MACRO MORNING NOTE APRIL 11, 2017
SPX Down, DXY Down, WTI Flat
SBA’s Alastair Williamson concludes the Macro Morning Note from Baltimore, Maryland.
To sum up the growing geopolitical concerns mounting in North Korea and Syria. We have resorted to a google keyword phrase: ‘going to war’ exploding to all time highs.
For the most part global equities are mixed in Asia and Europe. SPX500 futures -15bps in the premarket as the US reflation trade continues to stall. Yellen’s speech prior session failed to provide clarity with investors still thinking about last week’s Fed stock market bubble warning.
Two quotes of Yellen’s speech provided via Zerohedge.com
“I think we have a healthy economy now,” Yellen said at an event at the University of Michigan’s Ford School of Public Policy in Ann Arbor and confirmed that the “appropriate stance of policy is now closer to, let me call it neutral” and that “we want to be ahead of the curve and not behind it”.
“Whereas before we had our foot pressed down on the gas pedal trying to give the economy all the oomph we possibly could, now allowing the economy to kind of coast and remain on an even keel — to give it some gas but not so much that we are pressing down hard on the accelerator — that’s a better stance of monetary policy,” she said.
In our opinion, when Asia and Europe want nothing to do with US reflation trade and SPX500 this usually serves as a warning for US cash unless a narrative is produced intraday.
Overall US reflation trade has stalled and has never traded correctly since rate hike in March, as well as failed healthcare bill.
A quick recap of the latest geopolitical news (zerohedge):
- China has deployed 150K troops in order to deal with the possible North Korean refugees over fears that Trump may strike Kim Jong-un following the missile attack on Syria.
- North Korea vowed to take toughest counteraction against US after the US deployed the USS Carl Vinson to the Korean peninsula.
- China and South Korea have agreed to place “strong” new sanctions on North Korea if it conducts further nuclear or long-range missile tests, according to a South Korean official.
- U.S. Secretary of State Rex Tillerson will visit Moscow this week in an effort to persuade Russia that its alliance with Assad is no longer in its strategic interest.
- The G-7 foreign ministers hold a news conference after a two-day meeting in Lucca, Italy.
The US reflation trade this week is in a downward slope taking US equities with it. WTI pump continues on geopolitical fears.
Global Gov’t 10Y yields stalling attempting to reverse. Run for bonds amid economic slowdown and geopolitical fears.
In the forex world, dollar demand lacks starting this week rejecting the 101 handle as DM FX finds a bid.
Overall, dollar demand is weak with a 1.06 handle bid in the EUR/USD. GBP/USD regains the 1.24 handle. USD/JPY rejects the 111 level probes to the midpoint of the 110 handle. USD/CNH inches up 6.90.
Deflationary trends continue to soft agri.
Deflationary trends rollover from March in Corn, soybeans, sugar, and wheat.
WTI tags resistance in the 53 handle following a geopolitical fear ramp to multi month highs. Gold and Silver are flat but holding composure with dollar loosing steam. Copper continues tag resistance 2.6-2.7 risks reversion 2.4 level. BCI index prints at a premium verse 200sma daily.
Global credit impulse back to negative. Systems break when the credit spigot is broken.
US commercial bank loan creation y/y change crashing..
ATL GDPNOW Forecasts 1Q17 crashing from 3.5% to .6%
Soft data v. hard data
SPX500 monthly/weekly R2 2398 resistance risks downside imbalance to R1 2287.
UST10Y monthly/weekly R1 2.63 resistance with downside projection for pivot 2.13 reversion.
DXY monthly/weekly R1 103.74 resistance, but bracketed with Pivot 99.26 support. Rotations will occur in the bracket until maturity then an imbalance will occur.
WTI monthly/weekly R1 55 resistance with downside projections to pivot 44.81 reversion. Back rotating in 50-55 bracket following geopolitical concerns. API AH will be the next market generated information.
SPX500 -30% correction scenario with 1/1 GANN rejecting at current timeframe. If this was to play out, rule of angle migration to 2×1 would trigger.
87 Year Long Wave in US Real Estate. Are the good times expired? Just remember there is a lot of leverage in this industry.
Why we’re in Syria. . …