Hi AverageJoe and All,No ... I think it is the exact...

Hi AverageJoe and All,

No ... I think it is the exact opposite.

I'd recommend following Keith McCollough from Hedgeye and another publication, Notes From The Rabbit Hole (NFTRH).

Keith uses a proprietary system involving rates of change in data. He then tracks these various inputs through 4 different quadrants.

He states that we are current in "Quad 4" which means growth and inflation is slowing. Asset classes of choice under this condition are:

(1) Treasuries
(2) Gold
(3) REITs

(From a US perspective)

This means easier CB policies, lower real interest yields, falling corporate profits, greater credit risk, and falling asset prices (such as equities adjusting to lower profits).

You can see this in the chart below which is of the 5 year TIP's and show the real interest rate yield ... note it is falling noticeably since Powell's change of heart. That is a sign that the market believes inflation will fall, the FED will opt for easy monetary policy and that growth is slowing and there is a need to hold "safe" assets:



Jesse Felder has also been tracking various analogues including this one below from 1937 (sourced from ZH). Ray Dalio has also been commenting on the underlying conditions (not just the chart similarities below) between 1937 and 2018 and they are very similar. When TA and FA line up investors need to pay attention.



There are a lot of reasons to be long gold (and thus, as a consequence, being short a bunch of other themes) right now.

Cheers
John