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2019/11/10 Commentary: Santa Already in Town

November 10, 2019 Rohr-Blog Leave a comment

2019/11/10 Commentary: ‘Santa’ already in town (redux)

© 2019 ROHR International, Inc. All International rights reserved.

Extended Trend Assessments reserved for Gold and Platinum Subscribers

COMMENTARY: WEEKEND: November 10, 2019

‘Santa’ already in town (redux)

But is it Mr. Claus or someone else?

This year is a bit different than the end of last year (more so like 2017) in the context of just how upbeat the US equities performance has become into late year. Despite the overhang from the continuing US-China differences, it has been injected with steroids on the sense that those talks are continuing.

At the very least, any near term agreement will lead to the cancellation of the US tariffs increase that was supposed to be implemented into mid-December. The question over whether any 'Phase I' agreement amounts to nothing more than Donald Trump's need to 'declare victory and go home' remains (see Thursday's 'The Bank Overshadowed by US-China News' emailed research note for more.)

That this seems a bit more likely in the face of other pressures on Trump is moot in the near-term. The sight of him and Chinese President Xi signing any agreement will encourage thoughts of broader rapprochement to come; regardless of how far apart the two sides may remain on the more substantive critical issues.

However, US equities extended their rally into the end of last week despite first the Trump administration, and then the man himself, refuting Chinese claims that a broad tariffs rollback agreement had been agreed. So what could possibly be so influential as to overshadow the idea there are still stumbling blocks on the way to even the limited Phase I agreement? Well, in the context of the overall US equities strength finally extending late this year after stalling repeatedly against topping indications since July (see any recent research notes for more on that), there could already be a strong seasonal factor influencing the Evolutionary Trend View

The general psychology remains the same as any other strong year insofar as our long-standing views on the ‘Santa’ influence in the markets remains as always, yet based on something more than a jolly old guy in a red suit. In 2017 US tax reform certainly provided a plethora of blessings for US equities from multiple factors on the outlook into 2018. Of course, as the market is a ‘creature of expectations’, that is now being strongly reflected this year.

Whether or not the anticipated greater rapprochement between the US and China occurs, the anticipation that at least things are not going to become more acrimonious again in the near term can drive the US equities psychology. And that should then be accentuated by the need for under-invested individuals and especially portfolio managers to purchase equities on any setback (more below.)

While that leaves a 'hostage to fortune' in any return of overt US-China hostility, there is now quite a bit of substantial lower support in the US equities. As such, any fresh US-China confrontation would also need to be substantial to upset markets enough to drop US equities back below that now meaningful lower support; which is not really expected, at least not at this juncture.

Yet in the final analysis of the sheer equities trend, it is all very impressive and reinforces the natural tendency of ‘Santa Portfolio Manager’ to benefit others by needing to apply any excess cash to purchases of well-regarded stocks in positive equities years. 

Now we just need to see how the markets respond to the idea that there may be a revival of coordinated global economic strength if indeed there is a broader US-China rapprochement (which still seems quite far off in the distance.) Yet for now that anticipation (along with just a bit better European and Chinese economic data) has also weighed on global govvies and inspired an overall bid in emerging currencies (even if the latter faded a bit late last week despite US equities strength.)

The bigger foreign exchange question is why seemingly constructive Brexit developments along with the better global economic anticipation have not helped the euro or the British pound. Each of them has dropped back down to key lower support areas, which has brought some surprising strength to the previously weak US Dollar Index.

Yet none of that is going to derail the Santa Claus rally in the near-term. This can only occur in the (as noted above) unlikely event of a return of significant US-China acrimony.

▪ Based on this year’s extensive bullish anticipation, it is obvious that Santa is already in town. While he tends to increase his influence from Thanksgiving into the middle of December, he seems to be starting early this year on the positive US-China inferences noted above. As such, in spite of any setbacks it is likely the US equities will maintain their overall up trend into this month by holding setbacks, like the one they recently experienced on concerns over the Fed's less accommodative guidance (yet which was so short-lived.)

We suspect any December S&P 500 future downside reaction from higher Oscillator resistance will either hold into the lower 3,065-70 Oscillator threshold it overran last week, or at worst ratchet down to no worse than heavier support around that old July 3,030 area all-time high (with a Tolerance into the 3,025-15 range that was seen during the post FOMC sharp reaction.)

As this tendency goes back through many years of our late year seasonal analysis, we are very comfortable repeating our assessment from years gone by… [Original version posted Monday, December 23, 2013]

One of the key aspects which many market participants expect to be critical at this time of year is whether or not there will be a classical ‘Santa Claus’ equity market rally into the end of the year. And we say there is a certain element of humbug inherent in any such assumption.

