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 Kleine.
Good morning and happy Friday to you. Today we're going
to talk about interest rates. I know, exciting stuff right
the US dollar, some currency market stuff, and then lastly
volatility with some sentiment rolled into it. So right now,
what we've got short term as in like the very
(00:20):
near term and time the longer dated maturities of the
US Treasury bond market just keep flirting with their trends.
They're holding just above these levels. And again, when I
say trend, it's the rate of change of price, volume,
and volatility with a time series of longer than three months.
That's what it means by trend. It's not just it's
not just price, it's more. It's more intricate than that.
(00:43):
But by holding just above trend in this semi bullish
looking phase, it just makes the bond balls crazy. Now
there's something that's important about the dollar and interest rates
that I'll get into in just a minute. But on
the short end of the yield curve, what we call
the FED proxy, the two year yield is very much
so far falling again at trend. It's failing right where
(01:05):
we would have expected it to so right now, the
bond market gives us this steepening yield curve, which implies
the FED is going to cut into a non recession.
Now that should be interesting and probably very very bullish
when it's all said and done. Germany is accelerating into
a growth and inflation accelerating together part of their economic cycle,
(01:27):
and they're seeing their tenure bond flirt with a bullish
trend phase transition as well. And so if that happens,
if the bond market in Germany breaks out to a
bullish trend, well that's just a continued signal for the
global non recession. Right. I'm going to jump real quickly
into a conversation or a specific identification, if you will,
(01:51):
before I talk about the US dollar, about the relationship
with the dollar in interest rates. Interest rates have since
September gone straight up, and it's not hard to see that.
Just go look at a chart of symbol TNX, which
is the US ten year yield, and symbol TYX, which
is the symbol for the thirty year yield, and then
(02:13):
compare that against DXY and do it over a long
term cycle. DXY is the US dollar index. What people
often just miss for whatever reason is that the market's
forward looking. And if you look at those charts that
I just mentioned a moment ago, you can see that.
But there's something happening underneath the surface of price right now.
With respect to the bond market. What we're seeing is
(02:37):
quite a shift in positioning. We're seeing commercial hedgers, you
could probably call that smart money. They're aggressively buying US
Treasury bonds right now, and this kind of behavior suggests
that interest rates are going lower. Meanwhile, we're going to
talk about the US dollar next. It's gotten completely hammered.
Rates usually follow the dollar. Now, if you look at
(02:58):
the last chart that I just just talked about, compare
on a longer term cycle, the US ten year yield
symbol TNX with the US dollar index symbol DXY. Look
at that relationship, right, If you look at that relationship,
they look exactly the same until recently. If you look
at it just recently, the DXY, the US dollar has
(03:19):
gotten completely beaten down, daring interest rates to follow it lower. Hey, look,
if commercial hedgers are right about rates falling, and the
dollar is right that rates are going to fall, the
Fed's going to do whatever the bond market tells it.
To do, which would be cut into a non recession,
if non recession is in fact what we have economically.
(03:41):
And just one more observation that you can see in
the price of this thing. But commercial hedgers have been
buying bitcoin very aggressively too, and so now you can
see how that's played out since bitcoin has recently popped
back up above one hundred thousand dollar mark. So what
do we have with the US dollar? It's failing again.
That trade trade is the rate of change of price,
(04:01):
volume and volatility over a one month period or less,
so we'd call that momentum. The resistance level. There was
at one hundred, and it hit it and it failed.
So it just continues its bearest trend, continuing to confirm
the expectation for lower interest rates. If we continue to
have this relationship where rates essentially follow the dollar, and
(04:24):
if these smart money bond buyers, the commercial headers are right,
that would lead us to expect these lower interest rates
on top of it. So the dollar isn't yet giving
us a signal for lower lows, but we still do
have lower highs. And when I say that, it's not
just a function of price, it's looking at that daily
trade range which is again, it's a calculus of calculus
(04:46):
rate of change, same thing, right, It's a calculus of
the price, volume and volatility of the thing that we're
looking at that gives us a likely range of trade
up and down. And when the bottom end, the low
end is high than the most recent closing price over
the last thirty days, we would call that a higher low.
