Weekend July 29, 2017
Interest Rates
This chart ends in 2010. If it continued to today one would see it has reached the previous 1947 low.
This chart goes back to 1962, If it began in the late 1940s again one would see symmetry in price and time, a Gann view of markets.
The technical point being the markets ran from a multi-century low in 1946 to a historic high in 1980-81 and then back again.
My point being we are now surely at the beginning of a steady increase in rates, it is just a matter of how fast it will happen.
And this appears to be happening with commodity prices across a broad spectrum, making multi-year bottoms.
30 Year Bond Price in Green Versus Yield
The yield is represented by the red black bars, recently making a multi-decade low.
The green line is the bond price, recently making a multi-year high.
This is to demonstrate that the rubber band has been stretched as far as possible, I don't have data any further back or it would look even more stretched.
Long Term CRB Chart
The contrast would be more dramatic if the first chart were bond prices but
as one can see the CRB index is at multi-decade lows.All of this highlights the message that we are likely at an important juncture. Now throw in
political chaos at the White House dating back to the 1970s
North Korea ICBMs
South China Sea Jousting
Political Chaos in Venezuela, Brazil, Pakistan, Phillipines
And we have a cauldron of negative mood about to showing no signs of retreating
How long will markets ignore this or how long before some bad actor decides to use this backdrop for aggression?
Energy
Monthly WTIC
This is a non log chart of West Texas Intermediate. The MACD at bottom seems to pause, the RSI hesitates at 50%.
Weekly WTIC
This weekly chart back to 2006 suggests we are closer to a low. Note that three of the MAs have converged.This is typical prior to a trend change.
Weekly Four Years
Here is a more detailed look at the weekly chart over a shorter term. Indeed the 50 week MA has risen over the 87 and 125. That is a huge positive.
Apache APA, Same time period as above
A bell weather indeed, note the similarity. Again the 50 week MA has already risen over the next two longer MAs.
Our purpose in this weekend update is to make the case for a moment of convergence in multi-decade terms.
Oh just noticed, FLS had a really bad day on Friday missing expected earnings by 50% and now being investigated by a law firm for potentially misleading investors in violation of the Investment Company Act of 1934.
Does anyone imagine a law firm would find FLS innocent? Eventually this will be a great buy, let's monitor to see if support at 39 holds.
Five Year Note Yield Daily Chart
The parabolic rise at left broke the long term downtrend in yields dating back to Year 2000. Now after consolidating all year, the MAs have once again converged just as they did last November. Remember a convergence of MAs begins the start of a new move.
Dow Transports
Transports were hit hard this past week. Transports are usually a leader among stock indexes.
The Bottom Line
Stocks continue their uptrend. The Transports and Techs are taking a breather
Interest rates should resume uptrends soon.
Energy shares are leading oil prices higher. This is all part of across the board bottom in commodity prices in 2017 to be followed by up moves in 2018.
Social Mood
We have written a good deal about a convergence of 60,30,17 year cycles. The cycle from the start of the Nixon administration in 1973 is off a bit, or from the 1974 low to the 2017 high is 43 years, though from the start of the Carter Presidency is about 40 years. Point being this 1973-1979 period witnessed
A President driven from office mostly due to his own paranoid schizophrenia
Ford not wanting to see a President put on trial and possibly jailed, therefore issuing a pardon and losing to Carter
Carter finally learned on the job but was too naive about Russia and suffered a second oil embargo, as well as a Iran hostage crisis
Now the WSJ in the weekend edition suggests Trump is about to suffer the fate of these two earlier Presidents given the chaos in his administration.The WSJ suggests Trump has about run to the end of his support rope withe Republicans already defecting over his criticism of Sessions. :I read an interesting comment to the criticsm of Trump in one of the WSJ articles or editorials this week. The writer suggested that articles and interviews in the 1980s showed Trump at the top of his game. But now irregular reported sleep patterns, adolescent outbursts, the desire for staff conflict reflect a totally different person. the writer suggested this might be the start of dimentia. Or as Peggy Noonan observes does Melania act like this?
The DJIA had reached another all time high on Nixon's second inauguration, just as it has with Trump. Will History repeat? Recall the DJIA dropped 50% from 1973-74.
denislelam@gmail.com
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