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Wednesday, January 4, 2017

Wednesday -- Euro Zone Inflation? Six-Hour Workday Trouble, Potential USD Trouble

S&P E-mini Futures:
Some upside follow through, challenging yesterday's pre-market high.

Much optimism over euro zone inflation figures (which are still below 2013 levels). Oil prices are the main culprit, however, hardly something to cheer.

Careful. "This latest [inflation] data could mark the beginning of the end to ECB's bond-buying program," one trader commented.

Money velocity, not rising asset prices, is the thing to watch. The latter simply means prices are rising, whereas in a credit and debt economy, velocity much keep rising much like a shark must keep swimming or die.

Deutsche Bank noted that Greece is the only developed nation with a manufacturing PMI below 50 (49.3), though it's at a four month high.

Welfare state trubs, per Bloomberg: Swedish Six-Hour Workday Runs Into Trouble: It’s Too Costly

2pm Fed minutes today.

First time in a long time that I'm concerned about USD action. Yesterday's new high and subsequent reversal has a distinct impulsive look to it. Granted, it could be an A-wave of an ABC correction, but treasuries, gold, and equities are looking like reversals could come soon too, and could therefore corroborate a lower dollar. Worst case scenario is a multi-decade falling wedge targeting below 70. Then an explosive upside that would destabilize things globally.

If correct, I will certainly have Mexican pesos as part of the mix. I think they're about to usurp China's role in global trade and manufacturing, wall or no wall.

CHF and JPY both stronger today.

China may consider selling treasuries to stabilize its currency. Not seeing it in today's price action thus far, but yesterday's action left high volume swing points to shoot for below.

WTI crude reversed hard from yesterday's pop. Low volume and fading open interest claimed another victim.

NG particularly ugly day yesterday. Not worth it yet.

Some follow through of yesterday's ripfest. Green.

S&P Outlook:
The current wave structure -- S&P in a wave 4 -- means prices need to quickly rip higher or risk "something else" happening.

That "something else" could get really weird really fast. Below 2213.35 would likely be the early warning.

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