MACRO MORNING NOTE MAY 19, 2017
SPX Up, DXY Down, WTI Up
SBA’s Alastair Williamson concludes the Macro Morning Note from Baltimore, Maryland.
Global stocks are modestly quiet to end the week following a political crisis breaking-out in Washington, D.C., along with Brazil’s stock market crashing. The political crisis in Washington this week has crushed the reflation trade sending the dollar to midpoint of the 97 handle and UST10Y to 2.24. As a result, safe haven flows for the week are a rush into bonds and precious metals. The likelihood of a June rate hike has declined amid the cross asset rout. A reminder, that the deep state in conjunction with the fourth estate is in full gear in attempt to impeach President Trump. If an escalation does occur, there could be more cross asset routs in the summer. As of right now, President Trump cannot be impeached, because there is no evidence, it’s merely just hype from the corporate media. What President Trump can do is launch a counter offensive, which will deepen the political crisis. Notice when President Trump launched 59 tomahawks in March, the deep state and corporate media cheered him on, then left him alone for a few weeks. Well, it doesn’t help that the US Navy is moving the second aircraft carrier to the Korean peninsula and overnight Chinese jets intercepted a US plane. Light day for economic data, but a slew of Federal Reserve members will be out and about spewing nonsensical illusions.
June’s rate hike probability is now 70% compared 90% last week. This is due to political crisis unfolding in Washington this week.
Yield Curve is now at October 2016 levels with a daily death cross imminent. The Trump hype in terms of the yield curve is dead.
UST10Y <TNX> bracketed 22.23-24.46. Waiting for next imbalance.
The reflation trade verse the SPX500 is negatively diverging.
This week was evident of a run into bonds and outflows of equities.
SPX500 stocks over 20/50/200sma Full STO show equities are waning.
NYAD Cumulative starts to wane with RSI (7) rejecting overbought territory.
When the MAs start to tighten, it’s time to start worrying.
The low volatility bubble.
US Financials follow yield curve.
Deflationary trajectory in commodities for 2017. Blame China
<CRB> monthly/weekly pivot support 181 boosted via heavy weight in WTI.
SPX500 monthly/weekly R2 2398 overhead supply unlocking amid political crisis in Washington. R1 2287 downside projection.
DXY monthly/weekly pivot 99.26 rejection unlocking overhead supply with S1 94.78 downside projection.
UST10Y monthly/weekly R1 2.63 resistance with pivot reversion 2.13.
WTI monthly/weekly R1 55 resistance with completed pivot 44.81 reversion. Hype on OPEC cut extensions.
Bonus: Traders Favor Bitcoin over King Dollar This Week