Sunday, July 9, 2017

SUNDAY 7/9/17; G20 Aftermath

The full moon peaks for the month a few minutes after midnight. Earthquake activity may increase over the next few days since the gravitational forces on Earth are at an inflection point. Stocks are typically buoyant moving through the full moon.

Russia says the Trump-Putin meeting eclipsed the entire G20. President Putin is clearly pleased after the meeting. Putin says, “TV (television) Trump is different from the real person.” Putin says, “He (Trump) shows a more pragmatic approach on Syria.” The Russian president stresses the Syria ceasefire agreement as an important development.

Putin says Trump accepted his repeated denials that Russia meddled in the US presidential election. The Whitehouse, however, says President Trump did not accept Putin’s comments on election meddling but the two leaders simply moved on to different subjects.

The language barrier between Russian and English words may cause some of the confusion on what was said in the meeting. Of course the left-leaning press in the US such as CNN, MSNBC, ABC, CBS and NBC, that denigrate Trump daily, say the president did a horrible job at the G20 and is in bed with Putin. No surprise.

Also of no surprise is the right-leaning press in America such as Fox News, Drudge Report and Breitbart, that cheerlead Trump daily, say the president is a master statesman hitting a homerun at the G20. About 70% of the news (television, internet, print, media) in the United States is provided with the democratic, liberal and progressive slant while the other 30% of the news is provided with the republican and conservative slant. US Secretary of State Tillerson visits Ukraine for a quick trip today.

German Chancellor Merkel receives praise for hosting the G20. The communiqué released highlights the common ground between the nations. One sticking point is the United States not jumping on the climate change bandwagon and exiting the Paris Accord.

Merkel says, “I deplore the US position on climate change” her strongest words to date. Merkel has a right to believe in the climate change hoax and drag Germany in that direction if she chooses. The fact remains that the climate change scenario is based on barely a couple hundred years of limited weather data for a planet that is billions of years old.

Of course most countries around the world tout climate change because they will receive the free money from Western nations in exchange for conducting token environmental projects; most of that dough will actually end up in the pockets of third-world dictators. Trump is wise to prevent the US from participating in such folly.

Now that the G20 Summit is over, the riots are diminishing in Hamburg. There are fires overnight and water cannons deployed for a few demonstrators but the protests are tame compared to the prior two days. 140 people are arrested in Hamburg since Thursday. Over 200 police officers are injured. An astounding 20,000 police were on duty in Hamburg to guarantee the safety of the world leaders but they could not contain the violence in the streets. This is an omen. When serious social unrest likely begins around the world in the months and years ahead, it will be impossible to contain the huddled masses.

The US Congress returns from the July 4th Independence Day holiday recess tomorrow. It is great work if you can get it. The politicians are part of the privileged elite class in America.

At 5 AM EST (10 AM London; 11 AM Frankfurt and Paris; 12 Noon Syria), a ceasefire goes into effect across southern Syria. The ceasefire was negotiated by Presidents Trump and Putin at the G20. Time will tell if the ceasefire holds.

Euro 1.14. Dollar/yen 113.88. Pound 1.289. WTIC oil 44.33. Brent oil 46.71. Natural gas 2.85. Gold 1212. Silver 15.56. Copper 2.65.

Treasury yields are; 2-year 1.40%, 5-year 1.95%, 10-year 2.39%, 30-year 2.93%. The 2-10 spread widens to 99 bips from 78 bips only a week or two ago. Investors are buying banks with both hands touting that a steeper yield curve is guaranteed going forward. Are they correct or are they chasing the inflation ghost?

Global 10-year yields are; Mexico 6.81%, India 6.53%, Portugal 3.10%, New Zealand 3.00%, Australia 2.73%, US 2.39%, Italy 2.33%, South Korea 2.30%, Canada 1.88%, Spain 1.72%, Hong Kong 1.48%, UK 1.30%, France 0.93%, Germany 0.57%, Japan 0.08%, Switzerland -0.03%. The United States, Italy and South Korea are the same yield. The US-German 10-year yield spread is 182 basis points.

The VIX begins the week at 11.19. Volatility spiked higher last week but quickly retreated. The VIX tagged the critical 200-day MA at 12.44 but price was spanked back down. Market bulls win big as long as the VIX remains under 12.44. Bears will create stock market carnage if the VIX moves above 12.44.

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