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Euro slips to 5-month low

The euro remains under pressure, and EUR/USD has fallen below the 1.1200 level for the first time since late June. The euro is trading at 1.1194 in the…

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This article was originally published by Market Pulse

The euro remains under pressure, and EUR/USD has fallen below the 1.1200 level for the first time since late June. The euro is trading at 1.1194 in the North American session, down 0.51% on the day. The euro is having a dreadful month of November, down 3.17%.

German business confidence declines

The euro is having another bad day at the office, courtesy of a drop in the German Ifo business climate survey. In November, business confidence fell to 96.5, down from 97.7 in November. The index has declined for a fifth straight month, pointing to a prolonged downtrend. The survey found that supply bottlenecks and the fourth wave of Covid were the top concerns of businesses. Manufacturing continues to expand, but the production has been scaled back due to a shortage in materials, such as auto microchips. A spike in Covid cases and supply shortages is a recipe for trouble, and the German central bank has warned that Q4 could show negative growth due to the shortage in goods and workers, combined with health restrictions due to Covid.

With US markets closed for Thanksgiving, attention will be focused on the ECB. The minutes of the November policy meeting will be released, and investors will be looking for clues ahead of the key December policy meeting. The ECB is expected to announce at the meeting that the Pandemic Emergency Programme (PEPP) will be terminated in March 2022. As well, ECB Christine Lagarde will address an ECB legal conference on Thursday and Friday. Lagarde has done her best to dampen expectations of a rate hike before 2023 and has dismissed inflation as being transient. However, as other major central bankers are finding, rising inflation can only be ignored for so long.

Lagarde’s sanguine view on inflation is not shared by everybody at the ECB. Executive Board member Isabel Schnabel said in an interview this week that “risks to inflation are skewed to the upside”. This assessment wasn’t earth-shattering, but a hawkish opinion from an ECB member is very unusual and therefore newsworthy. Following her comments, the markets factored in a 0.10% rate increase in December 2022.

 

 EUR/USD Technical

  • EUR/USD has broken below support at 1.1201, which had held since July. This is followed by support at 1.1118
  • There is resistance at 1.1415. Above, there is resistance at 1.1546




Author: Kenny Fisher

Economics

Bullish Island Reversal

You can blame Omicron or elevated valuations or call it a
Fed taper tantrum. Bottom line, the market was overbought entering the
seasonally weak beginning…

You can blame Omicron or elevated valuations or call it a
Fed taper tantrum. Bottom line, the market was overbought entering the
seasonally weak beginning of December. In a year with big gains early December
tax-loss selling, some profit taking and yearend portfolio restructuring is not
surprising.

All of the above and some geopolitical worries likely
conspired collectively to cause the recent selloff. But today’s action in DJIA
(the oldest reliable benchmark we know) as shown in the chart above created a
bullish island reversal. DJIA also bounced off the uptrend line from the June
and September lows right near the 200-day moving average and above support at 33700.
Today’s rally also closed the island gap near 35600, which is also around support/resistance
at the August high. And to top it off there was a new MACD Buy crossover and
histogram confirmation.

So, technically speaking the market likely found some solid
support here and is poised to rally to continuing new highs into yearend on the
still super accommodative monetary policy and rather robust economic and
corporate readings.

Our outlook remains bullish for the remainder of 2021 and as
long as the proverbial stuff doesn’t hit the fan, new highs are likely before
yearend and we would not be surprised to see the S&P 500 encroach upon the
big round number of 5000. 2022 will likely be a different case and we will
address that thoroughly in our 2022 Annual Forecast to subscribers next week.




Author: Author

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Economics

When Idiocy Becomes Hardwired

When Idiocy Becomes Hardwired

Authored by Jeff Thomas via InternationalMan.com,

At this point, virtually all of us over the age of forty…

When Idiocy Becomes Hardwired

Authored by Jeff Thomas via InternationalMan.com,

At this point, virtually all of us over the age of forty have encountered enough “snowflakes” (those Millennials who have a meltdown if anything they say or believe is challenged) to understand that, increasingly, young people are being systemically coddled to the point that they cannot cope with their “reality” being questioned.

The post-war baby boomers were the first “spoiled” generation, with tens of millions of children raised under the concept that, “I don’t want my children to have to experience the hardships that I faced growing up.”

Those jurisdictions that prospered most (the EU, US, Canada, etc.) were, not coincidentally, the ones where this form of childrearing became most prevalent.

The net result was the ’60s generation – young adults who could be praised for their idealism in pursuing the peace movement, the civil rights movement, and equal rights for women. But those same young adults were spoiled to the degree that many felt that it made perfect sense that they should attend expensive colleges but spend much of their study time pursuing sex, drugs, and rock and roll.

