20221005 :Macro Cycles

GTZ Fx Trading

7 min readNov 14, 2022

Good morning Team,

It has been a while. Though a lot hasn’t changed materially from what I had earlier posted, let me:

first and foremost do a little recap on the same,
then a reference to communication with the leadership team
and then we enter into the main thing.

First, where are we, Second what do I anticipate next?

Table of Contents

Recap

Trend Position

Based on this chart, I noted that we were in 7G (Green — Bull run) which was in April 2022. Looks like we were still in 6R (Red — Bear run) and are still there.

I opened a trade, a discount one at $0.55 and we didn’t wait for $1.28. Status quo remains largely unchanged.

2. Team leadership communication

I have also stored the communication with the leaders and team in the blog so in case anyone wasn’t kept in the loop and would like to review here is the link

That being said, let’s review where we are.

Where are we? (as at the time of posting on 5th Oct 2022)

I will be reviewing from a Macro perspective in a simple way that everyone is able to understand.

First, the US dollar,
then US Stock market,
then inter-relation with Oil, Gold and Kenya.

Once we do that you will now understand crypto, fx and other markets.

USD Dollar Index Macro-Cycle: DXY

The USD, weekly timeframe. It has been on a parabolic rise from May 2021 to Sept 2022. This happens like once every 20 years. The other times it was in the 2000’s and 1980’s. In 2000’s it started in 1995 to 2001~6 years. In 1980’s, it started from mid 1980 to early 1985 ~4.5 years

One thing to note here is this:

STRONG DOLLAR -> means Interest Rates are high -> which means money moves FROM Equity Market (Stocks) TO Credit Market (Treasury Bills/Bonds).
WEAK DOLLAR -> means Interest Rates are low -> which means money moves TO Equity Market (Stocks) FROM Credit Market (Treasury Bills/Bonds).

There’s always money it just depends on where it is.

2. SP500 Macro-Cycle

This is its impact on the US stock market from 1920.

A strong cycle is a growth of above 200%, and a weak cycle is a growth of below 200%. Take note of how the market alternates between weak and strong every 20 years. Especially from 1960.

Added: Assuming full cycle total growth i.e. strong cycle + weak cycle and getting the average of the previous 2 full cycles we get an estimate of 500%. Taking the difference of the weak weak cycle for the period 2000–2020 we get 347%. Multiplying this by starting price gives us 11K$ by 2039 as a probable estimate.

3. Gold Macro-Cycle

For Gold, the opposite happens to US stock market.

Our benchmark here is 10%. Above 10% is strong, below 10% is weak.

4. Oil Macro-Cycle

For Oil, it’s the same as gold from 1960 with earlier years being an exception. I will explain why.

Benchmark here is 100%, Greater than 100%, strong. Less than 100%, weak.

NOTE: Initially US Dollar was backed with Gold. In essence, based on amount of gold the US government, they would print US dollar. In essence, you could go to the bank and exchange your dollar for gold. In the 1970’s US president Nixon shifted from gold to entering an agreement with Saudi Arabia and in essence oil producers, that oil should be bought in USD thus shifting from gold to oil in what they call petrodollars.
This shift is significant because it was a shift from gold as a hedge (store-of-value) to oil as a hedge (utility : medium-of-exchange). Oil is energy and is mainly used as a utility to enable the transport of goods and people, the production of energy and many other retail products and is thus the premium utility commodity (ever-green demand) in any market.
Investopedia: Petrodollars are oil export revenues denominated in U.S. dollars. Petrodollars are not a distinct currency; they are simply U.S. dollars accepted as payment by an oil exporter.
Oil exporters prefer the U.S. dollar because it is the pre-eminent global currency for global investments. That makes it the most convenient store of value for accumulated oil revenue, which needs to earn a rate of return to be useful.
The U.S. dollar’s global popularity does not depend on the good will of oil exporters. It is based on U.S. status as the world’s largest economy and goods importer, with deep, liquid capital markets backed by the rule of law as well as military power.

5. Emerging Market (Kenya) Macro-Cycle

Now Kenya goes same with Gold and Oil in being inversely (i.e. opposite) correlated with the US Stock Market S&P500.

The Benchmark here is 300%. Less than 300%, weak cycle. Greater than 300% GDP growth is strong cycle

That is how Kenya’s economical growth looks, considering the 20-year cycles

Macro Cycles Summary

Summary of the different markets. Near similar to Joseph’s “7 years of plenty, 7 years of scarcity” for us we have 20 years of strong growth, 20 years of weak growth.

NB* 2020 -2040 is anticipated if it repeats. For Kenya, if we take different steps the outcome is different. Singapore did it we can. Though we aren’t at the Country level we can do it at the individual level. Here is the gameplay to tap into this great opportunity.

Investor Strategy (2020 to 2039)

Here is the gameplay to tap into the booming US & Western markets, we either have to:

1. Export goods/services, to earn in USD
2. Labour — move there like diaspora and work there to get paid in USD
3. Invest there. This is where I come in. This is where we are playing at. Through the digital tools that have being availed.

To invest, one would be looking at what will perform equally to SP500 or better.

On this note, Bitcoin is the one that has outperformed SP500 after it obtained parity (1:1) in July 2017. You can see the parity line at the bottom of the chart above, blue line at 1.0

Based on this If (Bitcoin at 5 digit as at 2022, peak 6-digit), then definitely the rest of crypto like which I anticipate to even perform better than Bitcoin such as in succeding digit orders:

(Ethereum at 4 digit as at 2022, peak 5-digit)
(Litecoin at 2 digit as at 2022, peak 4-digit)
(Cardano at 0.ABC digit as at 2022, peak at 2 digit)
(Doge at 0.0ABC digit as at 2022, peak at 1 digit?)

Safaricom Macro Cycle

With that, here is an interesting discovery I found about the correlation between Kenya’s best-performing Stock Market i.e. Safaricom and S&P500.

This is Safaricom Share price performance on monthly timeframe from June 2008, just a few months after IPO. Note the bottoms I mark with red and the chart pattern.

S&P 500 Chart on a monthly timeframe.

That’s it for now. Chew and re-chew the information. Next week we have another Fed meeting. There are some little triggers/events that I am watching from the market/charts. Once done, I will inform the team that the ‘long wait’ is over, the bull run has started. Hopefully, mid-November but no guarantee on the same the ball is after all on the Fed’s court.

God bless, enjoy your day.