The StealthFlation [6]macro market minute WAG:
As far as next week goes, I'm tossing up the notion that the market will run up until Mario delivers his large pepperoni pizza pie on Thursday, probably spike right after his piping hot delivery, and then the crust will cool a bit into the close.
Friday will be a volatile rising & falling dough dippy day. The market will close out the week at the low end of the session's trading range heading into the all important election in Athens. Hold the Greek olives, Italian sausage and Spanish onions.
If Tsipras is elected over the subsequent weekend, which seems likely according to the latest polls, all hell breaks loose next Monday, and the selling intensifies during the week, until finally a new restructured Troika deal begins to privately take shape and publicly emerge.
My WAG is that the timing of how quickly the new deferred debt deal materializes will depend heavily on how rapidly and deeply the global equity markets sell off. I'm looking for 1935 on SPX, before a huge rally begins off of the Troika-Athens debt restructuring resolution, and eventually new market highs are made early March.
The other possibility is that none of the macro stuff really matters here, since, despite a peppering of decent backward looking data points, the large institutional players have already begun distribution out of Equities into Bonds, as they now fully appreciate that the U.S. and global economic growth picture is fading fast and cooked to a crisp.
As usual, it will probably be a combination of macro, momo, and fundamental, but the terrified timid trendos will have nowhere to hide.
My overriding view is that the market won't completely fall apart until it becomes crystal clear to all involved that the true condition of the United States economy is actually dreadful, at which point even the FED will no longer be able to goose the market into that entirely understood reality.
Remember, this is just a WAG on my part, for the fun of it. Be careful out there, don't slip on a greasy Kalamata olive.
Good Luck, and be sure to wash it all down with some golden ale!
