Weekly Macro Analysis 04.05.24
Have we seen the bottom already?
Conclusion:
We saw a very constructive week on the indices with leadership from the small caps which I take as a good sign, however the best performing sector was Utilities once more, followed by Real Estate, both are highly dependend on interest rates and are rather defensive.
I did like what powell was saying and doing as he continues to be dovish. The FED is moving on from QT with big steps, which should provide more liquidity to the treasury markets, lower rates and on the fringes should be positive for EM and Small Caps.
The employment report on friday came out with goldilocks numbers and markets, especially tech was up big… however the USD was not as weak as I would have hoped for. It sold off initially but finished rather strong.
DXY 2h chart:
Overall I would not be surprised if we saw another leg down with a new low in the next weeks, but if we move up strongly next week, the bottom in the markets is likely in.
Macro and Micro opportunities:
I don´t have any great setups for now, however I wanted to revisit the Macro Opportunities from last week:
The UK100 followed through on its break out and looks really good here:
The HSI followed through as well and it seems like China is the place to be for capital right now:
Things to watch:
Small Caps vs Large Caps:
I think Small caps are more related to the actual economy than the Large caps, which are more dependent on liquidity flows. It would not be a bad sign for the economy if we saw small caps starting to outperfrom large caps in the future, however it might mean that markets overall might go down.
BTC vs QQQ
We see BTC lagging a bit here and it would certainly be a good sign for risk assetf if BTC would start outperforming again.