Even as a Very Merry disposition is apparent in the recent major extension of the equities rally reinvigorated by the better prospects for US tax reform, the question remains “Who is this capitalistic, market profit-oriented ‘Santa’?” Of course, there is a question of whether anyone really believes Santa Claus exists in a market context in the first place, regardless of their personal life desire to believe or not.

In fact, the idea there is a Santa Claus which visits the broad market indices in December is at least a bit of a misnomer. In truth, as we have noted each year, any benefits to the broader market into December is more so due to ‘Santa Portfolio Manager’, and whether he decides to provide joy from his cash hoard to the other market participants.

And his tendencies in that regard are self-serving rather than altruistic. He must assess whether it looks smarter to be holding cash or holding stocks. And that in turn has to do with the position of the market indices relative to their highs or lows of the year. The further below their highs of the year (or indeed closer to their lows) the stock indices are trading into December, the less inclined that ‘Santa’ is to provide gifts to the other participants in the form of further purchases. Sort of a “Scrooge’s Scrooge” in those sorts of already trying times.

However, the closer the indices are to their highs of the year, the more so Santa Portfolio Manager is inclined to provide cash to the market so that he is fully invested at the calendar year-end… regardless of whether his overall returns for the year have been  spectacular or second-rate.

To wit (and to the tune of Santa Claus is Coming to Town)…

Verse:

He buys them when they’re lower,

He buys them when they’re high.

Can’t have any cash on the books

When New Year’s Day is nigh.

Refrain:

No need to pout,

No need to cry.

He’ll only shout,

“Buy, Buy, Buy.”

Santa Portfolio Manager’s

Coming to town.

▪ All previous analysis from the Market Observations (lower section, available to all Gold and Platinum subscribers) in our Weekend: Oddities and Anomalies? post that were updated after last Tuesday’s US Close remain the operative Evolutionary Trend View, except as updated in recent emailed notes. The next full Commentary will be posted once we have the final details of the US government budget deal that must be struck by the end of this week.

Thanks for your interest.

Rohr Market Research

2018/07/04 Commentary: Independence Day Paradigm Shift

July 4, 2018 Rohr-Blog Leave a comment

2018/07/04 Commentary: Independence Day Paradigm Shift

© 2018 ROHR International, Inc. All International Rights Reserved.E

Commentary: Wednesday, July 4, 2018

Independence Day Paradigm Shift

First of all, Happy Independence Day to our United States subscribers. We hope they will all be enjoying their annual celebratory fireworks displays, much like the fiery half of the yin-yang display in our opening graphic. While it is likely lost on some folks in this age where liberal democracy has become more of a global norm, the original American Experiment was also an explosion of the highest extension of Age of Enlightenment political philosophy. The idea that the government would hold power only by the assent of the governed was an explosive concept at the time. It flew in the face of most previous forms of government (outside of limited periods in ancient Greece and Rome) that had been based on some sort of divinely designated top-down monarchical rule.

It was given little chance of success by many contemporary observers, especially those with a vested interest in monarchy as the only right form of government. Yet here we are 242 years later, celebrating the ‘great experiment’ which gradually changed the global thinking on government away from absolute monarchy. And while fireworks have been used for many centuries going back their invention in ancient China, they have a special meaning for the United States. Its national anthem was inspired in part by Francis Scott Key’s awe at the sight of the British fleet’s new Congreve rockets (named for inventor William Congreve) during the naval assault on Fort McHenry during the War of 1812. 

While being held on a British ship south of the fort overnight on September 13, 1814, the rockets and other ordinance illuminating the American flag above the fort inspired Key to pen the poem ‘Defense of Fort McHenry’. That was of course later to be changed to ‘The Star Spangled Banner’, and be set to the music from a British drinking society song ‘To Anacreon who Art in Heaven’. Respect and thanks is due to our British clients and friends. The Americans are triply indebted to the British for having developed the bicameral parliamentary form of government the new country used, bringing the Congreve rockets to attack Fort McHenry, and providing a drinking song as the melody of the US national anthem (not officially recognized as such until 1931!) Somehow it all seems so fitting.

[Opening graphic via wallhere.com. © 2018 All Rights Reserved.]

▪ All of that history is interesting, yet merely scratches the surface of the full story of the defense of Fort McHenry (also now an oft-visited US historic site.) For any history buffs interested in the full story of both the sea and land defense of the fort in 1814, we suggest visiting the very good ThoughtCo learning site review of the events leading up to and during the battle as well as its aftermath at http://bit.ly/2O5S1Uq.

