MACRO MORNING NOTE August 14, 2017
SBA’s Alastair Williamson concludes the Macro Morning Note from Ocean City, Maryland..
After a week of incendiary language from President Donald Trump and North Korean leader Kim Jong Un, U.S. Officials on Sunday downplay the idea of nuclear war. Since the repeal of the Smith-Mundt Act in 2013, the latest barrage of mainstream media hysteria is plainly psychological warfare on the American people.
In response, global stock markets in all regions are higher with the threat of nuclear war subsiding, which led U.S. stocks to the largest weekly lost in 2017. Perhaps, the Federal Reserve couldn’t stomach the pain from last weeks losses. This is a pivotal week for North Korea, who has said before that mid-August would complete the plan for an upcoming Guam attack. So, the threat is still very real, it just goes to show you the power of American propaganda last week despite weekend attempt to calm the situation via U.S. Official.
Jumping to Europe, where stocks snap back from 5-month low as North Korea fears fade following U.S. Officials downplaying the threat. The CAC40 +94bps, DAX +119bps, and UK100 +64bps. European stocks compared to the rest of the global community have been fading from highs since June indicating stress in Europe is a tremendous threat into fall 2017. The EUR/USD faded from 1.18500 spot from late last week now in the high 1.1790 level. On a larger timeframe, a new currency regime is certainly in play with a stronger EURO and weaker Dollar. Since global Central Banks have poured trillions into markets in the past few years for levitation purposes, MSCI Europe hasn’t had a 10% correction in more than a year.
Into Asia, where stocks are mostly higher as North Korea war of words with the United States settles down. The Hang Sang, Shanghai Composite, KOSPI bounce after last week losses, but Nikkei falls. Starting in China, where economic data disappointed across the board as Chinese retail sales and industrial production for July missed estimates.
Meanwhile in Japan, the Nikkei 225 Index decline .98% on Monday, as losses in insurance, mining, and machinery sent sectors lower. The Nikkei Volatility, which measures the implied volatility of Nikki24 225 options was up 1.25% to 16.26 a new 1 month high; perhaps the BOJ is having trouble with suppression. Lower equity markets in Japan are surprising considering Japanese economy grew at an annualized rate of 4% in June compared to previous year.
“Although it is usually exactly the wrong thing to respond to volatile Japanese GDP data by revising full year forecasts, arithmetically, it is going to be hard for us to see only the 1.2 percent for 2017 we currently have penciled in,” said ING Asia Head of Research Robert Carnell in a note, adding that an upgrade now seemed “extremely likely.”
Reverting back to the United States where there is no major economic data nor Fed Speak; equity index futures are higher following a subsided North Korea threat. The unfortunate weekend events in Charlottesville,V.A. verifies that the ‘Fourth Turning in America’ is alive and well. We expect more turbulence in America’s inner cities for Fall 2017, as this ploy via the Deep State is a direct counterattack to discredit President Trump. Our domestic intelligence analysis of the situation has concluded that most social upheavals are isolated to weekend events. Does not pose a major concern as of today unless social upheavals are conducted on the weekdays for the very reason of understanding the bottom 90% of Americans financials. Many Americans have low wage and low skill jobs with high debt, that limits the financial and social mobility of many during weekdays.
S&P futures are +50bps higher on a counter move this morning, which we believe if buyers are limited today could be an open reject session. WTI -43bps amid heightening concerns of lackluster global demand, along with oversupplied markets. Reflation trade continues to suffer with a dollar in the low 93 handle and UST10Y 2.219. Our analysts are starting the theme out a low probability of fiscal stimulus passage this fall with more Deep State social upheavals planned for Fall 2017. The very real possibility of a disappointment phase is around the corner with sub par economic growth in the U.S. and a consumer that is suffering.
It’s all a distraction from sub-par economic growth
We are the United States of Drunks
The ping pong from hell, it’ll lead to much larger events…
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