Hey Everyone,

We hope you’re having a good weekend!

Here’s your weekly MacroVisor Dashboard. The markets remain turbulent, with a breakdown happening across many global equity indices. Rising rates, geopolitical tensions, and the long and variable impacts of tightening monetary policy are all weighing on risk assets and having an impact on commodities and currencies as well.

This week’s MacroVisor Dashboard is largely bearish, but there are some interesting areas of positive momentum worth watching, particularly in oil, agriculture and short bonds.

We’ve put in our views as:

• Macro: Medium to Longer Term (3 to 6 months)

• Momentum: Short Term (1 to 3 weeks)

• Previous Week’s View

• 1-week Return

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

Notes

SPX, NDX, DJIA, Russell-2000

• Flash PMIs on Tue Oct 24, Powell testimony on Wed Oct 25 and PCE, Advance GDP on Thu Oct 26 on Fri Oct 27 are likely to move markets

• Technicals continue to look very poor, with momentum strongly favoring sellers

• Equity risk premium vs 6-month T-bills is inverted (meaning equities are expensive here)

• Earnings season remains a volatility catalyst with a large amount of S&P 500 companies reporting this week

• Small caps are breaking down, setting new lows for 2023 as they violate their trading range to the downside

Long Bonds, Short Bonds and US Dollar Index (DXY)

• Selling in long bonds showing some signs of exhaustion, but momentum remains decisively negative.

• May see support in ZB at 106.

• The lack of a bid on the long-end during times of increasing geopolitical tension is an ominous sign.

• It shows that concern about the US budget and Treasury issuance outweighs the attractiveness of bonds as a place to hide.

Japan & USD/JPY

• Tokyo CPI on Thursday Oct 26.

• CPI came in muted, lower than expected and that's not what they want to see right now. They want inflation to take hold.

• Momentum remains positive for USDJPY, with buyers in control. This is not an area where we would want to add to longs.

China

• Light data week in China.

• Following on from property woes, we're still bearish on China. There's no news to change our thought process.

• The liquidity injection was a stop-gap solution but, actual rates were not cut.

Europe & EUR/USD

• Flash PMIs on Tue Oct 24 probably come out better than expected but, unlikely to move the market positively

• ECB Rate decision on Thu Oct 26. Quite likely they remain on pause and they've been hinting at that.

• We have earnings from a few key Eurozone banks - Deutsche, Santander, Danske, UniCredit, BNP. These drove the market higher last quarter as banks are expected to beat earnings on higher rates.

• We're therefore remaining neutral with outsize risks in both directions keeping us on the sidelines for now.

UK & GBP/USD

• Flash PMIs on Tue Oct 24 likely to come out better than expected but, unlikely to move the market positively.

• We have earnings from a few banks - Barclays, StanChart, NatWest, Lloyds. These drove the market higher last quarter as banks are expected to beat earnings on higher rates.

• We're therefore, remaining neutral here as well.

Australia & AUD/USD 

• Flash PMIs on Monday may not have such a bad reading. Services PMI actually moved into expansionary territory for the last reading.

• But, we also have CPI Inflation data on Tue Oct 24, for the quarter. Last quarter, it was at 6% YoY which is still too high and we're likely to see a resurgence with higher commodity prices.

Switzerland & CHF/USD

No major news. Federal election is unlikely to be a big issue. We see follow through on bearishness on equities from the previous week.

Crude Oil

Crude remains bullish, but positioning is lopsided long. That may cap upside without further catalysts.

Gold

Gold's breakout this week shows that it is once again being treated as a safe haven. Momentum strongly favors buyers, but we are seeing some signs of buyer exhaustion so caution is warranted.

Copper

Copper is hovering above a key level at 3.5485. Breaking below that decisively would give sellers room to m ake a larger leg down towards the late 2023 lows. For now, however, sellers would be rewarded by being patient and waiting for that break on a closing basis.

Henry Hub NatGas

• Storage levels are within the higher band of the average 5-year range as we approach winter heating season.

• Producers and managed money were net sellers last week, adding pressure to futures. Overall, however, trend remains constructive.

Agriculture

Positive momentum continues for agriculture, as seen by the DBA ETF, with a higher low in place and supply concerns persisting for cocoa and sugar, which are top weightings

Lumber

Lumber took a tumble and the housing market is slowing further, with builders reducing future projects. Demand is likely to fall, pushing prices lower.

India

• Momentum has stalled, favoring sellers mildly in the short term, but caution is warranted with too much bearishness as longer term momentum remains intact.

• Would be looking for a consolidation, possibly with further retracement, leading to a resumption of the broader uptrend.

Philippines

Momentum continues to show sellers are in control, and the economic mood is souring as Philippines has about 25% of the country's exports heading to China and Hong Kong and that demand remains disappointing.

South Korea

• Busy week of macro data with PPI on Mon Oct 23, Consumer Confidence Tue Oct 24, GDP on Wed Oct 25;

• PPI has been accelerating m/m. Roughly 1/3rd of SK exports go to China and Hong Kong, which is dragging on their economy -- as seen with GDP flattening out. This warrants concern as the 20-year average is 3.4%.

• Comparatively speaking, the South Korean economy is expected to register a very slow growth rate of just 0.9%. Momentum remains negative, with sellers in control.

Vietnam

Momentum in Vietnam remains negative, though we have seen some evidence of exhaustion as we approach some potential support.

Brazil

• Consumer Confidence on Wed Oct 25 and PPI on Thu Oct 26;

• Momentum remains negative for equity markets

Mexico

• GDP on Monday Oct 23 and CPI, Tue Oct 24 and unemployment on Thu Oct 26.

• Unemployment is rising, the GDP is slowing, but inflation is under control.

• There is plenty of market moving data as we approach the bottom of a broader uptrend channel; but short-term momentum remains weak and continues to favor sellers.

Key 🔑

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