The Continuum continues to form its right inverted shoulder
In the spring the NFTRH plan was for a “summer cool down” in inflation expectations and the inflation trades. This after noting that the situation had become overdone in the public consciousness, untenable to the (self-consciously inflating) Fed and thus, unsustainable.
Inflation indicators then spent the summer backing off and the 30yr Treasury yield Continuum dropped into right side shoulder making mode, exactly as projected.
Now, are we turning ‘er back up? If so we would still be on the original plan, which was for a resumption of the inflation trades, likely with eventually less pleasant effects upon the economy (Stag) when the tight economic rope slackens.
All I can tell you is that the plan is 100% on plan as it stands now and thus, there are dos and don’ts about the macro. In other words, depending on long-term yields, yield curve, inflationary, deflationary, Goldilocks, etc. there are assets and sectors to be involved with (as one example, I am long the Pigs… err, that is, the banks as part of a constantly managed/adjusted portfolio) and those not to at this time (for example, richly valued growth stuff that was so mid-2020 and again so summer-2021).
But the macro continues to morph its way along. If/as the yield reaches the limiters (monthly EMAs 100 & 110) there will be new decisions to make because as I see it, we’re either going to bust on through for the first time in the decades-long history of this chart and onward to vonMises’ Crack-up-Boom or it’s going to be deflationary liquidation of the inflated excess once again.
But for now, we are on a course of action until new information may alter the view. All sorts of play-by-play callers are calling the macro in real time. But this chart – as you’ll see if you care to dig through old posts – told us 7 months in advance what would be likely. Ah, but indicators are worthless some say. Ha ha, that’s a good one.
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