The Everything Rally. Where is inflation?

What to watch this week: Corporate spreads widening, Dollar, VIX, Ethereum. If the market continues to rally, QQQ and large cap over everything else equity. Inflation is supply driven.

Key Highlights:

• What to watch this week: Corporate spreads widening, Dollar, VIX, Ethereum

• If the market continues to rally, QQQ and large cap over everything else equity

• Ethereum CME micro futures will release Dec 6, prepare for a TON of inflows

• Index providers proposed moving Mastercard, PayPal, and Visa out of the tech sector and into financials here… XLF was trash to begin with, it needs support

• Dollar’s strength is inflation & copper’s weakness

• Truckers are the supply-chain holdup

• Nvidida will top in the coming days, while QQQ continues making new highs

We received a lot of feedback regarding our stance on transitory inflation and we stand by our call and have been winning with strides. The S&P 500 remains projected for a Q1 run to our 5,100 target as commodity prices and “hyperinflation” faces a headwind from the US Dollar strength. Outperformance in the US Dollar is conventionally a headwind for inflation expectations, commodities and emerging markets. Think of it as the tightening of financial conditions without the Fed having a direct impact.

Copper was smashed like we said it would and commodities are rolling over on longer time-frames. Higher inflation should mean higher commodities, right? That is the wrong risk to model! Inflation isn’t the true commodity mover; it is the USD. Contrary to popular belief, correlations turn extremely positive when the S&P500 down-ticks. When S&P gets smashed, higher beta will get blasted along with commodities.

Equity risk always crashes the party.

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Now that you were spoon-fed, see more below:

US Corporate Credit spreads are our main focus right now. The first chart below (blue line) shows fears around China and the Evergrande situation died down completely. There seems to be a dislocation in domestic corp spreads that we are keeping an eye on.

Take the time to study this chart

Triple C rated bonds to post their worst weekly loss in a year… Not good

Gaps like these do not go unfilled… Watch for a top in NVDA (for the short term)

Here are a few resources to properly monitor underlying market conditions in crypto (these are not paid promotions):

• CoinGlass

  • Monitor liquidations

  • Monitor for widening funding rates

  • Changes in open interest across all exchanges

• Coinalyze

  • See how open interest reacted over night across all the BTC/ETC markets

• SKEW

  • Did any large options trades go through?

  • Did any strikes change?

Bitcoin with the nice jump this morning.

How most crypto investors are feeling this week. Hold steady lol

This is all for entertainment only. This is not investment advice.

Return always wants its risk payment.