Wed, Sept 07, 16


SPX Down, Dollar Down, Crude Down

Prior session’s US non-mfg. ISM hit it’s lowest level in six years (51.4 vs. 54.9 exp.). To make things worst, ISM mfg. printed at six months lows as US manufactures continue to struggle from weak business spending and uncertainty in the global outlook. Here is a chart to complete ignore-

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Commenting on the PMI data, Chris Williamson, Chief Economist at Markit said:

“The weak PMI readings send a downbeat note on economic growth in the third quarter. Taken together, the manufacturing and services PMIs are pointing to an annualised GDP growth rate of a mere 1%, similar to the subdued pace signalled by the surveys throughout the year to date, suggesting that those looking for a strengthening in the rate of economic growth will be disappointed once again. “With non-farm payroll growth also showing signs of waning in line with the surveys’ employment indicators in August and inflationary pressures remaining subdued, the data flow is leaning towards the Fed staying in “wait and see” mode at its September meeting.

“The slow pace of growth and weak hiring was in turn often linked by companies to growing uncertainty about the economic outlook as the presidential election approaches, suggesting growth could pick up again later in the year.”

US Event Calendar

  • 7am: MBA Mortgage Applications, Sept. 2 (prior 2.8%)
  • 8:55am: Redbook weekly sales
  • 10am: JOLTS Job Openings, July (prior 5.624m)
  • 2pm: Fed Beige Book
  • 4:30pm: API weekly oil inventories (Holiday Week)

There is a wide spread between US Macro and the S&P500 fair market value. Fundamentals are out of tune which can lead to a reversion.

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Rate Hike probabilities are declining post ISM MFG/NON data crashing in August.

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Central Banks print $180 billion per month injecting into global markets to maintain the status quo, meanwhile stagnating the global economy.

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US Productivity has rolled over as central banks print record amounts of electrons.

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Meanwhile, as central bank balance sheets expand. MSCI World EPS for 2016 plummets or negative diverges from world stocks.

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  • Top left Corner: SPX & WTI ignore negatively diverged UST Yields. Perhaps reversion in US session.
  • Top Right Corner: Hit piece overnight criticized BOJ has disorganized sending USD/JPY plunging to mid-101 handle with Nikkei and JPY10Y following.
  • Bottom Left: EU Gov’t Y plunge as equity indexes ignore.
  • Bottom Right: Global Yields tumble this morning.

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Prior session major Forex shifts included DXY -120bps. In return commodity linked currencies such as CAD, AUD, and ZND had modest gains. USDJPY declined overnight after an article outlined BOJ confusion of negative interest rates.

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Over in the commodity space, WTI is surprisingly down on the session probing in the mid-44 handle. This is surprising due to DXY declines and CAD/USD boost, but serves as a warning for WTI bulls. Tremendous whipsaws in WTI have been recently produced by OPEC or OPEC “anonymous sources”. Prior session, Genscape reports: Cushing inventory draw -706,184 bbl, week ended Sept.2. Due to a holiday week, API private data will be released at 430pm post US cash session. Latest reports overnight have RUSSIA OIL OUTPUT SEEN AT 10.9M B/D IN 2016, 11.3M B/D IN 2017 and OPEC-RUSSIA OUTPUT AGREEMENT UNLIKELY AT ALGIERS: GUNVOR. Latest fears are originating from China where global oil demand is set to tumble as china cracks down on refiners. China’s relentless demand for oil in 1H16 was used to fill SPRs. Now that appears to be topping out. China could release the next deflationary wave in oil as imports are expected to be trimmed in Sept’16.

WTI: Most important line in the sand is 44.77 monthly Fib-Pivot

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Solar Eruption, Sunspots, Outlook | S0 News Sep.7.2016

Sept-Nov Above Average Temperatures. It’s 2013 all over again, with the cold will shift to the east heading into Dec. Of course this will be a disrupter to the seasonally prone retailors.

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Get ready the next cycle will surprise you.

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Spaghetti Models and Tropics Maps: A tropical wave is passing near the Cabo Verde Islands accompaniedby disorganized showers and thunderstorms.

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60 minute timeframe w/ 200sma. Is price above or below 200sma?

Above: Copper, EEM, Copper, XLF, HYG, SPX

Below: VIX, WTI, DXY

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Soft Commodities are experiencing a massive clear event. Waiting for a bottom. Review Stockboardasset.com for the Grand Solar Minimum Trade.

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In the pre-US Cash session price rotates +657 bps premium verse the point of control at 2048 in the upper bi modal. The market has auctioned +1000bps in a post-Brexit vote era on declining participants. Advertisements of the auction have been in attempt by central banks, but so far the average volume line does not reflect an abundance of new entrees. Price is likely to oscillate from 2166.7 to 2182 as the balance matures. Then use the balance’s extremes for hints of a directional imbalance.

Our fear is the premium verse the point of control has been decreasing in a lower high formation. This may signal the balance nears maturity thus indicating a directional imbalance is near. Driver of markets today Fed Speak + DXY + WTI.

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Bonus: SPX,Monthly’s Momentum forced rejection indicates an alarm bell is ringing. Usually forward looking.

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