June 12, 2025 • 10 mins
1.) US DOLLAR - What is correlated and what is not...and why does it matter?
2.) INTEREST RATES - Consensus will now get TOO DOVISH headed into next month's CPI print. UST tapping TRADE support at 4.33%
3.) OIL - TREND support at 63/barrel WTI
ONE MORE - Volatility. IVOL premiums showing up. Not crash conditions.
2.) INTEREST RATES - Consensus will now get TOO DOVISH headed into next month's CPI print. UST tapping TRADE support at 4.33%
3.) OIL - TREND support at 63/barrel WTI
ONE MORE - Volatility. IVOL premiums showing up. Not crash conditions.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Now here's your care for my wealth guy, Chris Clyde.
Good morning, and welcome to another edition of How to
Invest Wisely by paying attention to the things that the
crowd is not. Remember the mantra beware the herd at extremes.
So what do you want to talk about today? The
things that are on my mind as important right now
(00:22):
are the US dollar, interest rates, oil, and then one
more thing with respect to volatility. So let's talk about
the dollar quick after yesterday. Yesterday we have to remember
the CPI data came out and it's surprised the street
to the downside. Okay, CPI was one basis point away
(00:42):
from our forecast, by the way. Nevertheless, fed rate cut
expectations are starting to percolate again, and the US Dollar
Index DXY isn't yet oversold, but it's close, and it's
tapping the low end of its daily trade range. And again,
one more time for those who might be tuning in
for the very first time or finding this podcast for
the first time, when you hear me say trade, it
(01:04):
is not a verb. It is it's actually a it's
actually a noun in this respect, and what I mean
by that is trade is a level that is identified
by the rate of change of price volume and volatility
over a period of time less than a month. In
other words, we would view that as momentum. The machine
(01:25):
chases momentum in both directions. So when you hear me
say trade, that's what that is. If you hear me
say trend, that's a level that's identified by again the
rate of change of price volume and volatility over a
period of time that is greater than three months. It's trending, right,
So think of those two things. Try to acknowledge or
(01:45):
just absorb the meaning of that stuff when you hear
me say trade and trend. But if you look at
the DXY, the Dollar index, it's tapping the low end
of its daily trade range. And so what tends to
happen after something goes down and touches the low end
of its range, it goes back up towards the top
of its range. Simple, Right, For the DXY, that's not
(02:06):
that far away. It's at ninety eight point eighty five,
and it's signaling lower highs and lower lows. So what
does it all mean. It's likely that we could see
a bounce to lower highs in the dollar as it
continues to trend down. Now does that matter? The US
dollar and other asset correlations are always valuable to understand.
(02:27):
They don't necessarily create an environment where if the dollar
goes down, then the thing that has a negative correlation
to it automatically goes up. It acts as a head
or a tailwind just depends. So those with a positive
correlation tend to move with the dollar and those with
the negative correlation tend to move against the dollar. Or
a better way to think about it is just that headwind.
(02:49):
If you're outside and you're walking in a fifty mile
an hour headwind. It's not that you can't move forward,
it's just that it's hard right. Think of it that way.
And in terms of correlations to other asset classes, the
US dollars immediate term trade correlation to oil just went
to a negative point five to five, and the S
and P five hundred and gold are at a negative
point thirty nine and point eight two, respectively. So what
(03:14):
does that mean. Dollar down would be a tailwind for oil,
gold and the S and P five hundred Dollar up
would be a headwind for those three asset classes. Doesn't
mean they can't move up in relation to a dollar
that is also moving up. It's again a headwind, so
(03:35):
think of it that way. Interest rates. This is the
second thing that I think is important right now. Duvish
was the perspective from how CPI came out versus what
the establishment economists expected. Those people now flipped to a
consensus getting two duvish on the CPI ahead a next
month's print, where we're looking for a thirteen basis point
(03:57):
month of a month acceleration towards two point four eight percent.
When that happens, I'm going to expect those same latent
lagging economists to get hawkish at that point, which would
be at the wrong time. Both the US tenure treasury
yield and ten in the two year two they keep
oscillating within the same bullish trade ranges. Right The US
(04:20):
tenure yield is tapping trade support right now at four
point three to three percent, so a bouncing yields fairly soon,
which would not be good for bond prices. By the way,
it just shouldn't be too surprising to anyone just why,
because that at US treasury bond yields tenure, twenty or
thirty year, they're all bullish trend as they have a
(04:41):
counter trend move. In other words, they move down. We
look for areas of natural support levels, and the first
support level that would be valuable for the US tenure
Treasury would be its trade level. Again, rate of change,
of price, volume of volatility over a period of time
less than a month. The machine values those, and so
(05:02):
as we see it get near or tap four point
three to three, my expectation would be that we'd see
a bounce or at least within that area in that range.
