2016/04/05 TrendView VIDEO: Global View (late)

© 2016 ROHR International, Inc. All International rights reserved.

The analysis videos are reserved for Gold and Platinum Subscribers

TrendView VIDEO ANALYSIS & OUTLOOK: Tuesday, April 5, 2016 (late)

Global View: All Markets  

Is there a Yellen Put? We are about to find out.  

Based on the reversion to dovish positions in her speech last Tuesday, it would be easy to imagine the equities would now be well underpinned on any setback. Yet as has been apparent of late, that does leave room for those erratic setbacks. And ‘erratic’ is a typical market tone for a bear market rally, especially a substantial one. For all of the magnitude of the rally from the January-February lows, much of that is for the same reason as the rally back from August and September lows: the news becoming so bad that a classical ‘bad news is good news’ central bank psychology set in. This is the tendency toward believing the central banks can resuscitate the robust growth from prior to the 2008-2009 crisis. Yet as we noted in our March 23^rd Commentary: Fed’s ‘Normalcy Bias’ Crumbles:

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.

While that may seem a rather radical statement with which to begin exploration of whether that ‘Yellen Put’ is now in place, we have been noting it for some time. And the additional research behind that view is spread out across the major early December post noted below, with more telling recent updates in the extended sections of our March 6^th Equities’ Goldilocks Psychology and the March 16^th Equities Still a Major Bear.

In the latter lies the key to our confidence that within the rapid rally back from those early year lows the bear is alive and well. It is the nature of volatility at the top of extended bull markets that is more often the case than a precipitate plunge. For more on that see the Current Academic Volatility Timing Insight section of that March 16^th `post. In the meantime, the rationale behind the US equities rally remains the renewed assumption that the forbearance of the Federal Reserve means ‘risk on’ is safe for now.

The next test of that proposition comes on Wednesday afternoon’s release of the minutes of the FOMC’s last meeting on March 15-16. Based on their reversion to more hawkish comments again in the wake of the major downward of FOMC rate hike projections, there will likely be quite a bit of comment from the more hawkish FOMC members that will be at least as prominent as that of the more accommodative members.

And that is where the ‘Yellen Put’ comes in. If it is indeed in place, then any immediate damage to the equities from those hawkish views will be temporary. We shall see.

_____________________________________________________________

Video Timeline: It begins with macro (i.e. fundamental influences) discussion on the 'Yellen Put' potential noted above along with discussion of how the economic data had eroded once again for Asia and Europe. That said, there were some bright spots, and US data went from weakness on Monday to overall strength Tuesday. Other than the holiday-delayed Chinese Services and Composite PMIs Wednesday morning that was the last data until the release of the FOMC minutes Wednesday afternoon.

It moves on to S&P 500 FUTURE short-term at 03:00 and intermediate term view at 06:30, with OTHER equities from 08:30, GOVVIES beginning at 11:00 (with the BUND FUTURE at 13:45 including implications of the early March expiration rollover) and SHORT MONEY FORWARDS from 15:30. FOREIGN EXCHANGE covers the US DOLLAR INDEX at 18:00 EUROPE at 19:30 and ASIA at 22:30, followed by the CROSS RATES at 25:30 and a return to S&P 500 FUTURE short term view at 28:45. We suggest using the timeline cursor to access the analysis most relevant for you.

_____________________________________________________________

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...