Fra Saxobanks Steen jakobsen:
We are now 75% of the way in terms of correction – VaR explosion is driving momentum and the marginal selling…..
Levels:
I have taken back (in system overrule) short in S&P and DAX, remain long EURSD and Gold.
S&P: Target 1875/1825 (another 5-6%)
Dax: 9310(9400
These levels fit correction depth and magnitude of prior moves. Chart to follow this pm.
Bank sector should hurt the most due to much flatter yield curve…..
Timeline:
We will be looking at FED hike still… September now priced @ 30% probability and December @ 56% – in other words – unlike other BTFD scenario’s we don’t have “guaranteed” support from US monetary policy, I still see Fed hiking as markets and price of money needs to clear at a higher interest rate price: ie. 100-200 bps higher. The September FED event will keep market nervous and highly volatile into the actual meeting.
Macro drivers:
The US$ is EVERYTHING – the DXY now leads the stocks market with R2 of 80%……. hence the “sell-off” in US$ over last three trading session is NET POSITIVE…….for markets/support.
Overall this correction was born not by China devaluation but by having a FIAT economy driven US$ debt….. the strong US$ hurt commodities, lower commodities hurt fiscal and FX rates in high volume growth countries (EM+ CHINA) and now full cycle to export driven markets like Germany and Europe overall.
Watch the US$ for LEAD in support or lack of it in markets.
OVERALL:
If my WEAKER US$ get further confirmation I will be looking to add Emerging markets to my portfolio
