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Strategies & Market Trends : Technical analysis for shorts & longs

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To: Johnny Canuck who wrote (52530)

7/15/2016 8:05:48 PM

From: Johnny Canuck

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Christine Hughes Weekly Macro Insights

Weekly Macro Insights for July 15, 2016

Our hearts go out to the loved ones of those impacted by the horrific event in France. In many ways it does seem insignificant to talk about the market but it keeps on moving ahead.

One of the two equally big stories in the markets this week was the continued surge in US equities (dragging up the rest of the world’s markets with it) to all-time highs. The initial breakout was last Friday after the strong jobs report followed by Monday’s strength off the back of good earnings numbers out of Alcoa.

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???????See the chart below which demonstrates the strong breadth of this week’s rally which is a vast improvement. July 8th was the day the strong jobs data came out and although the market was climbing before it, the rally was being led by those defensive sectors. All week this week, however, far more sectors have been participating. This is a good thing.

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The second big thing for markets this week was all the chatter out of Japan on Ben Bernanke’s visit there and the (alleged) helicopter money to come at the end of this month. All speculation at this point but certainly gave the global risk markets a boost as well.

For those who missed it, Bernanke’s blog about dropping free money from helicopters can be found here.

The gist of it is, if you give free money to people and they don’t think they’ll get taxed on it later, they’ll spend it – all of it. Stepping back and looking at the novel ‘tools’ the central banks have used since the 2008 crash, we started with QE (my video explanation of QE can be found here). QE has not worked like they thought, as the banks hoard most of the money the central banks print so the world is still fighting deflation. Negative rates haven’t worked like they said it would because people don’t spend their money when it’s penalized at the banks, they hoard it outside of the banks instead. See here and here for more on this. If helicopter money comes, will central banks have finally figured us all out or will we be skeptics of this too and just save/hoard the free money? Only time will tell but they’re batting 0 for 2 so I have my doubts.

?Market ?RunDown?