23.05.2022
Signs of relief?
The bad news keeps coming & the single most important chart on Qi continues to point to deteriorating macro conditions: macro-warranted model value for the S&P500, NASDAQ (indeed most major DM equity indices) continues to point lower.
But it is when the news flow is so uniformly one-way, that it pays to be on guard for any contrarian signs. Two barometers of the global business cycle are showing interesting patterns on Qi.
The importance of cyclical industries like autos & semiconductors means the Korean economy is often regarded as a lead indicator for the global economic cycle.
It is worth noting therefore that the KOSPI is in a strong macro regime (76% model confidence) & back below model fair value for only the third time in 4 months.
The valuation gap has closed because model value has risen. It is not yet definitive but there are signs macro conditions have troughed & are potentially turning higher.
The importance of cyclical industries like autos & semiconductors means the Korean economy is often regarded as a lead indicator for the global economic cycle.
It is worth noting therefore that the KOSPI is in a strong macro regime (76% model confidence) & back below model fair value for only the third time in 4 months.
The valuation gap has closed because model value has risen. It is not yet definitive but there are signs macro conditions have troughed & are potentially turning higher.
In a similar vein it is worth noting AUDJPY, another barometer for the global business cycle & risk appetite. It’s back in a macro regime & Qi model value is accelerating higher.
Mainstream financial media is focused on demand destruction & recessionary risks ahead; & that narrative explains AUDJPY’s recent retracement of the early 2022 rally. A -0.8 sigma (-3.9%) FVG suggests spot is now lagging an improvement in macro conditions.
Mainstream financial media is focused on demand destruction & recessionary risks ahead; & that narrative explains AUDJPY’s recent retracement of the early 2022 rally. A -0.8 sigma (-3.9%) FVG suggests spot is now lagging an improvement in macro conditions.
Given how bearish market sentiment is currently, any signs we’re not heading for an imminent recession could be sufficient to prompt a relief rally in risky assets. Monitor these models closely. Look Up ™.
