Anyone who has ever rowed crew at a high level (I did not) knows it’s not how you start, but how you finish. Importantly, as the second half of the year kicks off, many of our key macro proxies (Gold, Silver, Yields, Yen, Yuan, European Banks, Pound Sterling, EURGBP, Defensives) are flashing textbook warning signs which share an ominous symmetry with prior declines of magnitude.

Technically speaking, Brexit is just another shot in the global currency war, and the collapse in the Pound and commensurate surge in the FTSE 100 in local currency terms simply reinforces the notion that a weaker currency is good for the host nation and bad for everyone else. EURGBP is surging and will continue to surge just as it did during the financial crisis in ’08 when GBPUSD collapsed coincidently. The Chinese have taken notice pushing the Yuan to the lowest levels of the year and getting weaker, and much like Brexit the S&P actually rallied for a week after last August’s shock devaluation before collapsing 11% in 6 days.

Conversely, currency alternatives like Gold, Silver and even Bitcoin are surging and getting stronger while the Gold/Silver Ratio has peaked and collapsed just as it did in October 2008. Similarly, safe haven buying across asset classes continues to belie the post Brexit bounce in stocks, with Yields and Yen making all-time lows on the charts dragging down banks and the Nikkei respectively, while pushing defensive yield plays (Ute’s, REIT’s, Telco’s, Staples) to the front of the peloton.

While we are constructive on Crude for now, in each of the last two years WTI stalled and rolled in July along with inflation expectations which have already rolled. On Friday the Put/Call ratio fell to .57 which is far too optimistic and wholly inconsistent with a macro technical backdrop of this magnitude. While the expansion in breadth and strength in Commodity Currencies is encouraging, the ongoing technical erosion and overwhelming body of evidence suggests that the risk/reward post Brexit is now to the downside.