The data is reasonable

US equity indexes closed moderately weak, sp -7pts @ 2153 (intra low 2144). The two leaders - Trans/R2K, settled lower by -0.9% and -0.8% respectively. VIX settled +5.0% @ 13.48. Near term outlook offers a push into the 2170s, as Q3 earnings start to pour in.


sp'daily5

VIX'daily3

Summary

We saw a natural down cycle, flooring at sp'2144. There was a latter day recovery, but it wasn't anything of significance.

With indexes closing a little weak, the VIX managed a moderate net daily gain in the mid 13s... which is clearly still bizarrely low, considering the uncertainty of looming earnings and an election.
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Market chatter from Schiff



As ever, make of that... what you will.
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Another big data point

The monthly jobs data wasn't great at 156k, and was well below my target of >200k. Yet... neither was the number remotely dire.

It was merely 'reasonable', and that is arguably how much of the dozens of key econ-data points continue to come in. The US economy is not close to a recession... its merely ticking along, which is far better than most other world economies.

Fischer (not pictured), that is GS' Hatzius

The Fed's Stanley Fischer touted today's report as pretty close to Goldilocks. Indeed, the Fed don't want too high a number, nor one too weak.

This 'ticking along' is set to continue into 2017.. and probably 2018. However, the next recession... when it hits, will give us another bear market, probably on the order of 40/50%.

Ironically, I do hope we begin such a down wave from much higher... preferably around sp'3K. There will be multi-decade support of the sp'1500s, and that'd be the primary target. I kinda hope I'm still around to see it happen.

Goodnight from London
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*the weekend post will appear Sat' 12pm EST, and will detail the US monthly indexes

Stagflation is a major threat

US equities closed broadly flat, sp +1pt @ 2160 (intra low 2150). The two leaders - Trans/R2K, settled u/c and -0.2% respectively. VIX settled -1.1% @ 12.84. Near term outlook threatens a Friday swing day, with a low of sp'2145/40 in the morning, but still settling the week in the 2170s.


sp'daily5

VIX'daily3

Summary

It was not the most exciting of days. A little morning weakness, then a moderate swing higher on some chatter that the ECB won't be tapering QE 'early' after all.

VIX remains broadly subdued, as the US capital markets are very comfortable, which is especially impressive considering the looming earnings, and of course, the election.
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Market chatter from Armstrong



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This morning, Greenspan appeared on clown finance TV.

Greenspan seemed genuinely concerned that stagflation looms for the US. Growth is clearly not great, the post 2009 recovery has mostly been a case of 'ticking along', whilst inflation has been very subdued. Yet things do change.. and since the equity/commodity lows of Jan/Feb', I've been increasingly wondering if some significant price inflation is coming.

In the weeks and months ahead, I'll be sure to regularly highlight commodity prices, especially via the CRB index.
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Global QE is currently running around $200bn a month, which amounts to a monstrous $2.4 trillion each year. There is no question that some of this 'hot money' is starting to leak into commodity markets.

Just reflect on this..... we haven't even reached the stage of helicopter money - whether via a 'basic living income', or just giving money out with the intent to stimulate demand.

The times we live in are crazy, but if inflation does pick up... even to just 3-4%, things will get even more insane, as the central banks are going to be faced with needing to raise rates as a natural 'cyclical recession' occurs.  Happy dreams

Goodnight from London

WTIC pushing for $50

US equities closed moderately higher, sp +9pts @ 2159. The two leaders – Trans/R2K, both settled higher by 0.7%. VIX settled -4.7% @ 12.99. Near term outlook offers some Thursday weakness, with the threat of Friday ‘good jobs news is good news’.. with a weekly close above resistance in the 2180s.

sp'daily5

VIX'daily3

Summary

A day of moderate gains, as the market seems content for moderate swings ahead of the Friday jobs data.

VIX is naturally subdued, usually unable to hold the low teens. If the market can break above resistance of the sp'2170s this Friday, then VIX will see the 11s.. perhaps even 10s. From there, the sp'2210/20s might equate to single digit VIX (not seen since Feb'2007), which would be truly bizarre, considering an election is near.

Best guess remains... market holds together... with renewed upside on 'good news jobs data'.

Things don't turn remotely bearish unless the recent low of 2119 is broken, which would also violate the rising trend that stretches back to the Feb' low.

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WTIC oil, weekly

A net daily gain of $1.13 (2.4%) to $49.83.. with an intra high $49.97. A weekly close >$50 looks due, whether this week.. or later in the month. It should make little difference to those with eyes on the bigger picture.

Goodnight from London