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Citi Unveils The 12 Charts Of Christmas

Tyler Durden's picture


Despite misses on stocks and gold, Citi FX Technicals' excellent "12 Charts of Christmas" performed well in 2013 directionally across FX, bonds, and commodities. This year, Tom Fitzpatrick and his team unveil 2014's most important charts - establishing a starting point for their outlook in the year ahead. From a slowing housing market to expectations of a strong USD; and from a "roll-over" in Consumer Confidence to strength in gold, they see the "repair process" continuing albeit at a slow pace but worry that the stock markets are looking more and more like 2000.


Via CitiFX Technicals,

What do we believe for 2014?

  • The USD bullish trend remains intact and the DXY Index should set new trend highs (90+).
  • EURUSD: We expect a sharp turn lower that could see EURUSD in the 1.18-1.22 range in 2014. A very easy ECB policy will likely be a contributing factor here.
  • USDJPY: Remains in a broad uptrend and we would expect a move towards at least 110-111 this year. This should continue to be supportive of the Nikkei.
  • Consumer Confidence: Looks set to “roll” lower in a fashion similar to 2000 and 2007. This may have implications for the U.S. Equity market which looks stretched at this point in a fashion similar to 2000.
  • Housing looks better than it was at the lows but nowhere near the traditional recovery/escape velocity of prior cycles. In 2014 we may even see a pause in its improvement.
  • US yields: Similar to last year we suspect that an initial move lower may well emerge towards at least 2.40% (10 year) and 3.50% (30 year) and possibly lower. This is within a longer trend dynamic where they will likely move higher again thereafter. We would expect significantly higher yields in the next few years to materialise.
  • Gold finally looks to be forming a base for a move higher. However we need both more convincing price action and likely a struggling equity market to solidify this potential.
  • In Local Markets the USDBRL chart is one of the more convincing pictures and suggests a much weaker BRL is in prospect in 2014.

Overall: We see a backdrop where the “repair process” of recent years continues at a slow pace but where the US continues to look like the “best house on a bad street” when it comes to the major developed nations. This should also benefit the USD and keep the relative picture for yields (monetary policy) in favour of the US.


The corrective platform could be the “launch pad” for a move to new highs in the trend and a stronger USD all the way to 2016 as per previous post housing collapse cycles.

EURUSD turning lower like it did in 1998? A move towards 1.20 this year and much further over the next 2+ years looks likely.

A move similar to 1978-1982 could see USDJPY as high as 118 eventually while a repeat of 1995-1998 would suggest as far as 139. An average of the two could see USDJPY close to 130 by 2015. For 2014 we would expect a move to at least 110-111

Another 4 year and 4 month trend coming to an end?

The last 2 peaks in Consumer Confidence led the S&P by 3-4 months. That pretty much takes us to now... big divergence between the Equity market and the real economy.

Peak in the 1,820-1,830 area? Prior peaks have seen pretty quick falls to the 200 week moving average.

Is the US 30 year yield double topping as it has done so many times before?

The potential double bottom will target 3.70 with a break above 2.62. Beyond there the all-time USDBRL high at 4.00 could well be eventually tested.

And summarising their strong conviction 2014 views:


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Thu, 12/12/2013 - 15:10 | Link to Comment HedgeAccordingly
HedgeAccordingly's picture

wonder if the QQQ is one of their charts of X-mas -

Thu, 12/12/2013 - 15:26 | Link to Comment knukles
knukles's picture

Here's a Christmas present for ya'

Ha ha ha ah ... just at time for a Merry Christmas for the statists 

Thu, 12/12/2013 - 18:17 | Link to Comment monad
Thu, 12/12/2013 - 15:17 | Link to Comment TheRideNeverEnds
TheRideNeverEnds's picture

the tape is extraordinarily bullish, people are buying the shit out of this dip.  looks like we are going sharply higher into the end of the year, probably another 10% or so.  


this year reminds me of 1995, and if that is any comparison we are not even remotely close the this cycles high.  



Thu, 12/12/2013 - 15:26 | Link to Comment Orwell was right
Orwell was right's picture

The 'nay sayers' will give you negative marks....but I suspect that your basic theory is sound.    The markets may (or may not)  pop 10%.....but there is still life left in the current money printing frenzy.   

Thu, 12/12/2013 - 15:52 | Link to Comment TheRideNeverEnds
TheRideNeverEnds's picture

ok maybe 10% back up from here is a stretch, realistically more like 5%  but there is one thing you can take to the bank, they will not close them below 1800 for the year.  the SPX options are priced right now as we speak for a 47.852 point move from today to the end of the year.  I am thinking that will mostly be spent going straight back up.   


imo the risk remains to the upside, and we are seemingly going signifigantly higher.


hell look at twitter (a company that makes no money and has no plan to make money) is up 30+% this week alone with a market  valuation of thirty billion dollars now...  


we all know this market is not based on fundamentals in any was whatsoever unless by fundamentals one means M2 inflation and euphoria.


