Mar 8, 2018 - Market Update (ECB bit hawkish, tomorrow's US NFPs' earnings bit weaker can push EURUSD above 1.2500; EURUSD weekly - a funny joke 1998-2000; Fed- 5 hikes in 2018?; S&P 500 still a bit rich but reasonably attractive; USD and US deficit correlating as before dot.com bubble; USD decline impacting reserve currency status; Aramco IPO going against OPEC?)

Short recap

Asia in green after strong US session yesterday

On Trump softer on tariffs – but do not get mislead by risk on mood

Europe opening flat to higher

ECB today likely to confirm a gradual shift

But still not major change in wording

Draghi to talk down any hawkish views despite strong EZ economy

Fed 4 hikes warranted, eventually 5 in 2018 according to DB Securities

Trump’s tariffs plan not signed yet (today?)

Canada & Mexico exempt temporarily

11 members to sign TPP (US withdrew from the deal)

Beige Book – prices rising, employment up moderately

Equities

Renault-Nissan-Mitsubishi alliance getting stronger

Some Goldman Sachs’ employees on notice to move to Frankfurt amid Brexit uncertainty

IKEA to keep up investments

Boeing – tariffs unlikely to impact plane prices but can hurt sales strongly

General Electric still under pressure, valued at USD 125 bln (while in Jan 2018 at USD 580 bln)

S&P 500 still a bit rich after recent correction

But at reasonable to attractive levels based on P/B, P/E or dividend yield relative to 10-yr Trys yield (2.88%)

Improving earnings expectations and excess capital being returned to shareholders are supportive as well

Huge risks is coming from US economy bleeding from trade/tariffs war

Tech, financials, industrial doing the best

S&P 500

Strong resistance around 2800 level (high + 76.4% Fibo at 2795)

Resistance 2744 (61.8% Fibo), 2742 (50 DMA) and 2735

Support 2703 (50.0% Fibo), 2677 (100 DMA), 2663 (38.2% Fibo) and 2671

Source: Saxo Bank

DAX

Strong resistance around 12 745

Resistance 12 275 (76.4% Fibo & 10 DMA), 12 528 (61.8% Fibo)

Strong support 11 866

Source: Saxo Bank

Bonds

10-yr Trys yield at 2.88% vs 2.86% yesterday

10-yr Bund yield at 0.66% vs 0.68% yesterday

Interest rates are moving for the right reasons

This chart warns that the 30-year downtrend in interest rates may be over  link

USD following the US deficits again (budget and trade balance)

Remember the end of dot.com bubble? Quite similar….

How Corporate Debt Confirms The “Everything Bubble”  link

EURUSD

Resistance is fairly in place around 1.2555

Today a bit of sense of hawkishness from ECB and…

…tomorrow bit of weakness in earnings can push EUR above 1.2500

USD reaction to US tariffs will show further direction

Support 1.2318 (23.6% Fibo & 10 DMA), 1.2172 (38.2% Fibo), 1.2268 (10 DMA)

Weekly – anyone having fun with this chart?

Source: Saxo Bank

…but a Dollar decline rekindles reserve currency worries  link

Crude oil

Is Aramco share sale distorting OPEC policy?  link

OPEC cuts played well so far but the cost is losing market share to US shale

U.S. Oil Output Set to Average 10.7 Million Barrels a Day in 2018, Highest on Record  link

2018 oil output forecast to average 10.7 million barrels a day

Production expected to top 11 million barrels a day in October

Cryptos

SEC urging cryptocurrency exchanges to register

Data/events

ECB

Fri

BoJ meeting

US NFPs

Mar 12/13 – US bond auctions (10-/30- yr maturities)

Mar 21 – FOMC meeting (1 hike expected (market pricing at 86%) and 3 more in 2018 to be announced)

Mar 23 – US Fed gov spending deadline

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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Jan 25, 2018 - Market Update (Trump up, Mnuchin down but market is concerned about who will buy US debt; ECB - just up is a problem but Draghi likely not to say anything again); EURUSD set to check 1.2500; Weaker USD good for equities; Gold - make or brake the 1380, then 1484...?; BofA with most blockchain patents; Qualcomm fined USD 1.2 bln by EU; Mexican drug cartels stealing fuel

