June 12, 2017 - Market Update

Short recap

Asia lower taking clues from Nasdaq and its heavy weights

Europe opening lower

FR parliamentary elections – Macron’s party winning a huge majority in Lower House

What will make the reform package likely to happen

Traditional parties dying , Le Pen heavily down

China opening to foreign investors more, to cut restrictions on FDI

While reports of falsified provincial economic data

Fitch, Moody’s, S&P – no changes in UK rating but keep negative outlook

GBP waiting for clues

All points to softer Brexit as May’s coalition partner doesn’t want to have a border controls and customs union with Ireland

UK employers not really prepared for possible immigration changes

Equities

Apple – new iPhone may be lagging the download speed against its rivals

Elliott Advisors increasing the share in Akzo Nobel to 5%, becoming the largest shareholder

SoftBank entering the field of robotics by buying the business from Alphabet

EU to investigate Qualcomm-NXP (USD 38 bln)

NASDAQ sold off, driven by Apple (iPhone upgrade issue) and NVIDIA (casino stock label)

Investors may be caught by surprise as the volatility in techs is extremely low

Bonds

10-yr Trys yield at 2.22%

10-yr Bund yield at 0.25%

DXY

Should FOMC keeps hawkish wording, USD to benefit

If not, USD sell off to be small and short

Support at 96.44 (61.8% Fibo)

Resistance at 97.85 (50% Fibo), followed by 99.26 (38.2% Fibo)

EURUSD

Resistance at 1.1200, 1.1231 (10 DMA), 1.1284, then 1.1300

Support at 1.1180 (23.6% Fibo)

Lots of options expiring today within the range of 1.11-1.1200

So the trading should be contained here as we wait for FOMC

COT report – speculative longs in EUR increased by 1k to 74k, largest long positioning since 2007

USDJPY

Yields to lead the game ahead/after FOMC

Crucial resistance at 110.50 (200 DMA and 61.8% Fibo)

Support at 109.60 (76.4% Fibo), then at 108.12

Gold

Double top

Resistance at 1276 (23.6% Fibo)

Support at 1264 (38.2% Fibo), 1255 (50.0% Fibo)

Eventually, 1245 (61.8% Fibo) depending on how hawkish FOMC wording will be

COT report - saw long liquidation ahead of FOMC

Upcoming Data/Events

Tue – US Attorney General to testify before Congress over Comey and meeting with Russians

Tue/Wed – FOMC meeting

Dovish hike priced in

Market can get surprised if Fed keeps talking hawkish

Forward guidance critical (Yellen holds a press conference)

Economic projections to be released

Thu/Fri – EcoFin meeting to discuss Greece

Fri – Fed’s Kaplan speaking

June 18 – French Legislative (Parliamentary) elections

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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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 12, 2017 - Market Update

Short recap

Asia on a safe side on geopolitical risks, JPY, gold and VIX up

Europe opening higher

Kuroda – BoJ easing for price stability and not to target FX levels

Will keep going with easing to reach 2% inflation

BoJ reduced 3-5 yr bond purchases

Xi sent a message to Trump to solve the situation in North Korea in a peaceful way

Japan joining US in North Korea muscle flexing on the sea

US Sec Tillerson in Russia today

Merkel against EZ mutual debt to distinguish herself in election year from Schulz

Greece and Portugal would need to address debt sustainability anyway

China PPI at 7.6% but serious real estate problem

Economy way overleveraged (80% of GDP)

Will be negatively impacted by deleveraging that would need to take place at certain point in time anyway

VIX was up to 15.88% despite S&P 500 just slightly lower

BHP Billiton rejected any attempts to change the corporate strategy from Elliott Management side

Siemens to partner with Bombardier in train production to better position themselves against Chinese CRRC Corp

United shares hit by passenger issue due to overbooking

It seems like a very common practise by airliners to overbook and then offer you an incentive or compensation for not flying or flying another day

Dialog Semiconductor may lose deal with Apple

10-yr Trys yield at 2.30% (dropped to 2.28%) - should be temporary on geopolitical risks (Trump acting as a policeman)

While June rate hike is priced at around 60%

If the rate drops further below the 2.30% level it would express the level of doubt of bond market about Fed raising rates sooner than later

10-yr Bund yield at 0.20%

GE-FR spread rising to 74.50 bps again on the back of leftist Menchelon gaining momentum

