Feb 2, 2018 - Market Update (NFPs day but a high bar for USD to rise, Trys rising but where is the USD?, Rising yields challenging stocks (dividend/higher financing), Strong EUR to weight on EU stocks soon, Italy in or out?, eBay dumping PayPal and going for Adyen, Insurers to sell cryptos theft protection)

Short recap

Asia lower

Europe opening mixed

Strong EUR to weigh on EU stocks soon

10-yr Trys yield above 2.75% putting pressure on stocks

As dividend yield is not as attractive as before and cost of financing for companies is getting higher

With recent rise in US yields, economic numbers and improving earnings season

Are we going to see one 50 bps hike among all three hikes expected in 2018?

Equities

Apple likely to return half of USD 285 bln of cash to shareholders

Amazon.com enjoying a record USD 2 bln profit

Royal Dutch Shell attacking Exxon Mobil position of biggest cash generator

Daimler on the spending spree for electric and autonomous vehicles this year

eBay dumping a privilege partnership with PayPal

Adding a Dutch fintech Adyen to payment service

Insurers looking at protection against cryptos thefts

Saudi Arabia in strategic talks with China, Japan and SoKo before Aramco listing

Earnings

Chevron, Exxon Mobil reporting in the light of higher oil prices. Any surprises?

Merck

A bit of reflection…

Seems like 2-yr Trys yield is giving more than dividend yield of S&P 500 stocks on average or…

Market Euphoria May Turn to Despair If 10-Year Yield Jumps to 3%  link

Is the excess money from bond markets flowing to equities or does it mean something else?

Something like valuations are extremely high?

Number of Americans thinking about stock markets being higher in one year from now hitting multidecade records:

Well, two many too bullish…

Bonds

10-yr Trys yield at 2.79% vs 2.73% yesterday (20 bps from 3.00% mark)

30-yr Trys yield above 3.00%

Yield curve keeps flattening despite recent spike in short term yields

But 10-yrs touching 3% could help USD

Credit spreads in speculative bond space have been tightening over the past years

With lots of money flowing there, higher Trys yields may reverse flows

If US yields keep rising what in turn can send volatility waves across all markets

VIX is already trading above 10, the level that acted as a resistance for quite some time

10-yr Bund yield at 0.73% vs 0.70% yesterday

More and more EZ bond yields moving above zero level

Italy in or out?

Probability of Italy leaving EZ still elevated since Constitutional vote

ECB and Bank of Italy have a problem – holding over EUR 100 bln of debt

Once ECB stops tapering, IT bonds will suffer on the back of debt to GDP ratio being higher than pre crisis

Thus sending shock waves through periphery

Luckily, majority of the public supports more EU integration

Despite immigration and EU criticism

Parliament elections (Mar 4) to be a lose call

PIMCO: The Fed is quietly trying to engineer an inflation overshoot  link

There's been a distinct shift in currency markets that explains why the US dollar is getting hammered  link

Something strange is underway in currency markets at present…

EURUSD

Markets focussed on USD weakness and potential ECB taper, now holding pretty firm

Bids sitting below 1.2490

Stops seen above 1.2540-50, if broken we can visit highs of 1.2570 and 1.2602

To watch also 1.2597 (61.8% Fibo of 1.3992/1.0340 move)

EUR 1.1 bln options with strikes between 1.2495-1.2500 expiring today

Important 1.2516 (38.2% Fibo of 1.6038/1.0340 move)

Support 1.2398 (10 DMA), 1.2305 (23.6% Fibo) and descending trendline (highs 2008, 2011, 2014)

USDJPY

BoJ special operations helped the cross higher

Offers seen ahead of 109.75, 110.00 and stops above

Bids may be around option expiries (USD 2.3 bln strikes 109.00-35)

Support 109.45 (10 DMA), 109.06 (76.4% Fibo) and 108.12 & 107.31 lows

Resistance 110.14 (61.8% Fibo)

Crude Oil

Crude oil - US producing 10 mln barrels a day, putting enormous pressure on OPEC

But strict adherence to production cuts by OPEC and Russia support the prices

China overtaking US as a biggest crude importer

Latest correction seems not to do any harm to long speculative positions held by funds

GS upgraded Brent forecast that should hit 82.50 level by summer

Bitcoin

Well, few accounts holding huge amounts  link

 …and 13 exchanges trading 40% of the volume:

Data/events

ECB’sCoeure (1000 MGT)

ECB’s Villeroy (1400 GMT)

US NFPs

Bar high for any surprise to support USD

Payrolls 180k exp vs 148k prior

Unemployment rate 4.1% exp vs 4.1% prior

Average earnings (m/m) +0.3% exp vs +0.3% prior

Average earnings (y/y) +2.6% exp vs +2.5% prior

Strong labour market supporting consumptions

But earnings may disappoint despite minimum wage and bonus increases

If not, market will start to speculate about quicker rate hikes this year

Fed’s Kaplan (1830 GMT)

Fed’s Williams (2030 GMT)

Feb 3 – Powell taking office as Fed Chair (he is a lawyer and not economist)

Feb 16 – Chinese New Year

Mar 4 – Elections in Italy

Should you have any questions feel free to contact me anytime.