Short recap

Asia mixed to lower

Europe opening lower

Trump a year ago – USD strength means confidence in US and his presidency

Mnuchin yesterday – USD weakness good for US economy

…and market took it as a future direction of US policy

In other words the US trade war has begun and weak USD is part of it

Market is concerned about widening current account deficit (a problem for USD)

But bigger one is that there are still less and less international investors who like to buy Trys

IMF’s Lagarde – USD value determined by markets

Bitcoin buyers getting more ground

China to tighten control over offshore private equity fundraising

Mexican drug cartels stealing fuel from refineries (USD 1 bln of lost government revenues)

ECB today

Lots of speculations about policy shift – not expecting any change, may be some word playing in March

Recent move in EUR creating some headaches for ECB as inflation levels still low

Unlikely ECB will come up with something hawkish, we need to wait until summer

So growth and inflation have more time to surprise

Draghi to touch FX rates with dovish comments after recent rise in EUR

EUR not overvalued

S&P – strong EUR to delay tapering

EURUSD

USD still under pressure with psychological 1.2500 in sight

Likely to test important 1.2516 (38.2% Fibo of 1.6038/1.0340 move)

Then 1.2597 (61.8% Fibo of 1.3992/1.0340 move)

Support from descending trendline (highs 2008, 2011, 2014)

The 1.2400 may help to push some longs off, to open door towards 1.2300-90 zone

1.2166 (50.0% Fibo), then 1.2092

USDJPY

Interest in USD from importers and retail after o/n decline

Bids sitting at 108.50

Large options (USD 2.3 bln) with strike at 110.00 expiring today

Support 109.06 (76.4% Fibo) and 108.12 & 107.31 lows

Resistance 110.14 (61.8% Fibo)

Equities

Lower USD = higher global equities for time being…

As we have easier credit conditions

And profits of US companies artificially higher due to weaker USD

BofA owning more blockchain patents than peers

SEC looking into GE’s huge insurance charge

Company planning to sell USD 20 bln of assets

Goldman Sachs and Citibank shortlisted to bid for metal business of Scotiabank

EU fines Qualcomm (USD 1.2 bln)

Bombardier and Boeing to hear decision over dispute on Friday

Earnings

Reporting today: Biogen, 3M, Caterpillar, Intel (update on security issues), Western Digital, Celgene, Starbucks

Bonds

10-yr Trys yield at 2.64% vs 2.62% yesterday

10-yr Bund yield at 0.58% vs 0.56% yesterday

No boom to doom for central Europe's bonds when ECB stimulus ends  link

Gold

Facing strong resistance zone where it got rejected in 2014/16/17

Mnuchin, weak USD, inflation up, geopolitical risks supporting gold

More investors using gold as a hedge for potential spike in volatility

With HFs aggressively buying since Dec

Resistance 1375 high, 1380 (38.2% Fibo), 1484 (50.0% Fibo) both based on 2011/15 decline

Source: Saxo Bank 

Data/events

ECB rate decision

Jan 26 – Trump speaking in Davos (1300 GMT)

Will be interesting to see Macron/Merkel and the world

Against protectionism of Trump/US

Jan 30 – US State of the Union

Trump to announce an infrastructure plan but is not clear who would build the infrastructure

Because of his anti-immigration policies, may be Norwegian workers

But having no idea how many of them will come

Also to announce a new security policy moving away from fighting terrorism

And focussing on challenges from growing military strength of Russia and China (more military spending coming)

Jan 31 – FOMC

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

Feb 16 – Chinese New Year

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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Jan 18, 2018 - Market Update (Apple with USD 38 bln tax bill, bringing home USD 250 bln; Renault-Nissan a king over Volkswagen; Goldman Sachs dropping bond trading?; GE still on short side; Junk bonds spreads at record lows, China/Japan getting rid of Trys - nothing new; USDRUB floor between 55.70-56.00; Brent having hard time to stay above USD 70 mark; Biggest Bitcoin mines in China)

Short recap

Asia hitting record levels

Europe opening higher on bullish sentiment from US and Asia 

China growing too fast with respect to economic and pollution standards

Trump fighting back China with intellectual property breaches (likely getting ready for Davos)

Loud calls for EZ reform with new fiscal rules (GE) and joint safe assets (FR)

Equities

Cyber security start-ups having hard time

As very crowded market is moving fast and facing criminal predators, competition is a tough job

Volkswagen produced 10.7 mln cars last year

But the crown goes to alliance of Renault-Nissan though

Peugeot looking to come back to US market using know-how of Opel

Chinese interested in diabetes business from Johnson&Johnson (USD 3-4 bln)

