Developed Countries

Highlights Global growth is peaking, but US growth is losing momentum relative to its peers. This has historically been negative for the greenback. Chinese monetary policy is no longer on a tightening path, and might ease going forward. As discounting mechanisms, cyclical currencies should outperform. Our bias is that non-US growth will outperform growth in the US over the next 12-18 months. This will lead to capital reallocation away from the US dollar. While US bond yields could rise towards 2%, real interest rates will remain low compared to history. Our recommendations remain the same: the DXY will struggle to punch above the 94-95 level, but will ultimately touch 80. Feature Chart I-1US Growth Momentum And The Dollar The DXY index is up for the year, but has twice failed to punch the 94 level. The first leg of the rally from January to March occurred within a context of rising global yields, led by the US. The second leg, starting in June was triggered by a perceived hawkish shift from the Federal Reserve. The common denominator for both legs of the rally was that US growth was outperforming growth in the rest of the world. But that is beginning to change. Bloomberg consensus forecasts show a sharp reversal in US growth momentum, relative to its peers (Chart I-1). Historically, this has put a firm ceiling on the greenback. Cycles And The US Dollar The dollar tends to fare worse early in the cycle when growth is rising but inflation is falling (Chart I-2). Admittedly, inflation prints in some developed markets like the US and Canada have been rather strong. But to the extent that these prints reflect transitory factors, it should allow global central banks to remain accommodative, supporting growth. The remarkable thing about Chart I-1 is that the rotation in growth from the US towards other countries has been broad based. Countries such as Canada, New Zealand, Brazil and Mexico are seeing a bottoming in growth momentum relative to the US (Chart I-3). Chart I-2The Dollar Fares Poorly Early In The Cycle Chart I-3A Rotation Of Growth From The US This bottoming in growth momentum is occurring at the same time as local central banks are becoming more orthodox about monetary policy. The Reserve Bank of New Zealand has ended quantitative easing. The Bank of Canada has cut asset purchases in half. Brazil, Mexico and Russia, among other emerging market countries are hiking interest rates. While it is true that inflation in some developed and emerging markets like Canada, the UK, Brazil and Russia is perking up, for most developed markets as a whole, inflation is actually surprising to the upside in the US (Chart I-4). China has been tightening policy amidst very low inflation. Currencies tend to be driven by real rates. A growth rotation away from the US, in addition to more orthodox monetary policies outside the US, will be negative for the greenback. Chart I-4US Relative Inflation And The Dollar What About Chinese Growth? Chinese growth expectations are still cratering relative to the US. The fiasco around the China Evergrande Group has also led to speculation that this could become a systemic event. For developed market currencies, especially those linked to China like the Australian dollar, this is a market-relevant event. Admittedly, offshore markets have started discounting a bigger depreciation in the RMB (Chart I-5). That said, the RMB has been rather resilient against the dollar suggesting that the risk of this becoming a systemic event is rather low (Chart I-6). Chart I-5The Evergrande Risk Is Not Yet Systemic Chart I-6Chinese Equities And The RMB Have Decoupled. We believe currency markets are sending the right signal. For one, the Evergrande debacle is occurring at a time when China is no longer tightening monetary policy. Chart I-7 shows that cyclical currencies in developed markets tend to be coincident with the Chinese credit impulse. As such, any easing in monetary policy will put a bottom in these currencies. Over the years, the Chinese bond market has become more and more liberalized. This two-way risk implies that zombies companies should be allowed to fail while unicorns flourish. It is true that regulatory control has been front and center in the current Chinese equity market malaise. That said, our bias is that liberalization is a reason why portfolio inflows into China continue to accelerate, as the economy moves closer to market-determined prices (Chart I-8). This