Reflation trade firing on all cylinders

Every aspect of the reflation trade is on track today.

• The dollar and JPY are weak
• Commodities are at trend highs (oil near $68), CRB up 30% in two months.
• S&Ps have broken above their 200-day moving avg
• Chinese PMI is above 50, US new orders are above 50
• US Treasuries are back near the top of recent yield ranges

It all looks so good, I can’t see it continuing. Call me a crumudgeon, but when skies are this clear, a squall is usually forming just over the horizon….

Cable looks like it won’t quit until it reaches 1.6500. At that point, maybe it is time to trim positions and wait for a consolidation. That said, the trend is too strong to even THINK about buying dollars. The only two positions versus the EUR and Commodity currencies are long and square. It’s okay to be long USD/JPY, but there appear to be better opportunities elsewhere.