The collision of global markets and social mood

Friday, January 6, 2017

Friday -- China Losing Control, NFP 156K, Maybelline Goes Male

S&P E-mini Futures:
Flat overnight before NFP, higher but lukewarm after.

Have long thought it would be the BOJ that would blow up the world, but it looks like it may be China. Far from saving the world with its big spending ways, China is fast becoming a highly unstable situation.

An onshore currency, an offshore currency, massive liquidity operations one week, massive liquidity draining the next. Intervention. Central planning. Draconian laws that appear overnight.

Imitation capitalism is taking its toll.

Last night, the yuan, which some fantasize about being the world's new reserve currency, tumbled the most since last January (when it nearly crashed the entire world) after its biggest two-day rally ever.

Currency instability is the kiss of death for global markets where FX turnover is in the trillions each day.

The trubs are spilling over to the banks, where overnight deposit rates soared to 105%. That's stress.

At some point, a counterparty to this madness will blow up and the daisy chain will begin.

NFP: 156K jobs in December vs 158K expected. Unemployment rate edged up to 4.7%.

Equities like it so far, sort of, treasuries not so much. Here's why, perhaps:

Worker pay increases in 2016 at fastest pace in seven years

That could mean faster rate hikes.

Elsewhere, first it was Cover Girl. Now it's Maybelline.

Both beauty brands have welcomed their first-ever "male-ambassadors" in the last year.

Such gender bending, according to socionomics, is a hallmark of negative social mood.

"Men are more ‘masculine’ during bull markets, and women more ‘feminine.’ But in bear markets, those sexual stereotypes fall from favor and society embraces a greater variety of gender roles and identities."

Again, maybe we're not really in a bull market, but rather a centrally planned market that has taught the Chinese everything they know.

Source: Stifel Nicolaus, Ned Davis Research

Mirror image from yesterday. AUD & CAD weaker, CHF & JPY weaker. EUR weaker.

Finally caught a bid with volume too, but still lighter than previous declines.

WTI crude still rallying in choppy fashion vs prior decline. NG still trying to get off the mat, but not yet.

Red but for palladium.

S&P Outlook:
Yesterday's wave count scenario not inspiring a lot of confidence. The rate of ascent is so slow that I'm wondering if we're seeing the first 5 waves of 1 of 5.

More like this maybe:

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