JB would love to accumulate a big position in Silver in the low $20, it really doesnt look very likely at this stage. PMs do look a lot like they are breaking out, and it would be a shame to get nothing if Silver were to join the party.
  • YC
    Yi C.
    24 February 2022 @ 14:57
    Hi Harry and Julian, may i know what stop loss and target would be for the silve trade?
    • JW
      JW2 W.
      25 February 2022 @ 15:04
      XME SL = 45
    • YC
      Yi C.
      24 February 2022 @ 16:02
      Also what's the stop loss and target like for the updated XME trade?