has supported the RMB, a big weight in the Fed trade-weighted dollar. Chart I-7Chinese Policy And DM Currencies Chart I-8An Unrelenting Increase In Chinese Inflows A lot of EM debt is denominated in US dollars, which could be reprised for default risk. But on this basis, the Fed is ahead of the curve. This was the very reason the Federal Reserve introduced swap lines in 2020 with foreign emerging market central banks and made swapping FX reserves for dollars a permanent facility in its toolkit for monetary policy this year. Non-US domestic authorities have ample ability to decide which entities they allow to fail, and which they bail out from their USD obligations. Cross-currency basis swaps, a proxy for the cost of obtaining dollars offshore, remain well behaved (Chart I-9). Chart I-9No USD Funding Stress So Far In Developed Markets For developed market currencies, the implication is that China risks are currently overstated, while any upside surprise has not been meaningfully discounted. Gauging Investor Positioning The dollar tends to be a momentum currency. But at turning points, it pays to be a contrarian. Let’s begin with what is priced in. First, the overnight index swap curve (OIS) suggests that markets expect the Fed to hike interest rates faster than other G10 central banks (Chart I-10). This will not occur in a world where growth is stronger outside the US, and other central banks are well ahead in their tapering of asset purchases, pursuing much more orthodox monetary policy. Chart I-10The Market Remains Bullish On Fed Rate Hikes Chart I-11Speculators Are Bullish On ##br##The Dollar Second, at the beginning of this report, we highlighted the fact that the dollar is up this year. Part of the reason has been a pilling in of speculators into long greenback positions (Chart I-11). As a trading rule, it has usually been profitable to wait for net speculative positioning and moving averages to roll over before entering fresh dollar short positions (Chart I-12). On this basis, tactical investors might be a bit early, but its is also the case that the macroeconomic environment is moving against the dollar. Once markets start paying attention to the fact that global growth will rotate from the US, pinning the Fed into a more dovish stance, the dollar will quickly depreciate.   Chart I-12A Sentiment Trading Rule Will Wait For The Dollar To Roll Over More Broadly Often forgotten is that the dollar has tended to move in long cycles, usually 10 years between bull and bear markets. The US trade deficit (excluding oil) is hitting new fresh highs this year. These deficits need to be financed by foreign purchases of US securities, either by debt issued or equity raised. Investors could demand a discount to keep financing these deficits. Should the Congressional Budget Office estimates of the current trajectory of US deficits hold true, the dollar has about 10-15% downside from current levels (Chart I-13). Chart I-13Balance Of Payments Bode Negatively For The Greenback Our geopolitical strategists assign 80% odds to the passage of a bipartisan infrastructure bill, and 65% odds to the passage of a reconciliation bill. Either way, the US fiscal picture is set to deteriorate at a time when the Fed is comtemplating scaling back Treasury purchases. Interestingly, 10-15% downside in the US dollar is exactly what is needed to realign the currency competitively (Chart I-14). Consumer prices have been rising globally, but this has been especially pronounced in the US. To the extent that we live in a globalized world with flexible exchange rates, this should allow more competitive countries to see an increase in their trade balances. This is exactly what is occurring, with the US trade deficit hitting new lows. Chart I-14The Dollar Is Expensive On A PPP Basis Risks To The View Currency forecasts are obviously fraught with risks. The biggest risk to the view is a broad-based equity market correction, that reinvigorates inflows into US safe-haven bonds. We are cognizant that this is a risk worth monitoring. For example, investors are preferring to park cash in US Treasurys over gold, two competing safe-haven assets (Chart I-15). This has usually been positive for the greenback. But it also suggests investors view the Fed is going to be orthodox in monetary settings, tightening policy faster than the market expects. This boils down to a judgment call. The US market is much more vulnerable to rate changes than other markets (Chart I-16). As such, a hawkish shift by the Federal Reserve could significantly tighten financial conditions (through a stock market correction), setting the stage for an ultimate low in the dollar equity outflows. Chart I-15Safe-Haven Dollar Flows Face Technical Resistance Chart I-16Higher Bond Yields Will Be Negative For The US Market. Given this two-way risk, we are reintroducing our long CHF/NZD position that correlates well with currency volatility (Chart I-17). We are also long the yen on this basis. In terms of housekeeping, our long AUD/NZD trade was stopped out for a loss. As we iterated in our Aussie report, a lot of pessimism is embedded in the AUD, making it a potent candidate for a powerful mean-reversion rally. We recommend reinstating this position at current levels (a nudge above our stop loss). Chart I-17Buy CHF/NZD As A Hedge Chester Ntonifor Foreign Exchange Strategist chestern@bcaresearch.com Currencies U.S. Dollar Chart II-1USD Technicals 1 Chart II-2USD Technicals 2 Data out of the US this week was strong: PPI continues to accelerate in the US, rising 8.3% year on year in August while CPI also remains strong at 5.3% on the headline print. Pricing pressures remain acute in the US. The empire manufacturing survey surprised to the upside in September. The headline number was 34.2 versus expectations of a 17.9 reading. Admittedly, this was driven by an increase in selling prices. Retail sales were surprisingly strong in August, with the control group rising 2.5% month on month versus expectations of a flat number. The US dollar DXY index was relatively flat this week. The markets are at a crossroads, gauging whether strong US data will maintain momentum or revert to a lower equilibrium. Our bias is towards the latter, but admittedly, there are two-way risks to this view.  Report Links: Arbitrating Between Dollar Bulls And Bears - March 19, 2021 The Dollar Bull Case Will Soon Fade - March 5, 2021 Are Rising Bond Yields Bullish For The Dollar? - February 19, 2021 The Euro Chart II-3EUR Technicals 1 Chart II-4EUR Technicals 2 Euro area data remains robust: Industrial production printed a solid 7.7% year-on-year growth in July. The trade surplus for July rose to €20.7 bn. The euro fell by 0.6% this week. The ECB has engineered a dovish tapering of asset purchases, but it remains the case as the interest rate expectations between the euro area and the US are at bombed out levels. This should support positive euro area surprises. Report Links: Relative Growth, The Euro, And The Loonie - April 16, 2021 The Euro Dance: One Step Back, Two Steps Forward - April 2, 2021 On Japanese Inflation And The Yen - January 29, 2021 The Japanese Yen Chart II-5JPY Technicals 1 Chart II-6JPY Technicals 2 Recent Japanese data has been on the weak side: Core machinery orders rose 11.1% year on year in July. Exports were strong in August, rising 34% while imports rose 40%. The yen was flat against the dollar this week. Currency volatility is currently depressed, and Japan has been performing poorly economically. To the extent that this is pandemic related, it sets the JPY up for a playable coil spring rebound. Report Links: The Case For Japan - June 11, 2021 The Dollar Bull Case Will Soon Fade - March 5, 2021 On Japanese Inflation And The Yen - January 29, 2021 British Pound Chart II-7GBP Technicals 1 Chart II-8GBP Technicals 2 UK data remains on the mend: Industrial production came in at 3.8% year on year, above expectations. Average weekly earnings, including bonus payments, are rising 8.3% year on year as of July. Job gains continue. The July report pushed the unemployment rate from 4.7% to 4.6%. CPI and RPI remain rather sticky around the 3-5% level. House prices rose 8% year on year in July. The pound fell by 0.4% this week. The broad trend in the pound will now be dictated by what happens to both the dollar and the euro. The BoE is more hawkish than the Fed and the ECB should support gilt yields and the pound. A slowing in US economic momentum is also bullish for the sterling. Report Links: Why Are UK Interest Rates Still So Low? - March 10, 2021 Portfolio And Model Review - February 5, 2021 Thoughts On The British Pound - December 18, 2020 Australian Dollar Chart II-9AUD Technicals 1 Chart II-10AUD Technicals 2 Australian data was slated to slow as we expected, and recent numbers highlight this: There were 146K job losses in August. This was well split between part time and full time. NAB business confidence