If the top end of that range is lower than
(05:08):
the most recent thirty day closing high, we would call
that a lower high. And so what do we have
with the US dollar. We've got a higher low, but
a lower high. It's a squeezed range, which likely puts
us in just this chop zone if you will. Now
that said, is it possible we see the dollar move
incrementally higher towards one oh three over the next several weeks? Yeah,
(05:31):
I think it could be. That'd be the kind of
thing that would be very mister market like. In other words,
do whatever frustrates the most amount of people. Look, there
are a lot of US dollars short positions out there,
along with a lot of retail gold buying. Gold has
a very high negative correlation with the dollar, So dollar
up would not help gold. Dollar up stocks up would
(05:52):
be very much of a pain trade for a lot
of I think, very mispositioned investors that are out there.
So we'll see how it goes. The last thing is
just simply volatility vix, if you will, the S and
P five hundreds volatility metric. Most of the very recent
incremental S and P five hundred buying has come from
the systematic rules based crowd. And for those of you
(06:14):
who've been following me, know that we are systematically structured.
We have a very strong set of mathematical rules built
into algorithms that give us signals of where we should
position ourselves. And so we're simply doing what the systematic
crowd does. We're identifying the movements of the big money
(06:37):
in the systematic world and kind of riding those tailcoats, right,
that's the idea behind it. But amidst all this bearishness
and negativity, By the way, crazy stat of the day,
sixty four percent of US adults fear financial collapse more
than the end of life itself. That comes from Newsweek.
You believe them or not, I don't care, but that's
a crazy statistic that people are more afraid to financial collabs.
(07:01):
Goodness gracious. Sounds to me like they need to just
step back and have some contemplative prayer and ask for
a good walk with Jesus along the way. Any rate,
the whole systematic community has bought about one hundred billion
dollars of global equities over the last ten days. That's
a lot. So VIX continues to signal lower highs and
is now very very very close to signaling a lower low.
(07:24):
It is over sold, so a pop higher from here
probably takes it to twenty five. Anything above that would
give us a test of trade at thirty, and either
of those moves would probably cause a pullback for the
S and P five hundred, which would be likely a
buy opportunity, not a fear opportunity. So end of the day,
fade the fear. Don't fear financial collabs, don't fear any
(07:46):
of that stuff, don't fear the negativity of whatever the
news is trying to pump down your throat. Just ignore it,
ignore it, be happy, love life, move on. Thanks for
joining me. I hope you have a wonderful, amazing weekend.
God bless see you next week.
Now here's your care for my wealth guy, Chris Kleine.
Good morning and happy Friday to you. Today we're going
to talk about interest rates. I know, exciting stuff right
the US dollar, some currency market stuff, and then lastly
volatility with some sentiment rolled into it. So right now,
what we've got short term as in like the very
(00:20):
near term and time the longer dated maturities of the
US Treasury bond market just keep flirting with their trends.
They're holding just above these levels. And again, when I
say trend, it's the rate of change of price, volume,
and volatility with a time series of longer than three months.
That's what it means by trend. It's not just it's
not just price, it's more. It's more intricate than that.
(00:43):
But by holding just above trend in this semi bullish
looking phase, it just makes the bond balls crazy. Now
there's something that's important about the dollar and interest rates
that I'll get into in just a minute. But on
the short end of the yield curve, what we call
the FED proxy, the two year yield is very much
so far falling again at trend. It's failing right where
(01:05):
we would have expected it to so right now, the
bond market gives us this steepening yield curve, which implies
the FED is going to cut into a non recession.
Now that should be interesting and probably very very bullish
when it's all said and done. Germany is accelerating into
a growth and inflation accelerating together part of their economic cycle,
(01:27):
and they're seeing their tenure bond flirt with a bullish
trend phase transition as well. And so if that happens,
if the bond market in Germany breaks out to a
bullish trend, well that's just a continued signal for the
global non recession. Right. I'm going to jump real quickly
into a conversation or a specific identification, if you will,
(01:51):
before I talk about the US dollar, about the relationship
with the dollar in interest rates. Interest rates have since
September gone straight up, and it's not hard to see that.
Just go look at a chart of symbol TNX, which
is the US ten year yield, and symbol TYX, which
is the symbol for the thirty year yield, and then
(02:13):
compare that against DXY and do it over a long
term cycle. DXY is the US dollar index. What people
often just miss for whatever reason is that the market's
forward looking. And if you look at those charts that
I just mentioned a moment ago, you can see that.
But there's something happening underneath the surface of price right now.
With respect to the bond market. What we're seeing is
(02:37):
quite a shift in positioning. We're seeing commercial hedgers, you
could probably call that smart money. They're aggressively buying US
Treasury bonds right now, and this kind of behavior suggests
that interest rates are going lower. Meanwhile, we're going to
talk about the US dollar next. It's gotten completely hammered.
