MACRO MORNING NOTE FEBRUARY 13, 2017

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

Asian stock markets were mostly higher on Tuesday, tracking dip buying in the United States. While some stability seems to be returning to global markets, traders are worried about Wednesday’s US inflation data, which could spark the next round of bond market fears. Already, higher rates have unraveled some low vol strategies, which has formed liquidity gaps in US stocks in the past weeks. The new theme developing: what worked in a low rate regime, may not work in today’s higher rate regime.

Peter Schiff Quotes of the Week: 

  • CNCB is doing everything it can to reassure its audience that the recent 10% plunge in stock prices is not the beginning of a bear market, despite the fact that the current bull market is the 2nd longest in history.
  • Of course it’s possible that the 2nd longest bull market in history will live to become the longest, but to ignore the high probability that its finally come to a long-overdo end is the hight of journalistic irresponsibility.
  • Given how large past Republican deficits have been relative to the initial rosy projections when the goal was to balance in 10 years, imagine how much further off the mark #Trump’s deficits will be when even the pretense of eventual balance has been dropped!
  • The bond market is teetering on the brink, meanwhile, the “fiscally conservative” GOP is adding billions to the debt. Interest rates are going to have to go up which is actually good for gold.

Starting in Asia, regional stocks across the board are somewhat higher on Tuesday, tracking moves from US gains on Monday. Japan is back from holidays, and closed lower -.65% to 21,244, fading from two-decade highs, as long Yen becomes popular on the island. Across the Korean Strait, the KOSPI closed up +.41% to 2,395 with tech leading the way. In Australia, the ASX200 closed higher +.60%, as precious metals gained a bid in the overnight. Great China equities were stable. Hong Kong’s Hang Seng advanced +1.54% by closing bell. Property companies in the region were also stable. In the mainland, the Shanghai Composite closed up 1% and the Shenzhen gained +.41% to 1,730. Also, the blue chip CSI 300 index finished higher by +1.19%.

Copper/Gold Ratio negatively diverges from UST10Y

Will SPX500 pierce above ribbon?

A reminder of where we are…

Rare NYAD cumulative index bearish print of cloud

Risk Parity is having a bad day

Why does the UST10Y have to stop at 3%?

Deal volume in US is collapsing