Ted Darling Profile picture
Jan 15, 2023 โ€ข 21 tweets โ€ข 12 min read โ€ข Read on X
๐Ÿปโ™‰๏ธโ†—๏ธโ†˜๏ธโ†”๏ธโš ๏ธ๐Ÿšฉ๐Ÿ”บ๐Ÿ”ป๐Ÿงฎ ๐Ÿ’ฐ

Macro Review ๐Ÿงต
01/15/2023

1/11

Core #CPI running at +3.1% SAAR confirmed #Goldilocks for Q422 and catalyzed a ๐Ÿš€ in equities, metals, and hydrocarbons

#Core CPI - 3-month SAAR
Dec - 3.1%
Nov - 4.2%
Oct - 5.7%

Chart: #CoreCPI 5.7% ๐Ÿ”ป
1a/11

Despite all the recession talk - including my own, the @AtlantaFed #NowCast is projecting Q4 growth of +4.1%, an acceleration.

Growth ๐Ÿ”บ + Inflation ๐Ÿ”ป = #Quad1 #Goldilocks

Chart:
2/11

While #Quad1 #Goldilocks may be good for risk assets, itโ€™s decidedly poor for the $USD, which continued โ†˜๏ธ and took out the 50% retracement level of 102.12

Chart: $USD -1.64% (w) -9.94% 3M = T = Trend
3a/11

With a -0.76 correlation to the $USD over (T) duration, $GOLD +2.78% continued to ๐Ÿš€ and is now +18.7% off the October lows and VERY OVERBOUGHT

Chart: $GOLD +5.23% YTD
3b/11

Dr. $COPPER turned decidedly โ™‰๏ธ the week ending 11/11/22 and has been๐Ÿšฆbullish Trend ever since, front running China re-opening announcement by over a month.

Chart: $COPPER +7.8% (w) +23.9% (T)
4/11

Declines in energy costs in December nearly offset the rise in shelter costs in the #CPI report. The commensurate real wages โ†—๏ธ put pressure on hydrocarbons this week = sowing the seeds #Goldilocks early demise

Chart: $GASO +13.39% (w) -3.67% (T)
4a/11

๐Ÿ“Œ Importantly, I want to note that oil ๐ŸŒŠ has fallen to multi-month lows as speculators have been shaken from the market.

Time to get long energy ๐Ÿ›ข folks.

Chart: $OVX 38.19 at the lowest level in a year.
5/11

While the "the food index increased +10.4% over the last yearโ€ in the December #CPI report, grains have been decidedly subdued since peak inflation in June.

Chart: $DBA -0.15% (w) -2.64% (T) could be the next to join the โ™‰๏ธ party
6/11

With event risk behind us, the $VIX ๐Ÿ”ป to 18.35, a 1-year low and supporting equity prices as both realized and implied vol fall.

Chart: $VIX 18.35 has some calling for long zee puts, but Iโ€™m not so sure
6a/11

Small caps led ๐Ÿ‡บ๐Ÿ‡ธ equity indices โ†—๏ธ

Chart: $IWM +5.33%
6b/11

High beta โ™ฃ๏ธ low beta by a wide margin

Chart: $SPHB +5.96% (w) compared to $SPLV -0.43% (w)
6c/11

Growth had a slight edge over value

Chart: $SPYG +2.78% (w) compared to $SPYV +2.7% (w)
6d/11

With real wages rising, consumers ostensibly have more ๐Ÿ’ฐ in their pockets to spend.

Accordingly, consumer discretionary led US Sectors โ†—๏ธ while Staples -1.37% on the week.

Chart: $XLY +5.78% (w) +3.27% (T)
7/11

A weak $USD has also catalyzed โ™‰๏ธ moves in international indices over the past 3 months with both Europe and the Pac Rim showing outsized ๐Ÿ’ช

Chart: $DAX +3.26% (w) and +22.7% off the October lows
8a/11

In bond land, the yield curve remains deeply inverted as the short-end has been ๐Ÿ“Œ by the Fed and bonds have rallied on slowing inflation and the prospect of #recession in the year ahead

Chart: 10Y3M to -118 bps
8b/11

Corporate bonds led bond ETFs โ†—๏ธ

Chart: $LQD +1.72% (w) +10.05% (T)
9/11

Supporting all of this โ™‰๏ธ ๐Ÿš€, 374B has come out of reverse repo (money markets) and into risk assets since the end of December ๐Ÿ”ฅ

It only takes 50-100B to move markets each day

Chart: Overnight reverse repo
10a/11

The big question for investors is how long can this #Quad1 #Goldilocks โ™‰๏ธ last - especially as it runs into a ๐Ÿฆ… #FOMC on 02/01/23, one day after the Employment Cost Index (ECI) for Q422 is released.

