10. Scenarios and Macro Expectations 2017
--> Dollar ... 'easy part of the move is gone'
- .… All macro numbers are booming in all fronts marking a clear inflation expectations path for next year [check]
- From a strictly monetary point of view, FED should easily be able to hike 3 or 4 times next year. [check]
- However, we have a game changer in play since November. Trump is short-circuiting expectations across the board. [uber check] in the case of Dollar...
- Inflation expectation are jumping for next year [flop] and will easily carry Dollar with it Q1/ early Q2. However, fiscal issues…, momentum will completely fade out by Q3/Q4 after the next round of hikes as Europe (BOE first and ECB) rates expectations will enter in play. [uber check]
---> Europe Economy and European Equities...."Europe is back...in play ...and one more time also with risk"
- Most of EZ Equities looks solid. [check] …found a bottom from Spain to Finland and everybody else in between. Europe macro environment looks very similar to the US 2 years ago.[check]
- ….elections including France and the climax with Germany. If they stay on track and don't fall for the populist trap we will see a very sharp, consistent rally across the board. [uber check]
- Expecting (DAX and CAC as references) to break ATH early in the year. [uber check]….
- On FTSE, it will benefit from the collateral impact until Brexit details get confirmed but the 'minutes' are counted [check]. Only a major shift on the Brexit front will align FTSEwith the rest of the world. The high in this current leg will mark a long and mid term high that will hold for a few years [still in play]
---> OIL & commodities...."Trump? ... it's my best friend"
- Oil and commodities found a clear bottom. Both political factors, supply and demand factors are all aligned one more time. On top Trump initial plans (both in foreign policy and economics) are a huge gift for commodities across the world. [uber check]
- Expecting OIL to carry the rally fuelled by equities hand in hand. We couldn't complete the test $56.xx [check] this year but we already unlocked the $65 handle [still in play]. Exact same scenario for NG with $4.0x but also already unlocked $4.3x. [flop]
- Gold is very tricky this year and it will be a very hard one to trade [uber check]. Between hikes early in the year and ECB/BOE and BOJ at the end and with a plethora of potential hiccups via risk in between it's set for a rather unclean but volatile legs [check]
---> US equites ...."if Trump walks the talk ....the end of happy years
- S&P, DJ and all are ATH flying in a manic move on steroids (the usual boom part of the cycle that markets go overboard) [check] very little reference to the top side on the TA side [check]…..
Currencies Macro Expectations 2017
---> GBP ...".the lone rider"
- After a dramatic year with Sterling completing major mid and long term swings, the easy part of the trend is gone. Short term, inflation…. will keep the BOE holding horses until the Brexit storm… [uber check]
- The 1.21xx still holding but we closed in imminent break down alerts for the extension in the mid term. A break unlock the current lows and as low [Flop]
- For Q2 onwards things look a lot more complicate for this year. On the one hand BOE wont allow much lower that those levels as inflation will wipe out serious % of real wages in the average Joe and will hamper completely any positive side of a weaker Pound in the short term. [uber check]
---> EURO ... "the age of reason"
- In my books this is the graduation year of the Euro. [check] …. If Euro hold this year after all elections and Brexit BS, the Euro is set to enter with its own right in the major leagues ….
- On the macro front, we have found a bottom in most countries and macro numbers across the board are pointing for a better outlook next couple of years. [check] ….we extended the yearly lows but couldn't break them signalling volatility about to increase in the next few weeks with a rather bullish close for the year [check].
- Easy ride is gone in the Euro, …. Depending on how we clear elections and Brexits, Q3 is aligning for mid term consolidation until we enter in RMT trading for year's end [Flop and then check | no consolidation straight reversal]
---> JPY...."All in smooth continuation ride"
- Soft expectation for the Yen this year with BOJ holding its hand until we complete the test to the 121.xx handle [Flop].
- If all goes on BOJ expectations expecting to unlock a large mid term 128.3x with max extension 133.1x later in the year before the helping hand of Dollar hikes effect start fading away [Flop].
---> AUD, CAD , NZD & commodities currencies ..."choppy conditions ahead"
- Commodities expecting to have a two instance zigzag this year. All continuation in the same environment until early Q2. Thereafter we are set for a wide consolidations ranges across the commodity currency board [check].
sisse
Pending conversations? PM for a chat...I am mainly in OTM now
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