Implementation of a Macro Strategy

Implementation of a Macro Strategy

1.      Implementation of a macro strategy involves, first a fundamental model of factors, secondly a reliance on macro relative strength indicators, and lastly a view of macro chart patterns. Moving average indicators,  a core ingredient of short-term trading models, are too slow to activate a long term model.   

2.      What would it take to convince us that Deflation is off the table? 

A)     The three markets that to me provide useful information are the CRB cash Commodity Index, the Global Dow, and the Dollar.  I would not be surprised if the CRB Index is what keeps Ben Bernanke up at nights, not the employment numbers.  The Global Dow is a real representation of what global asset prices are doing.  And the dollar is out there for all to see.  So If the CRB took out the 2008 highs, The Global Dow took out the 2007 highs, or the dollar took out the 2011 lows I would need to look at a reset, especially if all three happened.

B)      I tend to view the other markets as trading vehicles which are highly affected by speculative assets and provide less useful information.  In this category I would put the S&P 500 and Gold markets.  Crude Oil is in its own special class, a non-market, run by Harvard trained Saudi’s who have a wide array of games that can be played.  They will take as much as they can of your money.  And not to forget T-Bonds, another manipulated market these days, in this case by the Fed and U.S. Treasury, no information there.