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Good morning all! 🙂 Morning in Copenhagen - listening to Ludovico while I'm updating analyses and family sleeps. Fantastic piece of music: #AllisGood
Time for some #HZupdates. Let's take a look at the market from the way I see it. Where is that deflation, I have been forecasting? Did CBs succeed to do their magic and eliminate that threat? What about the Kondratiev's winter - over/done? Stay tuned! 🙂
AUDUSD is inflation gauge. Rally=inflation up; Decline=inflation down. LT perspective looks like this. Decline in 2008 = wave A. Rally up to 2011 = wave B. We have since been in wave C. Wave 5 will take us to ~0.5. Note the horizontal line. When this goes -->free fall #HZupdates
Zooming in on #AUDUSD Daily - we may have this structure unfolding. Triangle - broken - 2 backtests - and reaction down. Combine this with the Monthly view, we get a very Bearish picture for AUDUSD. This is DEFLATIONARY and not a world which is about to reinflate #HZupdates
Then turning to Dr. #Copper, we get a LT-picture like this. Not Bullish and with pot. VERY bad outlook for the world economy. Either blue or black path. When this bounce is done, we are likely to see a strong decline. DEFLATIONARY #HZupdates
#Oil has same bearish picture. Developing in Major Ending Diagonal. Currently we bounce in wave (B) - triangle or zigzag. Following this, Oil will likely follow the outlooks of other inflation gauges - strong down! DEFLATIONARY! #HZupdates
All #Commodities send same picture. Bearish=inflation down! Here is #Wheat. Not a bullish picture - and notice same ENDING DIAGONAL like other commodities. This indicates the END of the major secular inflation cycle - a final low in inflation. But we are not there yet! #HZupdates
#CRB same picture... Ending diagonal! Deflationary! One last bust before the secular bottom which finally will send inflation in upward direction after decades of monetary insanity from CBs #HZupdates
#EmergingMarkets looks like this LT. Pot. Bear Flagging in a major ABC-structure. Again - align that with the other inflation gauges. What does that combined picture indicate? Inflation or deflation? I know, what I think it looks like #HZupdates
But why should we see #Deflation? Well - because #Trade, Manufacturing #PMIs, Construction Spending etc. globally are flashing RED! The global economy is not reinflating - it is about to decline into deflationary bust (is my conclusion) #HZupdates
Major turns do not just happen. They develop over months! This takes time but gradually, we see the slowdown creeping in everywhere creating the environment for the #BlackSwan event. This slowdown has developed over YEARS which speaks of the magnitude of coming crisis #HZupdates
#Yields around the Globe has been flashing the turn for some time now! We just need to listen. Neg. yields everywhere! And #TLT seems like it could drop a lot lower if major consolidation area breaks! Deflationary! #HZupdates
The driver of the deflationary environment is #DEBT. Debt needs to be solved (defaults, restructuring, forgiveness, inflation) globally before the world can start to grow again. This will be the final solution to end the #Kondratiev winter #HZupdates
I have been saying, that we are not out of Kondratiev's winter. Yellow events still to play out. I think it is safe to say, first step in Currency War has been fired with Trump's tweet this last week. Coming events will be driven by the deflationary environment #HZupdates
By the end of Kondratiev's winter we have: 1) #Debt to #GDP at lows 2) #Dow to Gold at lows 3) #Gold at bubbly peak. We are not there yet! But - if Gold should be at bubbly peak - WHY Bearish Gold? #HZupdates
Bearish #Gold due to the timing of events! My thesis is, that we will have DEFLATIONARY bust, which will send Fed and CBs in FOR REAL. When they are starring into the ABYSS is where we will see CBs deliberately try to crush their Fiat currencies. We are not there yet #HZupdates
In the DEFLATIONARY bust (remember charts of Commodities?) is where USD is King! Dash for Cash - everything-else will be sold off - also Gold - to provide the liquidity needed. We are getting closer to that point! #HZupdates
In DXY developments look like this. Rally may not be wanted by Fed. In fact, due to latest developments, I think it will be a consequence of a strong(er) US economy and flight to safety. Fed will need to deliberately crash USD, which will eventually be successful #HZupdates
Short term, I think we could see more downside in #DXY.... Anyway, the decline since May is not the crash of USD = correction! Soon we will see DXY turn up (did we already?) and rally towards higher target (target area 107-119) #HZupdates
Back to the timing of events during a crisis - and the connect to #Gold. I am the greatest Gold Bull on #FinTwit 🙂But - the commodity charts and DXY forecast tell me, that Gold will not enter Bull market before Fed steps in for real to crash USD. We are not there! #HZupdates
Markets are connected, and a general DEFLATIONARY bust (remember commodities) will not be kind on Gold. Turning to EW for the timing on #Gold my UPDATED view is this. Yes - I was MISTAKENLY calling for TRIANGLE - but it seems we are in ZIGZAG correction #HZupdates
This however, does not invalidate the entire Deflationary Bust Thesis! We are likely to rally to 1480ish - or pot. 1590 - before top and a strong decline in the deflationary environment - BEFORE Fed steps in for REAL #HZupdates
In fact, the INFLATION we have observed last 10 yrs has been Asset Inflation. Hence, it would make sense for the stock market #SP500 to start its decline as the Bust unfolds. I don't think we are quite there yet.... But the Ending Diagonal indicate bad things ahead #HZupdates
And if we look at #Gold 4H, would a pot. more HAWKISH Fed by end of July be the trigger - which sends #equities and #gold tumbling? #HZupdates
By the way....putting this 4H #Gold chart into the Weekly #Gold chart.... Not Bullish picture! #HZupdates
Epi-center of crisis will likely be #Europe #EU. #DAX looks terrible. Observe major decade-long divergence on Monthly chart. This is not a healthy look #HZupdates
#Gold and Miners will by the end of the Deflationary Bust be a fantastic buy! #Barrick chart gives me a view of the opportunity ahead. Not there yet! Anybody believing the small abc-bounce from end-2018 is a new Bull Market.... #Forgetaboutit #HZupdates
Now - let me end this #HZupdates with another fantastic piece of music from Ludovico Einaudi: Have a great weekend!
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