The collision of global markets and social mood

Monday, March 20, 2017

Monday -- Bitcoin, Fedspeak, DB's 35% Hair Cut, Bugatti Superyacht, Manic House Flipping Data

S&P E-mini Futures:
Slightly lower. Thus far, pullbacks remain in three-waves.

Markets:
Mixed in Asia, red throughout Europe.

Bitcoin fell over 10% Saturday and cracked 1000. Has crawled back above it, but could be a warning that animal spirits are waning.

Is the Fed is trying to tell us something? Speeches by Fed officials take up the entire week. Chicago's Charles Evans on Tuesday and Friday, Chair Janet Yellen on Thursday, Dallas's Robert Kaplan and Minneapolis's Neel Kashkari on Friday and New York's William Dudley on Saturday.

Watch the dollar.

Mood:
Deutsche Bank giving a 35% discount to raise capital seems an additional buzz kill for animal spirits.

And in signs of what could be a burgeoning trend to toward authoritarianism as mood transitions from positive to negative, Utah just became the first state to lower the DUI threshold. Utah's state Legislature voted last week to lower the DUI threshold from .08 to .05. The bill heads now to Governor Herbert.

Fear not, however, signs of ebullience continue to build.

For those that demand the ultimate in ultra-exclusivity, The Bugatti Chiron Has Been Transformed Into A Superyacht, complete with a hot tub and champagne bar, as well as the most dangerous thing to have on board a boat, an open fire pit.

Fearlessness reigns during peak positive moods.

This "floating tribute to automotive excess" is a textbook example of peak social mood at Supercycle degree.

Not to be outdone, RealtyTrac and ATTOM Data Solutions released its 2016 Year-End U.S. Home Flipping Report, and the results were flippin' incredible.

The report showed a record number of single family homes and condos were flipped last year, the highest level since 2006.

Other key findings:

Average Gross Flipping Profit is the highest ever.

Average Gross Flipping ROI is the highest ever.

Number of Investors Flipping at 9-Year High.

Share Financed by Flipper at 8-Year High.

The share of flipped homes that were purchased by the flipper with financing was 31.5%.

Among 5,625 U.S. zip codes with at least 10 homes flipped in 2016, there were 39 zip codes where at least 20 percent of all home sales during the year were home flips.

Home flips in 2016 accounted for 5.7% of all single family home and condos sales during the year, up from 5.5 percent in 2015 to a three-year high but still well below the peak in 2005, when 338,207 single family homes and condos were flipped representing 8.2% of all sales.

Check out the report here.

FX:
AUD & EUR stronger, MXN notably weaker vs USD.

Treasuries:
Prices stalling at the top of the range thus far this morning.

Energy:
WTI crude down over 1%, while NG recovered from 1% down to 1% higher.

Metals:
Gold, silver, platinum, and palladium green while copper is relative strength loser thus far (red).

S&P Outlook:
"Gaming a breakdown via puts with a tight stop at 2390.01 is a good risk/reward for me against my remaining SSO position."

This turned out the right play Friday, but price didn't rally enough for ultra-high conviction. Still, just enough for a hedge with SPY 237 puts.

But with choppy, three-wave pullbacks, might not have them for long.

Also, intraday TRIN closed as a freaky 2.17, so there could be a bounce at some point. And there has been little volume on the decline thus far.

Still anything below the 2374 area could be a warning shot that 2358.18 is in the cross hairs. And if that breaks price could test even lower, possibly down to the oft-mentioned 2349.88 38% Fib support level.

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