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Markets

Monday Morning Charts

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Markets kick off a big week as we dive into 2Q and earnings season, and digest a US Payroll number that was extraordinary in its weakness.

Much of Europe remains closed for Easter and the global macro markets are more quiet than they might otherwise be but positioning remains cautious for many risk assets which include equites in the developed world, and notably the US.

The Dollar remains under pressure and is now under the 50mda. Positioning was so strong and so overweight that I believe there are more flows to be unwound from later stage momentum players and non-dedicated macro who thought this was a free-ride to 110.

Fact is the Dollar has caused a lot of pain on both sides of the ledger. On the way up it only took 2 years longer than expected. On the trades lower, it will shake people out because of that very point. People suddenly have to question what the Fed is able to do. Our catch phrase "95 before 110" remains in the mantra today.

DXY 4-6

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On the back of this Emerging markets continue their strongest run against the SPX in over a year. Back to March '14 on this type of a relative breakout. We are through the key .2000 resistance level on the spread and now are staring at some key overall index resistance on the $#EEM at $42.00, $42.50, $43.00. On the MSCIO EM (MXEF) this is 1010. With currencies able to breath, expect these levels to be challenged.
EEMvsSPY 4-6

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With US earnings around the corner (expected headwinds) and the concerns for US equity markets there is a rise in the VIX that must be addressed even for EM which trades better. Watch 16 as a key level for breakout.
VIX 4-6

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The Euro wants to trade to 112 then 114 on this recovery. If you think EU macro has been a little better, it has been and we think differentials for the currencies (Euro v Dollar) (not necessarily the ECB and the Fed) are changing. Not so lopsided. Euro remains a trade to be long…as well as the commodity currencies of CAD and AUD ($FXC, $FXA)
EURO 4-6

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Be cautious on ame0v lower in rats for the US. While it is intuitive if growth is slower, if you think commodities, EM and even Europe are better than 1.80 is a key support to be BUYING the long $TBT
TBT 4-6

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Brazil remains on fire and a major overweight for us. The currency is your friend to 2.80 then be careful…
BRL 4-6

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We think BZ can trade to 56K on the Ibovespa. This along with the currency equates to about $38 on the $EWZ. Remember this is no longer a PBR VALE dominated trade. You are owning $ITUB(Itau) , $BBD (Bradesco) , $ABV (Ambev) and Brazil Foods as your top four weightings. These are companies I can own!
BVSP 4-6

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Commodities are bottoming. It's not a straight line and an easy pivot to call but while volatility in the CRB remains, 200 is your floor. Also interesting to hear all the mining merger discussions again - sign of a bottom? (Rio Glencore, TCK Antofogasta?)
CRB 4-6

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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