Good luck Champs!

Mr Hawk

  

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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Nov 29, 2017 - Market Update (OPEC day but will Russia, Iraq, Libya, Nigeria join? Preliminary Brexit bill EUR 50 bln, Gold attacking 1300 but..., EU to freeze funding for tax heavens, to prepare new black/grey lists, Softbank looking to buy Uber shares at 30% discount, Bitcoin a threat to global economy?)

Short recap

Asia in green

Europe opening higher

OPEC day today with not only oil but energy stocks in focus

NoKo threating with new missile test again

But no reaction from the markets (a sign that conflict escalation is low for the time being)

Powell with dovish tilt, no change to rate path

HFs having hard time to earn money from bond and FX trading

And may move over to strategies of flattening of US yield curve and USD weakness next year

Brexit – rumours about preliminary exit bill agreement (UK agreed to pay much of EU bill, likely EUR 50 bln)

GBP on a stronger foot today

Senate vote on tax bill already on Thursday

EU to freeze funding for tax heavens, new black and grey list coming

Britain, Malta and Netherlands used for aggressive tax planning

Bitcoin above 10k (up 940% in 2017)

Not threatening the world economy by its seize but creating a psychological bubble

Equities

Goldman Sachs interested in metals trading arm of Scotiabank (USD 1 bln)

Softbank looking to buy Uber shares at 30% discount

Royal Dutch Shell partnering with car producers in installing super-fast chargers in Europe

Oil majors moving aggressively to shale 

Bonds

10-yr Trys yield at 2.33%

10-yr Bund yield at 0.35%

It's Time to Get Out of Emerging Asian Currencies: LGT  link  

Slower growth in China, U.S. tax reform are both set to weigh

Higher interest rates are already largely priced in

EURUSD

Resistance 1.1886 (61.8%)

Support 1.1822 (50.0% Fibo/10 DMA). 1.1810 (38.2% Fibo of 2014/15 decline)

USDJPY

Support 111.02 (50.0% Fibo)

Resistance 111.58 (100 DMA), 111.68 (200 DMA), 111.80 (10 DMA), 111.89 (38.2% Fibo)

Gold

Getting some support from NoKo provocations but needs more JPY strength to move higher

Dowside is limited on geopolitical and economic risks

Not able to break 1300 (Fibo, psychological resistance)

Next resistance 1306, 1313, 1321 (23.6% Fibo)

Support 1288 (10 DM), 1281 (50.0% Fibo), 1283-85 (50/100 DMA)

Weekly Commodity: Oil bulls supported by Canadian supply disruption, Thursday OPEC meeting in focus  link

Data/events

OPEC meeting – to discuss cut extension and duration

Is Russia on the same page? As many independent producers may not necessarily obey the cuts

What about Iraq, Libya, Nigeria as they keep pumping

US inventories up while shale oil production rising

ECB’s Constancio (1000 GMT)

Fed’s Dudley (1330 GMT)

Fed’s Yellen hearing (1500 GMT)

ECB’s Weidmann (1700 GMT)

Fed’s Williams (1745 GMT)

Dec 13 – FOMC

Dec 14 – ECB

Dec 14-15 – EU Summit talking Brexit

Dec 21 – BoJ

Dec 21 – Catalonia elections

Should you have any questions feel free to contact me anytime.

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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Aug 1, 2017 - Market Update (Can Trump hit rock bottom? Weidmann – EZ needs a reform, Chinese Anbang Insurance Group to sell overseas assets & bring cash home, Europe experiencing the strongest earnings season since 2017, EURUSD above 1.1785 (200 WMA))

Short recap

Asia slightly up

Europe opening higher

Can Trump hit rock bottom?      

Trump looking at executive action on healthcare

North Korea can hit most of US

ECB’s Weidmann – EZ needs a reform

Oil popped over USD 50 on high fuel demand and HF short covering

While supply still high

Equities

Shell putting a financial hand in solar firm Sunseap Group

BNP Paribas interested in Strutt & Parker

Brexit to increase the needs for capital by 30% and costs by 4% for banks

Trump taking on insurers after Obamacare repeal vote failed again

LabCorp eyeing Chiltern (USD 1.2 bln) to expand oncology activities

Tesla down on “manufacturing hell” as Elon Musk commented the production of Model 3

That may last 6 months until the cash burn ends and company will start to make profits

China asked Anbang Insurance Group (huge insurer) to sell its overseas assets and bring cash home

A sign of troubles coming… More here & here

Earnings

Europe experiencing the strongest earnings season since 2017 with EBITDA at record highs

US doing well too witnessing sales and EPS acceleration

Apple – market is expecting an increase in revenue on the back of higher sales of its smartphones while checking also on a new release if iPhone that may be delayed until Oct

