Thursday, April 22, 2021

Biden Climate Plan and Global GDP

 KUDOS, and I mean it, to Biden. Real implementation will be incredibly difficult and failure will mean doom (don t think your grandchildren are going to survive in a world without plankton).  By next election cycle the path the world is on will be visible to all and most likely we will see spiking carbon emissions, devastating weather catastrophes, the need for even more investment, carbon taxes, and even more weaponizing of painful choices.

 The pandemic definitely decreased global emissions. To stay under the limit on future emissions needed to keep climate temps under the 1.5 centigrade increase, that same decrease in emissions Y on Y has to be achieved every year until 2030.

Reality No.1)  Co2 and other greenhouse gas emissions have a very high correlation w Global GDP, .87 to .93

Climate change is unfortunately global so don t bother with arguments based on regional data. In the United States some progress growing GDP while cutting emissions has been achieved in some locales. Most of the progress is a result of a one time switch from coal to nat gas by utilities AND relatively poor main street economic performance since 2007. Yes, it is true that there is evidence (weak) of an uptick in consumer interest in sustainability in very developed countries as gdp grows, but half the worlds people can t wait to get a stove and AC.

 Reality No.2)  The multi trillion dollar stimulus in the pipeline is going to significantly increase Global GDP, unless everybody dies. April IMF forecasts is for over 6 % global growth in 2021, and 4.5% f 2022.  IMF forecasts for the next few yr.s have been trending higher each Q. 

Global GDP in 2019 grew 2.3%, yet 2020 was tied for the hottest year on record even with the pandemic. Spending on the infrastructure to transition to a green economy will be slow to have measurable effect on emissions yet the stimulous is immediate.

Additionally, Green infrastructure spending ( think "good jobs" ), will likely have an immediate multiplier effect greater than what we've seen over the last 20 yr.s. ramping the marginal propensity to consume. Rates at the lower bound, moderating the crowding out effect, will add fuel to the fire.  

Reality No.3)  Much hope is based on switching the transport sector out of Internal Combustion Vehicles to  EV's.  It makes sense, it a thing, big investment committed,  but be real, the auto fleet in the US has a 15 year life span, EV's represent under 2% of that.  See below for Global % sales history.

 Meanwhile the total Global Auto and Light Truck Fleet sales clocks about 70 million.

Even with radical gov incentives like BUYING and DESTROYING your 2021 Sierra Pick Up (though eventually they will have to) its SUPER unlikely to happen this term, and thus make a difference before 2030 or even 2040. Sorry.  

Reality No.4)  The next 5 to 10 years are going to see the fastest growth of Co2 emissions ever, most likely exceeding current projections of worst case scenarios, as a result of the above. 

IS there a solution? All the above we can do but more, and most importantly LESS. Less global GDP growth has to be engineered in there somehow, aimed at anything NOT actively contributing to Zero Emissions growth.  A very painful decade.

 A great start would be for the US Fed to stop forcing rates down.  We've  engineered and directed our growth with monetary, fiscal,  tax policy, subsidies, grants,  etc. for decades. We need to engineer this economy as if we are in a world war, which in fact we are.

Now our survival depends on getting it right. 



Monday, December 7, 2020

Medium Term Crude Resistance

Just a little resistance in the form of Fib ratio and negative RSI divergence.

Rolling 1st month 4 hr. bar

click to enlarge

Thursday, April 16, 2020

Long Term WTI Counts Suggests Bottom Near

The Elliott Wave count I have on the long term monthly chart has very strong fib relationships and
structure suggesting a high probability low either at 19.55 or 18.25.

The chart reveals a pattern that can be described as either an ABCDE  declining triangle with the expected fib relationships between the legs, or alternately if the structure is a simple ABC the C = 50% of A at 19.55

click to enlarge

 While not shown on the above chart there is repeated Pos divergence on the RSI.

Wednesday, January 16, 2019

WTI Update- a 4 Handle Future?

From my last post Dec 28, "Before we get into next year, short term the WTI has a good deal of upside risk to between $48 and $54, with $51.50 being my favorite cluster of resistance/ and a measured target for a 4th wave."

click to enlarge
As can be seen, WTI is in the high side of that range and evidencing some recent weakness.
It does have a "look" that could produce a higher high at the top end of the range there, or even somewhat higher.  However the greater risk, short and medium term is to the downside from here. 
It may turn out that a "b" wave chop down is in the cards with a subsequent "c" wave up,  but that kind of move can be deep and retest the lows .
See above Fib retracements, particularly the .618 and .78 

Longer Term Risk For Bulls AND Bears

The Decline
click to enlarge

While the labeling of the subwaves above can be argued,  including whether the wave down is completed yet or not,  the $34 thrust down is probably NOT a completed correction.
At least one more wave down can be looked for, of similar degree, even in a "correction".  Even if this bounce carries as high as say $65.

The Elliott count above is a not quite complete impulse wave down. So longer term likely more to go with lots of 4 handle time.  

Of course in Elliott Wave there is always an ALT possibility. 
Have fun.

Wednesday, January 2, 2019

Will It Hold? Elliott Wave Outlook 2019 and Beyond

Time to examine the likely structure of the SP500 move down and it's long term implications.

