Friday, March 24, 2017

Trump Bubble Reversal Of Fortune

Social Mood is collapsing on Trump...

Trump began his foray into politics by alienating half of his country. Once elected, he promptly pissed off the entire world ex-U.S. He gave special "attention" to America's largest trading partners and allies. Next, the U.S. intelligence agencies went under the bus, the "liberal" media, half of Faux News, and the NeoCons who've been running the U.S. since Reagan. But it wasn't any of them who took him down, it was his own party. In doing so today, the ultra-right "Freedom Caucus" aka. the Koch Brothers, imploded the Trump bubble. 

Now, the blood is in the water. Trump has knives sticking out of his back from every angle, his entire platform is in peril. The Freedom Caucus not only took away his Obamacare rollback with attendant tax benefits, but they will very likely also take away his Border Adjustment Tax (Tariff) plan, which was also a necessary part of his plan to cut corporate taxes. And of course they can make his life hell vis-a-vis the debt ceiling. 

All well and good, except, he sold Global markets on reflation, and they bought it hook line and sinker. This week that Imagined Reality wore off, as the Trump trades across the board got monkey hammered.

Meanwhile, U.S. micro caps peaked back in December. The S&P and Russell 2000 small cap peaked three weeks ago. And the Nasdaq peaked on Tuesday of this week, having an outside reversal day on heavy volume. 

The Nasdaq's Tuesday outside reversal can clearly be seen - gap higher followed by straight line collapse lower. As of today, that first leg down has now been "corrected".

If the first wave down looked like this, what will wave '3' be like?

This coming week (Wednesday), UK PM Theresa May will officially trigger the Article 50 EU exit clause, hence we should expect volatility: 

As we know, the dollar is hanging by a Trump Fiscal lie which just burst:


Which means that we've seen this movie before...

Which just happens to look a lot like this movie...

S&P 12 month rate of change:

Should be an interesting week...

GBP (red) with USDJPY

"The peak of this volatility will likely happen between March 25th and April 8th – what we are calling the “heart of the window”.  This will likely be a very tumultuous and volatile period where massive rotations in price could occur"

You don't say...