2016/05/26 TrendView VIDEO: Global View (early)
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TrendView VIDEO ANALYSIS & OUTLOOK: Thursday, May 26, 2016 (early)
As noted earlier this week, the ‘Normalcy Bias’ Bunch at the Fed are back in full force after the recent somewhat stronger than expected US economic data. While they might be entitled to still speak of more FOMC rate hikes this year, they seem charged up about the aggressive nature of what is necessary. That is spite of significant weakness in quite a bit of the global economic data. As a sign of that, just look at the global Advanced PMI’s for Manufacturing on Monday and Services on Wednesday. Outside of Germany, those were fairly disappointing indications (even including the US.) Even this morning’s totally over-the-top headline US Durable Goods Orders data turns out to be based on very strong (yet erratic) airplane orders.
The subsets beginning with the Ex-Transportation figure tell a different story. Especially the Non-Defense Capital Goods Order ex-Aircraft figures maintained the weakness since the top of the year. That is the proxy for business investment, and the April number coming in at -0.80% (versus a +0.30% estimate) highlights a lack of business investment. And that is ultimately the font from which stronger hiring and wages must flow.
That said, any positive data of the sort the US has seen of late seems to vindicate the hawks at the Fed for now. Even if their latest pronouncements on at least two and maybe three more rate increases this year are more ‘data dependent’ than they would like to admit, the next rate move now being up seems to be the prevailing psychology. In a world that previously had a ‘Fear of Fed’, it finally seems that ‘good news is good news’!
Video Timeline: It begins with macro (i.e. fundamental influences) discussion of some of the factors noted above as well as key end-of-month data coming Friday right before the long holiday weekends in the UK and US. There has also been quite a bit of weak data elsewhere, even if that was recently buffered by surprisingly (even suspiciously) strong Japanese GDP. There was also strength in UK Employment figures in spite of weak CBI Trends Total Orders and this morning’s UK GDP and its subsets (especially Trade.)
It moves on to S&P 500 FUTURE ‘Quick Take’ up to 02:00 followed by the short-term at 04:00 and intermediate term view at 06:15, with OTHER equities from 09:00, GOVVIES beginning at 11:45 (with the BUND FUTURE at 14:15 including implications of the early March expiration rollover) and SHORT MONEY FORWARDS from 16:00. FOREIGN EXCHANGE covers the US DOLLAR INDEX at 18:30 EUROPE at 20:30 and ASIA at 22:45, followed by the CROSS RATES at 26:30 and a return to S&P 500 FUTURE short term view at 30:00. We suggest using the timeline cursor to access analysis that is most relevant.
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. Read more...