The collision of global markets and social mood

Thursday, May 4, 2017

Thursday -- China, Bitcoin, Puerto Rico, Bermuda Shorts

S&P E-mini Futures:
Breaking out higher overnight.

Asia mostly red. Europe all green. Commodities tanking again on bad rumblings out of China.

Fresh Kyle Bass quote on China:

"Think about this - in the US, our asset-liability mismatch at the peak of our subprime greatness was around 2%! ... China's mismatch is more than 10% of the system."

While yesterday saw news of the largest private power and sailing yachts in the world, the irony was that another record was being set:

Puerto Rico files for biggest ever U.S. local government bankruptcy (Reuters)

Adding to the irony, I tried to enter a government building here in Puerto Rico yesterday to pay a fee and was turned away.

I was turned away because I was wearing Bermuda shorts and not pants.

The local government is flat broke and in debt over $150 billion but is more concerned with attire than revenues.

I thought about going over to the mall to buy a pair of jeans but didn't have the 20 minutes to look for a parking space, nor the 20 minutes to stand in line to pay.

What was the fee for? To simply change my address.

"To simply change my address" meant I had to meet with an attorney to craft a sworn statement of when and where I moved, provide a copy of my lease, pay for it to be notarized, go to the bank and wait in line for 20 minutes for a bank check, then go to a government office to pay.

All this in order to eventually file my tax forms, but not until the address change is approved.

I love Puerto Rico but I do loathe socialism. And what I've learned of socialism here is that it's all about government concentration of bureaucracy and power over people via subsidizing them into submission.

In spite of this, there seems to be a growing entrepreneurial spirit on the island. Something I very much support and encourage.

EUR stronger. MXN notably weaker.

Bitcoin up another 2%, above 1500. Possibly on China concerns. Perhaps Bitcoin is more of a stress gauge than animal spirits indicator. Noted.

Another rough day yesterday, and another shaping up so far. Good for yields though.

WTI crude breaking below its March lows. Needs to hold current prices or risk busting the wedge trend line and signaling much lower.

NG higher.

Red along with the commodities rout.

S&P Outlook:
Sticking with the big picture plan presented yesterday. 2361.37 remains key near term. Positioning to buy dips unless broken.

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