Feb 23, 2017 - Market Update

Short recap

Asian stocks took a breather

Europe opened mixed

FOMC Minutes showing cautiousness (not to forget that the meeting took place right after Trump inauguration that was accompanied with huge uncertainty)

But lots has happened since then

May rate hike priced at 50%

10-yr US Trys yield at 2.40% after FOMC

FR elections: Bayrou pulling out and expressing support for Macron

GE-FR spreads down by 10 bps as a reaction

Demand for Bunds (politically driven vs strong momentum in stocks from good macro data)…something fishy here

EURUSD – experienced short squeeze on the news but jump was more about hitting strong support around psychological 1.0500 level

AUDUSD – not sure about the direction

Reflation and commodity story to push higher

Rate spreads to weight on the cross

Nissan Motors – Carlos Ghosn to step down as CEO after 15 yrs with the company

Airbus looking at easing penalties from EU govs for delay in military aircraft contract

Tesla to start Model 3 production in Sep, reporting smaller loss

Bayer expecting agri products (pesticides) business flat this year

Focussing on Monsanto takeover completion (USD 66 bln)

More HFs warning about Trump stock rally being overdone

While EU political risks not priced in

UK Brexit – Australia and Israel to expand trade and investments

US Trs Sec Mnuchin making vague comments about effects of strong USD

UK and Canadian regulators to assist FinTech

Goldman Sachs expecting crude oil stocks to keep falling

OPEC is tightening but US shale production is rising on better effectiveness and cheap funding

Don’t really see the signs of improved demand

Commodities need more real demand & lower inventories to rally further

Most vulnerable are copper and longs in oil

Data

GE: Gfk Consumer Climate Index – out slightly higher

UK: CBI Distributive Trades Index as a leading indicator for retail spending should point slightly higher

US: Initial/Continuing weekly unemployment claims – expected marginally higher

US: Chicago Fed National Activity Index – expected slightly higher

US: FHFA House Price Index

US: Kansas City Fed Manufacturing Index

ECB Praet speaking (0855)

Atlanta Fed Lockhart speaking (1335) – likely to provide a recap of his 10 yrs at Fed as he retires soon

Dallas Fed Kaplan (voter) speaking (1800)

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 22, 2017 - Market Update

Short recap

Asian markets on positive note

EU to open higher

BoJ planning to be more transparent with announcing specific dates for bond buying operations (likely to avoid recent surprise moves)

Kuroda: ready to easy more

US Treasury Secretary Mnuchin-IMF Lagarde: IMF to evaluate FX levels and police FX policies

Fed Mester – at full employment, prices raising but don’t want to surprise the markets

US VP Pence delivered the marketing message of support for EU and NATO this weekend

But week earlier Chief Strategist Bannon had a different view

Spain is really firing at all cylinders with 2016 exports of EUR 255 bln from EUR 160 bln in 2009

Proof that the reforms they did earlier with weaker EUR work well for them

DAX to push higher behind 12 000 mark on strong data

US stocks with strong momentum but getting overvalued

Usually stocks grow with rising bond yields until 10 yr US Trys hit the levels around 3.9%

So there is still room but since US election we’ve got too high to fast

Daimler planning to build a plant near Moscow to produce Mercedes-Benz cars

It is a first major investment after announcing sanctions

Verizon agreed with Yahoo on lower takeover offer due to cyber attacks on Yahoo

EUR weakness not USD strength

Daily pivot: 1.0558

1^st daily support: 1.0502

2^nd daily support: 1.0468

3^rd daily support: 1.0412

76.4% Fibo: 1.0455, the level 1.0450/60 next strong support range

Low from 1997 at 1.0416

Then the lows of 1.0340 only

Gold weakness seen more against EUR than USD

XAUEUR printing new highs

Brent crude getting tighter as we get closer to potential squeeze

As calendar spreads for upcoming expiries rose substantially

What in turn can make the storing of oil outside US a losing trade

10 yr US Trys yields lower on softer PMI data yesterday but erased the loses later on

Currently at 2.45%, still below important resistance at 2.51/52%

GE-FR spread hitting 78 bps again on Le Pen

Data

GE: Ifo Business Climate Survey – to confirm the overall strength of GE economy, no big surprises expected

US: Existing Home Sales – set to surprise on positive side

FOMC Minutes – markets still not taking the Mar 15 meeting seriously despite Yellen’s testimony from last week

Minutes can shed a bit more light on whether Fed is eyeing to raise rates in March

Fed Powell speaking today, as he is a possible successor of Yellen

It is worth to watch him as he may provide additional clues on March hike amid strong figures from US

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 21, 2017 - Market Update

Short recap

Asian stocks mixed despite some speculations about China getting back on track

EU to open lower with some caution ahead of Flash PMIs and after day off in US/CA

Volatility staying extremely low (as mentioned yesterday), no trigger in sight yet (may be Trump before Congress on Feb 28)

Difficult to time as the substantial rise in VIX is always steep

Oil supported by substantial jump in long speculative positions from managed accounts reaching record highs

Difficult to imagine what will happen if we experience sudden unwinding of positions

Seeing battle between OPEC cuts, higher demand from China vs rising US production

Iron ore higher today as per increased demand for higher graded steel from China

US homebuilders experiencing shortage of skilled workers

BHP Billiton reported higher profit on commodities rally

Warned about risks for metals and iron ore rally in the short term

HSBC disappointed as it struggles in its core markets, had a one off write-down, pre-tax profit down 62%

EM and China hitting the results

More and more speculative longs in Rubble sound like speculative accounts betting on rising oil

