July 28, 2017 - Market Update (Bad day for Trump - no Russia sanctions, no VAT, no BAT, no Obamacare repeal, EURUSD hitting strong multiyear resistance zone, USDJPY played by expiring options today, US GDP to surprise, NASDAQ down on rotation out of Techs, Apollo rising USD 25 bln)

Short recap

Asia lower on risk off

Europe opening

Mnuchin to support steps not tough talk against FX manipulators

As it hasn’t been working for years

Senate rejected new sanctions against Russia

Not even watered down Obamacare repeal bill can pass through Senate

Another huge blow to Trump after no VAT and BAT implementation

Those two got rejected due to the need to overhaul the whole tax system in US

Equities

NASDAQ down on rotation out of Techs

Amazon hit by cost jumping

UBS cautious despite good wealth management business

Credit Suisse – profit jumps

Apollo’s new private equity fund raised USD 25 bln for investments in North America and Western Europe

Airbus not happy with delays caused by Pratt & Whitney production

Cameco settled with IRS at a fraction of original claim but heavy fight with CRA is waiting

Any correction in stocks to be triggered by upcoming tapering? The stock markets were moving higher hand in hand with QEs all around the world. What’s next?

Few facts:

Had a nice bull market rolling over the years

Market multiples above historical levels

Equities vs fixed income yield differentials are low

M&A activity hitting high

Upcoming tapering

Extremely low volatility will not last

Trump administration not able to deliver

Earnings

Earnings season so far good on weaker USD

Merck, AbbVie – to be watched as competition is rising

Exxon Mobil, Chevron – market expecting a profit print

Bombardier – cash flow, CSeries deliveries and potential joint venture with Siemens to be questioned

Baker Hughes, Barclays, Goodyear, American Airlines

Bonds

10-yr Trys yield at 2.30% up from 2.28% yesterday

10-yr Bund yield at 0.53% down from 0.55% yesterday

EURUSD

Down from yesterday on USD buying

Underlying tone stays pro-EUR, US GDP in watch

Support of note 1.1623/21 (10 DMA/23.6% Fibo), 1.1615, then 1.1580

100/200 HMA may also see some buying

Resistance at 1.1750, 1. 1776 (high), 1.1794 (200 WMA), 1.1810 (38.2% Fibo)

USDJPY

Sitting on 111.00 with likely dip demand around 110.80

Option expiries at 110.80 (USD 1.2 bln), 111.00 (USD 1.4 bln)

Likely to stay within the sight of expiry levels unless US GDP moves the market heavily

Lots of bids at 110.00

Gold

Durable goods orders and higher USD put pressure on gold yesterday

Traders see Fed to announce taper in Sep

Resistance at 1261 (61.8% Fibo)

Support at 125 (50.0% Fibo)

10/50/100 DMAs converge to 1250 level

Data/events

US Q2 GDP +2.6% exp vs 1.4% previous

Some banks revised up expectations on the back of yesterday's much better Durable goods orders

Fed’s Kashkari (1720 GMT)

Aug 24-26 Jackson Hole

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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Apr 28, 2017 - Market Update

Short recap

Asia – saw some profit taking after risk on week

Europe opening lower

ECB no change in monetary policy

Draghi had a good showing, inflation not a worry, economy doing better

(5-yr forward inflation swaps above 1.6% indicating ECB still undershooting its inflation target)

Taper and rate hikes not a question of a foreseeable future

What may put additional pressure on EURUSD and close the Sunday’s gap up

New healthcare vote delayed again

Trump’s new trade war target is South Korea (kind of blindness in between the North Korea tensions…)

US and China say that North Korea situation can escalate if talks fail

Equities

Stocks too rich or too cheap?

Hard to say as the enormous QE stimulus is still here and rates are not at normal levels

S&P 500 trades at 18 times 2018 forward PE

S&P/TSX at 18 times 2018 PE

Deutsche Bank surprised but revenues are falling and trading is short of US peers performance

UBS benefited from trading and investment banking activities

Earnings season

Alphabet (mobile ads and YouTube), Amazon (well positioned), Intel, Microsoft, Ford doing very well

Exxon – market is looking at substantial rise in profits on cost cutting

Chevron – expecting company to by back to profit on refining and cost cutting

Others to report today: Colgate-Palmolive, General Motors, Goodyear, Imperial Oil (CA), Cameco (CA)

Bonds

Yields lower on risk off

Europe’s corps in high demand, credit spreads very low

May be the time to look elsewhere for better yield

10-yr Trys yield at 2.29%

10-yr Bund yield at 0.30% (pretty nice jump in Bunds after Draghi yesterday)

EURUSD

Looking whether closing the week below Sunday’s open at 1.0889 (Reuters)

Support at 1.0850; 1.0834 (200 DMA) and 1.0820 (50% Fibo)

Resistance at 1.0933 (61.8% Fibo) and around 1.0950 (upper channel line)

1999 high at 1.0915

Options expiries and US GDP to drive the market

Data

EZ: Flash CPI – 1.8% exp. vs 1.5% prior; Core 1.0% exp. vs 0.7% prior

US: Advance GDP – expecting slowdown with 1.2% exp. vs 2.1% prior, but it is not alarming as it is a historical pattern. Important to watch business investments but here, we can eventually blame lacking Trump policies that create hesitation about capital investments

US: Chicago PMI

US: Uni of Michigan Sentiment index – looking higher

Fed speakers: Brainard (1715 GMT) and Harker (1830 GMT)

Upcoming

Apr 29 – EU Summit to sign off the Brexit negotiations guidelines

May 7 – French presidential elections 2^nd round (Macron/Le Pen – 60/40)

May 25 – OPEC/Non-OPEC meeting

Jun 11/18 – French Legislative (Parliamentary) elections (a big question mark for Macron to gain majority)

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

Read More