From the Punter Trenches (6 February 2018)


By Tanya Rawat

What you see it what you get or so the old adage goes. It was indeed a case of self-fulfilling prophecy wherein what majority of the market participants were seeing in the markets or talking about came true.

However, it isn’t all gloom and doom. It was a necessary correction as the markets were steaming ahead while the economic condition didn’t support the extremity of the move.

Key Takeaways: Bullish Gold, Bearish Dollar, Bullish SPX, Bearish DAX

Bullish Gold, Bearish Dollar
I still remain Bullish Gold and see it after a pause (I mentioned last week that while I remain bullish Gold either as a haven asset now or inflation hedge in the future as the latter picks up steam in the US it could retrace to $1,300/oz or $1,293/oz levels) heading to $1,375/oz or higher. If the Yen is unable to breach 108 support (a key support level) vs the Dollar (DXY), I see no more room for its strength primarily given how strong the momentum in the Nikkei is.

Overall, I still remain bearish DXY and see another 2% down move in tandem with EURUSD 2% up move to 1.28 levels. Though we might see temporary strength in the DXY.
We must keep this in mind as, if the DXY does start to strengthen we will see momentary correction in Gold as mentioned above.

Bullish SPX
The top constituents of SPX are:
Infotech, Financials, HealthCare, Consumer Discretionary, Industrials and so on. Energy is a meagerly 6% of the index. (There seems to be slowdown in momentum in Energy names in Europe and US on a weekly basis).

IT companies have their own idiosyncratic factors hitting it. APPL because of X not being able to receive calls and a switch to Intel from Qualcomm going forward for chips etc, Google with its case with Uber etc. If you look at the largest component of  Infotech and SPX, it started stumbling mid-January way before the ‘correction’.

Additionally, Financials are probably being sold off as ETFs with the large cap names are being sold off. Historically when yields do well, so do Financials given their direct relationship. Also, the correction in Financials is because of the psychological resistance of 500 set prior to the ’07 crash. If it breaches that, it will set new highs, hence this correction is minor.

Bearish DAX
It has breached the 50 week Simple Moving average of 12,647 levels and looks headed to 12000 levels and probably 11604. This was on the back of it unable to breach the 13,400 resistance for a second time in a row (last attempted in November 2017). There remain downside risks to DAX given that I view the Euro weakness as only temporary till it retraces to 1.28 levels.

Stay Calm and Carry On.

Questions? Comments? Contact me at

Copyright © 2018 Tanya Rawat. All rights reserved. These materials are proprietary to Tanya Rawat and may not be reproduced, modified, transmitted, transferred or distributed in any form without the prior written consent of the author Tanya Rawat.

No Monkey Business (Market Wrap- May 31st)

Coverage: Saudi Arabia, Turkey, UAE, Egypt, Nigeria and South Africa 


Author: Tanya Rawat

“Now I’m the king of the swingers, the jungle V.I.P,
I reached the top and had to stop” starts the beginning verse of the catchy Jungle Book track “I wan’na be like yo…” made immortal by Louis Prima.

In the same rambunctious flavour, expect the markets to show chutzpah this week with Turkey getting the party started with pre-partying already reaching crescendo in the latter end of May (USD terms); the Borsa Istanbul 100 Index lost ~9.30% as polls conducted by trusted agencies showed the AKP (viewed by many as pro-market) losing ground to opposition. Ahead of the June 7th elections, expect the downward slide to continue with Benchmark 2Y bond yields at close to 1Y highs at 9.85% and 5Y CDS at 220 bps. Additionally, Turkey equity markets have a strong negative correlation with the US 10Y Tsy yields which are creeping up to 1Y highs on strong economic data from the US.

The S&P looks stronger, the VIX at 13 levels, Dollar strengthening expected as US 10Y Tsy yields expected to rise further as the economic makeup improves in the US. Expect Gold to be flattish around $1200 per ounce till the June 5th deadline for Greece to make debt payments to IMF (a key catalyst).

As per my call last week, GCC markets broke first levels of support with the Dubai Financial Market (DFM) breaching the 4K level (AED terms), Saudi failing to continue its upward momentum. This week though markets look more resilient on Saudi opening mid-month via passive flows and I expect them to be range-bound with no major catalyst and Egypt to looking equally sedate.

While I expect Naira to fare in the median in the pool of African currencies, I expect the Rand to continue its slide on continued Dollar strengthening. This is hurting the JALSH Index akin to other emerging market indices.

“Ooh-bi-doo, I wan’na be like you
I want to walk like you, talk like you, too
You see it’s true, an ape like me
Can learn to be like you, too”

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