His surprise win may be a risk event reflected in USDJPY decline

FX options

EURUSD 1m RR dropped sharply, trading below Brexit vote levels

Traders favoring put options (getting more expensive than calls)

Market was buying strikes around French elections heavily yesterday

In a protection move

1w vols dropping sharply yesterday

EURUSD spot flat

EURUSD 1m vols spiking to 12.47 from below 9.00 level

12.50 vols is equal to a spot move of 76 pips a day

EURUSD 1m 25 RR heavily favoring puts

But…

EURUSD 1w vols trading at historically low levels and keep moving lower

What may be due to implied vols underperforming

And market using 1w strikes to finance strikes covering French elections (Apr 23/May 7)

USDJPY – with ease through 110.00

Sitting at descending trendline

But close to 200 DMA at 108.70

Are the bears strong enough to take it below 200 DMA?

Similar picture as for EURUSD

1m vols spiking to 12.48 from above 11.00

1m 25 RR dropping sharply following spot and favoring puts

Liquidity to disappear quickly as we get closer to Easter holidays

Shouldn’t experience any change unless we really have a huge event this week

Than we can see sharp moves either way

6m vols trading very cheap compared to risk events as French & German elections, North Korea, Syria are

Data

UK: Labour Market Report to stay resilient

Kaplan (Fed) speaking at 1400 GMT

Apr 23 – French presidential elections

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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Apr 11, 2017 - Market Update

Short recap

Asia cautious under geopolitical risks (Syria, N. Korea and upcoming FR elections on Apr 23)

Europe opening lower

China said No, thank you to coal from North Korea and fully loaded ships are heading back home

G7 pressuring Putin to stop supporting Syria regime

Yellen said nothing new yesterday

Looks like Fed is happy where they are right now

Trump meeting top business leaders today to discuss their support for his plans in infrastructure and taxes

Elliott Management working on changes at BHP Billiton to benefit the strategy

Bain Capital and Cinven on the way to acquire Stada (EUR 5.3 bln)

Swift and Knight Transportation planning to merge their operations (USD 5 bln)

Gold-S&P 500 correlation - S&P 500 way above Gold since Nov elections

Which one will give up?

Either S&P 500 will correct or Gold will spike to catch up…

S&P 500 – support at 2280 (38.2% Fibo), may be looking at resistance at 2390 or higher to 2430

But bear in mind that “Sell in May and Go away” is very close

DAX – below former support 12 190 and then 11 850 to keep the medium term rising view in place

EURUSD – support at 1.0566 (23.6% Fibo)

Trading slightly below the rising support trendline

Bollinger bands started to expand what may indicate bearish view if EURUSD stays below trendline

Yesterday’s bond buying report from ECB showed that the bank keeps firing at full cylinders and is buying corps heavily

Daily purchases were at around EUR 483 mln level (as mentioned yesterday the average was EUR 365 mln)

All of that is happening despite the taper in place since Apr

If the ECB is tapering while corps buying is much higher than before, it points to ECB is buying much less govies

Not to forget we may have seen some pre-loading before Easter’s low liquidity in corps space as well

10-yr Trys yield at 2.34%

10-yr Bund yield at 0.19% - very close to the lows

French elections

Question is how much risk is priced in EUR and Bunds ahead of FR elections

Are we going to see the risk-on moves and a huge risk repricing in EUR and Bunds?

At the moment the EURJPY steady decline may be an indication of what market thinks…

GE-FR yield spread widening again as we are getting closer to Apr 23

EURUSD 1m ATM implied vols jumped substantially to 12.58 level from around 8.50 just few days ago

Goldman Sachs was out yesterday recommending to short OAT futures as a strategic positioning ahead of elections

Data

EZ: Industrial Production expected to edge higher

US: NFIB Small Business Optimism Index to keep the positive trend

US: Job Openings & Labor Turnover Survey expected slightly higher

Short week ahead of Easter holidays, thus lower liquidity

Apr 23 – French presidential elections

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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Apr 10, 2017 - Market Update

Short recap

Asia with some caution

Europe opened higher but mixed now

Trump-Xi meeting – both declared friendship, trust and ready to work together…but no agreements

No real consensus on North Korea, US trade deficit on the table over the next three months

Chinese in South Korea to discuss North Korea

US NFPs lower on weather and layoffs in retail sector

Underlying theme staying strong with good household survey and unemployment rate down to 4.5% (full employment) without any change in participation rate