Remember, this Fed is focused on wages aka "services ex-shelter"
10b/11

Iโ€™m inclined to agree with @BobEUnlimited that this #Goldilocks is transitory and that it will sow its own seeds of destruction as moribund commodities spring to life and as real wage gains spur a resilient consumer, pushing #inflation โ†—๏ธ

blog.unlimitedfunds.com/transitory-golโ€ฆ
10c/11

In the meantime, we will run a Goldilocks play ๐Ÿ“— in combination with our recession play ๐Ÿ“•

Image: #Goldilocks play ๐Ÿ“—
11/11

Despite extremely overbought conditions in equities, expect positive vanna and charm ๐ŸŒŠ into #OPEX ๐Ÿฅ as well as more #TGA spend as Janet front runs Congress & reverse repo ๐Ÿ’ฆ as chasers chase the 200-day #FOMO

Note $SPX resistance at 4075-4100 and have a super ๐Ÿ’ฐ week!

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More from @tdarling1

Aug 29
Hello PCE Friday!

PCE is the Fed's preferred inflation measure

Consensus estimates:
Headline PCE +2.6% y/y, +0.2% m/m
Core PCE +2.9% y/y, +0.3% m/m

With GDP revised higher, PCE today and NFP on 9/05 take on more importance re: rate cuts on 9/17

Let's dig into the market ๐Ÿงฎ! Image
Asia closed a ๐Ÿ’ช month with $SSEC + 7.9%

$NIKK 42717 -0.25%
$SSEC 3858 +0.35%
$HSI 25107 +0.45%
$KOSPI 3186 -0.3%
$IDX 7851 -1.3%

Australia โ†”๏ธ
$ASX 8973 -0.1%

Bharat โ†”๏ธ
$BSE 80095 unch
Europe limps into month end with DAX neutral trend

$VSTOXX 17.53 ๐Ÿ”บ

$DAX range = 23646 - 24606 โ†”๏ธ
$FEZ range = 59.76 - 61.98 โ™‰๏ธ

$DAX 23912 -0.6%
$FTSE 9193 -0.25%
$CAC 7715 -0.6%
$AEX 899 -0.45%
$IBEX 14964 -0.95%
$MIB 42272 -0.4%
$SMI 12172 -0.35%
$MOEX 2894 -0.65%
Read 11 tweets
May 6
Hello Tuesday!

Trump 2.0 induced US economic uncertainly has reached record highs, exceeding even the pandemic

But there is one thing for certain, as the FOMC gathers today, Fed Funds will remain unchanged tomorrow

Let's dig into the market ๐Ÿงฎ! Image
China is back and Asia closed โ†—๏ธ

$NIKK 36831 ๐Ÿšซ
$SSEC 3316 +1.15%
$HSI 22663 +0.7%
$KOSPI 2560 +0.1%
$IDX 6901 +1.0%

Australia โ†”๏ธ
$ASX 8151 -0.1%

Bharat โ†”๏ธ
$BSE 80660 -0.15%
Europe โ†˜๏ธ on PMIs ๐Ÿ”ป

$VSTOXX 20.97 ๐Ÿ”บ

$DAX range = 21448 - 23841 โ™‰๏ธ
$FEZ range = 54.20 - 59.30 โ™‰๏ธ

$DAX 23061 -1.15%
$FTSE 8600 +0.05%
$CAC 7685 -0.55%
$AEX 894 -0.25%
$IBEX 13495 -0.15%
$MIB 38348 -0.35%
$SMI 12225 -0.2%
$MOEX 2787 +1.75% โฌ…๏ธ๐Ÿช† Image
Read 11 tweets
Apr 7
Hello Melt Down Monday! ๐Ÿ’ฅ

The Liberation Day celebration continues with the old adage that "the selling will continue until morale improves."

Let's dig into the market ๐Ÿงฎ!
Asia absolutely pummeled ๐Ÿช“๐Ÿฉธ๐Ÿฉธ๐Ÿฉธ

$NIKK 31187 -7.7%
$SSEC 3097 -7.35%
$HSI 19828 -13.2% โฌ…๏ธ
$KOSPI 2328 -5.55%
$IDX closed

Australia ๐Ÿช“๐Ÿฉธ๐Ÿฉธ
$ASX 7343 -4.25%

Bharat ๐Ÿช“๐Ÿฉธ
$BSE 72573 -3.7%
Europe ๐Ÿช“๐Ÿฉธ๐Ÿฉธ with ranges being blown out to the downside

$VSTOXX 51.55 โฌ…๏ธ ๐Ÿ˜ฑ

$DAX range = 20167 - 23808 โ™‰๏ธโ“
$FEZ range = 49.21 - 58.37 โ™‰๏ธโ“

$DAX 19408 -6.25%
$FTSE 7686 -4.6%
$CAC 6842 -5.95%
$AEX 792 -5.8%
$IBEX 11686 -6.0%
$MIB 43408 -6.45%
$SMI 10989 -5.35%
$MOEX 2702 -2.85%
Read 11 tweets
Mar 4
Hello Trade War Tuesday!

