This week: A Geopolitical Spike

Between November 19 – 23, the geopolitical situation changes dramatically, and crude oil may experience a sharp spike. (MoodCompass, Nov 2009, pg 14).

There is a high correlation between changes in society's view of the outside world and the price of crude oil. This allows us to produce the chart below which holds a lot of key information about global economic and geopolitical shifts in November. The orange line correlates with concerns about inflation. As it bottoms out near November 22, one would expect inflation concerns to be replaced with deflation worries. That's exactly what happened in the market place: U.S. Treasury prices climbed as rates went lower, the U.S. Dollar climbed and commodity prices sold off.

Then near Nov. 19, the purple line or "perceived geopolitical threats," becomes the primary issue, and is elevated through the end of November. It is interesting how this has played out so far: Iran declined the world offer to enrich its uranium on Nov. 19, and has initiated a series of war games on Nov. 22, right in the center of the geopolitical spike on this chart. This is a great example of what makes the MoodCompass so fascinating to work with.

Next Week: Market Meltdown

The social mood configuration for next week infers a collective search for safety or an avoidance of risk taking. This has particular economic significance, as this configuration has not been seen since last February, before the big market rally that has been occurring since March.
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Excerpt from the November MoodCompass:

November 9 - 15: Market Meltdown. Safety seeking. Inflation concerns are replaced with concerns of deflation. Likely commodity sell-off and Dollar rise. U.S. centered economic crisis. Markets may decline sharply.
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From the Week by Week Highlights of Global Mood, Perception, and Behavior on Page 2 of the November MoodCompass: http://anewstory.org/markets/Nov09_MoodCompass.pdf (current issue viewable by research sponsors only; reprinted with permission of A New Story Foundation).

November 2009 - Desperate Measures

Below is an except from this month's MoodCompass:
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There is a sense of desperation to the month of November which is likely to challenge world leaders to find new and creative solutions to long standing problems. There are economic concerns that “stimulus” has not yet been able to make go away, and chronic geopolitical issues that continue to go unresolved. In the first half of the month, the primary focus is economic and currency issues. There may be one last big panic over the fate of the U.S. Dollar, after which it should continue to show new strength. As the seriousness of the economic situation begins to become clear, inflation worries will be replaced with concerns about deflation, and global markets could see a sharp, but likely brief, sell-off. The yet unresolved unemployment situation may require new and innovative responses from federal and state governments.

The focus shifts in the second half to the world arena. A polarization develops between “good guys” and “bad guys” (the identification of the good guys and bad guys would be in the eye of the beholder). There is a societal sense of righteousness and unity against an enemy or cause. While it would make sense that a specific event would cause such a response, there is no direct indication as to whether such an event is likely to occur or what it might be. Because there appears to be some relationship to this polarization with the energy markets, there is a good possibility that it involves Iran and possibly Russia.
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http://anewstory.org/markets/Nov09_MoodCompass.pdf (current issue viewable by research sponsors only; reprinted with permission of A New Story Foundation)

Caution, Violent Week Ahead!

The global mood configuration for this next week indicates that it has the potential to be the most violent period this month. It might be of interest to watch the news this week to see how and where this manifests.

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Excerpt from the MoodCompass:

October 26 – Nov 1: Volatility. Resolution of global tension received as “bad news” (i.e. a negative event). Geopolitical concerns rise sharply. People are angry. Violence is increasing.
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From the Week by Week Highlights of Global Mood, Perception, and Behavior on Page 2 of the October 2009 MoodCompass: http://anewstory.org/markets/Oct09_MoodCompass.pdf (current issue viewable by research sponsors only; reprinted with permission of A New Story Foundation).

On The Brink - November 09 Videocast

The Global Mood "Weather Forecast" for November 2009. US centered economic chaos, Military display(s) of force, Hawaii event, and more swine flu are the highlights.

Is the Dollar Really Dead? Don't Fall For It!

Many have been discussing the Dollar's demise. There have been panic sell-offs of Dollars in the forex market, and U.S. Treasuries are being abandoned wholesale. Yet, this is the kind of extreme in sentiment that most often occurs at a market top or bottom. It's true that the U.S. government is borrowing unprecendented amounts of money. It's true that some countries including China, the U.S.'s primary creditor, is exploring alternatives in reserve currencies. However, as much as China, Russia, Iran, and other nations might wish there were another place to turn, the global system is intricately complex, and rests on a foundation based in debt and U.S. Dollars. Things can not safely change that fast. Also, as global anxiety climbs, and people are once again forced to liquidate assets that are primarily priced in Dollars, the U.S. currency will rise in value against the "commodity" currencies.

Even if there is still one more brief, but possibly extreme panic, holders of the U.S. Dollar will once again find their currency gaining in favor. Inflation worries will be a spector of the past, and deflation will once again be the primary concern. We've been here before. This is what it looks like at a social mood top, as markets in general begin to break down once again, and as Treasuries and the U.S. Dollar are sought as "safety." The Dollar may indeed collapse at some point, and inflation may very well soar to unbelievable heights as resources become more scarce. However, for now, and perhaps for some time to come, the Dollar may find support as the Great Recession continues to play out, and the spectre of Depression once again begins to lurk in the shadows.

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Excerpt from the October 2009 MoodCompass:

October 19 – 25: A Solution? U.S. government crisis resolved one way or another. U.S. Dollar declines sharply. Inflation concerns up sharply.

From the Week by Week Highlights of Global Mood, Perception, and Behavior on Page 2 of the October MoodCompass: http://anewstory.org/markets/Oct09_MoodCompass.pdf (current issue viewable by research sponsors only; reprinted with permission of A New Story Foundation).

The Next Two Weeks - Chaos

October 5 – 18: Chaos. Civil unrest in the U.S. and elsewhere. World leaders try to maintain stability. Possible E. Asia event (Japan earthquake?). Stock market lower. U.S. Dollar stable, and likely up.
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From the Week by Week Highlights of Global Mood, Perception, and Behavior on Page 2 of the October MoodCompass: http://anewstory.org/markets/Oct09_MoodCompass.pdf (current issue viewable by research sponsors only; reprinted with permission of A New Story Foundation).