Apple planning to open 2^nd Campus in US that is a part of 5-yr USD 30 bln investment package

And also repatriate USD 250 bln of overseas cash, thus paying USD 38 bln of taxes

Looking to create 20k jobs in US, focussing on data centers for iCloud, AppStore and Apple Music

Earnings

Goldman Sachs hit by a drop in bond trading

What makes question marks about keeping bond trading in current form

Or searching for new profit generating activities

Adjusted profit beat expectations but company is having harder time in trading than rivals

GE shares keep declining on USD 11 bln of charges and likelihood of a breakup

…already touched the GE story: Nov 15, 2017 – Story of the Week: Comparing old and new economy…General Electric and Tesla  link

Morgan Stanley, Bank of New York Mellon, IBM, AMEX reporting

New US corporate tax cut should help earnings to be revised higher

Bonds

10-yr Trys yield at 2.59% vs 2.56% yesterday

10-yr Bund yield at 0.57% vs 0.55% yesterday

Not only China but also Japan is lowering their Trys holdings  link

Back in 2004/05 both China and Japan held 50% of all Trys held by foreigners

And now they do 36% only

Junk bonds - The Great Credit Dilemma: When to Quit After Historic Rally?  link

Corporate bonds too expensive to own, but too valuable to sell

Schroder, Aberdeen fund managers plot exit strategies

USDRUB

Rising oil makes Russian officials not comfortable with strong RUB

As we saw back in 2017, they are quite good at defending certain levels

Support at 56.20 and 55.72 (Apr 2017 low)

Resistance at 56.73 (10 DMA), 56.76 (Sep/Oct 2017 lows), 57.20 (23.6% Fibo)

USDRUB weekly

Source: Saxo Bank

Crude Oil

Supported by decline in private inventories in US

And attacks from rebels in Nigeria

EIA inventories and OPEC Monthly report out today

With speculations about another decline in oil stocks and substantial rise of shale production

Brent having difficulties to stay above USD 70 level

Support 69.06 (10 DMA), 68.19 (23.6% Fibo), 66.84 (38.2% Fibo), 64.91 (50 DMA)

To watch the 66.84 key level

Source: Saxo Bank

WTI

Support 63.15 (10 DMA), 62.75 (23.6% Fibo), 61.43 (38.2% Fibo), 58.77 (50 DMA)

Source: Saxo Bank

Bitcoin miners locations

…or where is the cheap electricity and smart people are…

Data/events

ECB’s Weidmann (0800 GMT)

ECB’s Coeure (1430 GMT)

ECB’s Villeroy (1730 GMT)

Fed’ Mester (2305 GMT)

IMF’s Lagarde to speak today as well

Jan 19 – US fiscal deadline

Jan 23-26 – Trump in Davos with his crew

Will be interesting to see Macron/Merkel and the world

Against protectionism of Trump/US

Jan 23 – BoJ – any hints on potential taper?

Jan 25 - ECB

Jan 30 – US State of the Union

Trump to announce an infrastructure plan but is not clear who would build the infrastructure

Because of his anti-immigration policies

Jan 31 – FOMC

Feb 5 – Powell as Fed Chair

Feb 16 – Chinese New Year

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 15, 2017 - Story of the Week: Comparing old and new economy...General Electric and Tesla

As there are lots of questions about what’s next in equity space let’s compare stocks from old and new economy – GE and Tesla.

General Electric – a time to buy after almost 50% decline from 2016 peak and recent fall?

Still on the weak side as investors digest the overhaul plans with question marks about the success

Aligning dividend payout to cash flow generation

To cut underperforming divisions (USD 20 bln), long-term bonuses

To focus on aviation, healthcare and renewable energy equipment

More in article: General Electric Slashes Its Dividend 50% As CEO Flannery Resets Ailing Conglomerate  link

General Electric Cuts Dividend by Half and Slashes Profit Goals  link

GE weekly – with decline of 46% from 2016 peak

Source: Saxo Bank

GE daily – decline of 14% over the last two sessions after CEO announce dividend cut and overhaul of the business

Source: Saxo Bank 

Tesla – a short candidate on a strong history of cash burning?