Rates usually follow the dollar. Now, if you look at
(02:58):
the last chart that I just just talked about, compare
on a longer term cycle, the US ten year yield
symbol TNX with the US dollar index symbol DXY. Look
at that relationship, right, If you look at that relationship,
they look exactly the same until recently. If you look
at it just recently, the DXY, the US dollar has
(03:19):
gotten completely beaten down, daring interest rates to follow it lower. Hey, look,
if commercial hedgers are right about rates falling, and the
dollar is right that rates are going to fall, the
Fed's going to do whatever the bond market tells it.
To do, which would be cut into a non recession,
if non recession is in fact what we have economically.
(03:41):
And just one more observation that you can see in
the price of this thing. But commercial hedgers have been
buying bitcoin very aggressively too, and so now you can
see how that's played out since bitcoin has recently popped
back up above one hundred thousand dollar mark. So what
do we have with the US dollar? It's failing again.
That trade trade is the rate of change of price,
(04:01):
volume and volatility over a one month period or less,
so we'd call that momentum. The resistance level. There was
at one hundred, and it hit it and it failed.
So it just continues its bearest trend, continuing to confirm
the expectation for lower interest rates. If we continue to
have this relationship where rates essentially follow the dollar, and
(04:24):
if these smart money bond buyers, the commercial headers are right,
that would lead us to expect these lower interest rates
on top of it. So the dollar isn't yet giving
us a signal for lower lows, but we still do
have lower highs. And when I say that, it's not
just a function of price, it's looking at that daily
trade range which is again, it's a calculus of calculus
(04:46):
rate of change, same thing, right, It's a calculus of
the price, volume and volatility of the thing that we're
looking at that gives us a likely range of trade
up and down. And when the bottom end, the low
end is high than the most recent closing price over
the last thirty days, we would call that a higher low.
If the top end of that range is lower than
(05:08):
the most recent thirty day closing high, we would call
that a lower high. And so what do we have
with the US dollar. We've got a higher low, but
a lower high. It's a squeezed range, which likely puts
us in just this chop zone if you will. Now
that said, is it possible we see the dollar move
incrementally higher towards one oh three over the next several weeks? Yeah,
(05:31):
I think it could be. That'd be the kind of
thing that would be very mister market like. In other words,
do whatever frustrates the most amount of people. Look, there
are a lot of US dollars short positions out there,
along with a lot of retail gold buying. Gold has
a very high negative correlation with the dollar, So dollar
up would not help gold. Dollar up stocks up would
(05:52):
be very much of a pain trade for a lot
of I think, very mispositioned investors that are out there.
So we'll see how it goes. The last thing is
just simply volatility vix, if you will, the S and
P five hundreds volatility metric. Most of the very recent
incremental S and P five hundred buying has come from
the systematic rules based crowd. And for those of you
(06:14):
who've been following me, know that we are systematically structured.
We have a very strong set of mathematical rules built
into algorithms that give us signals of where we should
position ourselves. And so we're simply doing what the systematic
crowd does. We're identifying the movements of the big money
(06:37):
in the systematic world and kind of riding those tailcoats, right,
that's the idea behind it. But amidst all this bearishness
and negativity, By the way, crazy stat of the day,
sixty four percent of US adults fear financial collapse more
than the end of life itself. That comes from Newsweek.
You believe them or not, I don't care, but that's
a crazy statistic that people are more afraid to financial collabs.
(07:01):
Goodness gracious. Sounds to me like they need to just
step back and have some contemplative prayer and ask for
a good walk with Jesus along the way. Any rate,
the whole systematic community has bought about one hundred billion
dollars of global equities over the last ten days. That's
a lot. So VIX continues to signal lower highs and
is now very very very close to signaling a lower low.
(07:24):
It is over sold, so a pop higher from here
probably takes it to twenty five. Anything above that would
give us a test of trade at thirty, and either
of those moves would probably cause a pullback for the
S and P five hundred, which would be likely a
buy opportunity, not a fear opportunity. So end of the day,
fade the fear. Don't fear financial collabs, don't fear any
(07:46):
of that stuff, don't fear the negativity of whatever the
news is trying to pump down your throat. Just ignore it,
ignore it, be happy, love life, move on. Thanks for
joining me. I hope you have a wonderful, amazing weekend.
God bless see you next week.
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