MACRO MORNING NOTE August 17, 2017

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

Global stocks in all regions are mixed this morning following FOMC minutes of weak inflation and overvaluation of risk assets. US stock markets continues to stall on a monthly timeframe for the third week mostly because of the North Korean fears. As fears subside with North Korea, new fears develop in Washington, as top American CEOs resign from Trump’s business board sending the investment community into panic. Trump’s job approval rating hits an all time low at 34% earlier this week, along with media driven backlash over Charlottesville event. We believe the deep state is forcing a disappointment phase on to Trump and it would be a great idea to fasten seat belts for a turbulent ride into fall.

FOMC Headlines:

  • *MOST FED OFFICIALS SAW INFLATION PICK-UP OVER NEXT COUPLE YEARS
  • *MOST FED OFFICIALS BACKED B/SHEET MOVE AT `AN UPCOMING MEETING’
  • MANY FED OFFICIALS SAW WEAK INFLATION DUE IDIOSYNCRATIC FACTORS
  • SOME OFFICIALS CONCERNED BY WEAK INFLATION, ARGUE FOR PATIENCE
  • “Vulnerable To Elevated Valuations”

Regional stock markets in Asia are mixed this morning following FOMC minutes. The Nikkei225 fell .1% as did HKG33 -1.22% and ASX200 -.61%, with Shanghai Composite up +.68%. Overnight main data release came in the form of an Australian employment roundup for July. Headline job creation was better than expected. Copper and iron ore fade from highs following a multi-month advancement. On to Japan, where exports rose 13% in July y/y, the eight-straight monthly gain, gov’t data showed. The Nikkei was slightly off despite a lower USD/JPY at 110.20.

While Rob Carnell, head of Asia research at ING, said, “Confusion reigns at the Federal Reserve,” he added Asian markets were likely to take comfort in additional rate increases are likely to come “at worst at a very-modest pace.”

Regional stock markets in Europe are marginally lower this morning amid political uncertainty in the U.S. The entire world last week was concerned about North Korea now it seems that Washington’s dilemmas are more important. As we’ve said before, we believe that the deep state in the U.S. is setting Trump up for a disappointment phase for the fall timeframe. We would expect economic disappointment, limited to no fiscal stimulus, and social upheavals. Back to Europe, where the CAC40 -.12%, DAX +.27%, and UK100 -.13%. What we’re noticing this morning is a bid starting to develop in European stocks, meanwhile US equity futures are triggering sellers.

‘Record Bargain’: EU stocks are cheapest verse U.S. stocks

Moments ago, ECB minutes reveal concerns about “EURO Overshooting”.. Concerns were expressed about the exchange rate of the EURO mainly because it’s quick advancement relative to the dollar in 2017.

Some concerns we have is the lower high in World stock markets <VT> overlaid with S&P500.

European stock markets have been fading for four months…

Asian stock markets have been stalling since July.

Over in the U.S., small and mid stock markets negative diverge large cap.. This is a sign of market topping…

NYSE High-Low Index breaks 2016 demand line

<SPYHDA> Aristocrates Dividend Index monthly MACD bearish crossover

USHL-5 Compression leading to a downside imbalance

The multi session reflation trade party is over in the United States fading the the S&P500. Meanwhile, WTI proves lower into the midpoint of the 46 handle.

L Brands equity verse S&P500

 

CRB Index monthly/weekly Pivot 181 rejected S1 165 target.

U.S. Dollar monthly/weekly attempting to find support in the 93 handle…

SPX500 monthly/weekly momentum slowing waiting for an unfair high between R2 2398- R3 2578…

UST10Y pivot 2.13 compression waiting for next major move…

WTI monthly/weekly compression above Pivot 44.81. Y-axis P-shape distribution creates overhead supply.. There is a possibility of a double distribution forming signaling that 35 is likely unless an engineered event occurs.