If this chart is correct oil is headed to the $20 level sometime in the next year. The ramifications for credit market and geopolitical environment especially Russia would be huge.
Crude Oil Futures weekly
For Putin Regime to hold power after losing -15% of it’s GDP some foreign military entanglements would most probably be the distraction of choice. Lots are jumping into Russian market ETF’s now to ride the current wave of Putin worship among those with short memories or too young to remember how the last time this all played out.
Here is what Putin did last time he needed a foreign conflict to consolidate public opinion:
As the entire world laughs in disbelief at the fact that the US may actually elect Donald Trump the markets are yet to figure out that an untested, emotional, ego-maniac, reality show star that’s allegedly indebted to authoritarian dictators who are unfriendly to the US may not be the best thing for the US Dollar.
We can all admit that Obama’s weakness and lack of any real foreign policy created a vacuum that merely allowed opportunistic thugs such as Putin fill the void. Now we have an increasingly dangerous geopolitical situation. Unless the world is too busy posting selfies to Instagram to notice the creeping acceptance worldwide of dictatorial regimes and their invasions/occupations a real war may be required to clean up the mess.
Sadly, a real war with Russia in the next few years would actually not be the worst scenario if you figure the alternative would be to allow Putin to continue gaining strength, seizing lands and paying off Western European politicians to gain favor within their foreign policies. In this scenario a war would still be inevitable but the West would unfortunately be fighting a much stronger opponent having given Putin the time to build a better position. A Trump presidency assures this worst case scenario and markets are about to figure this out.
The closer the US gets to actually electing this guy the more the markets will move out of what will be increasingly uncertain USD assets. Today’s increasingly bullish European PMI’s is another side of this..but honestly for me it’s just a bonus as the larger logic for the trade is laid out here.
Long EURUSD. Technically a higher floor developing on the daily. Monthly confirming as well and showing 1.38 or so in price sometime over the next year.
If this HY chart is correct markets could be about to face a sell-off in corporate debt. Even moderate contagion could be quite an event given that markets have shrugged off everything that’s happening.
I don’t see a way that the CB’s won’t be riding in to “save” us very shortly. Fed first to announce a charity QE to ease markets?
Commodities, commodity currencies such as AUD and Gold.. Like ive been saying all year.. No where else to be in my opinion.
The longer i am in this business the more i realize it’s better to pull 2-3 big trades per year and fade the rest of the noise out there. Wait the really good set ups when everything lines up for a something huge. I think that’s what we have just been handed by the Australian dollar.
Australian housing is exploding and rates having been recently brought down to 1.75% and it’s doubtful that there will be further easing. Bubble talk has been overly prevalent across all AUS media outlets.
The US side of this is a basic “buy on the news, sell on the fact” run-up into the June Fed rate hike, probably the most preannounced hike in history and the USD overvaluation shows it. The USD in my opinion is about to tank in a big way with commodities, gold and the currencies that have GDP’s comprised heavily of these things will be the prime beneficiaries.
Here’s the technical case. This same pattern i am seeing across many commodities such as soybeans, orange juice etc. A long term own trend with a recent stepping up within that downtrend to find old resistance levels as new support levels. Moves in which old resistance becomes support are normally some of the most ferocious up-moves.
I began building a long AUD position last week out into August but the longevity of this move i suspect will be years not months. I’m expecting gold to do very well long term as well as USD floats back down to earth over the next few years.
And here’s more of the technical USD story.
EUR Daily – Ridiculous bullish
Times like these.. We dont get them often but when we do..gotta really hit it.