weekend lounge 23/11/18, page-54

Traditionally, the fed tend not to pay too much attention to oil prices in their ST monetary policy, mainly because it's so volatile. Demand side factors also tend to bear more weighting, as they are seen as more accurately linked to the real economy than supply side constraints (which are often transitory). I think they have to keep raising until signs begin to emerge that it's crimping growth. Monetary policy is based on negative feedback loops and the last rate adjustment in any cycle, by definition, must go slightly too far in the opposite direction, since equilibrium couldn't have existed before it was made.

So many instruments moving in and out of correlation these days, it can be hard to get a feel of what's going on. Algos only add to the problem by either accentuating themes or running mean reversion trades when correlations, in theory, should be changing.

I see a strong USD, with a further breakout and blowoff in 2019. Equities and gold to suffer during this phase, before gold begins its next bull phase, as USD starts to tank. Maybe commodities then start to catch a bid also.