• July 10, 2020

ELAM: Negative mood on the rise - Odessa American: Inthepipeline

ELAM: Negative mood on the rise

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Posted: Sunday, May 31, 2020 1:30 am

More than 40 million Americans, the equivalent of one worker in four, have filed for unemployment benefits since the pandemic began in mid March.

New York Times Friday

For new readers, I have underestimated the time and distance of this rally since March 23 The Transports and Small Cap Index were down all day Thursday with the DJIA finally dropping from up 250 pre-open to negative 147 on the close. The DJIA is down about 180 this morning, a total drop of near 600. If the rally has ended we would expect to see an expansion of negative social mood. Indeed mood has gone from simmer to full negative boil the last few days. Consider these events.

The Federal Government reliably sues the most successful company of the bull market near the top. It was RCA in 1929, IBM in 1966, MSFT in 1998, and now Trump is ‘fed up’ with Social Media. He would close Twitter (and presumably his 80 million followers) if he could. He took time out from that fight to criticize the Mayor of Minneapolis.

China’s Luckin Coffee evaporates its $12 B IPO valuation to near zero. Monthly home sales are down 34% from a year ago. National Guard called out to calm riots in Minneapolis amid a tragic death caused by police. China Tightens Its Grip on Hong Kong, Pompeo declares HK no longer autonomous from China. Beijing Vows to Shore up Economy, no target set. China picks a Border Fight with India. Spanish workers protest closing of Nissan auto plant.

Depend on Wall Street to add to the financial chaos with another whacky derivative. This time its called single asset single borrower bonds. The Fountainebleau in Miami Beach is already asking for interest rate relief. There are $120 B of these problematic bonds floating around.

Crude oil has risen with the stock market, now at $33. Apparently there was more storage space than was first thought. Daily momentum measures have topped out across a variety of asset classes including energy. Chevron has outperformed Exxon in the rebound. CVX is already starting to trend down.

Markets tend to top seasonally in May and that month is ending now. Evidence mounts that a top is at hand with momentum peaking and negative mood on the rise. Follow our updates at https://professorelam.typepad.com/markets/

DAILY OIL PRICE: July 9

  • Crude Oil: 39.62   (-1.28).
  • Nymex MTD AVG:  40.4656.
  • Natural Gas: 1.779   (-0.045).
  • Gasoline: 1.2505   (-0.0404).
  • Spreads: August/September   (-0.21)   September/October   (-0.19).
  • Plains WTI Posting: 36.00   (-1.50).
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