Pfizer – to report higher earnings supported by breast cancer treatment sales. The drag on earnings might be (as of other peers too, the patent expirations)

FireEye, Devon Energy, Under Armour

Bonds

10-yr Trys yield at 2.30% vs 2.28% yesterday

10-yr Bund yield at 0.54% vs 0.54% yesterday

EURUSD

Broad weakness pushed EURUSD higher

Higher EZ inflation making market believe in a hawkish ECB

But looking at Fed not hiking this year again

Support 1.1690 (10 DMA), 1.1785 (200 WMA) – checking what’s going on there

Resistance 1.1200 more psychological of nature

USDJPY

Heavy on USD weakness

Bids at 110.00 (around option barrier)

Also some options (USD 1 bln) expiring around this level

Speculators may be hunting stops below 110.00

Resistance 110.97 (61.8% Fibo)

Support 110.14 (76.4% Fibo)

Data/events

Wed

Fed’s Mester (1600 GMT)

Fed’s Williams (1930 GMT)

Fri

US NFPs – 173k exp

Aug 24-26 Jackson Hole

Draghi’s show up highly expected in the light of potential tapering

Any clues on EUR 60 bln monthly purchase being taken down o 40…or?

Sep 7 - ECB

Sep 19-20 FOMC

Should you have any questions feel free to contact me anytime.

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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July 6, 2017 - Market Update (Trump in Poland, EUR - lower global use on high hedging cost, EURUSD - focus on Minutes & 1.1300 with lots of expiring options, USDZAR - central bank to be nationalized, Gold supported by geopolitical risks, ExxonMobil, Shell, Total courting Qatar gas, Volvo - green from 2019, Nokia sharing patents with Xiaomi)

Short recap

Asia mostly in red

Europe opening higher

Trump in Poland to reassure about commitment to Eastern Europe through gas and military support

Before meeting with Putin

Also to outline the future relationship with Europe as such

FOMC Minutes show a split and no timing on balance sheet reduction

US ready to use force against North Korea but looking for a diplomatic solution

EUR experienced lower use as international currency and as a funding currency last year

Due to high hedging cost against its decline using swaps

Equities

ExxonMobil, Shell, Total getting closer to win the big share of a Qatar gas pie despite local tensions

Vantiv buying Worldpay for USD 10 bln

Marc Cohodes known for his short selling activities now targets Exchange Income after taking on Valeant and Home Capital previously

Stating that rich dividend is not supported

Novo Nordisk having some safety issues with insulin pens in Canada

Nokia signing a patent deal with Xiaomi (guys don’t forget that Nokia is sitting on thousands of patents that can/do bring a nice cash flow)

Car sharing biz getting tougher as Avis’ Zipcar leaves Austrian market after Car2Go (Daimler) and DriveNow (BMW, Sixt) are tough to take on

Volvo to sell hybrid or electric cars from 2019 only

Such moves to create pressure within the industry as well as on auto parts producers

Tesla breaking down the rising trendline on lower demand

Bonds

10-yr Trys yield at 2.33%

10-yr Bund yield at 0.47%

DXY

Support at 94.70 (76.4% Fibo)

Resistance at 96.44 (61.8% Fibo)

EURUSD

Market watching 1.1300 (post election high) on the back of recent correction and today’s ECB Minutes

10 DMA at 1.1336 and 1.1344 (38.2% hourly Fibo) providing some support

Further resistance/support levels come from hourly Ichimoku

But large expiring options sitting at 1.1290/00 (EUR 2.1 bln), 1.1320/30 (EUR 1.5 bln)

USDJPY

Flat yields helped to mute the move higher

Resistance from declining trendline

Support at 112.24 (61.8% Fibo), 113.05 (76.4% Fibo)

USDZAR

Yesterday’s announcement of intention to nationalize the South African central bank which is privately held

Pushed the cross spiking to 13.5000

Resistance 13.4253 (200 DMA) and 13.5547 (23.6% Fibo)

Support 13.3166 (38.2% Fibo)

Gold

Getting support from geopolitical risks

After the sell off and JPY stabilisation

Support at 1214

Resistance at 1231 (200 DMA), 1234 (76.4% Fibo) and rising trendline

Data/Events

ECB Minutes

Fed’s Williams (0745 GMT)

ECB’s Praet (1000 GMT)

Fed’s Powell (1400 GMT)

Fed’s Fischer (2330 GMT)

July 7 – US NFPs

July 7 – Fed to publish its semi-annual report on mon pol (1500 GMT)

July 7/8 – G20 meeting

Trump meeting Putin while Merkel hosting them

Trump readying for a steel fight and withdraw from international talks on financial regulation

July 12 – Yellen testifying before Congress (prepared text to be released at 1230 GMT)

July 20 – ECB meeting

July 26 – FOMC meeting

Should you have any questions feel free to contact me anytime.

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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