Also, the Chinese yuan, which was knocking on the door of seven to one against the U.S. dollar late last year, has now stabilized. Massive new accommodation from the People’s Bank of China, including the recent addition of a record $83 billion into the country’s  factors at work?


Chart 2: China / U.S. Foreign Exchange Rate


Source: Fred


Also, industrial commodity markets are performing better than the news would suggest. These markets have put in impressive performances recently, advancing above major downtrend lines. Do the industrial commodity markets sense a global economic recovery is coming?


Chart 3: Crude Oil Futures - Weekly


Source: Chart from QST


In addition, the U.S. Treasury yield curve recently became less inverted, which could indicate a sign of better economic times ahead.


There is a rule of thumb that any time markets can advance in price when the news is bearish, it can be a sign of higher prices yet to come.


 the U.S.-China trade dispute will come sooner rather than later? I believe this may be the case. If this assumption is correct, we could expect higher prices for stock index futures and also for industrial commodities, such as copper and crude oil.


Alan Bush


E: alan.bush@admis.com T: 001 312 242 7911


23 | ADMISI - The Ghost In The Machine | January/February 2019


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