Its make or break time indeed.
Im in a rush unfortunately so this post will be updated later today and tomorrow.
Technically some levels to the upside which need to be broken to confirm this, Dax 10300, EXX1 euro banks needs to get above 11, Oil did correct but is now back over 50 and lets see which way the moment moves from here. We have very weak momentum here on the sp500. Russel2000 looks constructive needs to get above recent prior high. Key sector wise, US banks weak momentum move so far off over bought levels.
Commodities are doing well and often when demand is weak this signifies a monetary move! The commodity currencies are also doing well off no news re an improvement in Chinese demand and not off over sold levels note. This appears monetary therefore to me. The ftse100 is a commodity index effectively.
Quantitatively, the higher the GBP goes the less attractive ftse100 earnings are and yet the ftse100 has scored one the best high momentum reversals in the market. Is this all above Brexit with the GBP so strong vs the USD? If you calculate the combined effect of the strong GBP plus the ex june Divi on the ftse100 we have already made a higher high here and this is telling potentially. Given the market always gave a higher percentage change to remain than leave, even when polls gave the advantage to exit, we cannot explain the ftse100’s rise purely from remain improving now. Quantitatively something has changed and that something, given slow world growth, has to be commodity demand driven by monetary intervention. IE the central bankers are in the market and juicing this, in my considered view. (I don’t want to be a conspiracy theorist but I do believe the CBs are taking technical advise here from their buddies at global banks etc).
On the macro side, what concerns me here is that the central banks appear active again in this market greatly reminding me of the Y2k liquidity injections. The bid over the last few days has been too strong. The way price has stepped up off some over sold and in many cases mildly over sold levels off the back on no real news smacks of intervention to me. The authorities do not want to see these markets fall and for as long as they can grease these markets upward they appear determined to do so. Only the BOJ appears hand tied for now requiring coordinated action that unilateral. The German court ruling on the legality of OMT a defining moment for the Draghi, the EU and the ECB. Brexit a smoke screen but a good cause to justify “stabilizing” liquidity.
The Swiss team here:
And here CB
Much more to follow as V2 V3
Here LC with some tech levels but prior to the big bounce note.
And here CS with today’s daily view:
Macro wise here “the land of the rising Inflation”.. UB
Fascinating isnt it that despite all the deflation in Japan the Japanese people saw their real incomes rise over their lost 2 decades. Now finally, due to the efforts or Abe and Kuroda, the Japanese people are seeing their real incomes fall. The genius neo keynesians continue their efforts to take us down that “Road to Serfdom”. Yes they can.
Here SC with an FX view:
And here with a weekly view again pre the latest moves upward:
sc-Weekly-Market-View-Brexit-or-Bremain-17-June-2016
Richard