Canada still not sure about how US is committed to introducing a border tax

Oil looking for a balance between Syria, higher demand and drilling activity in US

Deutsche Bank raised EUR 8 bln of fresh capital what can please regulators

And help with new investments and legal expenses

Rio Tinto had a lower tax bill globally due to lower earnings

Fox (part of Murdoch’s group) to acquire Sky

US equity funds experienced a huge outflow

As US investors search for better opportunities overseas going to Q1 earnings season

10-yr Bunds yield at 0.23%

10-yr Trys yield at 2.39% - after US NFPs the yield dipped below 2.30% support but recovered quickly

Trys kept selling off as market focussed on positive part and Dudley downplayed the impact of reduction in balance sheet on the pace of rate hikes

And confirmed the reduction start at the end of 2017 or early 2018

Moves in USD and Trys yields after NFPs clearly point to stronger USD and higher US yields

ECB to publish bond buying data (first after lowering the monthly buying amount)

Used to buy EUR 365 mln a day

Staying close to EUR 300 mln a day may have a positive effect on corporates but negative on govs

Recall – ECB has not specified about the split: govs/corps, sector…etc.

COT report

EUR staying pretty flat after adding few shorts

GBP near record shorts after trimming them a bit

USDJPY – traders not sure about risk off mood as the JPY weakens (after NFPs/Dudley)

If we get well above 112.00, we are likely on the way higher towards 115.00

Gold 3m vols very low close to 2013/2014 levels

If geopolitical/risk off even or 200 DMA at 1255 broken

We can see a sharp move higher

Data

EZ: Sentix Investor Confidence Index expecting higher print

US: Labor Market Conditions Index expecting a lower number

US: Employment Trends Index to provide a bit more clarity on Friday’s NFPs

G7 foreign ministers meeting in Italy today

Yellen speaking (2000 GMT)

Short week ahead of Easter holidays, thus lower liquidity

Apr 23 – French presidential elections

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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Apr 6, 2017 - Market Update

Short recap

Asia down on Fed planning to reduce its balance sheet while more doubts about Trump ability to deliver fiscal stimulus makes rounds in the markets

Saw strength in JPY, VIX and USDJPY vols sharply higher, AUDJPY on the short side

Europe opening lower

Draghi was just out – Monetary policy still appropriate, reassessment not warranted at this stage, still need to build sufficient confidence, not having enough evidence to change inflation forecast

FOMC Minutes – Fed officials seriously discussed the shrinking of balance sheet with possible start at the end of 2017 but not sure whether through direct sales or not reinvesting maturing papers

ADP numbers confirmed strong underlying hiring trend by US companies

Trump expressed himself that Asad crossed the red line in chemical attack on civilians

But haven’t specified anything more (seems like he is learning how to communicate…before meeting Xi today at least)

Toronto house prices up 33% on a year with average price around CAD 916k per property

Sounds like a bubble

To watch global financials and credit for a potential upcoming correction

Monsanto reported better results helped by seeds of soybean and corn

AkzoNobel shareholders may go against the company in order to push for take over talks with PPG Industries

As mentioned yesterday after positive US antitrust ruling the EU officials approved the ChemChina takeover of Syngenta as well yesterday

Apple to control more the core technologies due to margins, further innovation and decrease dependence on 3^rd party suppliers

Rockwell to buy B/E Aerospace (USD 6.4 bln)

Amazon looking to buy hydrogen fuel cell maker Plug Power

10-yr Trys yield at 2.34%

10-yr Bunds yield at 0.25%

Data

GE: Factory orders lower than expected

EZ: Retail PMI expected lower

US: Jobless Claims expected lower

ECB Praet (0730 GMT) Weidmann (0940 GMT), Constancio (1145 GMT) speaking

ECB Minutes (1130 GMT) - should provide more clarity either on market overraction or misjudgement of Draghi's speech

Trump to meet Chinese president (2 days)

G20 Econ ministers meeting

NATO foreign ministers meeting (2 days)

Fri:

US NFPs

Fed Speakers this week:

Fred Williams (today)

James Bullard

Apr 23 – French presidential elections

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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Apr 5, 2017 - Market Update

Short recap

Asia higher but very safe on Trump-Xi meeting on Thursday

While PMIs better

China back after holiday helping markets

Europe opening lower

BoJ reduced purchases of short term gov bonds (1-3 yr space)

Brexit – households planning to reduce spending

UK planning to abandon the clean energy commitments what may in turn make Brexit talks with EU harder

North Korea firing a missile ahead of Trump-Xi meeting…a smart decision?

