MACRO MORNING NOTE MAY 09, 2017
SPX Flat, DXY Up, WTI Up
SBA’s Alastair Williamson concludes the Macro Morning Note from Baltimore, Maryland.
Asian stocks are mixed overnight starting with a flat SHCOMP and +127bps HGK33. Over in Japan, the Nikkei225 +25bps with a 113 handle USD/JPY. Europe’s regional equity indexes DAX, CAC40, and UK100 are slightly higher following more digestion after the French elections. Regional equities in the US are flat following the failed advertisement yesterday of a Macron win, oil ramp, and USD/JPY 113 handle and 1993 low VIX.
US Events Calendar
- 10am: JOLTS Job Openings, est. 5,725, prior 5,743
- 10am: Wholesale Inventories MoM, est. -0.1%, prior -0.1%; Wholesale Trade Sales MoM, prior 0.6%
Federal Reserve Governors
- Fed’s Bullard Speaks on Panel on Interest Rate Policy
- 9am: Fed’s Kashkari to Speak to Minnesota High Tech Conference
- 11:40am: Fed’s George Speaks in Santa Barbara
- 1pm: Fed’s Rosengren Speaks at NYU Conference on Risk Management
- 4:15pm: Fed’s Kaplan Speaks at Summit in Dallas
SPX500 verse Americas, Asia, EU, and World stock markets. Notice in Asia the SHCOMP is negatively diverging verse SPX500. Over in the Americas most stock markets are lagging SPX500. In the EU only UK100 is lagging.
Overnight, the US reflation trade, SPX500, and oil were ramped at the EU start. The bottom two thirds of the chart includes higher timeframe indicating a negatively divergence in the Dollar and Oil verse SPX500 and Yields. Bottom third chart indicates the overall reflation trade is stalling.
China, EU, Japan, and US 60min timeframe of Gov’t yields, forex, and regional stock markets. Starting with the US, reflation trade is attempting to be revived this is a new trend starting prior session. Over in China, the SHCOMP and CNY/USD negatively diverge sky rocketing CN02Y and CN10Y. In Europe, EUR/USD negatively diverges advancing regional stock markets, and regional yields. Japan’s Nikkei225 and USD/JPY are in an upward trajectory.
The main forex theme is dollar demand has increased in the past couple sessions probing the midpoint of the 99 handle. USD/JPY has gone parabolic tagging the highpoint of the 113 level. GBP/USD sits at the low 1.29 level in resistance. EUR/USD has lost the 1.09 handle now probes into 1.08 area. Commodity currencies such as CAD and AUD remain under pressure in a weak commodity environment.
In the commodity patch oil cannot hold the Europe ramp gains heads negative with a probe into the low 46 handle. API will be after-hours, so brace for new market generated information. /NG recovers from prior session terrible liquidation now in the 3.21 handle. Precious metals remain in sellers paradise with /SI in the low 16 handle and /GC at the 1224 level. <TRJEFFCRB> Commodity Index breaches the daily 200sma leading to deflationary times ahead. Base metals such as Iron Ore are mixed with the unwinds due to a Chinese deleveraging.
Global credit impulse is negative for 2017. Most importantly, China’s credit impulse is negative, which was responsible for reflation over the past few years. Progressing into 2017, we expect slower global growth and lower commodity prices.
Major Commodity Indexes under severe stress. Deflationary times are here.
WTI monthly/weekly timeframe rejects R1 55 with 320sma rejection 47.59 with downside projections to pivot 44.81. Upon complete reversion, we will then reassess the next project.
UST10Y monthly/weekly R1 2.63 rejection with pivot 2.13 reversion. Weekly counter trend with upside potential 2.40.
US Dollar monthly/weekly cancelling S1 94 handle projection remain neutral as auction regains 99.26 pivot. The object is to understand how long will probe stay above pivot.
SPX500 monthly/ R2 2398 testing
CRB Commodity index monthly/weekly pivot 181.079 blown through with S1 165 projection.