The collision of global markets and social mood

Tuesday, February 16, 2016

Tuesday -- Monkey Business, JPY, SPX

S&P E-mini Futures:
Strong rally but rolling over from its best levels.

Bottom line is that there was strong follow through from Friday's close, however.

Welcome to the Year of the Monkey.

China roared back from its Lunar New Year holiday with the Shanghai Composite closing up 2.5%.

The latest figures suggest China is going to print its way out of trouble just like every other country, that is, until it doesn't work anymore.

China's January credit figures were pure monkey business at its best.

New Yuan Loans surged 320% to 2,510 billion CNY, the highest on record.

Aggregate Financing surged 88% to 3,420 billion CNY, the highest on record;

Money Supply M2 expanded 14.00%.

China also announced plans to add 400 billion CNY in Special Building Projects (more ghost cities??)

No one seems to be discussing these things today, but it matters from a macro level.

I do think China will blow up at some point.

And I do think there are slightly lower lows in store.

But I don't think the final highs are in yet on the Shanghai Composite.

Ditto Europe and US stock markets.

USD and USDJPY almost exact mirror images of each other. USD stronger, USDJPY weaker (which actually means JPY stronger) which adds up to a warning, albeit probably a confusing one haha.

Thus far retracing highs with lighter volume.

WTI crude may be reversing a rally on Saudi & Russia failing to agree to cut production together, but its rally created a huge overlap which suggests that any new low may be a marginal one and quickly reversed.

Gold also correcting on lighter volume. Ditto silver, platinum, and palladium. Copper doing the exact opposite. Rallying on lighter volume.

S&P Outlook:
Two scenarios shown today. The first scenario is that the correction could be over. The second is that the correction could last until the 1st quarter of 2017.

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