and current conditions moderately improved in August. House price inflation is tracking the global wave, rising 16.8% year on year in Q2. The AUD fell 1% this week. We discussed the AUD at length in our report two weeks ago and believe current weakness is unwarranted. We are reinstating our long AUD/NZD trade this week. Report Links: The Dollar Bull Case Will Soon Fade - March 5, 2021 Portfolio And Model Review - February 5, 2021 Australia: Regime Change For Bond Yields & The Currency? - January 20, 2021 New Zealand Dollar Chart II-11NZD Technicals 1 Chart II-12NZD Technicals 2 The was scant data out of New Zealand this week: The current account deficit widened in Q2 to -3.3% of GDP. Q2 GDP was an upside surprise but will likely be torpedoed in Q3 by COVID-19. The NZD was down 0.25% this week. We continue to believe the NZD will fare well cyclically, likely touching 75 cents, but our bias remains that hawkish expectations from the RBNZ are already well priced. This will make the kiwi lag other commodity currencies like the Aussie. We are reinstating our long AUD/NZD trade. Report Links: How High Can The Kiwi Rise? - April 30, 2021 Portfolio And Model Review - February 5, 2021 Currencies And The Value-Versus-Growth Debate - July 10, 2020 Canadian Dollar Chart II-13CAD Technicals 1 Chart II-14CAD Technicals 2 Data out of Canada this week has been robust: The labor report was strong. Hiring came in at 90K, with a favorable tilt towards full-time work. The unemployment rate fell from 7.5% to 7.1%. The CPI report was equally robust. Core CPI was at 3.5% year on year with most measures of the BoC’s underlying gauge inching higher. Housing starts remained strong in August at 260K, a slight dip from July’s 271K. The CAD was up by 0.44% this week. Last week’s currency report was dedicated to the loonie. With strong oil prices, a relatively hawkish central bank, and easing on tightening pressures from China, the loonie should remain well bid. A minority government will also be bullish for the loonie, as we highlighted last week. Report Links: Relative Growth, The Euro, And The Loonie - April 16, 2021 Will The Canadian Recovery Lead Or Lag The Global Cycle? - February 12, 2021 The Outlook For The Canadian Dollar - October 9, 2020 Swiss Franc Chart II-15CHF Technicals 1 Chart II-16CHF Technicals 2 There was scant data out of Switzerland this week: PPI came in at 4.4% in August, an increase from July. The Swiss franc was down 0.22% this week. We are going long CHF/NZD as a hedge against rising currency volatility. Being long the yen also makes sense in this environment. However, given our view that risk sentiment will stay ebullient, the franc will lag the bounce in other cyclical currencies on a longer-term horizon. Report Links: An Update On The Swiss Franc - April 9, 2021 Portfolio And Model Review - February 5, 2021 The Dollar Conundrum And Protection - November 6, 2020 Norwegian Krone Chart II-17NOK Technicals 1 Chart II-18NOK Technicals 2 Norwegian data is surprising to the upside: CPI was 3.4% year on year in August, above expectations. PPI rose 50% year on year in August. The trade balance posted a healthy surplus of NOK 42.6bn in August. The NOK was up 0.5% this week. We continue to be bullish Scandinavian currencies as a cyclical play on a lower US dollar. The NOK benefits from bombed-out valuations and a more orthodox central bank. Report Links: The Norwegian Method - June 4, 2021 Portfolio And Model Review - February 5, 2021 Revisiting Our High-Conviction Trades - September 11, 2020 Swedish Krona Chart II-19SEK Technicals 1 Chart II-20SEK Technicals 2 The most important data from Sweden this week was the CPI report: CPI rose from 1.7% to 2.1% in August. CPIF, the Riksbank’s preferred measure, accelerated to 2.4%. The SEK was flat this week. A bottoming in the Chinese credit impulse will be a positive impact on growth-sensitive Sweden. Meanwhile, this week’s positive CPI report should pare back expectations of more stimulus from the Riksbank. We are short both EUR/SEK and USD/SEK as reflation plays. Report Links: Revisiting Our High-Conviction Trades - September 11, 2020 More On Competitive Devaluations, The CAD And The SEK - May 1, 2020 Sweden Beyond The Pandemic: Poised To Re-leverage - March 19, 2020 Trades & Forecasts Forecast Summary Strategic Holdings Tactical Holdings Limit Orders Closed Trades

