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Citi's 12 Charts Of Christmas
Despite misses on gold and the US Consumer, Citi's FX Technicals "12 Charts of Christmas" performed well in 2014 and today they unveil the the 12 most important charts (in their view) that establish a “starting point” for their outlook on markets as we head into 2015.
Via Citi FX Technicals,
What do we believe for 2015?
- EURUSD bearish trend remains intact and we expect to see 1.10-1.15 levels in the first half of 2015, with parity or below possible over the year. Full QE from the ECB is likely early in the New Year
- European Bank Stocks Index may be the outperformer as the ECB further expands its balance sheet, with a move to at least 163 on the Index likely and an extension to the 240 area possible
- USDJPY trend looks bullish with levels above 130 likely in 2015
- Consumer Confidence (U.S.) looks set to continue to move higher as the economy improves. A robust U.S. economy will likely propel US Equity markets to new highs in 2015. Another double digit percentage return here would not be surprising in 2015.
- We expect to see NFP numbers head towards or above 400k, the Unemployment Rate decline towards 5%, and an elevated Core PCE potentially printing near 2.5%
- 2 year yields (U.S) will break the cycle of lower lows and lower highs and the Fed will start to normalise rates by June at the latest. The 2’s versus 5’s curve will bear flatten as the market anticipates this normalisation of monetary policy
- Crude oil (WTI) should regain some of its recent losses and could quite possibly head back towards $90 or above
- USDBRL looks likely to complete the double bottom around 2.62 and target as high as 3.70
Overall: A more resilient economic/employment recovery in the US should be favourable for the USD and see US yields (in particular short end) head higher. Europe, along with the EURO, will continue to struggle. The backdrop for Equity markets overall should be positive, as a lot of liquidity remains in the system despite the withdrawal of accommodation by the Fed.
- For only the 2nd time in the history of floating exchange rates we are looking at the potential for a bearish outside YEAR in EURUSD.
- The only other time this happened was 1980, after which the USD rallied for another 4 years. There has also only once ever been a bullish outside year in EURUSD (1985), which was followed by 2 up years and a USD bear market that lasted 7 years (EUR as it’s components).
- In 1981 (the year following the bearish outside year) EURUSD fell to a low 25% below the 1980 close. In 1986 (the year following the bullish outside year) EURUSD rallied to a high 23% above the 1985 close
- IF we were to see a dynamic similar to the above next year it would suggest that EURUSD could trade below parity before the end of 2015
- In addition, a close above 84.75 on the USD-Index, if seen, would be a bullish outside year (Not shown).
A similar move in magnitude to the 1995-1998 period would suggest that 140 is “in the crosshairs”
The present set-up in volatility is more like that seen in 1993/1994 than 2007. As a consequence, we suspect the trend low is in and a more normalised level of volatility can be expected in 2015 (more likely in the mid to high teens than single digits).
A monthly close this December above 56 bps would give an outside month (arguing for higher yields). The last time this happened was at the May 2013 lows. From the close that month we went 25 bps higher in less than 4 months.
A bounce back towards ~$90 or above looks likely over the next 12 months (WTI).
A decisive break of 2.62 suggests much higher levels with a target as high as 3.70.
And summarizing Citi's strongest conviction 2015 views...
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Your government does evil things. The government arrested and ruined the life of an innocent man. Watch the documentary. Takes about 12 minutes.
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If you vote for Justice Denied before midnight it may get to Sundance.
Thanks for your help.
Regarding the Cromnibus bill, here are my insights.
Could this end up being another form of QE, less traceable to some back door through Belgium?
Consider theoretically when the first bank tries to put America on the hook for some hundreds of billions of some derivative due bill. Will that be a signal to Russia, China, or any other treasuries holder to start cashing out?
I wouldn't be surprised to see foreign T-Bill holders pressuring the congress to eliminate that clause ASAP.
