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highlights

=IF(CLH4L)

Higher for longer crude plus stable equities is bearish USDCAD

8, 800, 808, 818, 880, 888, 885, 884, 889, 881, 887, 886, 883, 882, 811, 815, 850, 858, 855, 854, 859, 851, 857, 856, 853, 852, 805, 840, 848, 845, 844, 849, 841, 847, 846, 843, 842, 804, 814, 809, 819, 890, 898, 895, 894, 899, 891, 897, 896, 893, 892, 801, 807, 817, 870, 878, 875, 874, 879, 871, 877, 876, 873, 872, 806, 816, 860, 868, 865, 864, 869, 861, 867, 866, 863, 862, 810, 813, 830, 838, 835, 834, 839, 831, 837, 836, 833, 832, 803, 812, 820, 828, 825, 824, 829, 821, 827, 826, 823, 822, 802, 18, 80, 88, 85, 84, 89, 81, 87, 86, 83, 82, 11, 15, 50, 58, 55, 54, 59, 51, 57, 56, 53, 52, 5, 500, 508, 518, 580, 588, 585, 584, 589, 581, 587, 586, 583, 582, 511, 515, 550, 558, 555, 554, 559, 551, 557, 556, 553, 552, 505, 540, 548, 545, 544, 549, 541, 547, 546, 543, 542, 504, 514, 509, 519, 590, 598, 595, 594, 599, 591, 597, 596, 593, 592, 501, 507, 517, 570, 578, 575, 574, 579, 571, 577, 576, 573, 572, 506, 516, 560, 568, 565, 564, 569, 561, 567, 566, 563, 562, 510, 513, 530, 538, 535, 534, 539, 531, 537, 536, 533, 532, 503, 512, 520, 528, 525, 524, 529, 521, 527, 526, 523, 522, 502, 40, 48, 45, 44, 49, 41, 47, 46, 43, 42, 4, 400, 408, 418, 480, 488, 485, 484, 489, 481, 487, 486, 483, 482, 411, 415, 450, 458, 455, 454, 459, 451, 457, 456, 453, 452, 405, 440, 448, 445, 444, 449, 441, 447, 446, 443, 442, 404, 414, 409, 419, 490, 498, 495, 494, 499, 491, 497, 496, 493, 492, 401, 407, 417, 470, 478, 475, 474, 479, 471, 477, 476, 473, 472, 406, 416, 460, 468, 465, 464, 469, 461, 467, 466, 463, 462, 410, 413, 430, 438, 435, 434, 439, 431, 437, 436, 433, 432, 403, 412, 420, 428, 425, 424, 429, 421, 427, 426, 423, 422, 402, 14, 9, 900, 908, 918, 980, 988, 985, 984, 989, 981, 987, 986, 983, 982, 911, 915, 950, 958, 955, 954, 959, 951, 957, 956, 953, 952, 905, 940, 948, 945, 944, 949, 941, 947, 946, 943, 942, 904, 914, 909, 919, 990, 998, 995, 994, 999, 991, 997, 996, 993, 992, 901, 907, 917, 970, 978, 975, 974, 979, 971, 977, 976, 973, 972, 906, 916, 960, 968, 965, 964, 969, 961, 967, 966, 963, 962, 910, 913, 930, 938, 935, 934, 939, 931, 937, 936, 933, 932, 903, 912, 920, 928, 925, 924, 929, 921, 927, 926, 923, 922, 902, 19, 90, 98, 95, 94, 99, 91, 97, 96, 93, 92, 1, 100, 108, 118, 180, 188, 185, 184, 189, 181, 187, 186, 183, 182, 111, 115, 150, 158, 155, 154, 159, 151, 157, 156, 153, 152, 105, 140, 148, 145, 144, 149, 141, 147, 146, 143, 142, 104, 114, 109, 119, 190, 198, 195, 194, 199, 191, 197, 196, 193, 192, 101, 107, 117, 170, 178, 175, 174, 179, 171, 177, 176, 173, 172, 106, 116, 160, 168, 165, 164, 169, 161, 167, 166, 163, 162, 110, 113, 130, 138, 135, 134, 139, 131, 137, 136, 133, 132, 103, 112, 120, 128, 125, 124, 129, 121, 127, 126, 123, 122, 102, 1000, 7, 700, 708, 718, 780, 788, 785, 784, 789, 781, 787, 786, 783, 782, 711, 715, 750, 758, 755, 754, 759, 751, 757, 756, 753, 752, 705, 740, 748, 745, 744, 749, 741, 747, 746, 743, 742, 704, 714, 709, 719, 790, 798, 795, 794, 799, 791, 797, 796, 793, 792, 701, 707, 717, 770, 778, 775, 774, 779, 771, 777, 776, 773, 772, 706, 716, 760, 768, 765, 764, 769, 761, 767, 766, 763, 762, 710, 713, 730, 738, 735, 734, 739, 731, 737, 736, 733, 732, 703, 712, 720, 728, 725, 724, 729, 721, 727, 726, 723, 722, 702, 17, 70, 78, 75, 74, 79, 71, 77, 76, 73, 72, 6, 600, 608, 618, 680, 688, 685, 684, 689, 681, 687, 686, 683, 682, 611, 615, 650, 658, 655, 654, 659, 651, 657, 656, 653, 652, 605, 640, 648, 645, 644, 649, 641, 647, 646, 643, 642, 604, 614, 609, 619, 690, 698, 695, 694, 699, 691, 697, 696, 693, 692, 601, 607, 617, 670, 678, 675, 674, 679, 671, 677, 676, 673, 672, 606, 616, 660, 668, 665, 664, 669, 661, 667, 666, 663, 662, 610, 613, 630, 638, 635, 634, 639, 631, 637, 636, 633, 632, 603, 612, 620, 628, 625, 624, 629, 621, 627, 626, 623, 622, 602, 16, 60, 68, 65, 64, 69, 61, 67, 66, 63, 62, 10, 13, 30, 38, 35, 34, 39, 31, 37, 36, 33, 32, 3, 300, 308, 318, 380, 388, 385, 384, 389, 381, 387, 386, 383, 382, 311, 315, 350, 358, 355, 354, 359, 351, 357, 356, 353, 352, 305, 340, 348, 345, 344, 349, 341, 347, 346, 343, 342, 304, 314, 309, 319, 390, 398, 395, 394, 399, 391, 397, 396, 393, 392, 301, 307, 317, 370, 378, 375, 374, 379, 371, 377, 376, 373, 372, 306, 316, 360, 368, 365, 364, 369, 361, 367, 366, 363, 362, 310, 313, 330, 338, 335, 334, 339, 331, 337, 336, 333, 332, 303, 312, 320, 328, 325, 324, 329, 321, 327, 326, 323, 322, 302, 12, 20, 28, 25, 24, 29, 21, 27, 26, 23, 22, 2, 200, 208, 218, 280, 288, 285, 284, 289, 281, 287, 286, 283, 282, 211, 215, 250, 258, 255, 254, 259, 251, 257, 256, 253, 252, 205, 240, 248, 245, 244, 249, 241, 247, 246, 243, 242, 204, 214, 209, 219, 290, 298, 295, 294, 299, 291, 297, 296, 293, 292, 201, 207, 217, 270, 278, 275, 274, 279, 271, 277, 276, 273, 272, 206, 216, 260, 268, 265, 264, 269, 261, 267, 266, 263, 262, 210, 213, 230, 238, 235, 234, 239, 231, 237, 236, 233, 232, 203, 212, 220, 228, 225, 224, 229, 221, 227, 226, 223, 222, 202, 0

