In April 2016 we posted "Global Macro: There Are Many Ways To Approach It, Here's A Good One" with this introduction:
A couple weeks ago I emailed a friend:
Re: posts on moneyYears ago one of the mentors said you can approach macro from a lot of starting points, for him it was bonds, he had internalized the price/interest rate teeter-totter to the point that if the other parts of the matrix, currencies or metals or equities, whatever, didn't fit the paradigm he'd know he was looking at either danger or opportunity.
I can't go so far as to say they are all fungible but along with empirically derived lead/lag times, grit in the gears/slippage inefficiencies and leverage it's a close enough first approximation to use as a mental model.The key is to have enough exposure to your subject that your understanding is innate, that you don't have to consciously think "Now when interest rates go down, bonds go up". When you've achieved this level of mastery you immediately sense when the presented facts aren't conforming to the mental model and may be worth further scrutiny.
Another way in to global macro is commodities and if this is your choice it helps to internalize curves to the point the dangers/opportunities pop when you look at them.
Permit me to present Izabella Kaminska, writing at FT Alphaville:
Bringing balance to the commodity force, not leaving it in surplus
***
And here's the latest, from StockCharts, September 17:The commodity charts continue to drift lower. There are lots of nice trend lines formed, but there seems to be little energy for a break to the upside just yet. The currency charts are important this week as the $USD seems set up for a sell signal on the momentum indicator. That might create a spark in the commodities and the emerging markets.
The Yen is still holding above the black horizontal support line. However, the zoom panel shows a strong move down on the week with a lower high and lower low. So this is not supportive of a dollar move lower....Remember, there are only three places to get a profit in commodities:
***... On this weeks video, the case for directional changes in the currencies shown above are presented. While the $WTIC chart was above the 10 week moving average this week, it was about the only commodity thing that perked up. The bonds present a mixed picture. If the bond yields accelerate above the 3% level, This might create a selloff in bonds. This will create a thrust for investing the freed up capital somewhere else. Is it equities or commodities? Lastly, the end of the video covers off the dichotomy in the Bullish Percent Indexes. With that, here is the Commodities countdown video for the week....MUCH MORE
1) The interest on your collateral
2) The roll yield
3) The change in price
If you are at zero or negative on the first two you had better be very good at figuring out number three.
Related:
Oil Tankers and Interest Rates and Scallywags and Time
The Thomson Reuters/CoreCommodity CRB Commodity Index is at 190.56 USD +0.91+0.48%
