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2017/08/31 Commentary: When It Rains…

September 4, 2017 Rohr-Blog Leave a comment

2017/08/31 Commentary: When It Rains…  

© 2017 ROHR International, Inc. All International rights reserved.

Extended Trend Assessments reserved for Gold and Platinum Subscribers

Commentary: Thursday, August 31, 2017

When It Rains…   

…as the old saying goes, “…it pours.” And if you happened to be in Houston, Texas over the past week it pours and pours and pours. That was due to Hurricane Harvey making landfall last Saturday morning only to get stuck between eastern and northern high pressure areas, and hover over the southeast Texas coastal around Houston. Yet its impact as a hurricane was only a relatively modest beginning of overall highly destructive activity. Because this is not hot news, we will be brief with summary details that led to some conclusions about the markets we will explore first, and return to more discussion of the somewhat horrific facts concerning Tropical Storm Harvey (which it became once it stalled after making landfall.) However, before returning to those details the opening graphic (courtesy of Photo Grid) speaks volumes about just how much water was dropped on the Greater Houston area and some key points east.

In fact, the US National Weather Service had to upgrade the color coding on its maps of actual and predicted rainfall amounts. As it noted on Monday, “We've had to update the color charts on our precipitation graphics in order to effectively map [Tropical Storm Harvey]." It added that the new scale “…resets that dark purple color to denote 15-20 inches of rain — and tacks on two more lighter shades of purple to denote 20-30 inches and greater than 30 inches." It is important to keep in mind those are for daily rainfall, and cumulative totals in Houston reached a record of over 50 inches.   

Yet market responses are not necessarily consistent between asset classes, especially on the US equities taking the long view of Hurricane Harvey’s impact as it evolved into a sustained tropical storm. They seem to reflect the likely economic strength to follow on a major rebuilding effort. Yet that has not weighed very much on govvies, which seem to be more so discounting the likelihood of near term economic weakness on the struggle to rebound from damage to a significant portion of the fourth largest US city. While the US dollar recovery seemed to reflect economic strength from major rebuilding, late week it is fizzling into nothing more than a bounce from key support (more below.)

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 Tagged analysis, Beaumont, benefit, bond, ceiling, comments, concrete, confluence, Congress, contaminated, debt, Debt Ceiling, Democrat, economic, election, employment, equities, Euro, Europe, FEMA, fixed income, flood, Foreign Exchange, GDP, Gilt, govvies, Harvey, Houston, Hurricane, Indicators, inflation, insurance, Katrina, loss, macro, macro-technical, market, markets, mold, mosquito, New Orleans, NWS, Port Arthur, rainfall, record, refinery, Republican, S&P 500, Sandy, storm, T-note, technical, TREND, Tropical, Tropical Storm, Trump, US dollar

2017/08/24 Commentary: Trump Troika

August 25, 2017 Rohr-Blog Leave a comment

2017/08/24 Commentary: Trump Troika  

© 2017 ROHR International, Inc. All International rights reserved.

Extended Trend Assessments reserved for Gold and Platinum Subscribers

Commentary: Thursday, August 24, 2017

Trump Troika   

The ‘Troika’of factors that weighed on US equities and the US dollar and bolstered the govvies remain in place. Yet after the extended problems of the US President due to his various actions regarding the Charlottesville protest, the lack of progress on the tax reform and infrastructure spending aspects of his legislative agenda and the still less than credible approach to the situation with North Korea (NOKO), he now owns  various problems through self-inflicted wounds. As such, it is now the ‘Trump Troika’.

So why would we open a review of how those various factors combine to impede the US economy’s progress toward greater growth with a chart of the Euro versus the US Dollar? Quite simply because it is a good measure of how US prospects have been fading since the early enthusiasm for the Trump administration. While it has been most evident against the euro on EUR/USD strengthened from a 1.0340 January low to current levels, the greenback has also weakened against all other currencies, including emerging currencies for the first time in years. And key investors are losing faith in the ‘Trump trade’…

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 Tagged 2007, 2007 redux, 2016, analysis, balance, balance sheet, Bannon, bias, Bridgewater, Charlottesville, comments, Deflation, Disinflation, Dodd-Frank, Draghi, ECB, equities, Europe, Fed, Flake, FOMC, Hole, inflation, interest, interest rate, Jackson, Jackson Hole, macro, macro-technical, McCain, McConnell, minutes, Moon, Moon Jae-in, NOKO, normalcy, normalcy bias, normalize, Obama, Obamacare, political, politico-economic, QE, Quantitative Easing, reduction, redux, risk-off, risk-on, Ryan, S&P 500, sheet, SOKO, tail risk, technical, Troika, Trump, US, Yellen, Yellen. Dalio

2017/08/18 Commentary: ‘Troika’ Into Next Week

August 18, 2017 Rohr-Blog Leave a comment

2017/08/18 Commentary: ‘Troika’ Into Next Week

© 2017 ROHR International, Inc. All International rights reserved.

