What worked at the beginning of the inflationary phase will probably work in reverse at the end
As USD pops today to test the breakdown from the SMA 50…
I am by no means calling an end to the inflation trades yet (near/intermediate-term targets are higher), but I am telling you that the reputations being made (or in many cases re-made) among the ‘Commodity Super Cycle’ crowd are likely to be temporary… again.
I am not going to get wordy in a public post. The chart is wordy enough. I am pretty sure a day is coming before long where I’ll be subtly making a ‘I told you so’ type post as I’ve done in the past after watching the herd reinforce itself one way while the indicators point another.
Herds follow trends and buzzwords. But analysis that will be right at important junctures (like Q1 2020 and the upcoming macro pivot) just do the work and realize that a lag by the herd at the beginning will probably be bookended by a lag by the herd at the end. There are very distinct indicators in play now diverging the health of the inflation trades as the herd cements its view.
USD is not one of them currently. It did that all through 2021. But it does have a neat story to tell.
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