2016/03/04 TrendView VIDEO: Concise Highlights (early)
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TrendView VIDEO ANALYSIS & OUTLOOK: Friday, March 4, 2016 (early)
Concise Highlights
What remains the case now to a goodly degree is the overall soft global economic data while the US data has improved ever since last Thursday morning’s strong US Durable Goods Orders. The same was true for weak global PMI’s (including French Services on Thursday) and other data into above-estimate US ISM Manufacturing and Construction spending Tuesday. And Wednesday’s strong ADP Employment at 30,000 above estimate has now been vindicated by US Employment report Non-farm Payrolls number. Yet here as well, the ‘Goldilocks’ (i.e. data ‘not too hot and not too cold’) rally in US equities (which are leading the others higher) has been reinforced now by even the US data.
While a 242,000 Non-farm Payrolls gain was indeed well above the plus 198,000 estimate, the -0.10% Monthly Hourly Earnings was a real disappointment in that context. There was a lot of hope that last month’s +0.50% Hourly Earnings was a new dawn in earnings gains. In the event the two month average drops right back down to the paltry 0.20% gains that were about the best the US economy did over the past year-and-a-half.
The point of all this is the degree to which the March S&P 500 future has shifted from the threat of a very negative bear extension three weeks ago into 1,805. Out above the interim 1,958-62 area on Tuesday morning it is important to note the next major resistances are 1,970-75 and 2,010-20. Holding at no worse that the top of the lower of those on Thursday morning leaves the bulls in charge. We suspect that it can pull back to 1,975-70, with a Tolerance to Wednesday morning’s 1,967 low. It is also important to note the interim resistance at the 1,995 bottom of another January gap. But the trend remains up.
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Video Timeline: It begins with macro (i.e. fundamental influences) mention of some aspects noted above, and the degree to which international data remains weak even as some US data has improved quite a bit. That was especially so for still weak global Manufacturing PMI’s Tuesday even as US ISM Manufacturing and Construction Spending were stronger. Wednesday’s Beige Book was a typically mediocre yet positive view, and Thursday somewhat weaker than expected US Services PMI is also actually constructive in the context of the Goldilocks equities psychology right now.
It moves on to S&P 500 FUTURE short-term view at 03:30 and intermediate term at 06:00, and then only mention of OTHER EQUITIES from 08:30 and GOVVIES from 09:30 including the BUND at 10:45 and SHORT MONEY FORWARDS from 11:45. Foreign exchange also only mentions the US DOLLAR INDEX at 12:30, Europe at 13:30 and ASIA at 14:30, with only mention of CROSS RATES remaining steady yet with a firm euro (especially against sterling) at 16:30 prior to returning to the S&P 500 FUTURE short term view at 16:45.
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Authorized Gold and Platinum Subscribers click ‘Read more…’ (below) to access the balance of the opening discussion and TrendView Video Analysis and General Update. Silver and Sterling Subscribers click ‘Read more…’ (below) to access the balance of the opening discussion.
NOTE: Back on the evening of December 8th we posted our major Extended Perspective Commentary. That reviews a broad array of factors to consider Will 2016 be 2007 Redux? For many who believe that the US economy is really strengthening and can once again lead the rest of the world to more extensive recoveries, this may seem a bit odd.
Yet there are combined factors from many areas we have been focused on since the early part of last year which are less than constructive for the global economy and equity markets. We suggest a read if you have not done so already.
We pointed out last month that in the face of another likely Santa Claus Rally this was not an actionable view during the year-end equities rally. Yet it was (and remains) important background to utilize into 2016. This is much like our major late 2006 perspective on Smooth Rebalancing? …or… The Crash of ‘07? (even though the actual crash was deferred into 2008.)
▪ The reason we began with that market discussion instead of our typical background is the extensive macro-fundamental views we have already provided over the past week. There is last Friday’s Commentary: Equities-Energy Emancipation? that noted the relative strength of equities versus energy since last Thursday morning. That is another very important indication that equities are no longer taking energy market weakness as such a major stressor, and has proved to be the case since then.
There is also Tuesday morning’s Brief Update: Abysmal News Still ‘Good’ that highlights the degree to which weak economic indications are retraining the Fed’s more hawkish instincts at present, as mentioned above. In addition to the recent comments from key Fed minions, it also notes the weakness in the Organization for Economic Cooperation and Development’s Quarterly G20 Trade Statistics. That is just the latest in a series of global economic performance warnings from them, and highlights how a weak 2015 is likely heading into more of the same (and possibly worse) in 2016.
Those are worth a look along with their Economic Outlook Interim Report. It was the follow up a couple of weeks ago to the major (and also downbeat) semi-annual Economic Outlook Report last November. And they both cover quite a bit more than the Trade Statistics on why the global economy (ultimately including the US) is faced with a higher prospect of economic weakness than at any time since the 2008-2009 Crisis. All the rest of the fundamental back ground remains the same as our previous analysis, especially in the Commentaries. The relevant concise technical trend views can also be found in the lower section of yesterday’s Brief Update (reserved for Gold and Platinum subscribers.)
The TrendView VIDEO ANALYSIS & OUTLOOK is accessible below.
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