Deutsche Bank lost few executives after bonus payout

ChemChina got another green light to buy Syngenta (USD 43 bln) after receiving US antitrust approval

EU to review the deal by Apr 18

Daimler-Bosch to partner in self-driving cars

A self driving Mercedes taxi a dream? Well, not anymore in the future…

Another victim from retail space vs e-commerce fight is Ralph Lauren closing its store on Fifth Avenue

S&P 500 getting cornered by descending trendline and 50 DMA

Trump-Xi meeting or US NFPs a catalyst?

Oil higher on tightening seen in the market

Iron futures up

Gold failed to break through resistance at 1257 (200 DMA) again and staying close though

Needs 10-yr yield to break below 2.30% or get some support from USDJPY falling below 110.00 level

Support at 1236, Resistances at 1257 than 1273, 1292

10-yr Trys yield at 2.35%

10-yr Bunds yield at 0.26%

Global yields higher on rising oil

Peripheral spreads unchanged after FR presidential debate

GE-FR spread at 65, not very changed yet

French bonds can see some bids today

FX implied volatility falling down pointing to markets desperately in need of catalyst

Likely the 2.30% level in US 10-yr Trys can serve as one or outcome of Trump-Xi meeting

If positive, USD may benefit

USDJPY – close to 109.50 level that may be a good entry for reversal

And move higher to attack the Dec/Jan highs around 118.00/50 range

Data

EZ: Composite PMI – no major revision expected

US: ADP Employment Report expected slightly lower

US: ISM Non-Manufacturing Index expected slightly lower

FOMC Minutes – markets looking for any wording on balance sheet reduction

Thu:

ECB Draghi, Weidmann and Praet speaking (especially Draghi’s remarks on inflation will be closely watched)

ECB Minutes

Trump to meet Chinese president

Trump to use trade to wage on North Korea

Fri:

US NFPs

Fed Speakers this week:

Fred Williams, James Bullard

Apr 23 – French presidential elections

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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Apr 3, 2017 - Market Update

Short recap

Asia slightly higher

Europe opening higher

JPM and GS cut the US GDP outlook

Fed talking about shrinking of balance sheet in H2

Inflation heading lower in EU but higher in US (PCE)

Institutional investors lowered their exposure to US and UK equities on risks related to fading Trump rally and Brexit/UK brake-up risks

Poland to announce the purchase agreement of eight Patriot antimissile systems soon (USD 7.6 bln)

S&P 500 turning bearish?

Descending trendline but above 50 DMA

First rulings over Volkswagen emission scandal to come soon from German courts

Monsanto to report earnings on Wed, market expecting strong numbers

As farmers look at record planting of soybean and corn, South America doing well as well

Tesla shipped more cars than expected in Q1

Market looking at steeper production rise in H2

If that happens, stock price to move higher

BlackBerry surprised and proved that the move to more lucrative business software field was right decision

Boeing’s largest 787-10 Dreamliner successfully complete its first flight

CFTC speculative positions as of Mar 27:

EUR flat, massive liquidation of USD longs, significant reduction in JPY shorts, GBP keeps record shorts

WTI longs still liquidated

Oil – the sign of relief for bulls is the break of USD 51.95 and USD 54.45 (61.8% Fibo) in both WTI and Brent

EURUSD – support at 1.0570 (23.6% Fibo)

If broken likely to test the lows around 1.0340

DXY – support at trendline

Resistance at 100.50 and 101.00

USDJPY – USD might have run out of steam after reversal on Friday

Resistance at 112.16

Vols trading extremely low

Watch AUDJPY for any signs of downside and potential risk off hedge

10-yr Trys yield at 2.40% (sitting in a mid-range)

10-yr Bunds yield down to 0.32% on a strong change in the stance on inflation expectations and confirmation of ECB’s neutral position in policy tightening

Data

China on holiday until Wed

EZ: Unemployment to print new low

US: ISM Manufacturing Index expecting slightly lower

US: Construction market looking at higher number

Tue:

EU making a formal statement on Brexit about what they want to achieve

Wed:

FOMC Minutes

Thu:

ECB Draghi, Weidmann and Praet speaking (especially Draghi’s remarks on inflation will be closely watched)

