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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June 7, 2017 - Market Update

Short recap

Asia higher but risk off mood prevails while safe heavens in demand ahead of ECB, UK and Comey

Asia stocks up 2%, more than the rest of the region on consumers, value search and speculation about including China to ETFs

Europe opening mixed

Mnuchin on China – US to increase exports to address imbalance, splitting economic and strategic issues

US to watch FX to stay competitive, China used significant FX reserves

Trump pressing Congress over healthcare reform

Trump pleased by actions of Arab countries but US has the large air base in Qatar, so more relaxed talk will follow

US job openings skyrocketing, skilled workers in shortage

ECB bought a record amount of German bonds at negative yield last month (part of QE)

The step shows the shortage of positive yielding assets

Equities

Bayer exiting from Covestro

After Deutsche Borse-LSE deal went down, exchanges focusing on a low profile acquisitions/projects

Valeant to sell eye-surgery division to Carl Zeiss

Kaspersky taking on Microsoft

Wahed to offer robo-adviser services to Muslim investors

Banks warning on lower profits in Q2, blaming volatility

Bonds

10-yr Trys yield at 2.16%

10-yr Bund yield at 0.26%

China’s recent huge Trys buying likely aimed at keeping the yields low, thus supporting developed markets’ economies

What is in turn beneficial for China not only via internal deleveraging and possibility to attract foreign capital to its bonds

DXY

Support at 96.44 (38.2% Fibo) holding

EURUSD

Yesterday hitting 1.1283 before bids at 1.1284 mitigated the move

Question comes how long EUR can stay that high for?

Market keeps respecting 1.1300 despite lower US yields (bulls are definitely not happy about that)

Probably because of risk of ECB’s hawkish disappointment, very strong switch from EUR shorts to longs and huge China buying of US Trys, thus pushing the yields much lower (should be USD positive sign in longer term but correlation between USD and Trys purchases is weak)

Not expecting large moves today ahead of ECB tomorrow

But may see the cross heading lower on position squaring ahead of risk events

Resistance at 1.1284, then 1.1300

Support at 1.1227 (10 DMA), then 1.1180 (23.6% Fibo)

USDJPY

Quiet, waiting for tomorrow

May see some selling on spikes towards 110.00

Resistance at 109.60 (76.4% Fibo) with stops from 109.20, more below 109.00

Support at 108.12

Expiring options around 110.00 (USD 1.4 bln)

Gold

Gold reaching 2017 highs on low US yields, weak USD and risk off move ahead of events

Question is whether breaking the downtrend line is still a bullish confirmation

Resistance at 1300, then at 1307

Support at 1286 (76.4% Fibo)

Correlation with EURUSD is strong, so the 1300 level is also crucial for EURUSD while testing 1.1300

As gold may help EURUSD higher towards 1.1600 after clearly breaking 1300 line

If the 1300 is really strong enough to resist, we may have a look back at 1.1000 in EURUSD

But stay alert as risk events unfold

Upcoming Data/Events

G20 meeting

June 8 – ECB meeting – Draghi being alone but inflation data from US and JP suggesting ECB to carry on with ultra-loose stimulus

ECB likely to adjust the risk to economy wording but no change to asset purchases

June 8 - Former FBI director James Comey to testify before Senate (1400 GMT)

Unlikely, he would accuse Trump of interfering the investigation but will make him to suffer

Trump likely under investigation but no stopping of Flynn case request from Trump

If Comey doesn’t reveal anything new, markets should take it as a risk on and USD to benefit

June 8 – UK elections including Scotland, if SNP/Sturgeon wins the independence referendum likely to follow

Not the UK elections count but Brexit talks

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

June 13/14 – FOMC meeting – Jun hike probability at 95%, Sep at 28% and Dec at 40%. After Friday’s NFPs Sep hike may be skipped if data doesn’t come strong.

