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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Apr 27, 2017 - Market Update + ECB

Short recap

Asia up

Europe opening lower

BoJ – no change, outlook for econ up, CPI down

NAFTA to stay for now, I “admire” the respect of Trump for his partners

Trump’s tax reform out, if in place making a huge hole to federal budget

And making Fed to move faster

So far no inspiration for the market as it lacks the details and is very complex thing

No US Gov shutdown until Sep 30

New healthcare bill getting support

PBOC keeps reducing risk in financial system what is reflected in Shanghai Composite

Equities

US stocks didn’t hold gains after Tax reform announcement on fading momentum

With Home Capital Group in a need of USD 2 bln credit line

Something is going on in Canadian real estate

Airbus having a legal case

In love with Ducati? Likely on sale, just contact Volkswagen…

Earnings season

Twitter, Fiat-Chrysler surprised, strong results from BASF and Deutsche Bank

Alphabet – expecting higher revenue, would be interesting to see any comments on diversifying its advertising revenue over other areas (cloud…etc.)

Microsoft – expecting better results as company benefits from its cloud services

Amazon – expecting better results as it benefits from its market position but some risk of using cash are present

Intel – Mobileye acquisition to pay off but company is still having to fix the core

Others to report: Celgene, Ford, Dow Chemical, UPS, Bristol-Myers Squibb, Johnson Controls, AbbVie, Marathon Petroleum, GoPro…etc.

Bonds

US yields experiencing more positioning then reflecting the reality of strong data and Fed likely hiking again in June

10-yr Trys yield at 2.31%

10-yr Bund yield at 0.36%

EURUSD (daily)

Negative tone under 1.0970

Looking whether closing the week below Sunday open at 1.0889

Support at 1.0850 and 1.0835 (200 DMA)

FX options

EURUSD 1m ATM vols

Saw a massive sell off in vols after 1^st round of FR elections

RR favoring calls (from O/N to expiries covering 2^nd round of FR elections)

ECB today – O/N vols trading at 17% setting the expected spot moving range at 0.9%

Commodities

Gold – now supported by geopolitical risks (fading) only

Upcoming

Bundestag voting on Brexit

ECB meeting

Expecting quiet meeting, no surprise (FR elections in two weeks)

Draghi to defend the QE continuation with maybe a slower pace of bond buying in 2018 and the rate rise well into the future

Will need to talk down any taper speculation at an earlier stage despite EZ macro data

Would correspond to three year cycle as Fed had

To please the hawks likely a small wording adjustment at Jun 8 meeting

Inflation to stay low (oil prices), core still weak at 0.7% (likely to be still disappointing in 2017/18)

Draghi/officials will be very prudent after last experience with a bit more hawkish tone

Having a huge market impact, had to talk it down after

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

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