Financial performance deteriorates - structural unprofitability likely

Most cash raised recently is already burnt - next equity sale looms

Institutional ownership declines - distribution continues

Management churn accelerates - corporate culture looks damaged

Only the story matters - the stock remains a trade vehicle

More in article: Tesla Approaches Terminal Decline  link

Tesla weekly – up 101% from 2016 low

Source: Saxo Bank

Tesla daily – a 21% decline from Sep 2017 peak

Source: Saxo Bank

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 9, 2017 - Market Update (Brexit saga continues - EU giving UK 2-3 weeks to come up with something, GE signing deals (USD 3.5 bln) in China Marks & Spencer speeding up stores closures on weak sales, 10-yr Trys yield key levels 2.27% & 2.50% to show DXY direction, EURUSD cluelessly waiting for US yields and stocks, Offshore investor flows into Japanese stocks continue)

Short recap

Asia up

Europe opening higher

US tax reform in place likely in 2019 on respecting proper budget rules

TPP – 11 countries at the table and discussing

UAE investigating financial transactions/assets of 19 Saudis at its banks

Brexit saga – EU giving UK 2-3 weeks to bring the bill otherwise not able to prepare for Dec summit

US & SoKo Navy to launch drills near Korean peninsula

Equities

General Electric signed 3 deals in China (USD 3.5 bln)

Marks & Spencer speeding up stores closures on weak sales

The Banco Santander laying off 2000 employees as part of Banco Popular take over

Tencent buying 12% of Snap

Earnings

Walt Disney – theme park revenues to help

Bonds

10-yr Trys yield at 2.33% vs 2.31% yesterday

Key levels 2.27% and 2.50% for further DXY direction

10-yr Bund yield at 0.33% vs 0.33% yesterday

EURUSD

Volatility is extremely low, only central banks drive the market

Market not sure which way to go

Currently near fair value according to Barclays

USD needs to speed up otherwise we are again back to nowhere

Thus US yields the key, eventually stocks

Expiring options of note with strike 1.1600 (EUR 1.7 bln), much more between 1.1650-1.1700

Stops sitting below 1.1550

Bids sitting above 1.1500

Resistance at 1.1605 (50.0% Fibo), 1.1615 (high from May 2016), 1.1620 (200 HMA), 1.1658 (200 WMA), 1.1670 and descending trendline connecting the lows of Oct 2008, Jul 2012

Support at 1.1590 (55 HMA), 1.1570/50, 1.1500, 1.1490 (61.8% Fibo)

USDJPY

Higher US yields and stocks helped

Offshore investor flows into Japanese stocks continue

Resistance at 113.78 (10 DMA), 114.40/50, 114.72

Support at 112.97 (23.6% Fibo)

Data/events

Busy day with ECB speakers but Draghi firmly laid down dovish view few two weeks ago...

Any surprise today? As number of opponents is growing...

ECB’s Noy (0800 GMT)

ECB’s Coeure (1000 GMT)

ECB’s Mersch (1315 GMT)

ECB’s Constancio (1345 GMT)

ECB’s Villeroy (1500 GMT)

ECB’s Weidmann (1800 GMT)

ECB’s Lautenschlaeger (1820 GMT)

Nov 28 – Powell before Senate Banking Committee

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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Oct 20, 2017 - Market Update (US Senate moving on budget, US jobless claims hitting multidecade low - positive on spending/GDP/inflation/USD, Catalonian bank run, S&P 500 tested the support around 2544/40, Earnings to set the tone for today's trading, Schlumberger results important for correction in energy stocks)

Short recap

Asia up after some hesitation at the beginning

Europe opening higher

US Senate moving on 2018 budget, next step towards tax reform

US jobless claims hitting multidecade low what means more people working, more money for spending

As consumption is 60% of US GDP, we can see in the future higher GDP growth pressuring up inflation

Merkel positive on Brexit progress but not at the stage to move to trade talks

Catalonian separatists supporting bank run what may send shockwaves across equity markets in Europe

BoJ’s Kuroda – to continue with powerful QE

Equities

Stocks had a test day yesterday on Catalan risk, speculations about high valuations and weaker earnings

Bias still negative today – a correction before weekend coming? Well, depends on earnings now…

S&P 500 tested the support (now around 2544/40) with resistance between 2573/75

But US Senate move with 2018 budget to reflect positive in today’s session

Apple hit by weak demand for iPhone 8

Greek banks Piraeus, National and Alpha looking to sell EUR 5.5 bln of bad loans

Nestle beefing up restructuring cost

Earnings

Weak in Europe – a strong EUR an issue or what?