Weekly Performance Update For the week ending Thu Sep 16, 2021 The Market Monitor displays the trailing 1-quarter performance of strategies based around the BCA Score. For each region, we construct an equal-weighted, monthly rebalanced portfolio consisting of the top 3 stocks per sector and compare it with the regional benchmark. For each portfolio, we show the weekly performance of individual holdings in the Top Contributors/Detractors table. In addition, the Top Prospects table shows the holdings that currently have the highest BCA Score within the portfolio. For more details, click the region headers below to be redirected to the full historical backtest for the strategy. BCA US Portfolio Total Weekly Return BCA US Portfolio S&P500 TRI -0.24% -0.40% Top Contributors   AN:US EOG:US GOLF:US KOF:US SAFM:US Weekly Return 34 bps 30 bps 8 bps 5 bps 2 bps Top Detractors   CQP:US MRNA:US UGI:US PFE:US DUK:US Weekly Return -14 bps -11 bps -11 bps -10 bps -9 bps Top Prospects   BRK.A:US SC:US MPLX:US ESGR:US PFE:US BCA Score 96.34% 95.76% 95.14% 94.82% 94.64% BCA Canada Portfolio Total Weekly Return BCA Canada Portfolio S&P/TSX TRI 0.02% -0.43% Top Contributors   TOU:CA PXT:CA AND:CA ECN:CA IMO:CA Weekly Return 45 bps 21 bps 20 bps 15 bps 13 bps Top Detractors   CFP:CA CRON:CA LNR:CA TOY:CA L:CA Weekly Return -24 bps -13 bps -12 bps -12 bps -12 bps Top Prospects   LNF:CA ELF:CA WIR.UN:CA CFP:CA RUS:CA BCA Score 97.84% 96.35% 96.27% 95.53% 94.44% BCA UK Portfolio Total Weekly Return BCA UK Portfolio FTSE 100 TRI -1.75% 0.05% Top Contributors   ROSN:GB EMIS:GB IMB:GB SVT:GB KLR:GB Weekly Return 18 bps 15 bps 5 bps 4 bps 4 bps Top Detractors   MXCT:GB FXPO:GB CNE:GB TRMR:GB AAL:GB Weekly Return -48 bps -37 bps -27 bps -22 bps -21 bps Top Prospects   SVST:GB GLTR:GB BPCR:GB FDM:GB VVO:GB BCA Score 99.58% 98.43% 98.11% 97.85% 97.70% BCA Eurozone Portfolio Total Weekly Return BCA EMU Portfolio MSCI EMU TRI -0.84% -0.39% Top Contributors   HLAG:DE OMV:AT RDSA:NL MELE:BE IRE:IT Weekly Return 32 bps 18 bps 11 bps 10 bps 2 bps Top Detractors   TTALO:FI BSL:DE CDI:FR TL5:ES FSKRS:FI Weekly Return -33 bps -20 bps -18 bps -13 bps -13 bps Top Prospects   FSKRS:FI STR:AT LOG:ES BFF:IT EDNR:IT BCA Score 99.53% 99.47% 98.58% 96.15% 96.08% BCA Japan Portfolio Total Weekly Return BCA Japan Portfolio TOPIX TRI 0.33% 1.23% Top Contributors   5021:JP 4966:JP 5020:JP 8334:JP 3132:JP Weekly Return 16 bps 15 bps 11 bps 11 bps 11 bps Top Detractors   7244:JP 3290:JP 4326:JP 8117:JP 9543:JP Weekly Return -26 bps -13 bps -11 bps -9 bps -8 bps Top Prospects   6960:JP 9882:JP 9436:JP 4544:JP 2208:JP BCA Score 99.93% 99.33% 99.11% 98.49% 98.22% BCA Hong Kong Portfolio Total Weekly Return BCA Hong Kong Portfolio Hang Seng TRI -3.36% -4.01% Top Contributors   857:HK 1735:HK 2686:HK 6118:HK 506:HK Weekly Return 42 bps 21 bps 14 bps 8 bps 5 bps Top Detractors   710:HK 836:HK 991:HK 1277:HK 323:HK Weekly Return -80 bps -37 bps -34 bps -32 bps -23 bps Top Prospects   1277:HK 98:HK 316:HK 6868:HK 323:HK BCA Score 100.00% 99.50% 98.59% 98.35% 98.31% BCA Australia Portfolio Total Weekly Return BCA Australia Portfolio S&P/ASX All Ord. TRI 1.24% 1.36% Top Contributors   YAL:AU BFG:AU MMS:AU SXY:AU SGF:AU Weekly Return 32 bps 27 bps 25 bps 16 bps 15 bps Top Detractors   BXB:AU SDG:AU AGL:AU SGLLV:AU CDA:AU Weekly Return -27 bps -17 bps -11 bps -10 bps -7 bps Top Prospects   SDG:AU GRR:AU PIC:AU PL8:AU RIC:AU BCA Score 99.91% 99.55% 99.38% 98.89% 98.59%

Following this week’s CPI release, we update our Corporate Pricing Power Indicator (CPPI). As a reminder, we calculate industry group pricing power from the relevant CPI, PPI, PCE and commodity prices growth rates for each of the 60 industry groups we track. Table 1 on the next page highlights short-term pricing power trends and each industry's spread to overall inflation. 83% of the industries we cover are lifting selling prices, at a faster clip than overall inflation. Commodity-sensitive industries dominate the top of Table 1 with steel and energy industries leading the way with 75% to 10% price increase as they have enjoyed a slingshot post-COVID-19 recovery. One notable exception is the forest products industry with a tape reading of -47% due to the ongoing bear market in lumber futures. We expect the rest of the commodity complex to give up leadership as headwinds from a slowdown in China filter through the global markets. Pricing power of auto manufacturers is also on the rise – empty dealership lots and reduced supply result in a significant upward pressure on prices. There is already evidence that