DXY went boom last night, breaking out of an inverse head and shoulders bottom as other majors fall away:
AUD was pole-axed to new closing lows versus developed markets (DM):
Emerging markets (EM) were hit even harder:
Gold is breaking down:
WTI went nuts as the US drew heavily on inventories:
Base metals hung on:
Big miners were mixed:
It’s all over for EM equity:
And junk:
Treasuries were actually bought:
Bunds too:
And Italy:
But US stocks took a hit as EUR helped Continental bourses:
It was all about oil last night. Charts from ZH explain it. Big stock draws:
As exports boomed:
But prooduction was flat:
Leading to the spike in WTI.
Traditionally higher oil is bad for the US but no longer. Shale production activity has inverted the paradigm and higher oil is a key input into industrial production and higher US wages. So long as oil rises (to a point) and shale overheats in response, the US is going to be booming and the Fed tightening. Hence the big USD spike. This reverses the traditional relationship:
The US steamroller is underway and everything EM is in its way. China, commodities and the AUD included.
David Llewellyn-Smith is the chief strategist at the MB Fund which is over-weight global equities that benefit from a weaker AUD. The first option is to use the MB Fund International Stocks Portfolio which is always 100% long as a part of your own asset allocation mix. The second option is to use an MB Fund tactical allocation in which we choose the asset mix for you, including exclusively international stocks, but with bonds and other assets as well to ensure a more conservative mix.
The recent performance of both is below:
If these themes interest you then contact us below.
The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance.
