Antipodean Capital Macro Strategy Daily Jan 24 - Canadian rates markets are wrong to expect rate hikes when retail sales growth is zero and consumer and business confidence are falling. Sell CAD.

USD & Commodities: The USD is looking like it has again made a ST peak after 2 weeks of upside trade, without any real data or commentary to validate that though. This is supporting precious metals. The demand outlook for Oil is weakening and inventories again surprised on the topside last night.

Macro: Canada: How can an economy recording near zero retail sales growth, and about to experience Oil related headwinds, be one where markets and the central bank still expect to hike rates? Our sense is that the CAD will weaken.

Macro: ECB tonight: We expect the ECB to isolate downside risks to the global & EU economy due to recent soft data, even if inflation outcomes remain stable. This won’t be enough, yet, to alter rate hike timing, or to establish new TLTRO programs. Normally though, recognition of downside risks would imperil EUR, yet signs of a base are emerging there also. Perhaps focus on $JPY for USD shorts rather than EUR?

Summary: Stock & bond markets ended little changed, but gave up substantial 1%+ gains early in the US session, declined by 2% to have decent losses on the boards, but then closed flatish. Rotation out of small caps and Transports was a theme. US yields are marginally lower, and the USD softer as well, which buoyed precious metals from substantial early falls, while rising Oil inventories and demand worries dampened Oil.

New trades: None.
FX: Short $JPY at 107.50 risk 110. Long EUR$ at 1.1360 risk 1.1260 target 1.18. Short NZDJPY at 72 risk 75. Long JPYKRW at 9.85 risk 9.76 target 10.30. Bought $CAD at 1.3350 risk 1.3250 target 1.40.
BONDS: Long 2 units ASX Banks 5yr CDS at 54bps, target 140. Long NZ 10s short NZ 2s at 104bps risk 130bps target 50bps. Sold Portugal 10yr bought German Bund at 158bps, risk 110bps target 350bps. Bought US 10’s at 2.91% risk 3.1% target 2.6%. Sold HYG at 83.55 risk 85 target 80.
EQUITIES: Long ASX All Ordinaries Top 100, Short ASX Small Ordinaries at 0.81x ratio. Short US Banks Index at 93.25 risk 100 target 80. Stay short Dow Transports at 10375 risk 10800 target 8000. Bought Feb VIX at 20.2.
COMMODITIES. Long Silver short Gold at 83.9x risk 87 target 65. Long Silver 14.08 risk 13.85 target 14.80+. Bought Gold at 1243 risk 1230 target 1300. Sold WTI at 52.70 risk 54 target sub 49.