price increases and shortages in supply are starting to discourage consumers from making purchases. Meanwhile, most other consumer goods and services categories populate the middle of the Pricing Power table, suggesting that there is a limit to companies’ ability to raise consumer prices without damaging the demand. We also note that it is reassuring that prices of semiconductors have come down, as it may be an early indication that supply chain is starting to unclog and shortages, such as the one in semiconductors, are starting to resolve. Finally, yesterday was Lehman Bankruptcy Day – 13 years have passed. Time flies. Bottom Line: Outside of commodities and building materials, price increases are moderating. Table 1

Highlights Since June, 6 structured recommendations achieved their profit targets: short building and construction (XLB) versus healthcare (XLV); long USD/CAD; long USD/HUF; long Nike versus L’Oréal; short corn versus wheat; and short marine transport versus market. Additionally, short AMC Entertainment expired in profit, while short Australian versus Canadian 30-year bonds expired flat. Within the open trades, 3 are in profit. Against this, 2 structured recommendations hit their stop-losses: short Austria versus Chile; and short lead versus platinum. Additionally, short France versus Japan expired in loss. Within the open trades, 6 are in loss. This results in a ‘win ratio’ at a very pleasing 59 percent. Even more commendably, the 9 unstructured recommendations have all anticipated reversals or exhaustions – most notably for the ZAR, BRL, and stocks versus bonds. Feature Chart of the WeekFractal Fragility Correctly Signalled The Exhaustion Of Stocks Versus Bonds A major advance in our understanding of financial markets is that the Efficient Market Hypothesis (EMH) is only partly true. The market is efficient only when a wide spectrum of investment horizons is setting the price, signified by the market having a rich fractal structure. The market is efficient only when a wide spectrum of investment horizons is setting the price, signified by the market having a rich fractal structure. The eponymous Fractal Market Hypothesis (FMH) teaches us that when the fractal structure becomes extremely fragile, the information and interpretation of longer-term investors is missing from the recent price setting. Meaning that the market has become inefficient. When the longer-term investors do re-enter the price setting process, the question is: will they endorse the most recent trend as a justification of a change in the fundamentals. In which case, the trend will continue. Or will they reject it as an unjustified deviation from a fundamental anchor. In which case, the trend will reverse. In most cases, it is the latter: a rejection and a reversal. As most investors are unaware of the FMH, it gives a competitive advantage to the few investors that use it to signal a potential countertrend reversal. On this basis, we have used it – and continue to use it – to identify countertrend investment opportunities with truly excellent results. Fractal Trade Update This a brief review and update of the 29 short-term trades that we have recommended since our last update on 3rd June 2021, including recommendations that were open on that date. The 29 recommendations have comprised 20 structured trades – which include profit-targets, symmetrical stop-losses, and expiry dates – plus a further 9 recommendations without structured exit points. In summary, 6 structured recommendations achieved their profit targets: short building and construction (XLB) versus healthcare (XLV); long USD/CAD; long USD/HUF; long Nike versus L’Oréal; short corn versus wheat; and short marine transport versus market. Additionally, short AMC Entertainment expired in profit, while short Australian versus Canadian 30-year bonds expired flat. Within the open trades, 3 are in profit. Against this, 2 structured recommendations hit their stop-losses: short Austria versus Chile; and short lead versus platinum. Additionally, short France versus Japan expired in loss. Within the open trades, 6 are in loss. This results in a ‘win ratio’ at a very pleasing 59 percent – counting a win as achieving the profit target, a loss as hitting the (symmetrical) stop-loss, and pro-rata for partial wins and losses. Even more commendably, the 9 unstructured recommendations have all anticipated reversals or exhaustions. The sections below review the structured and unstructured recommendations in chronological order. The 20 Structured Trades 1.  