The collision of global markets and social mood

Monday, June 13, 2016

Monday -- Zaitech, Blackstone, South Sea, Both Sides Now

S&P E-mini Futures:
Down but maybe trying to find a bottom.

Asia was a mess last night with Nikkei & Shanghai down over 3%.

Europe isn't much better. Spain and Italian bond yields are climbing, and their bourses are getting hit harder than the rest.

Market historian Bob Hoye recently reminded us that "In the late 1980s, the Tokyo market perfected 'Zaitech' which was the name for financial engineering."

The Nikkei is still far below its 1989 peak, and Zaitech is still failing, but has become business as usual world wide.

So much so that the world's largest private equity manager, Blackstone Group LP, expects this month to finish raising their biggest buyout fund yet, "designed to mimic the long-term, buy-and-hold strategy of Warren Buffett," according to Bloomberg.

In other words, now that the recent rally from 1810.10 has recreated the optimism of the trend since 2009, Blackstone will throw $5 billion at emulating Buffett (who has been bullish since the 1950s). The firm feels this is "ostensibly less risky than most buyout targets."

“These are assets we anticipate holding for a long, long time.”

That's accidental subtext -- unintended communication at odds with conscious intent. Perhaps Blackstone will party like it's 1989 in Japan and hold them for a long a loss.

Why, because Bob Hoye made another point in a recent note entitled Sunspots.

The current solar cycle -- "Solar Cycle 24" -- has exhibited the sharpest decrease in sunspot activity since the Dalton Minimum of 1790-1830, which was associated with the last serious phase of cooling.

Cooling solar phases can also cool off the "animal spirits" of speculation. Again I wonder if the reason why central banks are in full Zaitech mode is that they're well aware of this.

It should also be noted that the infamous South Sea Bubble occurred just after the most serious phase of cooling, the Maunder Minimum, which was referred to as the "Little Ice Age."

Source: Elliott Wave International
Another messy night for JPY and GBP. USD remains stubbornly firm (for those that think it's toast).

Prices higher, yields lower for now.

WTI crude declined sharply from its recent 51.67 peak, yet volume appears to be drying up. NG new high today. See if it holds.

Gold and copper are the relative strength winners thus far. Palladium down however.

S&P Outlook:
The decline from last Wednesday's rally high had something that I haven't seen in years: a clear 5-wave impulsive structure that did not require any visual gymnastics to recognize.

It also had strong down ticks, strongly negative A/Ds, down volume dwarfed up volume.

The weekly message was clear as well. A well-formed shooting star to go with 5 others.

Still, investor sentiment warns not to get carried away. Bullishness is low, bearishness is higher than I would like to see it, and neutral readings are very high.

It should be noted that in 1995, before the tech bull run, investor sentiment was still very bearish after the 1994 bond rout.

Bull and Bear wave counts abound. I'm going to trade both sides for a while. Today that means looking for longs.

For Joni that means Both Sides Now.

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