Our Less Prominent Paradigm Shift

Among the more useful shifts we have provided during the very complex politico-economic evolution in the wake of the 2008-2009 Crisis was our evolution into extensive, in-depth commentaries as blog posts. This was from roughly ten years ago, initially at the open WordPress blog (www.rohrintlblog.wordpress.com) that evolved in into the more extensive blog observations you have been reading since mid-2011.

Yet as the old cliché says, “Necessity is the mother of invention.” And we have found that the current more intensive market and politico-economic environment is better suited to our previous concise daily politico-economic updates with active Evolutionary Trend View market development adjustments. Those are both evolving so quickly in the Age of Trump (as well as other radical factors) that a concise daily commentary is more effective.

It is also the case that our recent ISP issues forcing us to publish daily brief updates has also been very well received. In addition to the rapid-fire changes in the fundamental factors best reviewed in real time, our readers have expressed a renewed preference for easy reading concise serial analysis of the evolving politico-economic influences. While this is in some ways a throwback to the previous style, it is also productive at this time.

Mother of Invention Redux

So our ISP problems seem to indeed be the ‘necessity’ which is the ‘mother of the reinvention’ of the Rohr Report politico-economic and price trend analysis. That includes your request that we stick with the daily serial update notes that still include the market assessment extension. This is our hot ‘yang’ extensive yet more selective major Rohr-Blog posts evolving back into the cool ‘yin’ of concise daily updates.

These can be referenced in light of each other; it will still be an in-depth analysis, yet spread out across serial emails of a daily ‘Rohr-Blog research note’. As we have already been relying on the emailed version of our analysis for the past several weeks of ISP issues, we are confident this will suit the many of you who already requested further pursuit of that format; and look forward to further feedback and suggestions.

Thanks for your interest in the more extensive observations previous. We look forward to serving your interests in our new, more direct and concise format.

Rohr Market Research

2018/06/27 Commentary: The Binary Confidence Conundrum

June 27, 2018 Rohr-Blog Leave a comment

Title: 2018/06/27 Commentary: The Binary Confidence Conundrum

2018/06/27 Commentary: The Binary Confidence Conundrum

© 2018 ROHR International, Inc. All International Rights Reserved.

Extended Trend Assessments reserved for Gold and Platinum Subscribers

Commentary: Wednesday, June 27, 2018

The Binary Confidence Conundrum

Once again it has been some time since we last posted, because much of the international markets context has continued to reflect the ‘indi-gestur-ion’ we explored back in the previous Weekend: In-digestur-ion and the G7 post. That was of course about President Trump’s penchant for the ad hoc ‘grand gesture’ (which we had criticized before as less than optimal in many cases) often needing to be remediated by the subsequent adjustment of a bold statement or threat. Yet each of those instances proved to be a temporary case of indigestion, with the adjustment of the misstep acting as a sort of politico-economic antacid. There were other culprits as well, like the new Italian government attempt to install a ‘euro-skeptic’ finance minister, which was also fomented a sharp bout of the international form of indi-gestur-ion’ shock. Yet, in each of these cases (and quite few others for Trump) the rapid reversal of the untenable position left equity markets back in decent shape, and the govvies less buoyant. Foreign exchange remains problematic on the differentials between steady developed economy currencies and overall weakness in emerging currencies with selective exceptions based on ‘country’ influences.

However, the progression of the overall ‘US versus the World’ trade stance of the Trump administration on everything from national security concerns to those nasty steel and aluminum tariffs is becoming more contentious… and at that leaves a significant potential for an outcome (or outcomes) that will be either very encouraging or significantly diminish current global economic confidence. Hence the split theater mask… even if the original Greek theater meaning of each was tragedy and comedy rather than economic success or failure. Muse of tragedy Melpomene actually started as the Muse of Chorus, which was the real story teller in ancient Greece rather than the actors.

After so many successful tragedies, she became associated with that dramatic form. On the other hand, her sister muse Thalia (comedy) signified ‘flourishing’ regarding the nature of her songs throughout time. Yet the relationship to laughing (or at least smiling) in modern economic flourishing cannot be overlooked.

How appropriate for our global trade outcome dichotomy: will it be smiles or cries?

Authorized Silver and Sterling Subscribers click ‘Read more…’ (below) to access the balance of the opening discussion. Non-subscribers click the top menu Subscription Echelons & Fees tab to review your options. Authorized Gold and Platinum Subscribers click ‘Read more…’ (below) to also access the Extended Trend Assessment as well.

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2018/06/10 Weekend: Indi-gestur-ion and the G7

June 10, 2018 Rohr-Blog Leave a comment

2018/06/10 Weekend: Indi-gestur-ion and the G7

© 2018 ROHR International, Inc. All International Rights Reserved.