June 15/16 – EcoFin meeting to discuss Greece

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 21, 2017 - Market Update

Short recap

Asia in green taking clues from US stocks

Europe opening mixed

Obamacare on the table again next Wed

Mnuchin was out with some details on tax reform

To be revealed soon (again…) and wants to push it through not waiting for healthcare bill approval

Trump doesn’t like Canadian milk

Despite Canada having USD 400 mln trade deficit in dairy products

Ontario (Province in Canada) to tax 15% all foreign property buyers

Kaplan (Fed) is ok with three hikes this year

Kuroda to keep current bond buying

US steel producers to benefit from higher defence spending

EU equities saw significant outflow ahead of FR elections

The money can return quickly after market positive election outcome

Recently we have mentioned that EU stocks trade at 20% discount to their US peers

French stocks to benefit most under this scenario

SNC-Lavalin Group buying WS Atkins (CAD 3.6 bln)

Deutsche Bank fined USD 157 mln over FX and Volcker

Danone completed acquisition of WhiteWave Foods (USD 12.5 bln)

Stays positive on earnings

Tesla recalling 53k cars

Earnings season

Visa – better results yesterday showed that consumer credit and spending is firm globally

Blackstone – better results on assets selling during Trump rally

Schlumberger – expecting worse results on rising costs, markets waiting for an update on drilling activity worldwide

General Electric – markets will question how efficient the company is (cost cutting, raising profits)

Honeywell International – expecting worse results on aerospace

Bonds

Cautious ahead of FR elections, keeping the yields low

Despite a small rise in yields as market expects positive outcome

10-yr Trys yield at 2.24%

10-yr Bund yield at 0.24%

FX

EURUSD – suffered from yesterday’s shooting in Paris and US yields moving higher

Trading flat ahead of very close FR presidential race

Let’s see whether the event will reflect in more votes for Le Pen but French are tired of terrorist attacks

To watch options expiries today: EUR 1 bln at 1.0600, EUR 1.27 bln at 1.0700

USDJPY – support at 200 DMA (108.90)

Some selling interest laying around 109.50 level

Commodities

Gold – 3m ATM vols still at the lows

Gold has the room to go lower on risk on election outcome, lower JPY and higher US yields/USD

After printing the high at 1295 looking at support at 1267 (descending trendline)

Then 1250 (200 DMA) and 1248 (50% Fibo)

Data

EZ: Flash PMI – expecting a small dip

UK: Retail Sales – keep slowing

US: Flash PMI – expecting a small dip

IMF, World Bank and G20 meetings/speakers until Sunday

Trump less aggressive with protectionism

Kashkari (Fed) speaking at 1330 GMT

Upcoming:

Apr 23 – French presidential elections

40% still undecided

Official results at 1800 GMT

Exit polls from midday but on BE and CH media only

More precise estimates around 1600 GMT

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

May 7 – French presidential elections 2^nd round

May 25 – OPEC/Non-OPEC 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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Apr 18, 2017 - Market Update

Short recap

Asia lower

Europe opening higher, UK lower but heading lower now

Markets getting ready for French elections this Sunday and developments around North Korea

Need some risk events to go away to focus on fundamentals and earnings season again

Trump congratulated Erdogan in a call

Appreciated Turkey’s support in Syria attack

Mnuchin smoothed out Trump’s comments against strong USD in a short term

Strong currency in a long term reflecting strength and confidence in the economy

But may hurt exports short term

Admitted that health care bill stop delaying tax reform discussions

US fully supporting Japan’s security

Japan appreciates all options against North Korea on the table

Chinese real estate prices keep rising

Despite cooling measures

Fed’s Fisher glad about muted market reaction to potential taper

Stocks

Genentech (Roche Holding) received approval from FDA on bladder cancer drug

Volkswagen positive on China sales grow this year

Wal-Mart looking to enter the online fashion world by Bonobos acquisition

To face competition from Amazon.com

Berkshire and Juwai.com working together to help Chinese to buy properties in US

Boeing keeps laying off employees

M&A in US telecom industry coming as the ban will be lifter in the coming days

Earnings season

Mostly US names reporting but Europe should bring more positive surprises

Need very strong earnings to push equity markets higher

Goldman Sachs – expecting a positive surprise supported by investment banking and bond trading. Markets also waiting for insides about the use of data and technology to be more efficient and profitable.

Bank of America – expecting positive results based on increased trading and rate hikes

UnitedHealth Group – should benefit from clients leaving Obamacare but lots of uncertainty after Trump lost the healthcare vote

IBM – not to surprise the market on a positive note as the company is still turning around

Johnson & Johnson – investors are curious how the company is coping with Obamacare repeal defeat, ongoing Actelion acquisition (USD 30 bln) and future plans

Yahoo – let’s check the last earnings report before getting acquired by Verizon

Bonds

GE-FR spread at 72 bps

Markets waiting for French elections results

Hedging started to go through the market last week

10-yr Trys yield at 2.25%

10-yr Bund yield at 0.19%

EURUSD – support 1.0566 (23.6% Fibo)