$GOLD ๐Ÿ”บ
$VIX ๐Ÿ”บ
$TNX ๐Ÿ”ป
$USD ๐Ÿ”ป
$WTIC ๐Ÿ”ป
$DAX ๐Ÿ”ป
$BTC ๐Ÿ”ป

GDP ๐Ÿ”ป Inflation ๐Ÿ”ป = Deflation

Trump 2.0 making bonds great again

Let's dig into the market ๐Ÿงฎ! Image
Asia โฌ‡๏ธ โฌ†๏ธ as China exacts 15% agricultural tariff

$NIKK 37318 -1.35%
$SSEC 3324 +0.2% โฌ…๏ธ
$HSI 22942 -0.3%
$KOSPI 2529 -0.15%
$IDX 6373 -2.25% โฌ…๏ธ

Australia โ†˜๏ธ
$ASX 8198 -0.6%

Bharat โ†”๏ธ
$BSE 72993 -0.1%
Europe with the "sell!" โ†˜๏ธ

$VSTOXX 20.375 ๐Ÿ”ป

$DAX range = 22328 - 23451 โ™‰๏ธ
$FEZ range = 53.90 - 56.14 โ™‰๏ธ

$DAX 22724 -1.8% โฌ…๏ธ ๐Ÿ‡ฉ๐Ÿ‡ช
$FTSE 8843 -0.3%
$CAC 8109 -1.1%
$AEX 921 -0.95%
$IBEX 13164 -1.7%
$MIB 38361 -1.8% โฌ…๏ธ ๐Ÿ‡ฎ๐Ÿ‡น
$SMI 13105 -0.6%
$MOEX 3243 +3.1% โฌ…๏ธ ๐Ÿช†
Read 12 tweets
Feb 21
Hello OPEX Friday!

There's a lot going on

Feb index options expire at the open ๐ŸŒŠ

S&P Global PMIs rolling out ๐ŸŒ

Chinese ๐Ÿ‡จ๐Ÿ‡ณ indices ripped ๐Ÿ“ˆ

And, in the face of 4.0% ๐Ÿ‡ฏ๐Ÿ‡ตheadline inflation, the #BOJ threatens QEโ‰๏ธ

Let's dig into the market ๐Ÿงฎ!

Asia rallied into the w/e with ๐Ÿ‡ญ๐Ÿ‡ฐ ๐Ÿš€

$NIKK 38784 +0.3%
$SSEC 3379 +0.85%
$HSI 23478 +4.05% ๐Ÿ‡ญ๐Ÿ‡ฐ
$KOSPI 2655 unch
$IDX 6792 +0.05%

Australia โ†˜๏ธ
$ASX 8296 -0.3%

Bharat โ†˜๏ธ
$BSE 73511 -0.55%
Europe โ†”๏ธ on mixed PMIs with ๐Ÿ‡ฉ๐Ÿ‡ช ๐Ÿ—ณ๏ธ pending

$VSTOXX 16.85 ๐Ÿ”ป

$DAX range = 21951 - 22904 โ™‰๏ธ
$FEZ range = 53.07 - 55.46 โ™‰๏ธ

$DAX 23324 -0.05%
$FTSE 8677 +0.15%
$CAC 8155 +0.4%
$AEX 939 unch
$IBEX 12937 -0.3%
$MIB 38322 +0.2%
$SMI 12868 +0.5%
$MOEX 3304 +0.35%
Read 11 tweets
Jan 1
๐Ÿปโ™‰๏ธโ†—๏ธโ†˜๏ธโ†”๏ธโš ๏ธ๐Ÿšฉ๐Ÿ”บ๐Ÿ”ป๐Ÿงฎ ๐Ÿ’ฐ

2025 Global Macro Outlook

1/15 ย ๐Ÿงต

Here are the major factors in play as we head into the new year:

- Fed and Bond market at odds
- Bear steepener in play with 10Y3M de-inverting
- US inflation sticky with strong, above trend NGDP
- Employment weakening around the edges
- CBs around the world cutting (US likely on pause)
- Yen carry trade unwind round 2
- China stimulating
- Global conflicts increasing
- Trump presidency (tariffs, taxes, budget deficit, and debt ceiling)
- $USD Strength, elevated yields
$SPX and $BTC near ATHs (sentiment near giddy)

Letโ€™s break these down
2/15

The Fed and the Bond market have been at odds all year

Coming into 2024, Fed Funds Futures markets were pricing 6 to 7 rate cuts. The bond market responded by driving yields from 3.87% on 12/31/23 to 4.7% in four months while the Fed stood pat at 5.25-5.5% FFs

Then came the summer growth scare

The 10Y dropped to a low of 3.603 coming into the 9/18 Fed meeting. Spooked by the SAHM rule trigger, the Fed cut 50.

What did the bond market do?

Turned tail and rose to 4.5% in 2 months, fell back briefly to 4.125% in early December before rising to 4.64% last week, following the Fedโ€™s hawkish cut and likely pause.

I see this back and forth dynamic continuing with another growth scare coming in Q125. More Fed cuts to come after a January pause.Image
3/15

The consequence of Fed/Bond market interplay is the bear steepening of the yield curve

After more than a 2-year inversion, the 10Y3M curve de-inverted on 12/14/24

Previously recognized as the most accurate signal of a coming recession in the next 3-6 months, the 10Y3M curve has been written off as dead

I donโ€™t think itโ€™s dead, and we are likely to experience a contraction in 2025.Image
Read 15 tweets

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