Do you recognize the order of this sequence?

Current Views

Flat

Something to think about

The market gets bored of bearish themes more quickly than it gets bored of bullish themes because it’s expensive to own puts, it’s expensive to stay short, and stocks have positive drift. So today I want to imagine a scenario where oil stays high because of the new tolls that Iran will collect, but the global supply chain does not freeze up, and equities do a replay of April 2025. Yesterday, I showed what such a replay would look like chart-wise: Rally to the 200-day, consolidate, then blow higher.

If that happens, short USD will probably be an excellent trade because:

  • Oil up + stocks up tends to be bearish USD. More on this after these bullets.
  • The market is extremely long USD and yet people are mostly bearish USD. This mismatch of positions and hedges vs. actual macro views is glaring and could resolve in a massive forced removal of hedges accelerated by FOMO USD shorts and CTA dollar selling.
  • Fed much less likely to hike into higher inflation vs. ECB and others. Yes, the ECB hiking into a crisis could be bad for the EUR. But if they are hiking because oil is higher-for-longer, labor markets are tight, equities are ripping, and life is okay… That’s bullish EUR.

Pulling out MEGACORR.xls, here’s how USDCAD behaves under various SPX and oil combinations since the year 2000.

While many correlations have changed post-COVID, the post-pandy data shows the same result (with much smaller sample sizes).

I am not putting this as a trade idea in the sidebar, but I do think short USDCAD here makes sense in many scenarios. Tim Power here at Spectra loves 2-week 1.3800s.

The chart looks decent for a couple of reasons:

  1. Perfect touch of downtrend off the Tariff Man highs around 1.45 (red line).
  2. Failure above 70 in RSI (bottom panel)

The blue line shows you that rate differentials roughly agree with the current level of USDCAD. The “Canadian economy is really bad” narrative seems to be well priced in by now after a couple of years of sluggish GDP growth and a drop in immigration hurting the gross/nominal growth side. Short with a stop above 1.40 or buying 2-week 1.3800s both look reasonable to me, though I don’t have QUITE high enough conviction to put the trade in the sidebar. It’s a weird thing sometimes trying to decide whether a trade is worthy of the sidebar. In this case, the whole idea is predicated on higher-for-longer oil + stocks do okay. So, the point here is if you believe that regime is what we’re going to see—short USDCAD will be a nice trade.

Some dates

There does not seem to be an official time designating the start of the ceasefire, but if we add two weeks to the rough start time that is April 21/22. Talks between the U.S. and Iran begin Saturday morning, April 11 in Islamabad. Given the Strait is still under Iranian control, these talks will either have to yield a compromise or a complete U.S. capitulation. Either is possible, but I suppose the third option is that the 2-week ceasefire is just a pause to allow the U.S. to reset and figure out a new strategy. I am in scenarios/planning mode here, not forecasting mode.

Final Thoughts

  1. You can see the 2027/2030 zone on the Brent crude curve moving up, suggesting a bit of a higher-for-longer type of situation.

  1. USDJPY bullish seasonality has finally ended and turns bearish over the next few days.

Have a perfectly-sorted day.

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Do you recognize the order of this sequence?

It is a list of all numbers from 0 to 1000 in alphabetical order.

Note that I am using Library of Congress (LOC) alphabetization methodology here, which puts 800 before 18. In the dictionary method, 18 comes before 800.

Library of Congress method goes word by word, while dictionary method ignores spaces and goes letter by letter. In the Library of Congress method, nothing always comes before something. So eight hundred, where there is a space after eight (i.e., nothing after eight) comes before eighteen, where there is an “e” after eight (i.e., something after eight). You got me?

To give you one more example: In LOC method, ant colony comes before antacid because the space after ant is considered first, standing before the letter a. In Dictionary methodology, antacid comes before ant colony because a comes before c and this method ignores the space.

good luck ⇅ be nimble

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