We’re back to bad news is good news….

That doesn’t really make sense does it? Well it does to market participants because what it means is that the worse the economic data reported is, the easier and more accommodating the Federal Reserve will be.  Maybe this is a viable strategy for 2019 hedge fund managers?  No.  The data is not improving, and the Fed is NOWHERE near as dovish today as they likely will be 6 months from now.  

Isn’t it funny?

Isn’t it funny that when stocks crashed in Q4 2018, you were told boogie-man tales of “Rising Interest Rates” and “U.S./China trade war fears” and “mid-term elections jitters” were to blame. Fact check that.  Because now as the macro data piles in, everybody is starting to realize that under the surface it was the CYCLE SLOWING stupid! Retail Sales -1.2% in Dec, PPI -0.1%, and this morning’s Industrial Production Data were quite rancid.  IP contracted -0.6% vs exp 0.1% exp.  Wall Street has now taken down its GDP estimates considerably in light of the data, and we’re still expecting to see a 1 handle on Q4 2018 GDP at months end.  This is why we use our cycle analysis – its just as important to know where you’ve been to help find out where you’re going. 

Where are we going?

Once again this is our argument to be Long Bonds, Long Gold, Short USD, and Long Yen.  We’re about to pivot come Q2 into a Growth Slowing/Inflation Accelerating environment, which subsequently is the most bullish cycle for Gold, Bonds, and even Energy – add Oil to your list of long ideas.  So if you bought treasuries and silver alongside of us earlier this week, you’re making money right alongside of us.  Well done. I did a brief write-up on the USD/EUR relationship for the website today below if you want to check it out (however, nothing we haven’t already discussed in here already).  Good luck. 

Actionable Ranges:

Market	Trend	Range Low	Range High
SP500	Bearish	2675	2763
Nasdaq Comp	Bearish	7192	7471
10yr Yield	Bearish	2.60%	2.75%
VIX	Bullish	15.3	20.09
Oil	Bearish	51.89	55.62
Gold	Bullish	1302	1326
USD (Cash)	Neutral	95.4	97.17
EUR/USD	Bearish	1.11	1.14
USD/JPY	Bearish	1.08	1.11

 

Feel free to reach out to John Caruso at jcaruso@rjofutures.com or 1-800-669-5354 if you’d like to get a 2 month free trial of our proprietary trade recommendations by email. 

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