Lioness Associates, Inc.

Economic & Corporate Risk/Yield Reports

May 9, 2012  -- Global Perspective for May/June 2012

With the averages falling on Wall Street this past Friday (May 4th) and unexpected results from the elections in Greece and France, the market futures were not looking good Sunday evening (May 6th) and commentaries were broadcasting to expect a tough open for the US markets. As it turned out, whatever waves were destined for the US dissipated as the markets around the world opened and closed in turn and the expected tsunami turned into a high tide.

Tuesday May 8th was telling a different story, the US markets opened and averages were moving down with heavy volume and expectations were that markets would close on the lows but, they didn't. The markets came off the lows and moderated before closing for the day.  Same thing happened on Wednesday.  

So, where is the market heading .... 

The Global Delta Core/Transient 2012 graph details that the May period is lackluster, in fact the black line (core) is flat which means that the Delta is neither risk nor yield (directionless).  Looking at the Global Risk/Yield 2012 graph, it is apparent that there are neither risk nor yield core data points for the May month, the only activity is some transient data points in yield.  With this, all appearances are that the current situation in Greece and France are limited in scope to the individual countries, at least for this time.  This does not minimize the changes that are occurring in both of these countries but, in some ways, Greece is an old story that keeps getting new twists but, it is still an old story. 

Looking further at the global situation for the end of May and into June 2012, the Delta Core line down shifts into risk and this could be a period of uncertainty and market unrest. A small move like this into risk (or yield) in a corporate chart might be ignored as it would be within a margin of error but, in a global or country graph like the USA graph it is usually an indication to be watchful as the time draws closer.  A small note, while the world news has been concerned with the elections in Greece and France, they have been less involved in providing details on what is happening in Russia with their elections and the smoldering unrest there.   

Some additional detail - one of the astrological configurations that is occurring in June was in evidence during 1933 to 1934 at the rise of Hitler and during 1964 to 1965 during the toppling of Khrushchev - so this is a configuration that occurs with the "changing of the guard" and "old regimes toppling". This same configuration happens later this year and again next year so while we'll see the first inkling in May/June of 2012, the situation will still be developing over the next year. I suspect that this could be another country "erupting".  To add, it could also turn out to be a "physical" eruption like a volcano or tsunami.

It's worthwhile to note that the USA chart for May (see home page) has a slight move into "yield" during May and a slight down shift in June into "risk" reinforcing that June is more likely to have some negative activity.  The expected Facebook IPO in May is likely to generate both interest and activity and may keep the focus on the US markets rather than problems abroad.

      Global Delta Core/Transient 2012 graph

        Global Risk/Yield 2012 graph

Disclosure as of 5/7/2012 - SPY is not part of our portfolio at this time.