One of the worst parts of this situation is that prior monies held by banks and investors were more honest money and not connected to some dubious derivative claiims on wealth Older monies were more structurally tied to some real work and real resources that were used to generate real profit. But these derivative claims on wealth seem to be some side bets that were never really structurally tied to real work done, real risk, and real economies. Rather, many of these derivatives seem to be conjured bets between parties that were acting in irresponsible ways. A lot of these derivative side bets were done at the over the top level in the economy, where the business model doesn't seem to have been tied to prosperity and constructive work performed.
I'm expecting some bank to be quickly trying to ramrod through some derivatives relief, before others banks can get in line ahead of them. Once the scale of derivative claims starts heading north, there will be blowback, and changes will be sought.
was a duplicate post. Apologies
not bad, seems very credible. But just that 90 dollar oil part may be wrong because there they would assume a new market peak recovery in 2015 and that is still the question if that is possible
Israel hits Iran, and we are there tomorrow.
agreed. sounds like the perenial short bond call.
it bothers me that i agree with most of the above. will have to carefully reexamine my thesis for 2015.
Now I'm convinced. I'm going to sell all my Au, Ag,Pb and 4140 steel and goin' long stawks....thanks ZH!
Hmmmm...rather optimistic, imho...I'll be posting my 2 cents' worth on my blog towards the end of this year.
Predicting outcomes is a difficult business but predicting them on a time line is totally foolhardy.
I am going to save Citi's predictions and see what doesn't happen.
Germany printed insanely in the early 1920s and remembered what it was like.
Looks like the US and other parts of Europe need a lesson in hyperinflation.
Deutschland remembers, stories handed down from generation to generation. The stuff that isn't even hinted at on ZH.
Oil will go to 40 before going to 80-90 or more: Perfect time for a long.
Bullish bitchez !
Overall: "A more resilient economic/employment recovery in the US should be favourable for the USD"
Would you like fries with that?
PLZ not another year of this BS!
heads - tails .....what happens if they are wrong.......NOTHING !!!
Wow is all I can say on this forecast. Just when I see a collapse coming an article of pure nadulterated bullshit. Only in Maerica
<--- Xmas Tree
<--- Hanukkah bush & Kwanza Hut
satan's chosen surrounded by all their pagan symbols in 1 Cartoon
The shitibank red ring of saturn on the bottom right is like a satanic seal of approval
What a load of bollocks.
Take the opposite view of most of the "analysis"--read guesswork-- on a wish and a prayer.
They don't know where any of the numbers will be next week never mind next year
He's been smoking something from his stocking. A 140 yen a sub par euro. That happens the yield on the 10 will be 0.25, the 30 probably 1.5...... We will have massive deflation as well. Corporate profits will be crushed, and you would be seeing 25x PEs..... nope.... a Keynesian fairy Christmas, but not likely to happen, unless the Bundesbanks gets nail guns for Christmas.
charts are now meaningless
so many charts can't infer them
The most important chart of all is missing, though inferred in the others. That would be the chart showing the sheer amount of theft of the American people's wealth and souls.
An American, not US subject.
"Wishing for the head of a bankster under the Christmas tree this year."
Where is the cartoon representation of the US citizens back stopping bank derivativs trading and positioning. So bank wins, bonuses for the traders and executives, bank loses bonuses for the traders and executives.
Ah, Yup. Yup. Yup.
And I believe Unicorn's fart Pixie dust!
Ahuh. Ahuh. Ahuh.
I'm surprised Citi had time to put all those charts together, they've been so busy lately writing legislation for the US Congress.
This is Citi's PPT to Congress showing how good things would be if only insurance for derivatives failure was passed on to the taxpayer.
Crony Bus bill passed (Wall Street Bailout 2.0 circa 2014 - because 2008-Present "wasn't enough").
Dow 20,000, shadow inflation and unemployment ^, more currency debasement, ZIRP & NIRP, etc.
In other words, Central Bank insanity to punish savers, citizens, pensioners & retirees - with gravy to banks and banksters - to continue unfettered.
That WTI chart kind of sticks out like a sore thumb with the on going "recovery is gaining speed" meme TBTB push through the propaganda channels 24/7. Don't you just hate it when a market temporarily resumes it's true value in a completely captured econoomy?