So let's see if intertrates do actually start to take
a bounce from here. Okay. The next thing is oil.
You know, headlines they are so scary and like I
said over the last couple of days, noisy, noisy, noisy.
(05:26):
So this is from JP Morgan this morning. Quote an
attack on Iran could spike oil price to one hundred
and twenty dollars per barrel, driving USCPI CPI inflation to
five percent. Okay, do I think that's likely? No, not
in the near term, not in the immediate or inter
immediate term either. But could oil spike on any kind
(05:48):
of an attack in and or on or around Iran? Yeah,
of course. But we didn't need a headline or a
narrative to consider oil moving higher. We knew the potential
for rising oil prices was increasing because oil broke through
trade resistance on June five. I talked about that the
other day. It's now five days above that that bullush
(06:11):
breakout and bullish trend breakouts tend to bring bullish prices.
Now that former trend resistance level of sixty three oh
one per barrel on West Texas Intermediate Crud, well, that's
now support. This whole reflation thing that we're starting to
see only produces upside to CPI forecasts for June, and
(06:32):
oil right now is signaling an immediate term overbought condition.
Doesn't mean that it can't get more overbought by going higher.
It just means that those overbought conditions start to act
as additional headwinds. So pullback toward that support level of
sixty three dollars and one cent per barrel, call it
(06:53):
sixty three even again West Texas Intermediate Crud. That shouldn't
be surprising either, But you should also not be surprised
to see it find that support and then bounce higher
from there. We'll see higher costs of inflation via oil
is not what we in America need or want, and frankly,
that's not what anyone in the current administration wants either,
(07:15):
So we'll see how they attack that with more noisy headlines.
Let's just let the assets trade and see what happens
from there. But that's our expectation for oil. And by
the way, one more thing, let's talk about volatility and
the vicks for just a second. Headlines create fear. Fear
(07:36):
increases protection actions by traders. That's usually expressed by buying
put options by the masses. Right This in turn creates
something called an implied volatility premium. Now, when those show up,
we shouldn't be fearful of crashes, and we're seeing them
across the board right now. At some point, those premiums
(07:56):
end up getting unwound, those put options get unwound, and
that pushes to buy futures, which tends to push market
indexes higher. Right now, the VIX, which again is just
an expression of market fear measuring the amount of protection buying. Right,
the VIX is at eighteen thirteen. The top end of
its immediate term trade range is nineteen point ninety nine.
(08:19):
With immediate term trade again, that's that level rate of
change of price volume and volatility of volatility in this
case is at twenty two point nine and it's still declining,
so VIX is still signaling lower lows and lower highs. Again,
the signal would be that calculus of price volume of volatility, right,
so the VIX is still signaling lower lows and lower highs.
(08:42):
If the low end of that signal, which is currently
fifteen point four eight, breaks above its most recent low
close of sixteen point seven eight, well then I'll reconsider
the potential for a volatility spike. But even then, that
twenty two point nine to nine trade resistance level is
probably where it stops. So we're watching vvi IX very closely.
(09:05):
That's the volatility of volatility, and if we can if
we end up seeing volatility of volatility exhaust itself here
fairly soon, which it in fact might why because it
tapped its trade range, and it did it this morning.
Trade range for it trades resistance, if you will, is
(09:26):
one o two point eighty six, and we've seen a
high of one to one point seven eight so far
on VVIIX. If markets market prices, the SMP five hundred,
for example, is down alongside VIX and VVIX being down. Well,
then what that's telling you is that traders are unwinding
their protections, they're put positions, and dealers are starting to
(09:48):
buy futures, and that's when you start to see a
reversal in the market move higher. Markets weren't off very
much yesterday, SMP five hundred was down a massive point
two seven percent, so I would anticipate a whole lot
of craziness there. Six zero one zero on S and
P five hundred futures is a pretty strong level. So
(10:10):
let's see if that can hold and how the day
plays out with volatility and volatility of volatility and all
things good. Okay, hope today was helpful for you and
understanding market structure and where things are at and what's
happening underneath the surface of price. If you have any
questions or want to chat, shoot me an email info
at carefromwealth dot com. That's info at care formwealth dot
(10:32):
com or old fashioned way eight sixty six five nine
six ninety eight eighty six. Thanks so much for coming
along in today's journey and we'll see you tomorrow. God
bless
Now here's your care for my wealth guy, Chris Clyde.
