Fri, April 1, 16
08:45 ET Update: [Stockboardasset] S&P futures -24bps
08:45 ET Update: [Stockboardasset] Nikkei -400ps
Bank of America’s Latest Global Research Report quoted, “It’s a big Scary World Out There”. Post Shangjai Accord where a collusion of Central Banks are attempting to revive global growth via arrest further appreciation of USD, along with force short squeezes in equity and commoidty indexes closed out 1Q Flat. Transpiring hours later global economies forgot to bring the snorkel as all hell was unleashed in Japan. JPN225 plummeted -400bps due to a 3 year low on the Takan confidence survery. EU Equity Indexes earsed all gains for March, and China is mixed as PBOC intervenes. In a surpising revelation the Young unseasoned Saudi Prince comments on production freezes only if Iran joins. From the beginning, we tend not to mention such conversatoin in Morning Notes, because its absolutely bull-shit. Data from the mid 1990’s tells the story between OPEC and Non-OPEC Countries attempting to tackle supply side issues, but at the end of the day, both parties pump even more. Iran is not going to freeze until their pre-sancattion quota is acheieved. The recent WTI/BRENT advancement was built on a false narratives, and our recent Oil Note explains another market clearing is on the horizon to the low 30s. What most don’t understand is the biggest bubble in human history is bursting, and that’s the 100YR Commodity Supercycle. Decrease in Interests Rates from the Low of the 1970’s to ZLB present date enabled a demand line of commidities that is not sustainable, thus we’re currently in a reversion. IMF,BIS,OECD, and WEF have issed the global growth warnings, and this unraveling is not at any surprise. US is in an earnings recession with 1Q about to report, which will make it the 4th Q consequively Y/Y since the great recession. We’ve entered the tightening cycle, which in fact started when Yellen started talking up the USD, she deflated Energy/Materails bubble. Here is her paper from 2004 “Stabalization Policy: A Reconsideration” speaks highly of the 1999/2000 FED for their deflation of Dot.Com. Inflation will be below traget and inflate the workforce before an economic event was FED’s dual mandate ending the Dot.com bubble. Very Similar to present. We don’t see equities advancing ATH due to the FED’s concern of deflating an already overvalued equity index, and see a reset of valuations in the near term. Hence the Rounding Top built by the Bullard Bounce at 1800, then the Hawks in 2100 range.
Uncovering Clues in Yellen’s 2004 Research Paper
We believe Yellen has been following the dual mandate of low inflation and boosting employment before the next economic event. She’s a fan of disinflation, and we’ve seen 1 by 1 the bubbles she’s been tackling. For example, WTI, she spoke highly of rate tick up for nearly a year without action, but was able to deflate oil/gas bubble. Next is tech and biotech, and systematically, revalue the US Equity market. While mainstream is ignorant to beliefs of one who is the overseer of the wave function, we carefully prepare for such an event.