The collision of global markets and social mood

Wednesday, March 15, 2017

Wednesday -- Fed Day, Dutch Election Day, Amazon Prime Goes Alcohol

S&P E-mini Futures:
Modestly higher.

Social Mood:
Dutch elections today. Erdogan still pissed. Geert Wilders on the brink supposedly.

Adventures in financial journalism.

Source: Marketwatch

As if.

And still love this one. . .

Source: Bloomberg
But quietly, the FT reported what may be the biggest factual shift in ages:

"China to become world international patents leader: Applications surge 45% in a year to put country on track to overtake Japan and US"

As perhaps too bluntly stated yesterday, while there may an undercurrent of desperation in China that no amount of central planning can control (such as emigration, capital flight, and entire cities built to support GDP figures), one thing is certain: intellectual capital is power.

If there was ever an indication of a true shift in the global power structure, a new patents leader may be it.

Meanwhile, the US has a different challenge: the growing pension system crisis, which will eventually prove former banking analyst Meredith Whitney correct.

Case in point: GARS, the Illinois General Assembly Retirement System, is only 13.52% funded, down from 17% funded in 2013, and has accrued a combined net pension liability of roughly $130 billion on which it assumes a 7% return.

Here in Puerto Rico, the headlines are about the $72 billion in debt that the government can't pay. But the larger problem is the island's government pension system which, by most estimates, is underfunded by $80 billion.

These are real, structural problems that underlie the ascent to peak social mood and serve as waxing undercurrents of negative mood as we near what is projected be a Supercycle degree Elliott top in several months.

As in really really big.

How's this little example of amazing timing:

"Amazon adds alcohol to Prime Now service"

GBP stronger. MXN weaker. CHF & JPY strength warning. USD slightly weaker.

10s trying to bounce while the rest of the curve has broken the Dec swing points. Doubtful.

WTI crude and NG both up over 1%.

Gold and Rich Man's Gold (platinum) are lower, with silver, palladium, and copper green.

S&P Outlook:
Who knows what the Fed will do today.

Goldman noted: "The S&P 500 has now increased for more than a year without a 10% drawdown and has had 67 consecutive trading days with 1-month realized volatility below 10%. In fact realized 1-month S&P 500 volatility is at 6.83%, which is the 7th percentile since 1928."

Both my weekly & monthly six-sigma VIX charts suggest volatility could contract even more.

Yesterday complicated the pattern in the S&P but didn't break it.

As long as 2354.54 holds, price is expected higher. 2380 area remains the target for now.

Below 2354.54 could bring a gap fill at 2351.16 and a test of the 38% Fib support level at 2349.88.

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