2016/05/05 TrendView VIDEO: Global View (early)
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TrendView VIDEO ANALYSIS & OUTLOOK: Thursday, May 5, 2016 (early)
Global View: All Markets
The central banks are obviously hitting the end of the (very distended) line with the move into NIRP (Negative Interest Rate Policy.) On the ‘macro’ front the first week of May brings important data and almost final corporate earnings. Yet even more critical coming out of last week were indications of whether central bank influence was still sufficient to buoy US equities at the top of a very significant rally. That was accentuated by June S&P 500 future selling off from 2,103-10 two weeks ago after what was a still very accommodative ECB press conference, with even more ineffective central bank influence on the BoJ’s refusal to dive deeper into NIRP (Negative Interest Rate Policy) last Thursday morning.
And the late week market failure after a still very accommodative FOMC statement on Wednesday afternoon meant the short-term Evolutionary Trend View was weak (amply illustrated by the initial upper left chart.) Note the DOWN Breaks from multiple projections up near the 2,078 area. While those are indeed short term, they are also very near the far more major 2,078 major weekly channel UP Break that appears to have been Negated by that recent weakness.
This is all that much more important in the context of other extensive background factors which indicate the potential for recent aggressive trend reversals to repeat if US equities weaken much further from current levels. All that additional background is available in previous posts, like last Thursday morning’s Special Alert: Equities Critical. And the activity in other asset classes was most prominent in foreign exchange, where US Dollar Index violated the .9325 Tolerance of important .9400-.9350 support. Yet that was not on typical euro strength, but sharp weakness of USD/JPY after BoJ’s ‘no action’. Of course, all of that is also consistent with the govvies return to strength last week after several weeks of atypical weakness on overall disappointing economic data.
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Video Timeline: It begins with macro (i.e. fundamental influences) discussion on the factors noted above as well as some of the key specifics of economic data that actually strengthened a bit in the US but with more weakness out of China and the UK. We suggest you listen to the early part for the summary on the central bank psychology failure.
It moves on to S&P 500 FUTURE short-term at 03:30 and intermediate term view at 07:45, with OTHER equities from 11:30, GOVVIES beginning at 16:30 (with the BUND FUTURE at 19:00 including implications of the early March expiration rollover) and SHORT MONEY FORWARDS from 21:15. FOREIGN EXCHANGE covers the US DOLLAR INDEX at 24:00 EUROPE at 25:30 and ASIA at 27:45, followed by the CROSS RATES at 30:30 and a return to S&P 500 FUTURE short term view at 34:45. As this a longer than usual video analysis, we suggest using the timeline cursor to access the analysis most relevant for you.
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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 in December 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 in 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.)
▪ As we have anticipated for a while and noted more pointedly on the recent equities weakness in spite of the still quite accommodative central bank positions, what we are now seeing is the denouement of the extended multi-year central bank efforts to rescue economies that climaxed in the recent US equities rally. Yet that was without essential assistance from structural reforms from the political class. As emphasized ever since our February 9th Fear & Loathing in Marketland post:
The next financial crisis will occur when the investment and portfolio management community (and ultimately the investing public) realizes that the central banks alone cannot restore the robust growth from prior to the 2008-2009 financial crisis.
We refer you to the Market Observations below last Friday morning’s Global View TrendView video analysis (updated based on last Friday’s Closes) for all of the general technical trend Evolutionary Trend View that is still relevant in spite of the extended market trend evolution this week. It also contains the specific ‘macro’ background for each market as well as some still relevant general ‘macro’ observations in the earlier section of Friday’s post.
The extensive analysis of the broader ‘macro’ background in previous posts (especially Thursday morning’s Special Alert: Equities Critical) has already explored all of the reasons the equities might be at the top of a more major bear phase, and we refer you back to those for that insight. Thursday morning’s Special Alert: Equities Critical also refers back to more meaningful previous ‘macro’ analysis of the economic data, central bank efforts, and the risks in the lack of structural reform from the political class.
The TrendView VIDEO ANALYSIS & OUTLOOK is accessible below.
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