Flunking out or dropping out was not seen as a major issue and very few of them felt any particular guilt about having squandered their parents’ life savings in the process.

The boomer generation then became the yuppies as they hit middle age, and not surprisingly, many coddled their own children even more than they themselves had been coddled.

As a result of ever-greater indulgence with each new generation of children, tens of millions of Millennials now display the result of parents doing all they can to remove every possible hardship from their children’s experience, no matter how small.

Many in their generation never had to do chores, have a paper route, or get good grades in order to be given an exceptional reward, such as a cell phone. They grew to adulthood without any understanding of cause and effect, effort and reward.

Theoretically, the outcome was to be a generation that was free from troubles, free from stress, who would have only happy thoughts. The trouble with this ideal was that, by the time they reached adulthood, many of the critical life’s lessons had been missing from their upbringing.

In the years during which their brains were biologically expanding and developing, they had been hardwired to expect continued indulgence throughout their lives. Any thought that they had was treated as valid, even if it was insupportable in logic.

And, today, we’re witnessing the fruits of this upbringing. Tens of millions of Millennials have never learned the concept of humility. They’re often unable to cope with their thoughts and perceptions being questioned and, in fact, often cannot think outside of themselves to understand the thoughts and perceptions of others.

They tend to be offended extremely easily and, worse, don’t know what to do when this occurs. They have such a high perception of their own self-importance that they can’t cope with being confronted, regardless of the validity of the other person’s reasoning. How they feel is far more important than logic or fact.

Hypersensitive vulnerability is a major consequence, but a greater casualty is Truth. Truth has gone from being fundamental to being something “optional” – subjective or relative and of lesser importance than someone being offended or hurt.

Of course, it would be easy to simply fob these young adults off as emotional mutants – spiteful narcissists – who cannot survive school without the school’s provision of safe spaces, cookies, puppies, and hug sessions.

Previous generations of students (my own included) were often intimidated when presented with course books that had titles like Elements of Calculus and Analytic Geometry. But such books had their purpose. They were part of what had to be dealt with in order to be prepared for the adult world of ever-expanding technology.

In addition, it was expected that any student be prepared to learn (at university, if he had not already done so at home), to consider all points of view, including those less palatable. In debating classes, he’d be expected to take any side of any argument and argue it as best he could.

In large measure, these requirements have disappeared from institutions of higher learning, and in their place, colleges provide colouring books, Play-Doh, and cry closets.

At the same time as a generation of “snowflakes” is being created, the same jurisdictions that are most prominently creating them (the above-mentioned EU, US, Canada, etc.) are facing, not just a generation of young adults who have a meltdown when challenged in some small way. They’re facing an international economic and political meltdown of epic proportions.

Several generations of business and political leaders have created the greatest “kick the can” bubble that the world has ever witnessed.

We can’t pinpoint the day on which this bubble will pop, but it would appear that we may now be quite close, as those who have been kicking the can have been running out of the means to continue.

The approach of a crisis is doubly concerning, as, historically, whenever generations of older people destroy their economy from within, it invariably falls to the younger generation to dig the country out of the resultant rubble.

Never in history has a crisis of such great proportions loomed and yet, never in history has the unfortunate generation that will inherit the damage been so unequivocally incapable of coping with that damage.

As unpleasant as it may be to accept, there’s no solution for idiocy. Any society that has hardwired a generation of its children to be unable to cope will find that that generation will be a lost one.

It will, in fact, be the following generation – the one that has grown up during the aftermath of the collapse – that will, of necessity, develop the skills needed to cope with an actual recovery.

So, does that mean that the world will be in chaos for more than a generation before the next batch of people can be raised to cope?

Well, no. Actually, that’s already happening. In Europe, where the Millennial trend exists, western Europeans have been growing up coddled and incapable, whilst eastern Europeans, who have experienced war and hardship, are growing up to be quite capable of handling whatever hardships come their way. Likewise, in Asia, the percentage of young people who are being raised to understand that they must soon shoulder the responsibility of the future is quite high.

And elsewhere in the world – outside the sphere of the EU, US, Canada, etc. – the same is largely true.

As has been forever true throughout history, civilisation does not come to a halt. It’s a “movable feast” that merely changes geographic locations from one era to another.

Always, as one star burns out, another takes its place. What’s of paramount importance is to read the tea leaves – to see the future coming and adjust for it.

