equities

Market echoes

The US dollar index ticked higher yesterday, as the euro fell across board during ECB Lagarde's presser. But any further weakness in today's PCE numbers could limit the upside move in the dollar index and throw a floor under the EURUSD's weakness around the 200-DMA.

It would sure be absurd if the Fed started cutting the rates with such a strong underlying US economy before the ECB, which, in opposition, deals with a serious economic slowdown across the euro area. But the Fed doesn't (need to) decide based on other central banks' actions. As such, a possible earlier Fed cut could slow down the euro depreciation but should not stop it.

NIO - Will It Support The Rise Of Chinese Tech Stocks?

NIO - Will It Support The Rise Of Chinese Tech Stocks?

FXStreet News FXStreet News 08.02.2022 16:08
NIO stock gets a strong rating from latest Barclays research. NIO remains bearish and is down 25% year to date. NIO and other Chinese EV names remain in growth mode as the latest delivery data showed. NIO stock remains mired as it ended Monday virtually flat. The stock is down over 40% from three months ago as Chinese names see international investors flee on regulatory concerns. NIO Stock News It has been a turbulent time for holders of Chinese tech stocks. Alibaba's ANT Group spin-off set things off. Then the DIDI delisting not long after its IPO added to woes. Then a host of regulatory crackdowns was the final straw for international investors who bailed out of the names en masse. This is despite the EV names in particular remaining on track from a growth perspective as all have posted strong delivery data. While January deliveries slowed from December, the yearly growth rates still are impressive. January is traditionally the slowest month of the year in China though due to the lunar new year. NIO for example delivered 7.9% fewer vehicles in January versus December. On a yearly basis, January deliveries were 33.6% higher. This was replicated across many other Chinese EV names. Now Barclays has picked up the theme as it issues a bullish note this morning. "We believe that the rapid adoption of EVs around the world and booming EV sales have presented China’s EV makers a rare opportunity to not only take a sizable market share of the domestic auto market – the largest in the world with about 25-30% global share by units sold per annum – but also build a dominant position on the world stage." Barclays put a $34 price target on the shares. This does highlight the potential growth potential of Chinese tech stocks and the EV space in particular. We question whether investors will reenter, however, having been let down previously. Fool me once, shame on you, fool me twice... Ok, let's not have another George W. Bush moment! The point is a valid one. It will likely take more than analyst upgrades to tempt investors back to the space. Goldman, the king of investment banks, has previously been strongly bullish on NIO and to no avail. It will take a series of strong earnings and relative calm in terms of regulatory concerns to eventually tempt investors back. NIO Stock Forecast The recent spike lower did fill the gap from back in October 2020. The market just loves to fill gaps. We also note this spike lower created a shooting star candle, a possible reversal signal. There is already a bullish divergence from the Relative Strength Index (RSI) as shown. The area around $27.34 is the first resistance. Getting back above indicates the bearish trend may finally be slowing. That would then bring NIO into a range-bound zone from $27 to $32. Only breaking $33.80 from January 3 ends the downtrend. Support is at $14 from the strong volume profile. Look for an RSI breakout as that could signal more gains. The RSI has been shrinking in range and may test an upside breakout. NIO 1-day chart
DJI (Dow Jones) And SPX (S&P 500) Are Likely To Recover Slowly

DJI (Dow Jones) And SPX (S&P 500) Are Likely To Recover Slowly

Alex Kuptsikevich Alex Kuptsikevich 09.02.2022 09:26
Stock markets continue their shaky recovery. On Tuesday, intraday trading patterns in US equities point to a buying trend on declines. The S&P500 and Dow Jones indices rebounded from their 200-day simple moving average. Both indices were below those levels in the second half of January. Still, by the beginning of February, they managed to get back above them on the substantial buying activity of the retail investors. Yesterday's stock market dynamics slightly reduced the tension. Increased buying at the end of the session indicates a buying mood for professional market participants. There have been increasing reports from US investment banks that markets have already priced in a tight monetary policy scenario and will not press equity prices further. Moreover, BlackRock recently noted that markets had priced in overly hawkish expectations. The bond market also looks oversold, declining in previous weeks at the fastest pace since 2008. This is a good reason, at least for a technical rebound. In addition, buyers are supported by strong economic and wage growth, promising corporate earnings stability for the foreseeable future. The switch to a monetary tightening phase turns the market into a more frequent and deeper corrective pullback mode but does not trigger a bear market before a rate hike even begins. Strong fundamentals support a bullish technical picture, with a recovery from the strongest oversold S&P500 RSI and the ability to pop above the 200-day average. From this perspective, the January drawdown has cleared the way for growth, recharging buyers. On an equity level, we can see stabilisation and sharp upward moves in stocks that have been weak since June and shone in the pandemic before that: Peloton, Netflix, GameStop. In theory, this could be a dead cat bounce, but it reduces the selling pressure in blue-chip stocks such as Apple, Amazon, Microsoft, Google and straightens out the overall market sentiment.
STX, RJF and BX were added to our Stock Market Watchlist in January

