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Hi #fintwit 😎 We are approaching a watershed moment in markets. Final deflationary phase of Kondratiev's winter is about to play out. Huge implications for #EUR, #Gold, #SP500, #DXY etc. I have some new interesting followers - hence something extra in this week's #HZupdates
#Kondratiev's winter is a period where #Velocity of Money drops which creates a disinflationary economic environment, where growth is subdued due to #debt levels. Since ~2000 we have been in this winter - and are still to see a range of "major economic events" unfold #HZupdates
In fact, we have never left the #Financial #Crisis. We have only been bouncing in the great "Financial and Sovereign Debt Crisis" of this #Kondratiev's winter. This can be observed from the #Deflation Gauges #Copper, #XAU, AUD, EUR. We are about to see wave C develop #HZupdates
The coming #deflationary period can be observed in #Oil, which forms an Ending Diagonal. We are likely to see a throw-over of lower trendline, which will take price to <23 - pot. to ~17 - or even as low as 10 USD! I think Oil topped last week. Strong decline ahead #HZupdates
#Copper provides us the outlook for the real economy. We are on the verge of entering a strong decline in wave 3(blue). LT-bottom will be below 2008-bottom few years out #HZupdates
#Kondratiev winter will not end before real problem is addressed and solved. Real problem and anchor on growth and inflation is #DEBT. Last Kondratiev winter ended in ~1949 We are still building debt and it will need to be reduced through defaults, relief and inflation #HZupdates
As we enter the deflationary period of this final crisis during Kondratiev winter, we will see #USD soar. Target for #DXY is min. 107-109 -but I think we may even see DXY rally to ~117-118-area. This will be the point, when #Fed decides to step back in to crash the USD #HZupdates
As #DXY soars (USD shortage) in the deflationary environment, #EURUSD will get crushed. LT-target is min. 0.91 - but I think we may even drop to 0.83. The EUR crash will coincide with a major crisis in EU, which is facing structural issues #HZupdates
#USD strength will be felt across all currency pairs. #AUDUSD will be crushed. My target is 0.46. We are very close to this watershed moment in AUDUSD. This is one of the #inflation gauges. See Monthly and Daily chart. #Deflation coming! #HZupdates
#USD strength will also be observed in #USDJPY. Wave B has shaped a triangle, which sets this pair up for the next strong wave up. A = C gives a pot. target of ~154 #HZupdates
#USD strength will also be observed in #GBPUSD, which has been shaping an Ending Diagonal on Monthly chart. We will see a drop to below parity as we may see a throw-over of trendline. This will mark a major bottom in GBPUSD #HZupdates
#USD strength will also be seen in #USDCNH. We are about to see a major rip in this pair. Will this be partly caused be a Chinese devaluation? Next wave could send us to ~8.1 which will not be the final top. Observe the bottom pattern on Daily chart #HZupdates
#USD strength will be seen in #Bitcoin, which is to drop to ~2200. However, this will be great opp to load up on #digital #currency. Decline from ~20000 has been orderly =correction. Corrections are always 100% retraced. The flight from paper currency during K's winter #HZupdates
#Equities and #SP500 will drop hard during the deflationary part of the coming crisis. When top of #Expanding Diagonal has been reached, I believe we will see strong reversal and decline to lows from 2016 in wave A(red). #Fed will enter - creating a bounce.... #HZupdates
....in #SP500 in wave B(red), which will be a backtest of trendline since bottom in 2009. The wave C (red) will be caused by stagflation, as economy slumps while commodities rally. This will be hard on SP500 which may drop to either 1500 or pot. as low as 700-1000-area #HZupdates
#Gold will eventually rally to bubbly highs (>9000 USD) by end of #Kondratiev's winter. The flight from paper currencies will send yellow metal soaring especially in the stagflationary part of the crisis. But - gold will drop first!! Target for bottom is ~800 USD #HZupdates
#Silver will follow its cousin lower for a retest of 2008-bottom ~8.4. Observe how silver broke down through LT-trendline and has backtested it. Next is a strong decline. Bottom will be in, when Fed steps in decisively #HZupdates
#Miners #GDX will be crushed as #Gold declines #HZupdates
#TLT will rally to new highs, as the crisis unfolds. We may however short term see a small pullback (as #SP500 rallies to ~3040). Some uncertainties around this! Either, blue or green path #HZupdates
I believe #real #rates will soar as the #currency and #liquidity #crisis unfolds. Rally in real rates will be caused by drop in inflation expectations and pot. by a short term pullback in #TLT. This will force Fed back into stimulus likely some time in Q3/Q4 2019 #HZupdates
That is all from #HZupdates for this week! 😎Hope you have enjoyed reading it. Interesting times ahead - with pot. great investment opportunities. Have a great Sunday!
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