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1. US Metals & Mining
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Metals and mining has been hit hard, and XME now screens 1.12σ (11.6%) cheap against a

Qi model value of 112.66. Macro is firmly in charge, with model confidence at 74% and

rising after briefly dropping out of regime in April. The big picture is reasserting itself

just as the sector looks washed out.
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The catch is that fair value itself is eroding. Qi model value has fallen over 5% in the past

month, dragged by rising real rates, hawkish central bank policy expectations and a

firmer dollar, with a softer metals complex adding to the pressure and only inflation

expectations offering support. That is why this is not yet a confirmed signal: the gap is

cheap, but against a falling target.
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The setup does have form, though. Buying XME at 1σ cheap with macro in regime has

historically closed the gap 75% of the time.

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2. China vs. India

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After years of strong performance, Indian equities have endured a tough run. Rich

valuations bumped into a sense that India’s large IT services sector was among the

most vulnerable to AI. The result was international investors trimmed exposure.

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South Korea & Taiwan were clear beneficiaries but, for many allocators, the choice is

between the two emerging superpowers – China & India.

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Qi’s model for the RV between China (FXI) & India (INDA) has just moved back into

regime (67% model confidence) & an interesting divergence is starting to emerge.

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FXI has outperformed strongly in July, but Qi model value is hovering near recent lows.

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The result is China screens as 3.3% rich to India. That triggered a +1 std dev Fair Value

Gap – enough for a new bearish signal. We also note strong correlation between spot &

Qi FVG; suggesting the mean reversion process occurs via the market re-pricing to

macro.

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So, if the AI trade is mature & set to pivot again, we have a situation where India has derated,

Chinese tech is having a Moonshot moment &, relative to macro, valuations are

starting to look stretched.

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3. NZDCHF

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The RBNZ is arguably the most hawkish G10 central bank right now – it’s already

resumed hiking & has a clear policy bias towards fighting inflation & additional rate

increases.

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On Qi, NZDCHF is the clear outlier amongst Kiwi fx crosses sitting 2.3 sigma (2.0%) rich

to macro fair value. Bond market shifts matter – interest rate differentials & relative

yield curve shape are the two biggest drivers. RBNZ rate hikes & subsequent bear

flattening of the curve are lifting Qi’s macro fair value.

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But the market has overshot & is in rarified territory. Qi’s FVG has only been north of 2

sigma & in a macro regime (RSq > 65%) twice since 2009. Both times the gap closed

by the market catching down to macro fundamentals.

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In short, such an extended FVG creates a rare & efficient entry level for anyone thinking

today’s inflation narrative soon shifts to fears of disinflation.

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