The collision of global markets and social mood

Friday, January 29, 2016

Friday -- BOJ Goes Negative, Corvette Goes 1963

S&P E-mini Futures:
Higher in tandem with global Risk On due to BOJ decision, but not exactly breaking out.

News:
BOJ went there and adopted negative interest rates. The yen got hammered. The Nikkei ripped higher.

Asian markets loved it -- even China -- and Europe is following suit.

But that's not the real story. Not here.

Social Mood wise, the real story is the newest Corvette and what it may be saying about where the markets are. Try 1963.


The article is a must read for accidental subtext (unintended, subconscious communication).

"Now you can relive the glory of that era."

1963, huh.

Why is this important? Because in 1963 we had just gone through the Cuban Missile Crisis. The world was on edge. Markets had dropped over 25%. Tension was high.

But then markets suddenly ripped over 60% higher into 1966. Are the markets about to get in gear?

"Put it in gear, let out the clutch like it was some kind of weight machine at the gym where you’ve placed the pin way too low and whoosh, you’re off. 1963 never felt so good. The power comes on way down low on the tach. There’s no waiting politely for turbos to spool up or VTEC to do some high-tech whatever. All the power you will ever get — all the power this nation will ever want — is right there on the right. Just step on it."

1963 never felt so good.

"You have to be present and at work for this thing to go. There is no cruise control, no autonomous robotic behavior nanny, no OnStar. There is only you and 550 hp from 1963."

The accidental subtext translation: Be fully present at work. Do not be on cruise control (no more buy & hold). No more systems trading or robotic algos. And don't expect much more help from the Nanny at the Mothership. There's only you and the grand sport of the market.

In other words, central banks may be nearing their effectiveness and we're about to enter a strange new world of unhinged, unsupported markets (note the Grand Sport is sold without an engine or transmission), but probably not until one last whoosh higher.

Also notice that crude is embedded in this story as well. Could crude oil be close to an interim bottom as well?

"The Grand Sport is crude, yes, and brutal, of course, yet powerfully glorious. Push the beefy, meaty clutch pedal down — go on, push it you wimp! All the way! This ain’t no Miata with “lightweight pedal action.” There’s no damned bud vase in here."

Whatever the answer, the message is clear. Man up, traders.

All of this is supportive of the "surprising disappointment" psychology of a 4th wave pullback in Elliott terms.

FX:
JPY pummeled on BOJ's move to negative interest rates. USD higher. CHF weaker as safe haven flows flee.

Treasuries:
Ripping higher as bonds seem to sniff out the possible end game at the Fed.

Energy:
WTI crude up, but not as high as one might expect -- however, NG is feeling it.

Metals:
One might expect a major rally in metals. And one would be wrong. Perhaps crude and metals are seeing well past the present to the hangover after.

S&P Outlook:
None of the above will matter for a bit unless 1921.84 can get filled soon. Futures are up, but don't look that enthused.

Otherwise, to echo the Corvette article, things could get brutal before they get glorious.

The danger is that markets figure out that central banks are becoming desperate yet having less and less effectiveness.

Has the Fed already provided all the power this nation will ever want? 

What if the markets are far more powerful?

Or what if the markets have to run on their own. No engine. No tranny.

The dark side of the Corvette article is that, if it is truly correct, perhaps the markets still need to reach 25% declines before we can relive the glory of 1963.

"Crude, yes, and brutal, of course."




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