Extended Trend Assessments reserved for Gold and Platinum Subscribers

Commentary: Friday, August 18, 2017

‘Troika’ Into Next Week

No, not the sustained collaboration Troika between the European Commission (EC), European Central Bank (ECB) and the International Monetary Fund (IMF) that is overseeing the Greek Debt Bailout. While we feel the Greek Debt Bailout situation is still festering in the background on the IMF actually only funding its commitment once the European creditor nations agree much more extensive Greek debt relief, that is not the ‘troika’ of the moment. We are rather referring to the tendency noted at many past junctures for any sustained pressure on US equities tending to require a confluence of three negative factors. Interesting in this case was seemingly more dovish than expected July 25-26 FOMC meeting minutes (our marked-up version.) That might have been a shining of the light of dovish benevolence, yet it brought concern to the equities. For much more on that see Thursday morning’s Commentary: FOMC Minutes Minuet post.

That was grounds to feel that for all of the Fed-speak on strong employment fomenting inflation there was some reason to believe the Fed was just ‘puffing’ again (like during its 2015-2016 ‘normalcy bias’ phase.) There was also the crumbling of business support for President Trump in the wake of his lame response to the fallout from the Charlottesville protest situation. This feeds the sense (previously explored at length) on the degree to which Trump’s diminished standing and distractions for the US Congress are a problem for the Trump reform and stimulus agenda; and by extension the US economy.   

And while the North Korean (NOKO) situation dropped from the headlines in the wake of Trump’s domestic problems, it is due to come back into focus on annual US-South Korea major military exercises from the beginning of next week. That is important, and anyone who has not done so already might want to review our WEEKEND: NOKO Crisis Redux post that also suggested a solution. And the first step of the US reverting to silence, ratcheting down rhetoric and only reacting to whatever North Korea actually does next has seemed to occur for now. Yet there is no guarantee this will remain subdued, and the equities might have been under some pressure from anticipation of that as well.

And so the negative ‘troika’ triumphed since Wednesday morning, with some fairly predictable market responses that we are going to pursue straight away….

Authorized Subscribers click ‘Read more…’ (below) to access balance of the discussion. Non-subscribers click the top menu Subscription Echelons & Fees tab to review options. As this is a ‘macro’ assessment, Market Observations remain the same as last weekend’s WEEKEND: NOKO Crisis Redux post that were updated (lower section) after Monday’s Close, and there is no Extended Trend Assessment in this post.

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Rohr Market Research Tagged 2007, 2007 redux, 2016, analysis, bailout, balance, balance sheet, bias, Charlottesville, comments, Deflation, Disinflation, Draghi, EC, ECB, equities, Europe, Fed, FOMC, Greece, Greek, IMF, inflation, interest, interest rate, macro, macro-technical, minutes, NOKO, normalcy, normalcy bias, normalize, political, politico-economic, QE, Quantitative Easing, reduction, redux, risk-off, risk-on, S&P 500, sheet, SOKO, tail risk, technical, Troika, Trump, US, Yellen

2017/08/17 Commentary: FOMC Minutes Minuet

August 17, 2017 Rohr-Blog Leave a comment

2017/08/17 Commentary: FOMC Minutes Minuet

© 2017 ROHR International, Inc. All International rights reserved.

Extended Trend Assessments reserved for Gold and Platinum Subscribers

Commentary: Thursday, August 17, 2017 

FOMC Minutes Minuet

And then in the face of inferential dread of Wednesday’s July 25-26 FOMC meeting minutes (our marked-up version) release came the shining of the light of dovish benevolence from on high. It could have been biblical if it were not so mundane. After all the recent Chair Yellen and other Fed member refutation of the previous press and analyst inferences of the more aggressive removal of accommodation by the FOMC, why was there such potentially hawkish anticipation accompanying the minutes that flowed from a more accommodative than expected meeting? Simple. In a word it was the feared specification of the beginning of the Fed balance sheet ‘reduction’. That is indeed cause for some concern after the 2013 ‘taper tantrum’ once Chair Bernanke announced reduction in Fed purchases of debt securities as part of ending its Quantitative Easing (QE) program.  

Yet, there it was in all its uplifting glory on page 9 of the minutes: still no specification of the meeting at which the Fed would announce the start of the reduction of its admittedly Brobdingnagian balance sheet. That was against the expectation that the FOMC had indeed decided a date certain to begin that process at the July meeting.

