“We are a part of nature, and inside each of us is a wild self that knows deeply what it is meant to do. Inside each of us is a natural innate knowledge of why we are here. Tracking is a function of directing attention, bringing our awareness back to this subtle inner trail of the wild self, and learning to see its path.” ~ The Lion Tracker’s Guide to Life
In this week’s Dirty Dozen, we look at Trump’s policy agenda, tariff threats, strange expectations, sour semis, BTC blast-off, USD crowding, and end with pitching a German arms manufacturer, plus more…
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1. You’ve probably seen Trump’s tweet on TruthSocial over the weekend, where he threatened “BRICS” countries with 100% tariffs if they try to create a replacement for the USD in their global trade. This table from BofA shows Trump’s policy agenda and the estimated impacts of his more probable policy moves.
2. This chart from JPM shows the implied tariffs should Trump follow through on his threats against Canada, Mexico, and China. Tariffs are unlikely to reach these levels, as he’s using these as a negotiation tactic. But we’re certainly moving further into a new regime of global trade conditions (h/t to Danny Danyan for the chart).
3. There appears to be a major disconnect in the market, with the number of respondents expecting higher vs. lower stock prices in 12 months at record highs. At the same time, those expecting lower interest rates are also near a record high.
Technicals & Sentiment
4. I’ve been writing about the unusual widening divergence between the semiconductor performance and the broader market for the past few weeks. Here we can look at SOXX/SPY on an oscillator basis (note: this function has been added to the Collective HUD for all Market Internals).
The red dots marks previous instances where the reading hit zero for an extended period.
This isn’t reason enough for me to sell down our longs, as the rest of our key data points remain supportive. But it does tell me to keep a close eye on things. My base case is that the market ramps for another few months before starting a broader correction. But we shall see…
5. BofA’s Bull & Bear indicator keeps falling and is squarely in neutral territory. This is not bearish.
6. “The one trade which remains EXTREMELY positioned within CTA Trend is the USD long… hence, meaning that THIS is now the most crowded position at risk of ‘reversal’” via Nomura’s Charlie McEligott.
Fundamentals & Trade Setups
7. For the past few months, we have consistently pounded the table on the major compression regime in BTCUSD and the big inbound trend. November’s candle completed the compression breakout along with its 4-year cup-n-handle. The measured move target is the price level of 127K. This is our biggest current position.
8. The recent sideways consolidation provides a good technical inflection point for those looking to enter or add.
9. Rheinmetall (RHM) has a solid monthly chart. RHM is one of the largest ammunition/defense manufacturers in the world. The company trades at a discount to market multiple despite being a strong business with increasingly powerful secular tailwinds (Disclosure: we’re long).
FYI, I’ll limit these notes to nine charts going forward since Gmail has been cutting off the tail end of them.
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Thanks for reading.
