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
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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