Extended Trend Assessments reserved for Gold and Platinum Subscribers

Weekend: Sunday, June 10, 2018

Indi-gestur-ion and the G7

Yes, that title term is a play on words combining indigestion and gesture. It directly relates to President Trump’s penchant for the ad hoc ‘grand gesture’. We have criticized that before as less than optimal in many cases, often needing to be remediated by subsequent adjustment of a bold statement or threat. However, he is not the only culprit, as the highly disparate sides in Italy’s current far Left and alt-Right coalition have recently demonstrated. (More on that below.) Yet first it is important to note that some of the President Trump’s more unconventional or outrageous ad hoc policy announcements have had a shock effect on the global politico-economic psychology. This has more than a passing impact, as it will also influence who is willing to work in the administration of someone who is willing to indulge in instinctive, impulsive outbursts… as seen at this weekend’s G7 meeting.

And by way of self-absorption we need to allow it has been a while since our last post. Yet that is because so much has been consistent with our view that Trump’s (and others’) sometimes shocking short-term impacts on markets have amounted to nothing more than temporary disruptions (indi-gestur-ion) our perspective has anticipated.

This goes back quite some time into the ‘consolidation consternation’ that began with the long-delayed yet sharp equities correction into early February. While this is not a broad condemnation of everyone in the Trump administration, as a case in point consider the resignation of ex-National Economic Council Director Gary Cohn.

While the recent Trump machinations on tariffs and trade may work out, let’s allow for the moment that Mr. Cohn probably has a broader and more effective understanding of that area than Donald Trump. After Trump’s surprise March 1st announcement of broad steel and aluminum tariffs, Cohn resigned the following Tuesday as Trump was still saying they would be fully applied 30 days later. As noted in our March 8th Commentary: Trump Trade Trauma?, Cohn’s departure had been predicted since Trump’s inadequate response to violence (including anti-Semitic overtones) in the Charlottesville rally last August. Yet the March 1st tariffs announcement seemed to be the last straw. Why?

Authorized Silver and Sterling Subscribers click ‘Read more…’ (below) to access the balance of the opening discussion. Non-subscribers click the top menu Subscription Echelons & Fees tab to review your options. Authorized Gold and Platinum Subscribers click ‘Read more…’ (below) to also access the Extended Trend Assessment as well.

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Rohr Market Research

2018/05/23 Special Alert: Turkish Lira

May 23, 2018 Rohr-Blog Leave a comment

2018/05/23 Special Alert: Turkish Lira

© 2018 ROHR International, Inc. All International Rights Reserved.

Extended Trend Assessments reserved for Gold and Platinum Subscribers

Special Alert: Wednesday, May 23, 2018

Turkish Lira

It is most interesting to see consistent weaker sister Turkish lira weaken still further at various points when other emerging currencies (which have also reverted to weakness over the past month-and-a-half) have attempted to stabilize at times. And the current lira weakness goes beyond just relatively weaker activity against the US dollar and other developed currencies it had seen since mid-March. To paraphrase the stock market assessment of ex-Fed Chair Alan Greenspan (and colleagues as evidenced in the transcripts from his mid-1990’s Federal Reserve), it seems at this point the Turkish lira has completely “slipped its moorings.” Yet as the Turkish government of President Recep Tayyip Erdoğan has gone a long way toward discarding various Western governmental and financial norms, it is less a surprise and more so a dilemma of how to view it.

While we will directly return to an overview of the reasons the lira is acting so weak (even so much weaker than other emerging currencies that also have reason to sag at present), first note the opening USD/TRY monthly chart. It can be enlarged by clicking on it, and also possibly more effectively enlarged and studied in the external version of it in our archives folder. The reason for providing such a broad summary view is to highlight not only the degree of lira weakness, but also sheer upward US dollar technical trend acceleration against it is now extreme. While the greenback is also strengthening against other developed currencies and especially emerging currencies on stronger US economic growth, they are nowhere as weak as the Turkish lira.

The opening monthly chart is also to establish that even on an historic view the up trendline across the SEP 2016 and SEP 2017 lows is the proper slope to then project the higher (blue dash) channel return line from the 3.9410 JAN 2017 high. This is because the lower, more gradual late-2014 through mid-2016 up trend’s (blue dash) channel return line had already been accelerated above in the low 3.60 area on the surge into 2017. This is important to confidently assess the situation on the USD/TRY weekly chart below.

And it is important to note that the reasons for the lira weakness are multifold, which is always the case for any market that experiences extensive sustained weakness.   

Authorized Silver and Sterling Subscribers click ‘Read more…’ (below) to access the balance of the opening discussion. Non-subscribers click the top menu Subscription Echelons & Fees tab to review your options. Authorized Gold and Platinum Subscribers click ‘Read more…’ (below) to also access the Extended Trend Assessment as well.

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