Unfortunately, as we have seen, the playing of the Game is not entirely a rational affair. If it were, the most impeccable fact-finding would soon dominate the market, and many of the players would be bored to death and would invent some other Game. ~ Adam Smith, “The Money Game”
Good morning!
In this week’s Dirty Dozen [CHART PACK] we look at skyrocketing business applications, a strange divergence in Put/Call activity, a crowded bond short, before ratio’ing a gold chart. We then cover some more bullish US housing prints, some deflationary data, a BIG compression regime in Bitcoin, and take a snapshot of snapchat, plus more…
Let’s dive in.
***click charts to enlarge***
- This is a pretty incredible graph. Business applications in the US are up nearly 40% this year (h/t to @keanferdy).
- The market is incredibly long single-stock calls relative to puts while it’s long index puts relative to calls.
- The following is from @MacroCharts:
Bond Speculators remain stubbornly Short one of the largest positions in history.
Extreme Bond AND Dollar positioning could be a big source of instability here – impacting all risk assets.
And critically, Stocks trade ok for now, but key Macro catalysts remain FAR from certain.
- For all of gold’s incredible run over the last 12-months it doesn’t hold a candle to the tear that the Nasdaq has been on. The question now is, does this relative outperformance continue? Or perhaps, even accelerate? Hat tip to @allstarcharts for the chart.
- We at MO continue to be very bullish on US housing plays. There’s a big demographic wave of first-time homebuyers crashing into record low mortgage rates and high housing affordability.
- Homeownership rises sharply once people cross 40 (chart via Barclays Research).
- Global industrial production relative to its historic trend has recovered to just above the GFC lows. This is a symptom of being at the tail-end of a long-term debt cycle.
We’ve spent decades artificially boosting capacity. That capacity is now meeting our declining ability to take on new debt. Hence growing excess capacity. In the coming years this capacity will fight it out with policy makers over inflation. It will take some time and a bit more shifting in policy anchoring. But have no doubt, the policy makers will win (h/t to AC).
- Remember all the talk two years ago about the CCP boosting their economy into 2021 for the centennial anniversary of the Chinese Communist Party? COVID obviously threw a bit of a wrench in those plans… Either way, credit markets are looking to transition to Late Expansion next year according PRC Macro (h/t WHilton).
- The big picture technical setup in Bitcoin today reminds me of gold in early Spring of last year. Bitcoin is trading in an extremely tight compression regime as noted by the monthly Bollinger Band width below, which is at an all-time low. Compression regimes like these lead to expansionary ones (major trends).
- Remember my comment above about how policymakers will eventually win the fight against deflation? Yeah, well, bitcoin is going to trade MUCH higher before this party is over. I think we see a bullish breakout soon and the Sentix Overconfidence Index shows the sentiment backdrop is constructive for a bullish move.
- You can find some incredible companies trading on the cheap in Japan right now. Outstanding shares in the Japan ETF (EWJ) have fallen to 7-year lows, reflecting little investor interest in the country. Yet, the market isn’t far from all-time highs…
- Snap Inc (SNAP) isn’t talked about much these days but it has a solid looking long-term chart. Plus, the company is doing some really interesting things around AR and could end up a clear leader in that space in the coming years.
Stay safe out there and keep your head on a swivel.