10 yr US Trys yield at 2.44%, we may see some selling pressure as US comes back

2 yr auction ahead of us can be a good gauge

Bunds range bound 164.07/164.94

GE-FR spread was widened again yesterday on Le Pen advance in polls

But new polls show Macron winning in 2^nd round (this one counts)

Some progress on Greece – bailout auditors coming to Greece again

But nothing else as EU officials do not want to irritate EZ public with Greece write off headlines ahead of crucial elections this year

Data

EZ: Composite PMI – expected slightly lower but still reaffirm the growth

US: Manufacturing PMI – expected higher

Will have FOMC Minutes and some Fed officials speaking this week but it shouldn’t be that relevant to the market after Yellen last week

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 20, 2016 - Weekly Macro Overview W47

The beginning of the week will be pretty quiet, only ECB's Draghi may cause some moves as he testifies before the European Parliament. Tuesday Kiwi and Canadian retail sales may move the relevant crosses. For Wednesday are scheduled US Durable Goods Orders and FOMC Minutes and also the regular weekly EIA Crude Inventories especially important due to OPEC negotiations on production cut will be watched by market participants. Thursday the German IFO Business confidence is due, which spiked to pre-crisis highs in September. Friday we have the release of the second estimate of the UK GDP.

But for a while let's go back to the last week which was not bad at all for Asia. The biggest surprise was the Japanese GDP, which really surprised on Sunday night. On quarterly basis the growth rate in Q3 increased to 0.5% from 0.2% in Q2 what was the third quarter of expansion in the Economy of the Rising Sun. Compared to the same quarter of the last year the GDP increased by 0.9%. However, the annualized growth rate made the headlines as it jumped to 2.2% (1980-2016 average was 2.04%).

There was no major change in Chinese data except the fact they had spent significant part of their reserves to support the Yuan, in other words they were selling US Treasuries … did you see where the US 10yr Treasury yields climbed over the last 2 weeks? It's clear it’s not only the market that priced in a rate hike and is too optimistic about the GDP growth during Trump presidency that makes Treasuries falling. Regarding the rate hike, the last week's US data weren’t super convincing even Yellen kept the doors open during the speech on Friday. As the focus of the market is on the FOMC meeting in December, I prepared the summary of significant US data from last week for a better overview:

Next week won’t be very busy as I wrote in the intro. Let’s look at some interesting data we can expect some volatility around.

Monday:

The inflation in Canada bottomed out in August and seems to be picking up momentum. The Wholesale Sales being the leading indicator to consumer spending and inflation can give us a hint what kind of consumer activity retailers expect – good indication ahead of Tuesday's Retail Sales. Later afternoon Mario Draghi will talk in the European Parliament and may be “grilled a little “especially by Germans due to the ECBs loose monetary policy. While we do not expect a change in the policy direction, any wrong or inaccurate wording from him (as we are used to) can cause a significant move.

Tuesday:

The day we start with New Zealand and the q/q Retail Sales. The headline figure at 0.9% seems to be leaked, but it’s not confirmed. However market participants will expect official figures at these levels and any difference could cause a nice move. Later in the morning RBA Kent will speak. In the afternoon Canadian Retail Sales are due which kept declining -0.1% the last three readings. Later afternoon the annualized sales figures of Existing Homes will be released in the US. The residential real estate purchase activity is still much lower than it was before the crisis. To have an idea, in most of 2005 this indicator was above 7 mln. This year we could hardly get above 5.5 mln... The last data of the day will be the API Oil Stocks which is a leading indicator to the EIA inventories next day.

Wednesday:

Construction Works Done, which is the first data of the day, was declining in Australia the last four quarters. Given Construction part of the GDP is at record highs this could be the sign that hard times are ahead the sector. The Kiwi PPI was also leaked as well as Retail Sales, so watch out if there will be any difference compared to the official data. The German Manufacturing PMI keeps beating expectations the last 2 months. The flash figures will give us a hint how manufacturers in the Eurozone’s strongest economy see the prospects of growth ahead of the Italian referendum. The afternoon will be full of US data like Durable Goods Orders and Unemployment claims, the two most important, Home price index, New Home sales, and Consumer confidence among the less watched ones. The FOMC Minutes are scheduled as the last event of the day, but no significant new facts are expected to appear from the notes. The EIA Crude Oil Inventories will be also released earlier, could be important for CAD, NOK and oil traders who are waiting for the outcome of OPEC production cut talks.

Thursday:

In the morning we will have the Final German GDP and a little later German Ifo Business Climate. The Later has been beating expectations since September but now the consensus is cautious this time and the forecasts are close to the last release. In the evening the monthly change of New Zealand Trade balance will be released. The deficit was at record high in the latest reading and this could be a serious problem at one point. The ongoing decline of NZD, as RBNZ joined the currency war, may be a part of the solution. The last data of the day will be the Japanese inflation if there is any… Or rather should we say the Japanese deflation figures? Well, let’s see but since mid 2015 the nation didn’t really record and increase in Core CPI, which proves the QE didn't have any effect without the support of the fiscal policy.

Friday:

A qiet day is ahead as except the Second Estimate of UK GDP and there will be nothing else really to watch. The UK's economy should have already got a boost from the weak pound but the effects are not yet fully visible. Maybe the US Flash Services PMI could bring some volatility after the Goods Trade Balance and the Wholesale Inventories which are relatively new indicators. But we do not expect any big change in ongoing trends.

Join us in our LIVE TRADING ROOM, this week We and Th,

subscribe here http://LiveTradingRoom.subscribemenow.com.

Remember to watch your risk and be consistent.

Mr Tech Man

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, Blog: landoftrading.blogspot.com

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