Why Bananas? Will post a list this afternoon. Preview: Most of it ties back to the DXY in some way. Heads on a swivel. Lotta positions will be offsides this week or next. Rico knows things.

1) Totally fucking Bananas thread: Why this week could be insane, like me.

2) DXY has become the most crowded consensus short in the market. CFTC shows a massive net long in EUR and huge net short in USD. Everyone is bearish the DXY and bullish commodities right now.

3) The DXY is massively oversold here at 3 standard deviations below it’s 200-DMA. This level of oversold condition during the past 5 years has led to large rallies in DXY. Just sayin.

4) With a record budget deficit, funding needs are through the roof. Treasury will be announcing Aug-Oct issuance plans this week, and Fed has $2.5T of bills they will roll to longer maturities. As Fed ramps up the bal sheet again they create a mechanical SHORTAGE of dollars.

5) With the DXY negative correlation to the S&P at -.85 over the last 30 days, even a small mean reversion in USD could have significant consequences for risk assets. The Jaws between SPX and DXY have not been this wide since March.

6) Opposite of the oversold condition in the DXY, Gold has become a consensus long and is at 3 standard deviations above its 200-DMA (which has been a good sell signal). This is not shocking given the -.98 correlation between the dollar and gold last 30 days.

7) The VIX has remained extremely stubborn, and refuses to head down below that 20 level bulls want to see. It’s also showing signs of positive divergence. Yikes.

8) Underlying liquidity on single names in the market is awful. I have no evidence for this other than the fact that while I’ve been grossing down over the last few weeks, I’m having a very thought time selling single positions. It’s weak under the covers.

9) While equity capital markets had the busiest 3 months ever from May-July (sucking up money demand) there are signs of fatigue. Some hot deals that open up 25% are now breaking issue by the close. This is definitely a change worth monitoring.

10) High frequency economic data for both the US and Europe are showing clear signs of rate-of-change deterioration now. This is not surprising, but it is a reality. This rate of change into the seasonally weakest part of the year for stocks will only get worse next few months.

Bananas!!! Listen, I’m not saying the world is gonna end, and the long-term trend for risk assets and especially commodities is still up imo. BUT, we could see people get whacked in the willy pretty hard the next few weeks/months on any mean reversion. It’s coming.

OK park residents, that’s it from your fearless leader. The weekend ain’t over, and you have 3 hours until spoos open. You are now free to do the party.