Resistance 1.0706 (38.2% Fibo)

Buyers sitting in 1.0550-1.0600 area

USDJPY – Mnuchin setting support line for the cross

Strong support at 108.82 (200 DMA) holding

DXY – support at 100

Resistance 101 (76.4% Fibo/100 DMA)

Gold – looking at 1295/1300 resistance; 1315 (Fibo 76.4%)

Likely to correct first to 1263/1270; 1278 (Fibo 61.8%)

Reacting to retracing of JPY and bond yields

Oil – recent rally was supported by strong short-covering with few new longs

Data

Fed’s George to speak

Upcoming:

Apr 23 – French presidential elections - still 40% of voters undecided

Apr 29 – EU Summit to sign off the Brexit negotiations guidelines – until then we won’t have clearer EU position on Brexit

May 7 – French presidential elections 2^nd round

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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Mar 20, 2017 - Market Update

Short recap

Asia mixed after last week

EU markets opening lower

G20 take away:

Free trade short of support

Mnuchin to correct imbalances – but the simple message to US is: “Consume less, Save more”

End of globalization trends? Or end of US on globalization map?

Merkel and Abe showed strong support for free trade on Sunday (after G20)

G20 outcome is negative for stocks

FOMC feelings still present in the market

Positive on EU stocks (if French elections positive) but higher EUR is a risk

US stocks negative view, may be playing with put options going to Q2

Deutsche Bank to issue news shares worth of EUR bln as a part of strategy shift

Swiss Re to focus more on tailor made solutions to generate more profits out of the deals

Tesla raised USD 1.2 bln to fund its activities, especially Model 3 and battery production

The proof that investors are still interested to participate at Tesla story via shares or convertible notes

Sinopec close to buying refinery from Chevron in South Africa (USD 1 bln)

Bombardier still struggling to handle the deal with Toronto Transportation Agency worth of CAD 770 mln

Oil – speculative shorts double while longs were cut (COT report)

May be pointing to new weakening cycle in oil as US shale production keeps rising

Critical levels: WTI USD 51.15 and Brent USD 48

Gold – also experienced net long positioning cut by almost the half (COT report) going to FOMC last week

Risk to upside move higher on weaker USD, geopolitical risks and huge demand from India

Levels: 1238 (61.8% Fibo), then targeting last high at 1263

USD close to key support levels, trading below 100 DMA

DXY 99.26 (61.8% Fibo), H+S, descending support line around 98.90

Few Fed speakers this week with Yellen (Thu) can clarify the FOMC stance
Important event for USD will be Obamacare repeal vote on Thursday
If passed, likely USD supportive - a sign of Trump having support for his further policies

EURUSD not clearly ready to break 1.0800/50 on political risks ahead of French elections

But market keeps pricing out the risk of Le Pen win despite her advances in the polls

Security question back on the table after shooting at the airport in Paris

10-yr Trys yield at 2.49%, failed to break clearly 2.60% level again

Back to 2.30%-2.50/60% range

Bund yields rising at short end while longer end is unchanged

10 bps rise in EZ rates by Jan 2018 is already priced in

Visco (ECB) – rising rates and terminating QE can be closely linked

Data

EZ: Labour Cost Index – expected to go higher

US: Chicago Fed National Activity Index – expected to go higher

France – election debate tonight

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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Mar 17, 2017 - Market Update

Short recap

Asia cautious before G20 FinMin and central bankers meeting (Fri/Sat)

EU opening lower

Foreign investors to be able to by Chinese mainland bonds in HK (important change going forward)

G20 – not high expectation, protectionism, free trade and currencies the main themes

US Treasury Secretary Mnuchin made “diplomatic comments” on USD and good international trade relations

US budget – Trump looking at heavy spending for security, topped with cuts in green projects, diplomacy and foreign aid programs

This may back fire to US as they will lose the international presence to mainly China

New approach from US to North Korea coming

US defense stocks to do well (draft of new budget) but trading at high valuations

S&P 500 weak with 2370/80 support

EU equities – as mentioned few time before EU stocks may be an interesting opportunity on the back of short covering after eventual Le Pen defeat

Institutional investors and HF staying short EUR and hedging stock positions for now

What may be reversed after FR elections

Gold – correction higher coming to an end as weaker USD is being offset by higher bond yields

Still neutral but geopolitical risks and potential stock market correction may push gold higher

