Interesting TACs of the Week (January 1 – January 8, 2021)

Summary – A top-down review of interesting calls and comments made last week in Treasuries, monetary policy, economics, stocks, bonds & commodities. TAC is our acronym for Tweets, Articles, & Clips – our basic inputs for this article.

Editor’s Note: In this series of articles, we include important or interesting Tweets, Articles, Video Clips with our comments. This is an article that expresses our personal opinions about comments made on Television, Tweeter, and in Print. It is NOT intended to provide any investment advice of any type whatsoever. No one should base any investing decisions or conclusions based on anything written in or inferred from this article. Macro Viewpoints & its affiliates expressly disclaim all liability in respect to actions taken based on any or all of the information in this article. Investing is a serious matter and all investment decisions should only be taken after a detailed discussion with your investment advisor and should be subject to your objectives, suitability requirements and risk tolerance.


1.Helpful CNBC

Remember what we wrote last week:

  • “Our friends at CNBC kept reminding us how they see smart players getting negative on the S&P 500 both physically & mentally. The action does seem to be factually true. But could CNBC folks prove wrong again true to their record?”

Believe us when we say that we are not mocking CNBC. We do think of them as our “friends” because we like them and they help us so much. Just after we wrote the above, the stock market had a terrific week. Dow was up 1.6%; S&P up 1.8%; Nasdaq up 2.4%; Transports up 3% & the small led the big with Russell 2000 up 5.9%. The emerging markets ETF, EEM, was up 5.7%. The star of the EM space was South Korea, up 11.5%. Thanks CNBC. We sincerely mean it.

Last week, we also pointed out what Lawrence McMillan of Option strategist had written about a Spike Peak signal from volatility. That signal did close out on Monday. But lo & behold, he saw another Spike Peak signal on Tuesday:

Lawrence McMillan then wrote the following in his Friday summary:

  • Both breadth oscillators are now back on buy signals and are moving quickly into deeper overbought territory. That is a good thing when $SPX is breaking out to new all-time highs, as it is now. Volatility is remaining mostly bullish as well. A new “spike peak” buy signal was generated on January 5th. We remain bullish on the market and are going to continue to maintain long positions tightening stops and rolling up where appropriate.”

Volatility levels are also the key to Tom Lee’s case for a a really big move not just this year but in the next couple of weeks. Lee said:

  • “I am still in the camp that there is still room for lot more upside, potentially explosive [upside] and that has a lot to do with the level of fear. VIX last year averaged almost 30 for the full year; that is the 3rd largest in history. Only 2 times it was higher, 2009 & 2010. The year visibility returns VIX should make a pretty big dive; may get as low as 15 this year; I think that’s going to take scared money off the sidelines. If we get some capital flying into stocks, stocks could make a really big move in the next couple of weeks …. ” 

On the other hand, Tom McClellan warns about “a speculative blowoff” in “a whole separate category“.

There is no question that the stock market is extended & capable of coming down hard. In fact, Tom Lee himself reiterated his warning of a sharp fall to S&P 3500 in the same clip above. But it doesn’t have this warning. Wonder if CNBC intentionally deleted that somewhat important warning!  


2. U.S. Dollar & Commodities

Something amazing happened on Thursday & Friday. The U.S. Dollar actually went up two days in a row. And so?

Remember the man who said “Buy Bonds, Wear Diamonds” in 2018-2019? The same man who urged purchase of Bitcoin last summer?

  • Raoul Pal@RaoulGMI It feels like we could see this happen again, where Fed/March is a complete reverse of Jan or even Nov/Dec/Jan. The reflation trade is what I fear gets unwound. Dollar, bonds and stocks. We are seeing first few signs of cracks.
  • Raoul Pal@RaoulGMIThe dollar going up is a wrecking ball. Rates at let’s say 1.20 in 10 years is similar and a potential dark 3 months for the global economy from lockdowns lies ahead. Just exercise some caution. I could well be wrong but I’m more tempted to add 3 month S&P puts and bond calls.

The NFP number was not so bad but it was awful for the small scale labor sector:

  • Lawrence McDonald@ConvertbondIndoor dining restrictions, weather seasonal impact. Leisure & Hospitality Sector, a colossal 498k jobs were lost in December, 372k of those L&H layoffs were at restaurants and bars. Fiscal relief is NOT focused here, should be.

And the above does not project what could happen with the rapidly deteriorating Covid situation.

  • Albert Edwards@albertedwards99I agree with @edwardnh . In the wake of the ADP data it’s clear the US is heading back into recession. Companies and investors (esp bonds) are ‘looking through’ this dip. But a likely spread of the Covid19 super-contagious B117 strain, discovered in the UK will change everything.

We all know what happens when risk aversion rises – the U.S. Dollar goes up. Coincidentally Carter Worth, resident technician at CNBC Options Action, said the Dollar could rally 3-4% and Commodities could fall to that extent:


Interestingly, the trade Carter Worth suggested was selling/shorting Deere. He explained that chart of Deere was nearly identical to that of the Commodities index. 

Who are we to wonder about the sagacity of Mr. Worth? But if Deere stock has anything to do with food prices, then a look at the soybeens chart below might make sense.

Speaking of food prices, take a look at the Bloomberg story about the ex-critical-ally in the war on terror. The article points out that NaPakistan has 60 ordered ships to bring in food to alleviate the 8% inflation in that land. The problem is so acute that they have postponed cement exports that bring them critical foreign exchange. We read that Iraq is also facing a food shortage. We can’t help feeling that intolerable food inflation might morph into another EM crisis later this year. 



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