I leave you tonight with another look at the BIG picture pattern that has developed in the USD vs. CNH (Chinese Renminbi) relationship, and secondarily another look at the mirror image of Gold (GLD) and USD/CNH.
Maybe I am way out of bounds here, but USD/CNH continues to exhibit a July-Sep. topping pattern. While I realize that CNH is a partially (mostly) managed, centrally planned currency, I also am a believer that the patterns it develops are neither random nor contrived, and are not coincidental. In English, what that means is USD/CNH chart patterns still can provide us with clues about strength of trend, as well as changes in perception and sentiment about certain markets and sectors.
Increasingly, the attached chart of USD/CNH is warning us that the USD is on the verge of a significant trend change to the downside, which begs the question, is a thaw in the trade-tariff confrontation approaching quickly? (My suspicion is that the answer is "yes.").
The second chart attached below compared USD/CNH with GLD, The two images are almost identically inversely related. If the relationship continues as such, and if USD/CNH is rolling over into a major correction, then GLD is on the verge a its first significant rally since Dec.2017 into Jan. 2018.
The Model Portfolio is long UGLD (3 X Bull Gold ETN) at 8.22 in anticipation of a turn in the USD/CNH.
How might that impact the equity and bond markets? We have to expect that any alleviation of the uncertainty and escalation concerning the US-China trade relationship will be met with a positive reaction from the equity indices. Whether or not such a reaction initiates a wild, vertical thrust that triggers "the great performance chase" into the end of the year is anyone's guess (but the prospect of that certainly becomes more likely).
As for the bond market, my sense is that such a scenario will put upward pressure on rates (YIELD), and improve prospects for continued domestic and global growth (a relief rally in the Emerging Markets)...
Food for thought... Have a great evening everyone... MJP