Good morning, and welcome to another edition of How to
Invest Wisely by paying attention to the things that the
crowd is not. Remember the mantra beware the herd at extremes.
So what do you want to talk about today? The
things that are on my mind as important right now
(00:22):
are the US dollar, interest rates, oil, and then one
more thing with respect to volatility. So let's talk about
the dollar quick after yesterday. Yesterday we have to remember
the CPI data came out and it's surprised the street
to the downside. Okay, CPI was one basis point away
(00:42):
from our forecast, by the way. Nevertheless, fed rate cut
expectations are starting to percolate again, and the US Dollar
Index DXY isn't yet oversold, but it's close, and it's
tapping the low end of its daily trade range. And again,
one more time for those who might be tuning in
for the very first time or finding this podcast for
the first time, when you hear me say trade, it
(01:04):
is not a verb. It is it's actually a it's
actually a noun in this respect, and what I mean
by that is trade is a level that is identified
by the rate of change of price volume and volatility
over a period of time less than a month. In
other words, we would view that as momentum. The machine
(01:25):
chases momentum in both directions. So when you hear me
say trade, that's what that is. If you hear me
say trend, that's a level that's identified by again the
rate of change of price volume and volatility over a
period of time that is greater than three months. It's trending, right,
So think of those two things. Try to acknowledge or
(01:45):
just absorb the meaning of that stuff when you hear
me say trade and trend. But if you look at
the DXY, the Dollar index, it's tapping the low end
of its daily trade range. And so what tends to
happen after something goes down and touches the low end
of its range, it goes back up towards the top
of its range. Simple, Right, For the DXY, that's not
(02:06):
that far away. It's at ninety eight point eighty five,
and it's signaling lower highs and lower lows. So what
does it all mean. It's likely that we could see
a bounce to lower highs in the dollar as it
continues to trend down. Now does that matter? The US
dollar and other asset correlations are always valuable to understand.
(02:27):
They don't necessarily create an environment where if the dollar
goes down, then the thing that has a negative correlation
to it automatically goes up. It acts as a head
or a tailwind just depends. So those with a positive
correlation tend to move with the dollar and those with
the negative correlation tend to move against the dollar. Or
a better way to think about it is just that headwind.
(02:49):
If you're outside and you're walking in a fifty mile
an hour headwind. It's not that you can't move forward,
it's just that it's hard right. Think of it that way.
And in terms of correlations to other asset classes, the
US dollars immediate term trade correlation to oil just went
to a negative point five to five, and the S
and P five hundred and gold are at a negative
point thirty nine and point eight two, respectively. So what
(03:14):
does that mean. Dollar down would be a tailwind for oil,
gold and the S and P five hundred Dollar up
would be a headwind for those three asset classes. Doesn't
mean they can't move up in relation to a dollar
that is also moving up. It's again a headwind, so
(03:35):
think of it that way. Interest rates. This is the
second thing that I think is important right now. Duvish
was the perspective from how CPI came out versus what
the establishment economists expected. Those people now flipped to a
consensus getting two duvish on the CPI ahead a next
month's print, where we're looking for a thirteen basis point
(03:57):
month of a month acceleration towards two point four eight percent.
When that happens, I'm going to expect those same latent
lagging economists to get hawkish at that point, which would
be at the wrong time. Both the US tenure treasury
yield and ten in the two year two they keep
oscillating within the same bullish trade ranges. Right The US
(04:20):
tenure yield is tapping trade support right now at four
point three to three percent, so a bouncing yields fairly soon,
which would not be good for bond prices. By the way,
it just shouldn't be too surprising to anyone just why,
because that at US treasury bond yields tenure, twenty or
thirty year, they're all bullish trend as they have a
(04:41):
counter trend move. In other words, they move down. We
look for areas of natural support levels, and the first
support level that would be valuable for the US tenure
Treasury would be its trade level. Again, rate of change,
of price, volume of volatility over a period of time
less than a month. The machine values those, and so
(05:02):
as we see it get near or tap four point
three to three, my expectation would be that we'd see
a bounce or at least within that area in that range.