I am still shorting the shit out of basically everything here, just sayin.    

Thu, 12/12/2013 - 15:22 | Link to Comment Orwell was right
Orwell was right's picture

These charts suggest no near term crash, just a long, slow, crawl where life never gets better....and where the economy won't totally implode to force the issue. 

Thu, 12/12/2013 - 15:27 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

Charts shmarts, I can draw little arrows too.

Thu, 12/12/2013 - 15:30 | Link to Comment delivered
delivered's picture

The problem with these types of analyzes, especially with FX, is that all of the major currencies simply move up and down against one another, over and over and over again. It's like a bunch of drunken sailors trying to hold up each other after a hard night of partying. Well what this tells me is that the Euro and the Yen are going to be doing the most "shots" at the bar with only the USD still strong enough to carry these drunken fools from one bar to another.

As for PMs, I'm expecting (and actually hoping for) another major pounding early in the year as the markets continue to sell the Kool-aid that all is well and the repair and recovery process is well underway. Of course don't mind that consumer debt, corporate debt, and most importantly, soverign debt levels will continue to accelerate to new record levels as the new norm for Washington is $600 to $700 billion in annual deficits. Just a matter of time and pressure before another round of excessive debt crushes some segment of the economy which spreads throughout the world. 

As for the stronger USD, well this will not bode well for US exports as well as companies with significant foreign operations converting earnings back into USDs. On top of corporate guidance being very poor right now, a strong USD is going to further drag earnings. Not a positive sign at all for the US trade balance.

What I'm most interested in starting the year will be corporate earnings, especially from companies dependent on the holiday season. Not so much at the top line revenue/sales level as these companies will figure out a way to hit the top line (but stuffing channels, discounting everything they have in stock, etc.). Rather, at the "real" margin level as pricing pressure will put pressure on both gross and net operating margins. The reason I mention "real" is that you have to be very careful with how companies may manipulate yearend earnings by inflating inventory values which tends to decrease direct costs of goods sold and improve margins. So if margins do hold, the key data point to understand is centered in ending inventory values (i.e., higher levels, increased days sales outstanding in inventory, reduced turns, etc.). If these continue to increase at the same rate as the third quarter of 2013, then somewhere in 2014, there's going to be a day of reckoning when all of this inventory has to be either liquidated at deep discounts or writtenoff.

Just my two cents but I find these types of analyzes less and less useful as they fail to account for the deep and wide spread structural problems plaguing the global economy.

Thu, 12/12/2013 - 15:29 | Link to Comment Sufiy
Sufiy's picture

Axel Merk of Merk Investments: Buy Gold for Protection as the Risk is Something is Going to Blow Up

Gold is taking the pause after its recent advance to $1260, but US Dollar is testing the new lows after breaking below 80.00 yesterday. Equity markets are under presser today and the most notable rotation is JPMorgan going Net Long Gold according to the reports.

Thu, 12/12/2013 - 15:33 | Link to Comment The Heart
The Heart's picture

History lessons are free. The question to the majority of intelligent beings on this planet is, will you repeat and continue to support the horrid history of war mongering for the banksters that seek to destroy the human race, and this planet?

Stupid stupid does.



Thu, 12/12/2013 - 15:34 | Link to Comment Yen Cross
Yen Cross's picture

   DXY @ 90.00> lmfao

Thu, 12/12/2013 - 15:36 | Link to Comment buzzsaw99
buzzsaw99's picture

Glad to disagree with their assessment of ust rates. imo they have it backwards, the first move will be yet higher, topping 3% on the 10y. From there it will go much lower over the next 3-5 years.

Thu, 12/12/2013 - 15:48 | Link to Comment W74
W74's picture

Semi-on-topic here, but I want to let JC Penny know that I've just spent the past few hours cleaning out my closet and drawers and that I have TWO large 50 gallon trashbags (heavy duty lawn type) stuffed full of garments which I will be dropping off at Goodwill.

I wonder if I'll see as many people there as I did last time.  So just to let them know....I'm good on clothes.  Like, WAY too many clothes.  Done.  Not buying any and haven't for years anyway.  Were it not for the well-to-do in-laws (Divorced as of Tuesday! Yay!) I'd be wearing the same shit from 10 years ago.  Not buying anything, and judging by the amount of traffic in goodwill stores I don't think a lot of people will be this year either.

SECOND HAND ECONOMY BITCHES!!!  Craigslist and Ebay are doing wonders for me trying to clean out shit.  I'd toss it anyway, but if people want to throw some fiat units my way that's cool too.

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