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2017/03/22 Commentary: ‘Vol’ is Back & ‘Regular Order’

March 22, 2017 Rohr-Blog Leave a comment

2017/03/22 Commentary: ‘Vol’ is Back & ‘Regular Order’

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

Extended Trend Assessments reserved for Gold and Platinum Subscribers

Commentary: Wednesday, March 22, 2017

‘Vol’ is Back & ‘Regular Order’

Of course ‘Vol’ is Volatility, as in short term trading volatility and especially the aggressive downside trading which had been absent from US equities from as far back as September. So in a way the markets were overdue for a hiccup like the one experienced Tuesday, which has room to spill over into the next couple of days. Yet this was not a ‘black swan’ event (see our WEEKEND: Black Swans(?): Italy & Greece post for the more likely source of those), as both the drivers for near term weakness and the potential extent of the selloff were very plain to see well ahead of the event. In fact, after last Thursday morning’s Quick Take: ‘Fecstasy’ Wins… For Now post pointing out the potentially transient nature of the FOMC boost for the equities, questions over the Trump administration’s healthcare reform efforts were already weighing on the US equities prior to Tuesday morning.

Yet much like the near-term upside volatility in the wake of the FOMC announcement and Chair Yellen’s press conference last Wednesday was not a game changer shifting back to more sustained strength, neither is Tuesday’s sharpest selloff in five months. The US equities had surged so extensively in the wake of the US election into December and again since early February into the beginning of March, the current selloff can indeed drop a bit further just to reach aggressive up trend support. And we will cut to the chase on that due to the US equities having experienced not only the most extensive movement, but also the only volatility of that extent compared to more orderly reactions in other asset classes.

In fact, the lack of more extensive reactions in other asset classes reinforces the degree to which the US equities had remained overdone on the upside in spite of the underlying psychology weakening due to concerns over the Trump reform agenda. Specifically the June S&P 500 future (front month since the end of last week) was critical into the support in the 2,370 area after gyrating above and below it prior to the FOMC announcement last Wednesday, as we have noted in all recent analysis. Yet it also quickly overran the next 2,350 support Tuesday morning. Fair enough, and additional weakness was therefore not all that much of a surprise. Yet even the aggressive up trend support is at key lower levels that could allow for between a twenty and forty dollar further drop…

Authorized Silver and Sterling Subscribers click ‘Read more…’ (below) to access the balance of the discussion. Non-subscribers click the top menu Subscription Echelons & Fees tab to review your options. As this is a concise follow on analysis of the US equities activity and relative performance of other equities and asset classes, there is no Extended Trend Assessment in this post.

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Rohr Market Research Tagged 2007, 2007 redux, analysis, black, black swan, bond, comments, confluence, Congress, currency, debate, economic, election, employment, equities, Euro, Europe, exports, fixed income, Foreign Exchange, FTSE, GDP, Gilt, govvies, healthcare, Indicators, inflation, interest, interest rate, Legislative, macro, macro-technical, market, markets, omnibus, Order, process, redux, reform, Regular, Regular Order, risk-off, risk-on, S&P 500, sequester, structural, structural reform, swan, T-note, technical, Trade, TREND, Trump, US dollar, Vol, Volatility

2017/03/19 WEEKEND: Black Swans(?): Italy & Greece

March 19, 2017 Rohr-Blog Leave a comment

2017/03/19 WEEKEND: Black Swans(?): Italy & Greece

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

Extended Trend Assessments reserved for Gold and Platinum Subscribers

WEEKEND: Sunday, March 19, 2017

Black Swans(?): Italy & Greece

This opening graphic notwithstanding, maybe in this case it is more so ‘gray swans’. After all, it’s not like Italy and to an even greater degree Greece are not on folks’ radar screens as potential global financial and economic problem areas. We have dwelt on their combined issues in recent posts, and they should likely be of more interest as the clocks tick toward certain key events. We have explored those at length in ‘European Kool-Aid’ observations from mid-February posts into the top of this month. Of course any observer of the overall global politico-economic scene is entitled to note that the sharp US partisan divide has also significantly worsened since Donald Trump’s November election victory.

And as a brief reminder for anyone who is still not attuned to what the term means, as originally reviewed our January 14th America’s Kool-Aid Crisis post, since the late part of the last century “Kool-Aid Drinking” has meant, “…extreme commitment to any idea or ideology to the exclusion of considering any other ideas might have merit.” The origin of the phrase in mass suicide of a religious cult is also explored there for anyone interested.

Yet the current ‘black swan’ (or ‘grey swan’ if you prefer) factor in this month’s vintage of European Kool-Aid is the intense focus on European elections to the exclusion of other critical influences. This is driven by the fixation on the populist parties’ fortunes, even though they are given almost no chance of success in actually winning to the degree necessary to form a government. This past week saw Dutch populist Geert Wilders’ Party for Freedom relegated to clear runner up status in Wednesday’s election. As noted previous and now reinforced by that slippage, French populist Marine LePen is also less likely than her previously slim chance to actually capture the French Presidency.

