#88: A Couple of Relationships

S2N Spotlight

There is no spotlight today; I just didn’t get a specific vibe.

S2N Observations

Inflation in Australia shot up more than expected, with year-on-year inflation coming in at 4%. The talk now is about a potential rate hike, not a cut. For political reasons, this will never happen while the rest of the world is cutting. Outgoing Reserve Bank governor Lowe really missed a perfect opportunity to act decisively. He waited too long and didn’t hike enough.

I created some new visualisations that I think are pretty nice. Remember, I will make all the code available on the site very soon. The 2 charts below are of the S&P 500 and the Nasdaq 100, with the number of constituents in each index above their own 50, 100, and 200-day moving average.

In the two visualisations I created below, I look at the relationship between the 10-year Treasury and the US Dollar Index and OIL. You can see a clear relationship, but over time there is often a breakdown, as shown in the ratio subplot with a spike (signal). These are often great trading opportunities. We will revisit this again.

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