So I was just randomly scrolling through some charts and thinking when I came across this.
The blue is long Industrials (XLI) / short financials (XLF). Both of those seem like they are a part of the whole reflation thesis. Financials are connected to interest rates and XLI is connected with manufacturing and commodity prices. But then I thought about how the whole FED balance sheet expansion is going to hurt financials. If that happens then they will be a great short in a pair trade. Then I overlayed the price of gold and it tracks it almost perfectly. I was really surprised at the pattern.
I have been thinking about trades that will do well regardless of the reflation thesis breaking down or not. Perhaps this was one of them. But as you think about the whole expansion of the FED balance sheet and different trades, maybe overlay gold here and there to see if there is a similar pattern.
Be curious and ask questions!
Would love any thoughts or feedback!