Yet all of that fixation on looming elections or more deferred votes captures most of the coverage in the political and financial press, and is reflected in the markets as well. There was an excellent column by the Financial Times’ John Authers this weekend on this outsized European market influence relative to actual potential for populist victories. His “Markets crude reading of populism distorts view on Europe” is nonetheless all about election calculus. That ignores some other critical developments…

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, analysis, Bagnai, bail-in, black, black swan, bond, Brexit, Clinton, comments, confluence, Congress, currency, debt, economic, election, employment, equities, EU, Euro, Europe, exports, Fed, fixed income, FOMC, Foreign Exchange, forgiveness, FTSE, GDP, Germany, Gilt, govvies, Greece, growth, IMF, Indicators, inflation, interest, interest rate, Italexit, Italy, Kool-Aid, macro, macro-technical, market, markets, Merkel, MPS, Paschi, redux, reform, refugees, relief, risk-off, risk-on, S&P, S&P 500, Schaeuble, structural, structural reform, swan, T-note, technical, Trade, TREND, Trump, US, US dollar

2017/03/16 Quick Take: ‘Fecstasy’ Wins… For Now

March 16, 2017 Rohr-Blog Leave a comment

2017/03/16 Quick Take: ‘Fecstasy’ Wins… For Now

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

Extended Trend Assessments reserved for Gold and Platinum Subscribers

Quick Take: Thursday, March 16, 2017

‘Fecstasy’ Wins… For Now

As explored in Wednesday morning’s Quick Take: ‘Fecstasy’ or ‘Fedache’? post, there was a choice between Janet Yellen providing exact ‘on target’ encouragement for the US economic outlook and the US equities psychology, or signaling more active further 2017 base rate increases. While the latter was deemed a possibility, Wednesday morning’s post covered all of the reasons why the Fed Chair both had latitude and incentives to remain circumspect on the future path of the federal funds rate. The interesting part is that the govvies were also encouraged by the Fed’s still accommodative stance. The interest rate trend being led by the longer dated bond yields is something we have noted for many years, and focused on again of late.

Yet in the Market Observations update in our WEEKEND: Hawkish Draghi? & Bull Age post, we were clear that the heavy recent selloffs may have left the govvies in a positon to rally; especially the recent weakness in new downside leader German Bund. This is not a major shift in our overall bearish view of the govvies. Yet as also noted previous, the early phase of govvies bears tend to be ‘trending’ rather than more accelerated implosions.

And indeed it has been the case once again that the longer dated bond yields led interest rates higher ever since the US election result. That had already rippled down into the short end of the curve as well. One very insightful longtime financial business participant responded to mention of the Fed raising the federal funds rate by noting, “The federal funds rate had already raised itself. The Fed merely came along and confirmed the trend.”

We have witnessed this tendency in most major trend shifts in the interest rates. It is not the central banks’ mandate to dictate rate changes that are not already based on some dynamic shift in economic conditions. And as the longer dated debt instruments are more sensitive to any shift in conditions, they tend to have already reflected any of those changed circumstances prior to the yields rippling down the curve into the short end.

Yet the more impressive reaction Wednesday afternoon was the sharp rally in US equities that once again led the other international stock markets. That includes a new all-time high in FTSE even if the DAX and NIKKEI are lagging. The question now is whether the US equities continue to lead higher? It may be more so likely they stall again if the other current major influences come back to the fore, which is likely to occur fairly soon.

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, bank, central, central bank, confluence, Deflation, Disinflation, dovish, Fed, FOMC, GDP, govvies, growth, hawkish, healthcare, hike, inflation, interest, interest rate, macro, macro-technical, OECD, Projections, QE, redux, reform, regulation, Ryan, statement, structural, structural reform, tax, technical, TREND, Trump, Yellen

2017/03/15 Quick Take: ‘Fecstasy’ or ‘Fedache’?

March 15, 2017 Rohr-Blog Leave a comment

2017/03/15 Quick Take: 'Fecstasy’ or ‘Fedache’?

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

Extended Trend Assessments reserved for Gold and Platinum Subscribers

Quick Take: Wednesday, March 15, 2017

‘Fecstasy’ or ‘Fedache’?

So what will it be? Janet Yellen providing exact ‘on target’ encouragement for the economic outlook, and with it the US equities psychology. Or even if she tries to sound a bit circumspect on previously signaled further 2017 base rate increases , will the very likely FOMC rate hike this afternoon lead to visions of further hikes that will worry the markets? The ‘received wisdom’ is that the US equities have discounted the heavily foreshadowed next federal funds increase today. Yet it is always important to see what happens in the event to understand how the markets really feel.