6th May: Short Building and Construction (PKB) vs. Healthcare (XLV) Achieved its profit target of 15 percent. 2.  6th May: Short MSCI France vs. Japan Expired after three months in partial loss but went on to become very profitable – implying that a longer holding period was required (Chart I-2). Chart I-2Short France Versus Japan Became Very Profitable 3.  13th May: Long USD/CAD Achieved its profit target of 3.7 percent and went on to reach a high-water mark of 5.7 percent. 4.  20th May: Long 10-year T-bond vs. TIPS Open, in profit, having reached a high-water mark of 2.7 percent (versus a 3.6 percent target). 5.  3rd June: Short MSCI Austria vs. Chile Hit its stop-loss of 7 percent, albeit after previously reaching a high-water mark of 5.3 percent – implying that the profit target needed to be tighter. 6.  10th June: Short AMC Entertainment Expired at a 4 percent profit, having reached a high-water mark of 65.3 percent (versus a 100 percent target) (Chart I-3). Chart I-3Fractal Analysis Works Very Well For Meme Stocks 7.  10th June: Long USD/HUF Achieved its 3 percent profit target, before continuing to a high-water mark of 7.6 percent (Chart I-4). Chart I-4HUF/USD Corrected By 7.6 Percent 8.  17th June: Long Nike vs. L’Oréal Achieved its 9 percent profit target, before continuing to a high-water mark of 31.3 percent (Chart I-5). Chart I-5L’Oréal Underperformed Nike By 31 Percent 9.  24th June: Short Corn vs. Wheat  Achieved its 12 percent profit target, before continuing to a high-water mark of 38.7 percent (Chart I-6). Chart I-6Corn Underperformed Wheat By 39 Percent 10.  1st July: Short US REITs vs. Utilities  Open, in profit, having reached a high-water mark of 3 percent (versus a 5 percent target). 11.  8th July: Short Marine Transport vs. Market Achieved its profit target of 16.5 percent. 12.  15th July: Short Lead vs. Platinum Hit its stop loss of 6.4 percent. 13.  15th July: Short Australia vs. Canada 30-year T-Bonds Expired flat. 14.  5th August: Short Tin vs. Platinum Open, in loss, albeit having reached a high-water mark of 9.3 percent (versus a 16.5 percent target). 15.  12th August: Long MSCI Hong Kong vs. MSCI World Open, in loss. 16.  12th August: Long New Zealand vs. Netherlands Open, in loss. 17.  19th August: Short India vs. China Open, in loss (Chart I-7). Chart I-7The Outperformance Of India Versus China Is Fractally Fragile 18.  26th August: Short Sugar vs. Soybeans Open, in loss. 19.  2nd September: Short Aluminum vs. Gold Open, in loss (Chart I-8). Chart I-8The Outperformance Of Base Metals Versus Precious Metals Is Fractally Fragile 20.  9th September: Short US Medical Equipment vs. Healthcare Services Open, in profit. The 9 Unstructured Trades 1.  10th June: Short ZAR/USD ZAR/USD subsequently corrected by 12 percent. 2.  24th June: Short Copper Copper’s rally subsequently exhausted. 3.  1st July: Short MSCI ACWI vs. 30-year T-bond The rally in stocks versus bonds has subsequently exhausted (Chart of the Week). 4.  8th July: Short BRL/COP BRL/COP subsequently corrected by 4 percent. 5.  8th July: Short Saudi Tadawul All-Share vs. FTSE Malaysia All Share KLCI The rally in Saudi Arabian equities versus Malaysian equities subsequently exhausted. 6.  12th August: Long NOK/GBP        NOK/GBP has subsequently rallied by 3 percent. 7.  26th August: Short Hungary vs. EM Hungary’s outperformance is losing steam. 8.  26th August: Short USD/PLN USD/PLN subsequently corrected by 3 percent. 9.  2nd September: Short Trade Weighted US Dollar Index The dollar rally is meeting near-term resistance.   Dhaval Joshi Chief Strategist dhaval@bcaresearch.com Mohamed El Shennawy Research Associate Fractal Trading System Fractal Trades 6-Month Recommendations Structural Recommendations Closed Fractal Trades Closed Trades Asset Performance Equity Market Performance   Indicators To Watch - Bond Yields Chart II-1Indicators To Watch - Bond Yields ##br##- Euro Area Chart II-2Indicators To Watch - Bond Yields ##br##- Europe Ex Euro Area Chart II-3Indicators To Watch - Bond Yields ##br##- Asia Chart II-4Indicators To Watch - Bond Yields ##br##- Other Developed   Indicators To Watch - Interest Rate Expectations Chart II-5Indicators To Watch - Interest Rate Expectations Chart II-6Indicators To Watch - Interest Rate Expectations Chart II-7Indicators To Watch - Interest Rate Expectations Chart II-8Indicators To Watch - Interest Rate Expectations