Not stellar in US with slow revenue growth – are investors going to punish companies with sell off?

On the other hand low bond vs dividend yields still supportive for equities

Today: Daimler (disappointed), GE, Schlumberger, P&G, Honeywell

Energy market will focus on Schlumberger as any disappointment in outlook

Can translate into energy stocks correction that is already sitting on support

Little bit of perspective of Black Friday sell off in Oct 1987:

Few words as well…  link

  

…and back to today’s reality:

If all market participants are buying, there is no bear that can get converted to bull

If it is the case, there are no other buyers left…

  

But still some thoughts from Warren Buffett – video (49 min)

Bonds

10-yr Trys yield at 2.36%

10-yr Bund yield at 0.39%

EURUSD - ready to correct big time and trading below parity? Next week's ECB holds the key as the 2yr Trys-Bunds spread is at extreme  link

  

DXY

200 WMA at 93.05 critical

EURUSD

Expiring options at 1.1800 (EUR 1.5 bln), then 1.850-55 (EUR 1.4 bln)

Likely to range 1.1800/50 today unless we get a surprise…

Resistance at 1.1847 (50 DMA), 1.1862 (23.6% Fibo), 1.1880, 1.1910

Support at 1.1800/10 (200 HMA), 1.1787 (Ichimoku), 1.1750, 1.1720 (38.2% Fibo)

Source: Saxo Bank

USDJPY

Supported by higher yields on US budget news

Resistance at 113.43 with stops sitting above 113.50

To test 114.00, then 114.50 but stops above both levels

Exporters can be seen above 113.50

Support at 112.48 (10 DMA)

 Source: Saxo Bank

Gold

Resistance at 1289 (10 DMA)

Support at 1281 (50.0% Fibo), 1276 (100 DMA)

Source: Saxo Bank 

Data/events

China National Congress (Fri/Sat)

EU Summit (Fri/Sat)

Czech parliamentary elections (Fri/Sat)

BoJ’s Kuroda (0635 GMT)

Fed’s Mester (1800 GMT)

Fed’s Yellen (2330 GMT)

Oct 22 – Japanese elections

Oct 26 – ECB

Nov 1 – 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 7, 2017 - Market Update (Good NFPs may trigger collapse in bonds/stocks, EZ stocks under pressure from higher yields/EUR, BoJ buying and buying, ECB not respecting allocation key, thus pushing core yields/EUR higher, EUR - make it through 1.1500 or ? Berkhsire to buy Oncor, Celgene/BeiGene to cooperate)

Short recap

Asia in red

Europe opening lower

Flash crash in Silver

Trump to meet with Putin

Very good US NFPs numbers may trigger collapse in bonds and stocks

As the risk of rising rates further will all implications will be higher

ECB Minutes with some tightening of financial conditions

Central Banks’ Reversals Signal the End of One Era and the Beginning of Another (Bridgewater CIO)  link

Equities

EZ stocks under pressure from higher rates and stronger EUR (like capital/debt intensive utilities)

But banks/financials doing well

In general financials (higher profits), health care (defensive play), consumer staples and techs (low debt) generally doing better

China pushing GM, Mercedes and Volkswagen to recall vehicles with air bags produced by Takata

Volvo selling 25% stake in Deutz

Berkshire to buy Oncor (utility)

Microsoft to cut 30k jobs (mostly outside US)

Dish Network and Amazon.com in talks about partnership

Knee surgery done by robots? Top medical techs working on…

Axis Capital to buy Lloyd’s Novae

EU to fine Merck, GE and Canon

Celgene and BeiGene agree on tumor cancer treatment cooperation

Bonds

BoJ to purchase an unlimited amount of 10-yr bonds at 0.11% yield

10-yr Trys yield at 2.39% vs 2.33% yesterday morning

10-yr Bund yield at 0.57% vs 0.47% yesterday morning

Broke an important 0.50% level, next is 0.60% and 1.00%

Looks like the move higher in core EZ bond yields comes from ECB

As it has not purchased assets fully in line with allocation key

What in turn supports EUR

Higher gov bond yields represent a risk for bonds with long durations and EM as such

EURUSD

Bounced off the pivot 1.1300 (post election high)