It is of course that much more important on this likely rate increase. That is due to it being a combined FOMC economic and interest rate projections revisions (14:00 EDT) meeting. That is followed by Chair Yellen’s press conference (14:30 EDT), which leaves plenty of room for anticipation. The recent strength in economic data seems to reinforce the case for a 25 basis point hike today from December’s first increase in a year to 0.50-0.75%.

Yet that is still well below the annualized US Core Inflation the Fed watches most closely, which is nearing its 2.00% target. The continued US economic growth has been reinforced by this morning’s coincidentally timely US CPI release and especially upward revisions to January’s US Retail Sales figures. The slippage in the February reading for the latter was well anticipated due to the late delivery of tax refunds from the Treasury Department.

As such, the question becomes whether the anticipation will be for the total of three 2017 rate hikes (i.e. two more this year) inferred from the December projections revisions and press conference, or it is possible there will be a total of four hikes? That’s an important question for US equities that have been under pressure of late after their stellar rally into a new all-time high right after Mr. Trump’s Tuesday, March 1st address to Congress.

However, it is clear that it has not been any ‘fear of Fed’ on this very likely incremental hike today that has been the real problem for equities since then. That is more so on the disappointment with the potential for Trump’s reform agenda to be implemented timely after the impasse over the House healthcare reforms plan. As noted repeatedly, those are an essential precursor to the more important tax reform effort. Therefore, equities may not restore their previous bullish tone even if Fed Chair Yellen is totally ‘angelic’ in her further communication today. And we suspect she can be just that for a very good reason…

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, bank, central, central bank, confluence, CPI, Deflation, Disinflation, dovish, Fed, FOMC, GDP, growth, hawkish, healthcare, hike, inflation, interest, interest rate, macro, macro-technical, OECD, Projections, QE, redux, reform, regulation, Retail, Retail Sales, Ryan, Sales, statement, structural, structural reform, tax, technical, TREND, Trump, Yellen

2017/03/12 WEEKEND: Hawkish Draghi? & Bull Age

March 12, 2017 Rohr-Blog Leave a comment

2017/03/12 WEEKEND: Hawkish Draghi? & Bull Age

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

Extended Trend Assessments reserved for Gold and Platinum Subscribers

WEEKEND: Sunday, March 12, 2017

Hawkish Draghi? & Bull Age

After watching every bit of the ECB press conference we were a little surprised to hear the collective response from quite a few analysts and the financial fourth estate that the ECB was now quite a bit more ‘hawkish’ overall. It must be allowed that Mario Draghi was indeed a bit less dovish, but hawkish? Of course, a good deal of that was the sense that the ECB is moving on from its most accommodative positions, which included its shift away from keeping its very most aggressive tools on the table in the current environment. Yet as we review below, the degree to which that amounts to a shift to a really hawkish stance is specious at best. And thanks to Zero Hedge blog for the interesting graphic’s play on trigger happy ‘Dirty Harry’.

Before we get back to a concise dissection of just what and what was not said at the ECB press conference, and the ‘street’ interpretation, we revisit another matter on which we have opined recently: the ‘age’ of the current equities bull market. That is of course relevant in the context of the folks who measure how much longer a bull market has to run based in part on how long it has already been trending higher.

As we noted in the March 2nd Commentary: Trumponomics & Kool-Aid Coda and previous, “…those who are using any classical calendar assessment of how ‘old’ this bull market might be are significantly misguided. Talk of it being in its eighth year, meaning it cannot continue much longer, fails to take a key influence into account…” That was of course the ‘Fed Factor’. This is degree to which the equities were able to avoid any setback since Ben Bernanke’s 2012 institution of QE-3. Now there is another perspective on that.

In a Bloomberg column on Friday the estimable Barry Ritholtz opined on This Bull Market Isn't as Old as Some Seem to Think. It is a very interesting column which allows there are quite a few different ways to view this. However, he chooses to fall back on a classic definition of a bull trend: it is only confirmed once a new cyclical high is established. This means the age of the current US equities bull can only considered since the May 2013 front month S&P 500 future new high above the 1,586.75 October 2007 high. So just short of four years at present, with quite an interesting discussion on all that.

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 age, analysis, Australia, BoE, BoJ, bull, Bund, calendar, China, comments, conference, confluence, currencies, cycle, DAX, debt, Deflation, Disinflation, dollar, Draghi, ECB, economic, Emerging, emerging currencies, employment, equities, Euro, Europe, Fed, fixed income, FOMC, Foreign Exchange, FTSE, GDP, Germany, Gilt, hawkish, Indicators, inflation, instability, Japan, macro, macro-technical, NIKKEI, PMI, Pound, press, press conference, QE, Ritholtz, S&P 500, T-note, technical, Trade, TREND, UK, US dollar, Yellen, Yen
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