*  *  *

Polls suggest that a majority of Millennials now favor socialism. And a growing number favor outright communism. Sometime this year, Millennials are expected to surpass Baby Boomers as the nation’s largest living adult generation. This is one of the reasons Bernie Sanders and other socialists are soaring in popularity. And when the next crisis hits, the situation will likely reach a tipping point. That’s exactly why Doug Casey and his team just released this urgent video outlining exactly what’s going to happen… and how you can protect yourself and even profit from the situation. Click here to watch it now.

Tyler Durden
Tue, 12/07/2021 – 17:25

Author: Tyler Durden

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Economics

Omicron Study Scare Stuns ‘Face-Ripping’ FOMO Short-Squeeze

Omicron Study Scare Stuns ‘Face-Ripping’ FOMO Short-Squeeze

Everything was awesome today…

UNTIL…

Headlines from a South African…

Omicron Study Scare Stuns ‘Face-Ripping’ FOMO Short-Squeeze

Everything was awesome today…

UNTIL…

Headlines from a South African study hit, suggesting a 40-fold reduction in neutralization capacity of the Pfizer vaccine vs Omicron... which suggest hospitals will get overwhelmed (due to its hyper-transmissibility) but it is notably less severe (especially for healthy people)…

Omicron’s ability to evade vaccine and infection-induced immunity is “robust but not complete,” said the research head of a laboratory at the Africa Health Research Institute in South Africa.

…and that sent stocks lower late in the day (although still a good day overall)…

And slammed ‘recovery’ stocks relative to ‘stay at home’ stocks…

But then again… it wouldn’t be the US equity market if a last minute total buying-panic didn’t send the Nasdaq up 100 points in 4 minutes…

*  *  *

As we detailed earlier…A China RRR cut? Omicron anxiety easing? Whatever it was, bubble markets exploded higher today…

Source: Bloomberg

But before we all get excited about “what the market is saying”, let’s bear in mind that today also saw the USA, USA, USA suffer its biggest decline in worker productivity since Q2 1960 (yeah 61 years ago!!!)…

Source: Bloomberg

Which is perfect because today saw unprofitable tech company’s best 2-day swing since April 2020 (+13.5%)…

Source: Bloomberg

Today’s melt-up from the moment the US cash markets opened (until around the European close) was impressive to say the least but also note that stonks were bid as China opened… and as Europe opened…

This is The Dow’s best 2 days since Nov 2020! Nasdaq surged 3% today – its biggest daily gain since March. Bear in mind that roughly 66% of the Nasdaq is in a bear market with losses of over 20%, while 35% of the Nasdaq is down over 50%!

The surge in the majors pushed The Dow (and only The Dow) up to unchanged, very briefly, from the Omicron emergence cliff after Thanksgiving. However, everything seemed to run out of momentum at that point…

Nasdaq and The Dow exploded above their 50DMAs, the S&P extended its gains well above its 50DMA. The Dow ripped up to its 100-/200-DMA but couldn’t extend the gains…

The 2-day ‘face-ripping’ short-squeeze off yesterday’s opening lows is the largest swing since March…

Source: Bloomberg

‘Recovery’ stocks notably outperformed today relative to ‘Stay at Home’ stocks as Omicron anxiety fades. They are now well above Omicron emergence levels and starting to erase the European lockdown anxiety losses…

Source: Bloomberg

‘Retail Favorites’ had their biggest day since Jan 2021…

Source: Bloomberg

Treasury yields were higher on the day with the short-end underperforming (2Y +6bps, 30Y +3bps), but as the chart below shows, the selling was all in the US session again…

Source: Bloomberg

The 10Y Yield was higher again but did not breach 1.50%, retracing the move post-Powell hawkish hearing…

Source: Bloomberg

The yield curve flattened notably today (2s30s) as the short-end priced in rate-hikes and long-end priced in policy mistakes…

Source: Bloomberg

The dollar ended lower on the day but again traded in a narrow range…

Source: Bloomberg

WTI topped $73 today, extending the gains from the last couple of days. However, oil prices remain well down from pre-Omicron levels…

And as oil prices ripped higher, so did US Breakeven inflation rates, but remain well down from pre-Omicron anxiety levels…

Source: Bloomberg

Crypto was mixed today with Bitcoin higher (tagging $52k) and Ethereum lower (after topping $4400)…

Source: Bloomberg

Gold ended modestly higher today but still below $1800 and well below pre-Omicron levels….

Finally, despite the equity market soaring unrelentlessly the last couple of days, STIRs have shifted considerably more hawkishly now pricing in 2 rate-hikes by September and a 75% chance of a rate-hike by May 2022 – there is no way the stock market is ready for that…

Source: Bloomberg

And Powell is not about to jawbone that back down.

Tyler Durden
Tue, 12/07/2021 – 16:01





Author: Tyler Durden

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