MACRO MORNING NOTE APRIL 12, 2017

SPX Down, DXY Down, WTI Up

SBA’s Alastair Williamson concludes the Macro Morning Note from Baltimore, Maryland. 

All is not well out there in the global landscape for equity markets with a recent volatility surge. VIX is currently trading at the 15 handle not seen since November 2016. Geopolitical events in North Korea and Syria are driving the safe haven plays of gov’t bonds and precious metals. Meanwhile, the US reflation trade i.e. Trumptrade continues to deteriorate with the dollar rejecting the 101 handle, and UST10Y benchmark < 2.30 setting up for a monthly pivot reversion 2.13. The surge in volatility is being  blamed on a holiday driven week. No matter how you look at the situation, it’s geopolitics running the show. The deep state is pushing for war, and in our opinion could be the mask for the stagnating US economy.

Prior session, API reported a draw across the board in crude and crude products except for Cushing. screen-shot-2017-04-12-at-7-40-02-am

According to @EnergyBasis: If tomorrow’s #WPSR confirms #API build @ #Cushing of +0.358 mbbls that would be another record high & @ 90.16% of Working Capacity #OOTT

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Checkout our 3 latest Zerohege Articles this week: 

US Equity Indices tagging resistance in 2017

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Wild roller coaster overnight in the Asian trade where USD/JPY, US reflation trade, and SPX500 surged then dropped. Laid stagnate until the EU ramp then post 4-5am est. fading. Oil continues to ramp on API waiting for EIA to confirm or deny, as well as geopolitical turmoil. We always caution when Asia and EU have trouble advancing US products overnight.

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US Reflation trade continues to decline in the past three sessions. Oil positively diverges on geopolitical flare up.

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US reflation trade post March’s rate hike and the failure of Trump’s healthcare bill has ratcheted down. Long term trend appears to be stalling in 2017. Fourth estate needs a new narrative, geopolitical tensions are flaring up, US neocon warmongers are pushing an agenda that if succeeded would resort to hot conflict in multiple theaters. Would mask the faltering US economic.

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With 2017 EPS expectations at 2017 lows, 2017 GDP expectations at 2017 lows… (zerohedge)

And real bond yields at 2017 lows, it should hardly be surprising that ‘hard’ economic data has collapsed to its lowest level in over a year. (zerohedge)

What should be surprising is the equity market’s desperate clinging to ‘soft’ survey data’s high hope levels… (zerohedge)

 

Stocks of the banks have totally decoupled from their credit market perception of risk… (zerohedge)

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Labor Market JOLTed: Rate Of Hiring Suffers Biggest Drop In 4 Years (zerohedge)

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Putting the above chart in a more troubling light was the Y/Y % rate of change: as shown in the chart below, not only did the rate of hiring not rise over the past year, but in February it declined by 3.6% relative to last year. This was the biggest decline in the annual rate of hiring in over four years, going back to March 2013. (zerohedge)

Which leads to our favorite chart: hiring vs payrolls. Has the long overdue inflection point finally arrived, and will the slowdown in hiring finally pull down the number of actual net jobs added? (zerohedge)

You are here

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You are here

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You are here

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Over in Japan, the rush into Yen forces USD/JPY into the 109 handle midpoint with Nikkei225 following.

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In Europe the recent dip then V-shape recover is fading in regional equity indexes and regional gov’t bond yields. UK Brent Oil tags the 55 handle.

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Global Rush for bonds continues w/ yields starting to rollover.

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Biggest forex theme is the dollar rejecting 101 handle fading to the midpoint of the 100 level. USD/JPY crushed as Yen long pile in. GBP/USD tests the 1.25 handle overnight. EUR/USD attempting the reversal with multi session support 1.05-1.06 level.

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In the commodity complex, WTI continues to probe upwards on geopolitical flare ups and API draws. EIA will either confirm or deny at 10:30am est. NatGas declining in recent sessions with a floor attempt in 3.13-3.16 area—direction will follow. Copper is setting up for more downside blowing through 2.6 support could see 2.45s on a reversion. Precious metals catch bid with gold 1274 and silver in the low 18 handle. Deflation continues for soft agri. BCI prints at premium rotation verse the 200sma daily.

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SPX monthly/weekly R2 2398 rejection with downside projection R1 2287

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UST10Y monthly/weekly R1 2.63 rejection with downside projection pivot 2.13 reversion.

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DXY monthly/weekly R1 103.74 rejection with pivot 99.26 bracket. Wait for direction it’s near.

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WTI monthly/weekly R1 55 rejection with overhead supply unlocking pivot 44.81 reversion.