I have been meaning to post this on thurs of last week, but between the rapidly incoming developments of 2020 Tokyo Olympics Disaster + Exchanging Lanes (and some other coming projects coming to you/for you) - I didn’t get a chance to fully post my flagging of a risk off cross asset coming imminently (from last thurs). So these are just charts & data are from Thurs 7/15 & some from Fri, data not updated to current markets. Apologies, the corresponding commentary will follow at some point but I wanted to just put out what I already have rather than write up and post when done, because in my broad scope world, things and their respective deadlines and developments tend to not care one bit about stacking up. 

But anyone who’s been even ⅓ aware of (let alone actually following)  my major themes, calls, observations and aware of my processes, you’ll likely know what I’m getting at without explanation for the following flood of cross asset charts. explanation coming - but just putting out my partial work from last week for now flag.

Markets:

MEME CRASH = EQUITY RISK CRASH = CRYPTO CRASH = BONDS SURGE


•BTC -  POTENTIAL SIGNIFICANT NEXT LEG DOWNWARDS IMMINENT


•UST Yields & to lesser extent other DM yields continue downward— not data driven, momentum via futures and technical driven. Any of the pure YC dependent bank stocks ↓ - as steepener trades unwind 

•Equities downside at index level (RUSSELL2000, NKY225, SX5E, HSI) - led by memes traders. Note that “meme traders” also trade “non meme” stocks, hence me saying meme traders and not meme stocks. Not as bearish/interested in SPX at the index level relatively speaking but SPX Index Volatility (upside) for sure

•FX: Forget “the dollar,” looking at JPY. The only currency stronger vs USD, and given Olympics 2020 with 200 nations exchanging how many currencies forJPY? In the immediate term JPY is the currency that matters. REMAIN BULLISH JPY. AUDJPY leading risk assets 

•crude down on opec yea yea - not that I don’t care, but you're not here for me to regurgitate headlines 

THE SAME DIRECTIONAL TRADE - if you’re positioned the same direction for these (and more) in your portfolio, just know that you may be more directionally concentrated than you realize in the near term.  

US memes, russell2000, UST 10y yields, AUDJPY, NKY, 9984 softbank, BTC (and their respective peers). Gold is more ¥ influenced than USD. Therefore it’s a safe haven and not a major upside money maker. 
 

sorry for the rush but this is in no particular order of chart display:
 

UST yields  vs NKY 

↑ + relatively irrelevant SPX eminis (thats right, SPX is less relevant to UST markets than Japan assets - I’m not hand drawing these) ↓ 

 

BTC: WATCH NKY (futures) and 9984 Softbank Group as well as US listed Softbank ADR (SFTBY)

Japan listed vs btcJPY
Japan listed vs btcJPY
US listed vs btcUSD
US listed vs btcUSD

NKY Mini futures are more important to watch vs standard OSE NKY Futures (NKU1 etc), as minis volume and notional has topped standard contracts years ago, and overnight trading (trading during US hours) is increasing. Because of retail and smaller sized traders, but hedge funds are using minis more and more.

nky minis vs BTC  

 

8698 Monex Group becomes less and less relevant in a crypto down market obviously, given the stock was used for upside BTC-like return exposure proxy. But today’s -3.5% drop to ¥665 is notable- now clear through the “proxy start” levels from early Jan. If any institutional proxy users were left holding long for a recovery, looks like they just left / threw in the towel on price action upside recovery. Again no this is not BTC.. obviously.. this is a stock…. What I’m merely illustrating is a portion of institutional sentiment on BTC price action. it’s negative. This is also something that the BTC flow analysis (some of whom are legit  and I respect greatly) miss - they’re all on-chain and not cross asset. 

 

AMC - GROUND ZERO TRIGGER for UST & BTC 

I don’t have time to re re re explain AMC (and memes overall) impact capabilities on markets, read my unapologetically direct comment from RVDB for the last person pushing back on how stupid meme stocks can possibly impact “the $50 trillion US bond market“ if you really need your reassurances. ↓ 

EQUITIES SURGE AS THE U.S. BOND RALLY RELENTSDaily Briefing 
Featuring Weston Nakamura, Ash Bennington and Jack Farley July 09
 

For the rest of you, AMC / memes matter. 
They matter to BTC and crypto (same traders migrating capital back and forth, and out of markets both crypto and meme vol altogether). 

They matter to hedge funds who are very much involved in this latest meme run up, and when things get risky, memes are the leading indicators (if not the direct cause) for risk sell off due to their portfolio last in / first out.

And they therefore matter to bond markets. HFs were / are short UST duration and curve steepeners. They’re unwinding, covering shorts, and / or opening new longs on UST futures. 


AMC just came off a big OPEX On Friday With whippy price action (if you’re wondering why USTs were all over the place it’s not “retail sales“ - did retail sales figure change midday??

Watch AMC AMONG OTHER THINGS 

Note once again, I AM NOT SAYING  “AMC → directly into USTs“ though there surely may be some of that. I am saying that memes are held and watched by institutions. They either get hammered from their levered long AMC -30% in a week on 3x leverage for -100%, and rush to USTs, or they are observing this happening and rush to USTs. And once people rush to USTs, that’s all you need for people to rush to USTs. People buy USTs because people buy USTs. AMC is not the full inflow.. obviously. AMC/memes are the lit match. Russell2k are the relative “meme index“ among the majors.

intaday Thursday 

 

 

AMC vs US10y yields - NOTE THE DATES / time frame ↓ 

So yea, this AMC & USTs isn’t new. 

1 year chart of AMC & UST 10y yields. How and why this is controversial i don’t understand other than “general inflexibly minded (arrogance) stupidity“ but this is going on whether or not you “think“ it is/isn’t. 

1 month UST VS AMC

1 day UST vs AMC

2 day

Gold and the lira (bottom half of charts are same as top but lira inverted)

Short term, (days) USDTRY & BTC are positively correlated. mid term (weeks - months) theyre neg correlated. long term (years), positive corr
Short term, (days) USDTRY & BTC are positively correlated. mid term (weeks - months) theyre neg correlated. long term (years), positive corr


 

Something I noticed years ago and watch every now and then as a rare long term indicator for short term price action - Univ of M Sentiment Survey (inverted) leads VIX. sentiment is sentiment. We’re currently coming off VIX lows about to break into 20 handle with U of M coming in weaker (chart lines ↑)

  

Sorry will come back to this for further explain but last 4 days i didn’t put this out because not yet a fully completed note with links and all the usual  - so now Im putting out incomplete