U.S. Market and Mood: June 21-27, 2015

Change is in the air as the week begins.  Instability, large moves, and uncertainty are all likely themes (see chart left), especially in the first half of the week.  Tension and anticipation build near the end of the week. 

A large directional move is indicated in the markets this week.  The increasing sense of vulnerability (chart below, right) is most often associated with risk-aversion, decreased spending, and down markets.

U.S. Market and Mood (June 14-20, 2015)

The week begins with an effort to put on a positive, "yes we can" attitude.  There may be some lingering, ongoing economic concerns and domestic issues, but the sense is that they can be addressed and turned around.  Competing with this resolve to look at the bright side, is a background of destabilizing factors, some of which comes from outside the U.S.  People begin to get agitated and anxious as the week goes on.  Midweek could even see a "mild panic" or moment of passion (strong emotions), as a general sense of increasing vulnerability begins to take hold  By week's end, risk aversion is becoming more pronounced, and markets are getting more decidedly bearish.  People have fixed ideas and opinions of "the facts," and are more willing to talk about them.  Protests and demonstrations are on the increase.

Analysis of U.S.-China relations shows China posturing in a more aggressive tone near June 18.

U.S. Market and Mood (June 1-13, 2015)

Social mood patterns for the first week of June indicates anxiety and restlessness.  Markets should be choppy for the most part with little clear direction.  Sometime near the end of the first week or very early in the second week, a directional move should occur.  The most  likely direction is down, as this transitory pattern is most often associated with bearish markets and risk aversion.  Spatial analysis by the MoodCompass team shows economic concerns likely arising from outside the United States having some effect on U.S. markets (see The Crow's Nest blog entry for June).

By midweek the week of June 7 and continuing through the end of the week, a "new paradigm" pattern is in play.  This marks a new chapter in U.S. social mood.  Things should become a lot clearer as to global conditions and market direction as the week plays out.   A shift to this new outlook and new priorities will be in process.  Be ready for something different!

Analysis of U.S. - China relations shows a significant development near June 11.

U.S and Global Trends, Remainder of 2014

In January, we published a summary of expectations for 2014.  Using a translation of then available social mood data into cyclical projections for the upcoming year, we filled in the blanks with a best-guess narrative for 2014.  The data showed a large spike in oil/fuel prices in March and April, surrounding an international crisis.  There were indications that the Iran negotiations could run into difficulty.  We put those together in our narrative.  The actual picture was much more complex, with several new situations.  In March and April the Ukrainian crisis was accompanied by an increase in oil/gas prices and volatility of global markets. In fact, on March 2, from our daily data, we were able to announce as imminent, a large international crisis impacting the U.S. only a few hours before news broke about Ukraine and possible Russian involvement.

The global situations continued to unfold.  In June, ISIS was an issue, and the continued stability of Iraq was a concern.  Social mood data continued to lack the signs of full relief and release that would indicate things might settle down for more than a moment.  In our last post (August 7), our conclusion was that these waves of global disasters were not finished.  We stopped posting after that.  What more could we keep saying that would be of any use?  Why continue to drone on with "more disasters to come?"  On September 29, a reader commented, asking for an update.  We decided to oblige.

Looking back at the data we had at the beginning of the year, we can now add to the narrative, as many of the details surrounding context has been filled in (Undoubtedly, there are also new surprises yet to come). 

Our forecast for the stock market (S&P) for the year was near unchanged.  Based on that, in our January presentation we said not to worry about a total market meltdown, and assured the Fed would do what it needed to keep the market at least near unchanged.  At this point, with the market still up about 5% for the year, many different scenarios could result in ending the year with the market near 1850.  One of those would include a sharp drop (crash) and modest recovery.  Another is a large rally followed by a sharp drop.  Another would be a slow meltdown from current levels.  No matter how we get there, the expectation is that we end the year somewhere near 1850.

