MacroVisor Dashboard - Week of April 8th, 2024

Hi friends,

Happy Monday! The latest MacroVisor Dashboard is now available, with updates on a variety of asset classes around the world.

Here’s how the MacroVisor Dashboard displays our analysis:

• Asset Name

• Macro: This Quarter’s Macro Score

• Macro: Previous Quarter’s Macro Score

• Momentum: This Week’s Momentum Score

• Momentum: Previous Week’s Momentum Score

• Trading Instrument

• 1-Week Return

• 1-Month Return

Please make sure to also follow our Breakfast Bites articles where we report on relevant data to keep you updated alongside our weekly dashboard.

There is a key at the bottom of this post that tells you what we’ve considered when putting together this dashboard.

Scoring

• 3 is our highest positive momentum score, when everything suggests strong upward momentum that is likely to continue. We are more aggressive in accumulating during a score this high.
  

• 2 is our second highest positive momentum score, where buyers are in favor and we are likely to continue to build into positions if we are just starting them.
  

• 1 is our lowest positive momentum score, where buyers still enjoy a tactical advantage, but our conviction is not as high as momentum is not as strong and risks may exist.
  

• 0 is our neutral momentum score, where we would want to neither have longs or shorts in the short-term.
  

• -1 is our lowest conviction negative momentum score, where we could start building a short position or exiting a long we held previously, but where we would not be aggressive.
  

• -2 is our second-highest conviction negative momentum score, where we would be looking at building short positions or fully exiting longs.
  

• -3 is our highest conviction negative momentum score, where we would be interested in more aggressive short positioning.

The MacroVisor Investing Portfolio

Our Notes for the Week Ahead

United States

S&P 500, NASDAQ 100, Dow Jones 30, Russell 2000

US equity markets slipped last week, with technical damage being inflicted against the intermediate-term S&P 500 and NASDAQ uptrends. That same trendline has now become an area of potential overhead resistance to monitor carefully.

We also see the second largest area of combined put and call positioning on the S&P 500, 5200, acting as a bit of a magnet and potential area of support.

Skew remains low, telling us that hedging is rather low given how elevated positioning has become.

The NAAIM survey shows managed money is still quite long, only modestly increasing their bearish vs bullish positioning during the last reading.

With all of this in mind, we continue to be bullish of late-cycle sectors and industries, such as industrials, metals and mining, materials, aerospace and defense, and utilities. We remain cautious of Big Tech after the impressive run it’s had as we get enter Q1 earnings season. That area of the market remains concentrated and it has a higher degree of left tail risk if we see a corrective drawdown.

The Dollar, Long, and Short Duration Treasuries

The greenback has been consolidating its gains over the last several days but remains in a primary uptrend even as momentum fades.

Treasury auctions pick up again this week, with $119B of notes and bonds on offer from tomorrow through Thursday.

We also have CPI on Wednesday, with the Cleveland Fed Inflation Nowcast looking for 0.31% core month-over-month and 0.34% headline month-over-month. On an annual basis, the model forecasts 3.73% for core and 3.41% for headline. This would mark an acceleration for headline and a modest cooling of core from last month’s readings of 3.8% and 3.2%, respectively.

If these readings come in meaningfully higher we believe that rates could continue their march higher with some additional vigor, bearing in mind that we have a $39B 10-year note auction on the same day that CPI data comes out.

On the longer end of the yield curve, we continue to monitor the ZB futures contract for the 30-year bond, which is experiencing a technical breakdown as rates hit their highest levels of 2024.

Overall, we believe that the dollar can remain firm, particularly if rates continue their ascent. Inflation data and the Treasury auctions this week will play a significant role in determining the latter.

Developed Markets

Japan & USD/JPY

Japanese equities are signaling negative momentum here and we would be cautious in the short term. There was some discussion from the BoJ about reducing the level of bond purchases in the future and that seems to have weighed on equities as well. The JPY still hasn’t made a major move and continues to consolidate here against the dollar. We do think, however, that we will see a move in the JPY eventually, with the currency strengthening.

China

China has inflation numbers being released on Wednesday night. This will be an important data point to watch given data flipped positive last month. The currency devaluated considerably over March and that supports inflation. Chinese equities continue to show bullish momentum in the short term, albeit not very strong.

Europe & EUR/USD and Germany

The ECB meeting is this Thursday and we’re likely to get a firm decision on the first rate cut being June. The probability of a rate cut on Thursday is extremely low. But, inflation has been declining and is mostly in line with the ECB’s outlook so, we think that this paves the way for a cut in June. The momentum in Equities is positive but slightly weaker.

UK & GBP/USD

UK equities continue to signal bullish momentum here and rate cut discussions strongly support the narrative. We have a long call on UK equities which continues to be reinforced. Monthly GDP numbers come out on Friday and while this number is very noisy, the 3 month average could give us an indication of whether the UK is out of a recession or not.

Australia & AUD/USD 

Equities continue to signal positive momentum and the Australian dollar has also started to look bullish here. An uptick in commodity prices has helped the mining stocks while the market continues to price in easing for the fourth quarter of the year.

Switzerland & CHF/USD 

Equities have now turned negative and the Swiss Franc also continues to look very weak.

