//Macro Recap June II

Macro Recap June II

By |2022-07-26T06:19:31+00:00July 26th, 2022|

[Original Author, by Nigel Ng]

Let’s take a live look at commodities month to date. Crude is down 9.5%. Copper is down 10%. Wheat down 14%. Soybean down 11%. Natural gas down 26%. The Fed induced demand destruction is already taking place broadly across commodities. Lumber, palladium, and many commodities are peaking and this is the first down month for many of them. So far, only commodities that are resistant to this are holding up (the likes of RBOB). US data has been coming in softer, and we seem to be going back to a low inflation low growth kind of environment. This means bonds should bottom and usdjpy should top.

What this means for equities and other risk assets is more uncertain. Same goes for the broad dollar. It really depends on the magnitude of the slowdown. If it’s not too bad, it’s probably bullish NQ. If it’s terrible, then all equities go down. Within a tactical timeframe, I am neutral, but if you were an investor with a 10Y time horizon, these equity prices are absolute steals. If forced to pick a side, I’d say the next CPI is a miss and we get a massive rally (not a bear market rally but a legitimate rally).