ECB Minutes

Trump to meet Chinese president

Trump to use trade to wage on North Korea

Fri:

US NFPs

Fed Speakers this week:

William Dudley (Mon at 1430 GMT)

Patrick Harker (Mon at 1900 GMT)

Jaffrey Lacker (Mon)

Daniel Tarullo (Tue)

Fred Williams, James Bullard

Apr 23 – French presidential elections

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 16, 2017 - Market Update

Short recap

Asia took the inspiration from Wall Street on dovish sounded Fed

EU opening higher on significant repricing of equities after Dutch elections and Fed

The Dutch stayed smart and said no to nationalism, thus sending the wave of relief across Europe

Fed still on the safe side

Hiked 25 bps, still sees 3 hikes this year as economy is doing well

On track to reach 2% inflation target, outlook for hikes/pace unchanged

Overall positive FOMC (in line) but what surprised many was no upgrade to the outlook/pace of hikes (dots) for 2017/18 despite the stronger data in Jan/Feb

That may prove that Fed is open to create asset bubbles and accept higher inflation over dumping the growth

Next hikes likely in June and Sept, Dec may bring balance sheet reduction talk

S&P 500 eying 2400

DAX to retest the April 2015 highs at 12 400

And may find additional support from another rise in car sales in EU (proving that economy is doing well)

Inditex (owner of Zara) doing better than H&M on the back of growing online business and better presence in emerging markets

Audi under emission scandal scrutiny

EDF working hard to put back to use 4 nuclear reactors after technical issues

FX – we need to respect the magnitude of the moves

EURUSD – back to the range 1.0500-1.0800/50

FOMC and Dutch election risks are off

Now we have Trump to watch as the importance of Fed is much lower as per their data dependency

But only until another round of speculations about June 14 hike re-emerge again

USDJPY – to follow yields, back to the range now

May get lower on yields even to touch the 111.50 level

Kuroda sees 1% inflation in 2018

FX options

Vols lower across the board

1m EURUSD down to 6.7% (lowest since Sep 2016)

1m USDJPY down to 7.9% (lowest since Dec 2015)

On the other hand overnight vols up on central bank meetings:

EURNOK, EURCHF, EURGBP, USDTRY - all up

Gold – fully depending on USD and yields

1221 important for further move up

But geopolitical risk of nationalism in EU receded

  

10-yr Trys yields at 2.52%

Experienced covering of shorts in Trys yesterday (strongest move since June 2016)

Questions – how durable this move is?

FR-GE yields spread below 60 bps on lower Le Pen fear

Data

BoJ meeting

SNB meeting (to be watched as EURCHF is not behaving in a normal way)

BoE meeting – no change expected

Trump to present budget (1100 GMT)

US: Housing Starts – expected slightly higher

US: Job Openings & Labor Turnover Survey – expected a small dip

Mar 17 – Merkel meeting Trump

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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Mar 14, 2017 - Market Update

Short recap

Europe opened lower

Brexit bill approved without any amendments – victory for May

Not to be invoked before Mar 27

FTSE pushed to retest the highs

14 mln Americans to lose medicare coverage is a bit bitter pill for Trump and his administration to swallow

Merkel to meet Trump on Friday instead of today due to flight cancellation (NY area bad weather conditions)

Intel buying Mobileye (USD 15.3 bln) to enter the field of autonome driving with direct competition of Nvidia and Qualcomm

Building a one place to do get all, so car makers can get all what they need in driverless technology and equipment

Mylan settled with Roche to produce a biosimilar version of breast cancer drug

Vista Equity Partners buying DH Corp (CAD 4.8 bln) to bet on fintech future

Morgan Stanley taking wealth management more digital and hiring tech specialist to train advisors

Blackstone to set up EU headquarters in Luxembourg

US cyclicals reversed yesterday and VIX dropped, proving we are in a bullish trend going to FOMC

EUR – a nice correction of Friday move in many crosses

But let’s wait for FOMC and market reaction

Thursday to be a “D” day (decision day) for EURUSD and its direction

USD – getting muscles ahead of FOMC

FX options

Vols keep falling with Implied still above Realized

Despite risk events like Dutch elections and FOMC

Once these events are off the table, expecting further drop in vols

Looking further to French election vols on election days decline in line with overall market

Seeing the vols cheap considering that Le Pen is still strong part of the presidential race

May be vols pricing is derived from current market sentiments? It doesn’t really make sense.

