Or should it be…
…Capital flows around the world?
Princeton Economics noted that the economy is like a child. It grows, matures and evolves.
Perhaps the greatest problem we face in attempting to reform our political-economy and move forward, has been the assumption that we are in control. We only to see things in our domestic political-economy and make our investments and policy decisions based upon this myopic domestic perspective. We assume governments are in control even though we do not understand what they are doing. They try desperately to influence what we think and do realizing that we actually respond to what we believe will happen in anticipation.
Yet the economy is far more complex and sophisticated. Everything is actually connected precisely as it is in nature for we are part of nature and that same grand design. The global economy is much like a rain forest with billions of lifeforms all depending on another. To analyze and model this kind of complex environmental and societal economic system requires research that views the system both as a whole and its component parts to reveal the interconnected data that lies hidden beneath the surface. This allows for the combination of small influences to cascade into larger global trends just as removing one specie in a rain forest will set off a chain reaction since it is either a predator or the prey in relation to other species. This is why we need to see the flow of capital between all the players for linking the global data for the analysis reveals the whole complex system, and not just a subset of all the interesting operations and processes of the system.
As illustrated by Highcharts Monthly Capital Flows Chart, the us markets have been held up by international capital flows coming from Europe and China. This is precisely why the markets have attempted to top and turn recently. But have failed to turn down with any significant momentum.
Bulish momentum remains solid and as long as the inflows continue a downside test will be delayed.