MACRO MORNING NOTE August 03, 2017
SBA’s Alastair Williamson concludes the Macro Morning Note from Baltimore, Maryland.
S&P futures are mixed this morning with uncertainty coming out of Asia and Europe. Lackluster follow through after Apple reported solid earnings prior session. This was supposed to be the narrative to carry all markets to all time highs, but only managed to surge DJIA to 22,000. Now small caps and tech are coming under-pressure with overall U.S. equity markets stalling. In recent sessions, Donald Trump has been using Twitter as an advertisement piece for the stock market. We’ve also noticed headlines targeting millennials to join the stock market fun. Usually this type of advertisement is used to attract new buyers, because the market participation rate is declining. It also serves as a warning for if the advertisement fails to attract new buyers, then the entire auction will reverse giving way to sellers. It’s like forward looking indicator…
Starting in Europe, where the BOE votes 6-2 to keep rates unchanged sending the GBP/USD lower. Regional stock markets are mixed with the DAX -40bps, meanwhile CAC40 and UK100 are in risk-on modes. The EUR/USD trades in the 1.18 handle signaling that if this level continues to probe a major regime change is underway signaling a weaker dollar.
Over in Asia, the Nikkei225 lost -20bps with USD/JPY probing into the midpoint of the 110 handle. More of the same in ex-Japan with regional Chinese stock markets mixed. FTSE All World Index on a monthly timeframe indicates global markets are overbought with a RSI (14) printing 73.10. The VEU/SPY ratio indicates that outflows from US stocks into global markets is of mild probability into the 2H17.
SPX500 continues to ignore lower commodities, collapsing dollar, and flattening yield curves.
Regime shifts to stronger EUR/USD and weaker US-Dollar appear. This is exactly what we’ve been telling our clients all year.
Over in Asia, the Australian stock markets is the biggest outlier cause for concern….
Regional European stock markets are under pressure…
Small Caps in US plunged prior session
Heading into the US cash session. UST Yields drop with a dollar in the 92 handle. SPX500 futures are mixed -10bps…
BOJ attempting to reflate Nikkei225 and crush Yen or advance USD/JPY hasn’t worked this week..
Over in China, regional stock markets surge in July, but have stalled in August. With the drop in the CN02Y, it appears a rush into short term bonds as stocks stall.
BTC/USD is compressing waiting for imbalance. If upside is seen our target is PT3600.
Biotech triangle of death
Dow Theory signals alarms
Compression in <USHL5>
Case Shiller P/E Ratio >30
American CEOs attempt to relate to America’s crippled middle class
Programming the American people to buy stocks.
2s10s and 2s30s curve continues to flatten leading to economic uncertainties in the United States…
WTI monthly/weekly recent counter trend from pivot 44.81 support coming into overhead resistance at the 50 handle.
UST10Y monthly/weekly pivot support at 2.13 with ceiling 2.40 compression continues.
SPX500 monthly/weekly R2 2398 through R3 2578 is the area where a possible blowoff top will signal.
US-Dollar monthly/weekly S2 92 projection.
CRB Index monthly/weekly testing pivot 181 for overhead supply..