The collision of global markets and social mood

Wednesday, November 9, 2016

Wednesday -- Globalism Rejected

S&P E-mini Futures:
Sharply lower, yet well off their overnight limit down lows.

First Brexit. Now Trump. Soon perhaps Italy in December and France later on: globalism is being rejected by ordinary people worldwide who have had enough of governance by elites and their secret cabals.

Again, not talking politics. Purely social mood. Following up on a topic that was discussed on this blog a while ago:

Trump's election doesn't mean anger will just go away.

The cautionary tale is that Trump has a history of peak popularity at market tops, the most famous example being the publication of his book The Art Of The Deal on November 1st, 1987, days after the historic stock crash, and just a few months after the markets peaked that August.

Was he just elected president the same few months after the markets peaked? Possible, yet not yet probable.

The point is, anger won't automatically be healed by his election. The same cabals will be working harder than ever, plotting their next move. The same millions of people who voted against him will only hate him more. The entire mainstream media, discredited as they are, will continue to unload on him.

And the worst cabal of all, the root cause of the entire mess -- the Fed -- still remains. If their reckless policies continue, markets could recover -- yes -- then crash. Anger could then be projected on Trump even by his own supporters.

Counter-intuitive, quite possible, yet not yet probable.

MXN said it all last night -- USDMXN showed a three wave decline which strongly suggested a new high for the pair (new low for the peso). This, coupled with strength in JPY and CHF (safe haven flows while S&P e-minis were making new highs) was the reason I went to bed early: I thought it was pointing to a contested election that would drag out for days like Bush/Gore 2000. Ended up awake later to see the whole thing unfold shortly after The New York Times projected a 95% chance of a Trump victory. Long night.

Messy action 2s-10s overnight. Note that bonds weren't happy yesterday while stocks continued to rip higher.

WTI crude broke its September swing point and is bouncing. Let it. It looks like much lower lows are in store eventually. NG could be setting up for another rally soon however.

Strong bid in metals, another reason why equity futures still might retest the overnight lows.

S&P Outlook:
The epic bounce from the overnight lows likely reflects the relief that the result was a quick decision. Futures were limit down, a la Brexit, then bounced heroically. Light volume however.

JPY still well bid. Asia and Europe red red red.

Still looks like the overnight futures lows (ES 2028.50) will be tested in the regular session. This calls attention to the 2050-2070 area and the 2036.09 gap on the S&P cash. Still am a buyer down there.

What if markets get a bid due to the uncontested election and dreams of massive fiscal stimulus? Gaps at 2163.66 and 2181.30 remain. Wild times.

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