Sweden

Sweden’s monthly GDP and Industrial production data will be released on Wednesday, while inflation data will be released on Friday. Last month we saw the inflation number accelerate marginally, which was a reason for the Central Bank to hold rates and not be too hasty about cutting just yet. Equities are starting to gain momentum but we need further confirmation of an uptrend

Commodities

Crude Oil

Momentum continues to favor further upside in oil. The commodity broke above its price channel showing that bullish animal spirits prevailing as geopolitical tensions rise and demand firms. We continue to like VTLE, LBRT, PTEN, CVX, SLB, HAL, XLE, XOP and others in the space.

Gold

It’s almost like groundhog week in gold. Last week’s commentary still applies here: The precious metal continues to ignore rising rates, showing impressive relative strength as it makes all-time highs once again. We remain constructive on the precious metal here and top notch companies in the space like AEM, RGLD, FNV, WPM and SAND. Exposure to GDX and SIL may also be attractive for more diversified exposure to both gold and silver miners.

Copper

Dr. Copper continues to show impressive upside momentum as it continues breaking out of this multi-year range. We remain constructive on the metal and the miners of the metal here. Particularly FCX and SCCO.

Platinum

What a difference a week makes! Platinum has finally put in a decisive bottom and looks very constructive here. We’re looking for it to get back to its 2024 highs of about $1030 over the intermediate term.

Agriculture

DBA is consolidating its gains after staging an incredibly powerful rally. We believe that the primary catalysts remain intact and a pause here is healthy to build on for the potential of more upside to come.

Lumber

We’ve hit a key support level around $565 in lumber and seen some supportive buying come in, but momentum is thoroughly favoring sellers here as we’ve experienced a decisive trendline break and all of our momentum indicators turning quite negative. Positioning has lightened up modestly, but remains rather extended, increasing the potential of further downside from here.

Bitcoin

Bitcoin is resuming its uptrend after consolidating for several weeks. The overall health of the trend remains intact and we could see further upside here as both bitcoin and gold appear to be ignoring rising rates and focusing on the increasing potential of a Fed policy mistake and potentially greater concern about geopolitical tensions.

Emerging Markets

Important point: The Fed keeping interest rates higher keeps the USD stronger putting further pressure on EM currencies. This could mean we see inflation pick up even further because of currency weakness, in addition to rising commodity prices, and shortages from weather conditions.

India

Last week’s RBI meeting had no changes, as expected. Inflation data is released this week on Friday and we continue to keep an eye on food inflation which has proven to be erratic given unpredictable weather conditions. Equities have returned to strong bullish momentum.

Philippines

Today, the Philippines' central bank decided to maintain its benchmark interest rate at 6.50% for the fourth straight meeting, aligning with market predictions and marking the highest rate since 2007. This decision came against the backdrop of rising inflationary pressures. March witnessed the country's headline inflation increasing to 3.7% for the second consecutive month, up from 3.4% in February, though slightly below the anticipated 3.8%. Equities are showing negative momentum here and we remain cautious in the short term.

South Korea

The bullish momentum on equities has waned and it’s a good idea to be cautious about South Korea here as it’s sure to be a volatile week.

The legislative elections in South Korea, scheduled for Wed April 10, might lead to a political deadlock, potentially hindering the implementation of fiscal stimulus measures such as tax reductions. However, this scenario is unlikely to significantly impact the markets as long as robust economic growth continues and the positive outlook on technology sectors remains unchanged.

The Democratic Party, which is in opposition, is expected to outperform the incumbent People's Power Party, largely due to President Yoon's low approval ratings. Analysts predict with a 60% likelihood that the left-wing opposition will secure a victory. If the opposition does not perform as expected, it could result in a better performance of South Korean assets and a reduced likelihood of initiating a cycle of interest rate cuts by the Bank of Korea.

The Bank of Korea’s meeting is on Thursday as well.

Vietnam

The market has been volatile in Vietnam, in the short term. While equities have returned +12% YTD on a USD basis, we continue to see the market make drastic short-term moves. In the longer run, however, we are bullish on Vietnam as a country.

Equities are signaling negative momentum here.

Brazil

Brazil releases inflation data on Wednesday and retail sales data on Thursday. While equities seem to be breaking out this, we continue to remain cautious about Brazil given the government reforms taking place that are putting pressure on State Owned Entities such as Petrobras.

Mexico

Mexico’s inflation data will be released on Tuesday. Inflation is showing some signs of being stubborn here. Nevertheless, the Central Bank has started its easing cycle, and will likely proceed cautiously. Equities still look bullish here.

Malaysia

Malaysian equities have picked up momentum and continue to remain bullish.

South Africa

South African equities have picked up momentum and continue to remain bullish.

Key 🔑

When we look at momentum drivers, we qualify them on the basis of a score between -3 and +3, with 0 being neutral.

Our model takes into consideration many factors when we calculate momentum on a weekly basis, and the way we built this system is to help update our audience on week-over-week momentum changes.

Macro drivers (varied weightings as appropriate)

• Rates

• Inflation

• GDP growth

• LEIs

• Liquidity

• Gov't intervention

• Earnings

• Options structure

• Intermarket dynamics

• Demand and Supply conditions (for Commodities)

Momentum Drivers

• RSI

• Volume Profile

• Relevant Oscillators (NYMO, NAMO)

• Ichimoku cloud

• Key moving averages

• Sentiment

• Flows (futures, ETFs, options)

• Positioning (futures, ETFs, options)

• RV vs IV