Nowotny knocked it up yesterday evening – as ECB rate increase may be on the way

Could rise deposit rate before main refinancing rate and end of QE

His comments helped EUR and Bund yields higher

10-yr Bunds yields erased half of the FOMC losses

Now 0.47%, on the way to 0.50%

10-yr Trys yields higher at 2.53%

In between the lines there was also “likely” discussion about who will replace Draghi in 2019

…now it makes sense why Nowotny’s rhetoric was so strong

On the contrary:

USD pullback not to last long as it is getting expensive as it is getting expensive to finance short USD positions

FX markets not reflective yet the rate differentials

Rates not reflecting the 2018/19 dots fully

USD is the 3^rd highest yielding currency among G10

DXY support at 99.26 (61.8% Fibo), then 99.00

Zone of uncertainty, range to decide about next USD direction

USD needs to find support around these levels

Otherwise we have already reached a cyclical high

Data

UK: Bank of England Quarterly Bulletin – anything on future rate hikes?

US: Industrial Production – expected further increase

US: University of Michigan Consumer Sentiment Index – a negative surprise may be coming

Merkel meeting Trump today

Mar 17-18 – G20 FinMin 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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Feb 27, 2017 - Market Update

Short recap

Asia started on a bad note but recouped the losses

EU markets opened higher

Trump not to cut social welfare programs: Social Security and Medicare

US Treasury Sec Mnuchin – fiscal stimulus impact this year muted (not helping USD and yields)

Busy week with plenty of Fed speakers to be watched for clues on Mar 15 rate hike (priced at 40%)

If there are no really strong comments, especially from Yellen on Friday, we should look at May or June meeting rate hike

Chinese Navy will benefit from rich funding as China to challenge US on the sea

Speculative longs in WTI from HFs reaching new high at 443 mln barrels

Russell 2000 lagging S&P 500 on fiscal stimulus delayed till end of summer or later

Note that small to medium caps will benefit more from fiscal stimulus, thus are much more sensitive to any news

LSE & Deutsche Borse merger unlikely getting approved by EU Commission

Nokia 3310 is back (by the way, I love my BlackBerry Bold…)

Stada is opening the books as a part of acquisition process

Bond yields hitting the lows on risk off and disappointment on Trump

10 yr US Trys yield at support level of the 2.31-2.55% range

GBP not feeling well on a risk of new Scottish referendum

EURUSD still in a range of going nowhere (1.0500-1.0680)

With 1.0500 super strong and battle ground within the range of 1.0500-1.0520 on the downside

Trump’s speech or US PCE inflation can shed some light on further direction

USDJPY – still very sensitive and may react strongly on Trump if we see lots of pro-inflationary talk that will spur the yields rise

Below 1125.50 we have next target 111.60 if Trump doesn’t deliver

Take a not of shrinking Ichimoku cloud on daily chart

Market may be pre-positioning for disappointment

May hit 110 or 115 (chance are widely open)

Vols pretty cheap either direction

Gold – 200 DMA at 1262 ahead of us

May see some profit taking ahead of Trump tomorrow

Fibo levels: 1250 (50%) and 1279 (61.8%)

Data

Mon:

EZ: Business Climate Indicator – to decline slightly

EZ: Consumer confidence – to decline more

US: Durable Goods Orders – to rise

US: Pending home sales – expecting 1% increase

Fed’s Kaplan (1600) – Q&A session

Tue:

2^nd estimate of US GDP expecting at 2.1% vs 1.9% last month

US: Consumer confidence – expecting no change

US: House prices – expecting 5.3%

Fed’s Williams, Bullard speaking

Trump at joint session of Congress (0200-0330 Wed)

Likely to express opinions and plans closer to Congress way of thinking than his ideas from presidential campaign

Wed:

US: Consumer spending – expecting 0.3% increase

US: Personal income – expecting 0.3% higher

ISM Manufacturing – expecting no change

Fed’s Kaplan, Brainard speaking

Beige Book

Thu:

Fed’s Mester speaking

Fri:

US: ISM Non-manufacturing activity index – expecting no change

US: NFPs only next week on Mar 10

Fed’s Yellen, Evans, Lacker, Powell, Fisher speaking

Super Wednesday Mar 15, 2017

Dutch elections

FOMC meeting

US debt ceiling deadline – if no agreement is reached as of Mar 16 the USD 20.1 trillion limit on federal debt is in place

What will stop Trump from his stimulus plans until the deal with Republicans is agreed

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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