And the market impact was immediate on the US equities deciding that the lack of a more aggressive ability to begin that balance sheet reduction is a weak sign, which left equities under some pressure. The knee-jerk reaction in govvies was an obvious price recovery (i.e. lower yields) reflecting both that soft psychology and the prospect of less securities potentially tendered back into the market as soon as previously expected. And foreign exchange saw the US Dollar Index weaken from resistance as recent modest weakness in the euro was reversed on EUR/USD ratcheting back up from its 1.1700 near-term support.

So the minutes reflect the Fed’s continued quick small steps dance to adjust its view while still trying to sound vigilant on inflation. In that regard this is like a ‘minuet’, which is a social dance of French origin for two people. That was possibly from the French ‘menu’ meaning slender and small, referring to the small steps of the dance.

Yet the major ‘big steps’ theme remains the previously noted analytic dislocation…

Authorized Subscribers click ‘Read more…’ (below) to access balance of the discussion. Non-subscribers click the top menu Subscription Echelons & Fees tab to review options. As this is a ‘macro’ assessment, Market Observations remain the same as last weekend’s WEEKEND: NOKO Crisis Redux post that were updated (lower section) after Monday’s Close, and there is no Extended Trend Assessment in this post.

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Rohr Market Research Tagged 2007, 2007 redux, 2016, analysis, balance, balance sheet, bias, Brainerd, Bullard, comments, Deflation, Disinflation, Draghi, ECB, equities, Europe, Fed, FOMC, inflation, interest, interest rate, macro, macro-technical, normalcy, normalcy bias, normalize, political, politico-economic, QE, Quantitative Easing, reduction, redux, risk-off, risk-on, S&P 500, sheet, tail risk, technical, US, Yellen

2017/08/16 Commentary: Back to the Fed

August 16, 2017 Rohr-Blog Leave a comment

2017/08/16 Commentary: Back to the Fed

© 2017 ROHR International, Inc. All International rights reserved.

Extended Trend Assessments reserved for Gold and Platinum Subscribers

Commentary: Wednesday, August 16, 2017

Back to the Fed

Markets seem a bit subdued this morning because nothing at all has changed since Tuesday’s strong US data. There was not all that much out on the international front this morning out of line with estimates, and reverting to softness were the weaker US Housing Starts and Building Permits. The NOKO situation continues calm (for now) after Kim Jong-un’s predictable decision to hold off on his imminent plan to launch four missiles toward the US Territory of Guam. While Mr. Kim said this is due to his desire to "watch a little more the foolish and stupid conduct of the Yankees" (according to the NOKO KCNA news agency), many people are hoping this means that either in his own right or through the pressure from benefactor China he has finally realized the US retaliatory threat is serious.

US Secretary of Defense Mattis warning that if North Korea fired on US territory it would be "game on" was very explicit. This is part of why we felt the ‘NOKO first strike scenario’ was not a likely outcome (see our WEEKEND: NOKO Crisis Redux post for more on that and alternative scenarios.) Yet that holds the prospect of heating up again as the US and South Korea head toward annual major military exercises from the top of next week.

And speaking of major influences that may become more critical next week, there is also the annual Kansas City Federal Reserve annual Economic Policy Symposium in Jackson Hole, Wyoming. Key among the various communications will be European Central Bank President Mario Draghi’s speech next week Friday (August 25th.) Yet the current spin on that is he will NOT suggest any policy shifts. This will be consistent with the overwrought inferences on removal of accommodation at his late June speech in Sinha, Portugal being reversed in all subsequent ECB communication.

And in any event we will need to deal with another central bank influence first: today’s 13:00 CDT (14:00 EDT; 19:00 GMT) release of FOMC July 25-26 Meeting Minutes. There is anticipation of much discussion of why any further federal funds rate increases are less than warranted or desirable at present. Yet there will also be keen interest in any discussion of the planned reductions in the Fed’s balance sheet, with potential to impact especially both equities and govvies with some influence on foreign exchange.

Authorized Subscribers click ‘Read more…’ (below) to access balance of the discussion. Non-subscribers click the top menu Subscription Echelons & Fees tab to review options. As this is a ‘macro’ assessment, Market Observations remain the same as last weekend’s WEEKEND: NOKO Crisis Redux post that were updated (lower section) after Monday’s Close, and there is no Extended Trend Assessment in this post.

Read more...

Rohr Market Research Tagged 2007, 2007 redux, 2016, analysis, balance, balance sheet, bias, BoJ, CNBC, comments, Deflation, Disinflation, Draghi, ECB, economy, equities, Europe, Fed, FOMC, FT.com. FT, govvies, Gross, Hole, inflation, interest, interest rate, Jackson, Jackson Hole, Japan, KC Fed, limit, macro, macro-technical, normalcy, normalcy bias, normalize, political, politico-economic, QE, Quantitative Easing, reduction, redux, risk-off, risk-on, S&P 500, sheet, tail risk, technical, US, Yellen
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