So let's see if intertrates do actually start to take
a bounce from here. Okay. The next thing is oil.
You know, headlines they are so scary and like I
said over the last couple of days, noisy, noisy, noisy.
(05:26):
So this is from JP Morgan this morning. Quote an
attack on Iran could spike oil price to one hundred
and twenty dollars per barrel, driving USCPI CPI inflation to
five percent. Okay, do I think that's likely? No, not
in the near term, not in the immediate or inter
immediate term either. But could oil spike on any kind
(05:48):
of an attack in and or on or around Iran? Yeah,
of course. But we didn't need a headline or a
narrative to consider oil moving higher. We knew the potential
for rising oil prices was increasing because oil broke through
trade resistance on June five. I talked about that the
other day. It's now five days above that that bullush
(06:11):
breakout and bullish trend breakouts tend to bring bullish prices.
Now that former trend resistance level of sixty three oh
one per barrel on West Texas Intermediate Crud, well, that's
now support. This whole reflation thing that we're starting to
see only produces upside to CPI forecasts for June, and
(06:32):
oil right now is signaling an immediate term overbought condition.
Doesn't mean that it can't get more overbought by going higher.
It just means that those overbought conditions start to act
as additional headwinds. So pullback toward that support level of
sixty three dollars and one cent per barrel, call it
(06:53):
sixty three even again West Texas Intermediate Crud. That shouldn't
be surprising either, But you should also not be surprised
to see it find that support and then bounce higher
from there. We'll see higher costs of inflation via oil
is not what we in America need or want, and frankly,
that's not what anyone in the current administration wants either,
(07:15):
So we'll see how they attack that with more noisy headlines.
Let's just let the assets trade and see what happens
from there. But that's our expectation for oil. And by
the way, one more thing, let's talk about volatility and
the vicks for just a second. Headlines create fear. Fear
(07:36):
increases protection actions by traders. That's usually expressed by buying
put options by the masses. Right This in turn creates
something called an implied volatility premium. Now, when those show up,
we shouldn't be fearful of crashes, and we're seeing them
across the board right now. At some point, those premiums
(07:56):
end up getting unwound, those put options get unwound, and
that pushes to buy futures, which tends to push market
indexes higher. Right now, the VIX, which again is just
an expression of market fear measuring the amount of protection buying. Right,
the VIX is at eighteen thirteen. The top end of
its immediate term trade range is nineteen point ninety nine.
(08:19):
With immediate term trade again, that's that level rate of
change of price volume and volatility of volatility in this
case is at twenty two point nine and it's still declining,
so VIX is still signaling lower lows and lower highs. Again,
the signal would be that calculus of price volume of volatility, right,
so the VIX is still signaling lower lows and lower highs.
(08:42):
If the low end of that signal, which is currently
fifteen point four eight, breaks above its most recent low
close of sixteen point seven eight, well then I'll reconsider
the potential for a volatility spike. But even then, that
twenty two point nine to nine trade resistance level is
probably where it stops. So we're watching vvi IX very closely.
(09:05):
That's the volatility of volatility, and if we can if
we end up seeing volatility of volatility exhaust itself here
fairly soon, which it in fact might why because it
tapped its trade range, and it did it this morning.
Trade range for it trades resistance, if you will, is
(09:26):
one o two point eighty six, and we've seen a
high of one to one point seven eight so far
on VVIIX. If markets market prices, the SMP five hundred,
for example, is down alongside VIX and VVIX being down. Well,
then what that's telling you is that traders are unwinding
their protections, they're put positions, and dealers are starting to
(09:48):
buy futures, and that's when you start to see a
reversal in the market move higher. Markets weren't off very
much yesterday, SMP five hundred was down a massive point
two seven percent, so I would anticipate a whole lot
of craziness there. Six zero one zero on S and
P five hundred futures is a pretty strong level. So
(10:10):
let's see if that can hold and how the day
plays out with volatility and volatility of volatility and all
things good. Okay, hope today was helpful for you and
understanding market structure and where things are at and what's
happening underneath the surface of price. If you have any
questions or want to chat, shoot me an email info
at carefromwealth dot com. That's info at care formwealth dot
(10:32):
com or old fashioned way eight sixty six five nine
six ninety eight eighty six. Thanks so much for coming
along in today's journey and we'll see you tomorrow. God
bless
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