GBP vols no reaction to Brexit bill approval

Just spot dropped to 1.2123 from around 1.2200

Vols in line with the market heading lower

Trys and Bund yields higher (2.62% and 0.48% respectively)

Peripheral spreads unchanged, waiting for Dutch elections tomorrow

GE-FR spread steady at 61 bps, to watch reaction to Dutch elections results

Oil still second guessing on how big and sustainable the supply overhang is

WTI and Brent oversold, resistance 50.60 and 53.30 respectively

US shale production rising

Gold range bound

Levels: 1177, 1193 and 1210, 1221

Data

GE: ZEW Economic Survey – expecting higher

EZ: Industrial Production – expecting higher

US: NFIB Small Business Optimism Index – to keep positive

This week is busy:

Mar 13-14 – US budget draft to show first details of Trumps stimulus plan

Mar 15 – FOMC (25 bps hike expected)

Mar 15 – Dutch elections (polling stations close at 2000 GMT, first exit polls to start right after)

Mar 15 – US debt ceiling deadline

Mar 16 – BoJ meeting (right after Fed hiking…)

Mar 16 – SNB meeting (to be watched as EURCHF is not behaving in a normal way)

Mar 16 – BoE meeting

Mar 17 – Merkel meeting Trump

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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Mar 6, 2017 - Market Update

Short recap

Asia in red on Fed rate hike prospects and slowing China

China working on reforms to reign in the debt load, put in place measures to contain future financial crisis and shift the export lead to consumer oriented economy

North Korea playing with fire again

German Private banking association don’t see the need for ultra-loose policy from ECB anymore

Oil lower on Russia production cut compliance

Trump verbally dumping MXN lower but is it really what he wants?

Weaker MXN means Mexico more competitive

Gold – net longs up 48% hitting 3-month high (COT)

Deutsche Bank selling EUR 8 bln of shares and stake in Asset management business

Need to strengthen position and increase the capital ratios

If sold at EUR 11.65 per share would bring the CET1 to 14.1%

A small surprised in dividend of EUR 0.19 while market not expecting anything

Peugeot-Citroen helped GM to exit from Europe by buying Opel-Vauxhall

OMV buying a share in Russian gas field (EUR 1.75 bln)

Yellen’s speech on Friday:

“A rate increase at next meeting "would likely be appropriate" if Fed determines that data on employment and inflation are continuing to move in line with expectations.”

Well a magic word “if”…

EURUSD and USDJPY – back to square one

Pace of rate hikes not expected to changed on Mar 15 even if Friday’s NFPs are strong

That’s why USD reaction on Fischer and Yellen muted

Do we really have more USD strength in store?

COT report – cutting USD long posit

EURUSD daily levels:

3^rd res 1.0789

2^nd res 1.0706

1^st res 1.0664

Pivot 1.0581

1^st sup 1.0539

2^nd sup 1.0456

3^rd sup 1.0414

USDJPY daily levels:

3^rd res 115.47

2^nd res 115.11

1^st res 114.53

Pivot 114.17

1^st sup 113.60

2^nd sup 113.23

3^rd sup 112.66

FX OPTIONS

EURUSD - Saw a massive selloff in the middle and longer end of the curve on Friday due to:

Le Pen losing ground, risk on in stocks, spot higher from 1.0500 despite Fed speakers and US data, and March hike already priced in

1w covering ECB and NFPs at 7.5 vol, what is the spot range of 110 pips

3m ATM down 0.9 vol to 9.35 level (3m covering FR elections)

BONDS – A heads up…

10 yr Trys yield at 2.47%

10 yr Bunds yield at 0.35%

A bit of divergence (more than 200 bps) between 10 yr Trys and Bunds

Is the market really reflecting the reality of rise in price and economy growth in EZ that way?

More reasonable level for Bunds yield would be around 1% than 0.35% now

Just imagine the shift if it materializes

ECB – QE and wording on inflation/growth crucial

As the political risks in EZ are fading away (Le Pen)

Data

The whole week will be about the below. Today we have EU Summit but no major headlines expected.

Thu:

ECB – expecting just some verbal tweaks on QE, bond buying, may be reshuffle of maturities…etc.

Markets will be searching for any hints on change in the position on rise in prices and growth

No major change expected despite Buba seeing world differently

Fri:

US NFPs – headline figure, unemployment rate and Average hourly earnings will be watched

Earnings is the number to look at if no bad surprise in headline

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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