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Global Macro Review
11/20/2022
🧵 1/7
#Recession cometh
Are you positioned accordingly?
Chart: Conference Board Leading Economic Index -3.2% over the past 6 months conference-board.org/topics/us-lead…
1a/7
The 10Y3M treasury spread, as a standalone indicator, has predicted recession with 98% accuracy.
Chart: 10Y3M Treasury Spread to -52 bps
1b/7
According to this Richmond Fed article, when both the LEI and 10Y3M are flashing #recession, there is a 99% chance of recession ahead.
richmondfed.org/publications/r…
Chart: Recession Indicators
1c/7
And yet the @AtlantaFed $GDPNow model is forecasting +4.2% for 4Q 2022
🤷🏻♂️
2/7
Long Treasury ETFs have started to show signs of life (meaning recession) over the past month (m) but still bearish Trend (T)
$IEF +3.21% (m) -6.25% (T)
$TLT +6.94% (m) -11.85% (T)
Chart: $TLT +1.79% for the week with some work to do to get back to ♉️ Trend
3/7
Energy took it on the chin this week with $WTIC back to contango and reinforcing #recession coming
$WTIC -5.81% (m) -11.42% (T)
$GASO -4.86% (m) -15.77% (T)
Chart: $GASO -8.01% (w) and back to critical support @ 2.35
3a/7
Dr. $COPPER got the memo this week, after chasing false hopes of #ChinaReopening
$COPPER +4.61% (m) -0.82% (T)
Chart: $COPPER slammed -7.19% for the week
3b/7
$GOLD typically performs well during recessionary environments as market starts to reduce long duration yields
$GOLD +5.92% (m) -0.48% (T)
Chart: $GOLD -0.85% after breaking the downtrend convincingly the previous week
4/7
After correcting 6.94% from the closing high of 9/27/22, the $USD found support at ~106
$USD -4.25% (m) -1.17% (T)
Chart: $USD +0.63% (w)
5/7
Under hedged equity investors have pushed the $SPX higher on every sign that #CPI and #PPI are slowing
$SPX +5.66% (m) -6.22% (T)
$COMPQ +2.64% (m) -12.27% (T)
$IWM +5.8% (m) -6.13% (T)
Chart: $SPX +14% from the opening low of 3520 on 10/13/11
6/7
Meanwhile, the Fed - committed to a 2% inflation 🎯 - continues to drain 💦 from the 👊🥣
Chart: The Federal Reserve balance sheet has declined by -3.8% to 8.62 Trillion since peak liquidity in April
So, folks, whether you call it #quad4 or #deflation, both growth and inflation are slowing
It’s time to get your #recession play 📕 out
Short $SPY $QQQ $IWM
Short $DBC $DBB
Long $GLD
Long $TLT, $IEF, $BILS
Long $USD
Keep it simple and have a super profitable 💰 week!
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