Health issues came up in our data for the year, but we decided not to emphasize this point.  We mentioned in the summary that it would be a good idea to get rest, exercise, eat healthy, etc.  Six months ago, the data started showing signs of an approaching epidemic affecting the U.S.  As we saw stories of Ebola in West Africa, we were quietly crossing our fingers that this had nothing to do with the U.S. indicators (what could we say, and to who?).  As of a few days ago, Ebola arrived in the U.S.   If the data reflected actual likely U.S. numbers of Ebola cases, this would not be anything like the plague in fatalities, but would definitely cause people to be concerned, possibly changing behaviors in public places.  It is likely that there would be quite a few more cases (more than double digits) before this is over.

Finally, a major turning point was mentioned in the summary occurring shortly before the November elections in the September/October timeframe.  We are in the midst of this now.  During this period, the focus of the U.S. government (and people) shifts from international issues to domestic issues.  There is not a lack of international issues, but a shift of priorities.  Economic concerns should increase,  and possibly other matters of a domestic nature.  Also mentioned in the summary, is that incumbents are not likely to do well in the elections.  These internal issues are the reasons why.  As the year comes to a close, the U.S. may also look more weak or vulnerable to the rest of the world than it has for some time.  This may be due to the issues now beginning to come into focus.

On the positive side, there is a better chance than there has been all year, for diplomatic agreements to be reached in November or December.  It will be seen how this affects dealings with Iran, Russia, and China in the coming months.

Global Disasters not yet finished

Recap: the MoodCompass team reported a disaster indicator peaking near August 1-8 that would impact the United States, but be more destructive outside the U.S. (see last few posts). It continues to play out.

Tropical storm Iselle will hopefully turn out to pack less of a punch to Hawaii than feared.  However, the MoodCompass disaster indicator says there is an even higher likelihood globally for natural disasters or major global changes tomorrow (8 Aug) than there were today.  The approximately 1 week period of an anticipated cluster of disasters began to show on 2 August with toxic water in Ohio, a potentially deadly inconvenience.  The following day, a major earthquake in China toppled thousands of homes and killed 600 people.  Today, 7 Aug, a rare hurricane landfall in Hawaii may cause some damages, but hopefully they will be minimal.  Tomorrow and into early next week, this global disaster wave should continue to play itself out.  Best case, it will soon run out of steam and fade away.  All that is clear today, is that it isn't over yet.

Global Cluster of Disaster-type Events Underway

As mentioned in previous posts, a global cluster of disaster-type events has begun, and it may be another week before this disaster wave peaks (current data shows it is not even near peak yet).  While the most destructive events should be located outside the United States, the U.S. will not be immune.

Saturday kicked it off with Ohio's forth largest city suddenly finding itself waterless due to toxins found in the drinking water. This has resulted in the governor declaring a state of emergency.  See news story.

On Sunday, over 12,000 homes were destroyed in China due to a large earthquake.  The current death toll is near 400.  See story.

There should be another week or possibly more filled with headlines of death, destruction, disease, and/or toxicity.  This is the measureable shift in consciousness we have already made in collectively turning away from a focus on global violence, aggression, and expansion.  It just hasn't yet all shown up in the news.  Give it a week or two.  We will have a new global focus, new types of collective troubles to worry about.  Perhaps it doesn't have to be this way, but for now, this is what gets our collective attention, and allows us to globally shift gears.



For more info on The MoodCompass Project, see http://moodcompass.com.

Update, 1st Week of August Event, 2014

On 24 July, we announced a disaster or tragic event of high impact to the United States was near and most likely to occur between August 1-8, 2014.  Also, that more information would be available in the days ahead as to the type of event that was anticipated.

The shift in social mood points to a collective desire to shift *away* from global violence as people become concerned with new types of threats.  Some of these new types of concerns, such as disease and economic issues have already begun to surface as Ebola makes headlines and market volatility spikes.  Environmental tragedies and natural events that relate to water or fluid such as severe storms, flooding, a tsunami, or volcanic eruptions (lava) may also be a part of this cluster.

At this time, we can say the following about likely events of this period:
1) The bulk of the destructive components of these events should be international (non-U.S.) in origin.
2) There could be a significant economic component or impact to the U.S.
3) The event or series of events should dominate U.S. conversation and air-wave time for days if not weeks.

For more info on The MoodCompass Project, see http://moodcompass.com.