As mentioned on Monday getting way over 1.1600 not sustainable

Trading right below strong resistance from descending trendline and 1.1445, then 1.1615 high

If above resistances are broken we can eventually get ready for a move towards 1.2000/1.2500

With first target at 1.1714 (1.1750)

In order to look at 1.1580 need get through 1.1450

On the top of very strong resistance range

1.1400, 1.1344 (38.2% hourly Fibo) and 10 DMA at 1.1365 providing some support

But bear in mind that financing long EURUSD positions is pretty expensive swap wise

USDJPY

Pretty resilient in risk off mood

Broke descending trendline

Resistance at 114.36 high

Support at 113.05 (76.4% Fibo)

Gold

Getting support from geopolitical risks

Support at 1214 low

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

Data/Events

US NFPs

Payrolls 179k exp vs 138k prior

Unemployment rate 4.3% exp vs 4.3% prior

Earnings 0.3% exp vs 0.2% prior

Participation …. vs 62.7% prior

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

July 7/8 – G20 meeting

To discuss terrorism, free trade and climate

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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June 26, 2017 - Market Update (Low yields to pressure US banks, Italian tax payers taking EUR 17 bln bill, FX options - implied vols making lows, VIX at 10, Fed to keep hiking, EUR longs trimmed)

Short recap

Asia up

Europe opening higher

Trump ok to cooperate with Senate on healthcare bill

Mester/Williams to keep hiking

Goldman Sachs sees 25% probability of a recession in US over the next 2 years

BIS was out with very positive annual report saying global growth to reach long-term average levels

Sees high risk of still growing debt level due to low rate environment and productivity growth

Arguing central banks should normalise their policies. More  link

FX options – implied vols making new lows

Similar picture in VIX, trading around 10 level

Equities

Pre-earnings – investors looking forward to see strong earnings in order they feel comfortable with current market valuation (highest since 2004)

Low yields to bite US banks, may see the pressure this week in case of risk off

As the valuations of US banks need to reprise given the low yields

Takata filling for bankruptcy after worldwide airbag recalls

Chinese bank regulator pushing banks to implement reforms

Intesa Sanpaolo to receive assets, senior bonds from two failed Italian regional banks

Gov to cover EUR 17 bln hole, subordinated debt holders to take the hit

Nestle having a new shareholder (Third Point) that pushes for squeezing more juice out of the company for shareholders

Looks like GE’s acquisition of Alstom’s power biz is paying off with a new contract for power plant supplies in Romania

IT companies like Cisco, IBM or SAP are pushed by Russia to share cyber security info

Bonds

10-yr Trys yield at 2.15% - not much movement

10-yr Bund yield at 0.25% - despite the mess with banks in Italy, the IT-GE yield spread stable after huge drop in June

The hit subordinated bond holders took in IT can spread around within this space in EZ

EURUSD

COT report as of Tuesday last week:

EUR longs 45k vs 79k previously - after the highest since 2007, EUR long specs trimmed positions

US yields to set the direction today

Range 1.1100-1.1300 this week likely

Support at 1.1187 (23.6% Fibo)

Trading above 10 DMA at 1.1176

Just out of curiosity Morgan Stanley was out with 'Strategic FX Portfolio Trade Recommendations' – Limit order from May 18:

Entry: 1.1030

Target: 1.1800

Stop: 1.0800

The rationale:

“We expect the USD to rally modestly against EUR as the market reprices its Fed expectations. We would use that rally in the USD to sell vs the EUR.

Increased signs of pro-integration pressures emerging in Europe (eg. Macron, Portugal - Fitch upgraded outlook from stable to positive ... improvement in the periphery)

Stronger growth environment should bring inflows into the equity market. The risk to this trade is a slowdown in equity market”.

Data/Events

Fed’s Williams

ECB’s Draghi (1730 GMT)

Tue

ECB’s Draghi (0800 GMT)

Fed’s Williams (0805 GMT)

BoE’s Carney (1000 GMT)

Fed’s Harker (1515 GMT)

Fed’s Yellen (1700 GMT)

Fed’s Kashkari (2130 GMT)

Wed

Fed’s Williams (0730 GMT)

Central bankers meeting in Portugal (1330 GMT):

ECB’s Draghi, Constancio, Mersch

BoE’s Carney

BoJ’s Kuroda

BoC’s Poloz

Thu

Fed’s Bullard (1700 GMT) 

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

Good luck Champs!

Mr Hawk

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