On that note the IMF warned in their latest outlook that they expect a period of prolonged low global growth with Emerging Markets leading the slowdown. The IMF also believes a lot of the output that has been lost since the financial crisis is not directly related to the financial crisis, but rather to other factors such as an aging population and they believe that some output loss since the financial crisis is now permanent loss that will not recover. Talk about glum outlooks, there's another.
Overnight Asia continued its gains, but a strange thing occurred with massive volume, the Hang Seng (Hong Kong) saw a near +4% gain as money flooded from the mainland to Hong Kong. There are theories as to some recent regulatory changes that allow common retail traders in to markets that were previously reserved for only what we might call in the U.S., "Accredited Investors", but others suggest a far simpler reason, some of the very same stocks listed on the Shanghai Comp. are trading at a discount of up to 35% in Hong Kong. How the Wall St. Whiz-kids ever let this kind of arbitrage opportunity slip by is beyond me or perhaps I'm simply missing something, but it seems that may be one of the reasons, although the volume suggested an event rather than a process of traders flowing in to the Hong Kong market.
US Index futures were not so exciting overnight, indeed they were quite flat until the now customary cash market opening volatility. It would seem that the release of the F_O_M_C's minutes from the last meeting at 2 p.m. today may have caused some traders to sit back and take a "Wait and see" attitude. It should be a somewhat interesting set of minutes as the F_O_M_D / F_E_D was clearly concerned with $USD strength at the last meeting, although with Friday's Jobs report and the major miss, some comments in the minutes may be considered to be behind the curve given the new/recent employment data, still this is a F_E_D event and that means one thing as always, "Beware the knee jerk reaction". This doesn't necessarily mean a knee jerk pop higher, although that's the norm in this market at this time, it can be a knee jerk reaction lower as well, but just as we saw with the last F_O_M_C and last warning of the knee jerk reaction, the entire knee jerk higher has already been retraced as is common and has been for decades now.
Perhaps a knee jerk reaction is exactly what is needed for the triangle forecast to play out.
The Bank of Japan also voted 8:1 to keep their annual stimulus (QE) as is at $80 trillion yen, the 1 dissenting vote was for a cut to stimulus to $45 trn annually, so the BOJ meeting slid by uneventfully.
You've no doubt heard about the Shell/BP corporate takeover deal valued at $70 bn making it the 14th largest Corporate takeover ever.
It seems in response to this mega merger the Saudis have gone on the offensive and rather than keep production unchanged, they intend to increase it to make up for any loss of market share in response to the mega-Energy giant of Shell/BP.
Russia's Putin and Greece's Tsipras are meeting today as the next Greek installment payment to the IMF comes due at +463 bn after the Greek FinMin assured the EU they have every intention of paying off their massive $324 bn Euro debt to the Troika. The next payment comes due at the end of May and is a whopper at $768 mn, a drop in the bucket of the $324 bn owed.
Issues on the Putin/Tsipras meeting agenda include sanctions both ways as Greece has made noises about opposing EU sanctions on Russia and Russia has counter sanctions on the EU that have sharply effected Greece, specifically the produce/food sanctions Russia imposed as Greece exported about 40% of its produce to Russia so that may be on the table. A Gas discount is another item on the table. I didn't know this, but Russia or more accurately Russian mega-Energy company Gazprom already owns about 70% of Greek energy assets. There's also talk and interest on the Greek side to get involved in the Turkish Stream gas pipeline that will run from Russia and through Turkey to the border with Greece, there may be some chance of it running through Greece as well to deliver gas to Europe, bypassing the traditional route through Ukraine.
Other more obvious items on the agenda are a possible loan from Russia which Germany has been quick to downplay as the nature of the global financial markets and nothing special, but we know for a fact it would indeed be special as we predicted this outcome with the probability of a Russian naval base smack-dab in the middle of the Mediterranean. Russian officials have already made it known that if they were to give Greece a loan they'd expect reciprocation via assets, perhaps like a naval port? Energy assets? Rights to explore for energy, etc. I'm sure from Washington and the EU's perspective, this would be a most unwelcome development and not global economic business as usual as the Germans have been quick to make a point of.
In any case we are well in to the open, off yesterday's closing lows, but not above yesterday's range meaning we haven't added to the triangle breakout forecast for the week which isn't surprising at this point before the minutes come out.
As I said yesterday and Monday as I started seeing changes in USO's near term character, I expected crude/USO to pullback and this Brent Crude futures chart looks the same way as we have begun a gap down this morning which is the least of the evidence in my opinion.
I'll leave the charts to the recent USO update from yesterday, USO Update and I'll of course follow up with any new information that may develop.
As for a market update, I have a feeling we are going to see rather rangebound action until the minutes are released at 2 p.m., but anything I see in scouting the market this morning I'll put out in a separate update from this to keep it more timely.
Expectations are still the same, for additional upside, however the same forecast was for distribution in to that which we have seen at a remarkable pace the last 2-days, I suspect we'll continue to see that and we have already moved from the 1 min to the 10 min. charts with the process of divergence migration, simply the strengthening of a divergence which has all been negative up to this point, that was also our forecast and I see no reason any of it should change unless the minutes have something very unexpected.
No comments:
Post a Comment