10 yr. Weekly 
click to enlarge

 I usually write assuming a pretty passable familiarity with the basics of Elliott Wave Theory on the part of my readers. A summary, including both pros and cons, can be found here.
 A post discussing the entire long term move up, it's structure, and why it had many features of a completed move, can be found in my Sept. 24 post Top of the Pops; Ring Ring for context.

Keeping it simple- the 20% pull back, coupled with that 10 yr. trend line is providing support...for now.  I do believe we are currently in a 3rd wave down, which is where you would expect to be in the count, to take out that trend line.
I have to say that labeling the sub waves down from Dec 12 to 24 is VERY difficult and suggest to me that they are a series of 1, 2 's in there and the -3- of 3 is still in front of us.

2 Yr
click to enlarge

Why It's Not Just a Corrective Pullback

The Christmas Collapse took out the lows for the year, the .382 retrace,  and the .50 retrace of the (5) of 5 of V of the GSC. That deep and powerful move is NOT a correction to the last 2 years' move up; if it were, it should have held at the 2530 mark.  At best it MAY BE a correction to the next larger degree, the 5th wave beginning Mar 2009. 

click to enlarge

The 4th wave of the next larger degree (4) carries all the way down to 1800 ALSO coincidentally a 50% retrace of that 5th Wave. 
So A very bullish minor correction would  retrace into the range of the (4) wave at a bare minimum 2000 at the .382 retrace, or down to the 1800 level mentioned previously. 

However it would be remiss, especially under the circumstances, to leave the impression that a pullback to 2000 or 1800 is the high probability outcome suggested by Elliott Wave Theory.

The Beginning of the End

The high of a Grand Super Cycle is thought to be reflecting and accompanying a "civilization peak". The ensuing reversal could be expected to last decades if not longer, and be marked by reversals in civil functioning, societal cohesion, global trade, law and order. In short the reversal of the last  cycles' progress. 

 IS THAT what we are starting to see?

I would argue absolutely yes; in fact in many capitals including our own, the term "globalism" is being used as a pejorative. We are rolling back the previous decades rules and regulations, and dismantling civic agencies and institutions like the State Dept. and EPA. Our President AND his supporters, are attacking our Allies, the FBI , the "deep state", and the Fed. These are the structures that accompanied and supported the ascent of our civilization and our leadership of western democratic capitalism.
These reversals of the progress of the last 50 yr.s are exactly what you would expect to see in a Grand Super Cycle correction.

And so as evidence piles up that we are beginning that multi decade slide downwards, it would be shortsighted to look for a bottom on the SP around 2000 or 1800. While one or both probably will provide short or medium term bounces, the most likely outcome in the end, would be that eventually markets will cease to function as the institutions that support them collapse. 
We probably have some time before that but... collapse is quick.

The last 4th wave of lesser degree (2 lesser), took from 2000 to 2009 and was a .61 Fib retrace at the lows of 666. You will recall that all our major Financial Institutions were collapsing or about to collapse at those lows. I would not hold financial assets, even shorts, until the lows. The 2000 A wave collapse took 2 years, the 2008 C wave collapse had most of the damage done in 1 year. 

A .618 pullback from the highs puts the SP at 1127. 
A .78 pullback targets 649

The 4th wave low of 2 lesser degrees is 666.

 Elliott , fractals, etc are easily misinterpreted and miscounted. The dim past and it's sketchy data are not reliable. Hopefully the Grand Super Cycle is yet to be completed and we'll all be re labeling everything in 2020. 

Friday, December 28, 2018

WTI Elliott Wave Outlook 2019 and Beyond

Before we get into next year, short term the WTI has a good deal of upside risk to between $48 and $54, with $51.50 being my favorite cluster of resistance/ and a measured target for a 4th wave.

click to enlarge
A leg up from todays low equal to the first leg up, targets 49, also the .618 retrace.

Click to enlarge
This chart is updated with my Elliott count, excuse my idiosyncratic labeling.

You will see that the range of the 4th wave of a lesser degree target is encompassed by the gray box.
That range might be expected to be reached according to Elliott,.

If the count above is correct, than another low is yet to be put in to complete a 5 wave count down impulse wave I or A.
Targeting rules for a 5th wave are either that it will be equal to the 1st wave or .618 of waves 1 thru 3.
Diagonal triangle 5th rules do not come into play here, at least at this degree and at this time.

The initial wave 1 down off the highs was truncated and is not usable here, leaving us with the .618 measure.
If the 4th wave were to carry as high as 54.50, the top of the potential range, than a 5th wave measured target hits at 33.12
If the 4th wave were to carry to 51.50, the middle of the potential range, than a 5th wave measured target hits at 30.12, etc.


This actually fits with thinking I ve had for a long time; that WTI would have to re explore the lows.

20 yr. Monthly
click to enlarge
The technical damage done thus far during the 4th Qtr. has made clear that the move up from 26.27 is over.
 WTI is now well into a new down leg that will almost certainly be related in degree, as well as by Fibonacci ratio or percent terms, to the preceding legs down. Most likely the C wave.

Possible E Wave targets

The C wave x 50% targets $32.6
The C wave x .618 targets $22.62
the C wave x .78 targets $8.36

 Happy New Year