STX, RJF and BX were added to our Stock Market Watchlist in January

Invest Macro Invest Macro 09.02.2022 22:39
The first quarter of 2022 is underway and it is time to highlight some of the top companies that have been analyzed by our QuantStock Fundamental system so far. Topping the list are three well-known companies, one in technology and two from the financial services side of the market with all three companies paying out dividends to investors. Our QuantStock Fundamental system is a proprietary algorithm that examines each company’s fundamental metrics, trends and overall strength to pinpoint quality companies. We use it as a stock market ideas generator and to update our stock watchlist every quarter. However, be aware the QuantStock Fundamental system does not take into consideration the stock price or technical price trends so one must compare each idea with their current stock prices. Many studies are consistently showing overvalued markets and that always has to be taken into consideration with any stock market idea. As with all investment ideas, past performance does not guarantee future results. Be sure to join our email newsletter for our system updates. Here we go with our 3 of our Top Stocks we added to our Watchlist from January 1st through January 31st of 2022: Seagate Technology Information Technology, Medium Cap, 13.8 P/E, 2.50+ Percent Dividend, Our Grade = B Seagate Technology (STX) has ascended our grading threshold to be included on the watchlist for the second consecutive quarter. STX is an information technology company headquartered in Ireland that specializes in technology hardware, storage devices and other cloud storage services. Highlighting their fundamental case over the past two quarters has been a rising earning per share (beating expectations three quarters in a row) as well as a rising dividend that is currently above 2.50 percent. On a technical basis, the STX price has been volatile since the beginning of the year like most other tech stocks. STX hit a low share price under $92.00 on January 25th but has rallied since to over $110.00 per share at time of writing. Raymond James Financial Inc Financials, Medium Cap, 15.84 P/E, 1.15+ Percent Dividend, Our Grade = B- Raymond James Financial INC (RJF) is next up and a well known financial company that has also made our watchlist for the second straight quarter. RJF, a medium-cap company ($28+ billion) is headquartered in Florida and provides financial services to investors and corporations throughout the US, Canada and Europe. RJF currently trades at an approximate 15.5 PE-Ratio and has had higher earnings per share for three straight quarters, beating earnings per share expectations in all three quarters as well. The dividend has continued on a growth path with the current quarterly dividend at approximately 1.15 percent at time of writing. Technically, the RJF share price has been surging higher recently and currently trading around the $115.00 price point at time of writing. In the short term, the stock is on the higher side of its trading range as evidenced by the ZScore of the 50-day moving average (2.38 standard deviations above the 50-day moving average currently). Blackstone Inc Financials, Large Cap, 15.8 P/E, 3.80+ Percent Dividend, Our Grade = C Blackstone Inc (BX) was added to our watchlist for the first time in January and is a financial large cap company ($154+ billion) located in New York, New York. BX provides global asset management services to investors, pension funds and institutional clients across a broad range of markets including real estate, bonds, equities and various credits. Blackstone’s stock is currently trading at a 15.8 Price/Earnings Ratio and the company has had earnings per share growth each of the past three quarters, beating expectations each time. The dividend has been on an upward trajectory with the current yield surpassing the 3.80 percent threshold at current prices. Technically, the BX share price has been on the rebound recently after dropping in late January to a low of $101.65. The stock has bounced back strong to a current price of above $130.00 per share and trading right above a support level. Article by InvestMacro – Be sure to join our stock market newsletter to get our updates and to see more top companies we add to our stock watch list. Disclaimer: I currently own STX, RJF and BX stock at this time in ETFs and/or Closed-End Funds. I do not own direct shares of these companies at time of writing. This article and our system grading are for informational and educational purposes only, not a recommendation to buy, sell or hold shares of any particular stock, ETF, company or security. All investors are always strongly advised to conduct their own independent research into any stock, ETF, closed-end fund or any other financial instrument before making an investment decision. Investmacro.com authors are not registered investment advisors, do not make stock market recommendations, do not offer legal advice, do not offer tax advice and cannot be held liable for any losses occurred. All data is thought to be accurate as of time of writing but can and will change over time due to changes in the underlying securities price and data.   
Peloton Interactive (PTON) Stock News and Forecast: And just like that, it's back

Peloton Interactive (PTON) Stock News and Forecast: And just like that, it's back

FXStreet News FXStreet News 09.02.2022 16:19
Peloton shares continue to be the most discussed stock on mainstream and social media. Two straight days of 20%-plus gains for PTON stock. The new CEO gets just the start he would have wanted. It is not exactly reassuring to your confidence when you step down as CEO of a company and the stock immediately explodes higher. Investors clearly had enough of Peloton's (PTON) former CEO John Foley. New man Barry McCarthy hits the ground running despite some mixed commentary from the analyst community this morning. Peloton Stock News Peloton reported earnings on Tuesday. The stock had already surged on news (https://www.fxstreet.com/news) of a new CEO and continued reports that the company may be in the sights of big tech eyeing a potential takeover for the beleaguered fitness company. Revenue came in at $1.13 billion below the $1.15 billion estimate. Earnings per share (EPS) came in below estimates at $-1.39 versus the $-1.20 estimate. The outlook was also weak with Peloton seeing full-year 2022 revenue at $3.8 billion, while analysts had forecast $4 billion. Following the results, Stifel maintained its buy rating on PTON with a $45 price target. Macquarie maintained its outperform rating with a lowered $60 price target, while Barclays also lowered its price target to $60 as well. Bank of America said, "Our estimates that assumed price cuts would drive new demand were too optimistic." BofA has a $42 price target for the stock. Peloton shares had already been strongly ahead in Tuesday's premarket before the earnings release. This was due to the new CEO and a cost-cutting plan including laying off 2,800 employees. The list of potential buyers for Peloton continued to grow as speculation mounted. Potential acquirers include virtually every major fitness company, numerous big tech firms, Berkshire Hathaway and SoftBank. We do question whether in particular big tech would get much benefit out of the acquisition. Fitness has been a big part of the wearable market, and Peloton's subscribers are its value, but do Apple, Amazon and Google really struggle that much for users? Sports companies mentioned include Nike (NKE) and Adidas (ADDYY). These may make more sense as the subscribers could generate more value, add-ons and ancillary sales. Peloton Stock Forecast The weekly chart (https://www.fxstreet.com/rates-charts/chart) gives us all the information we need going back to the launch in September 2019. Peloton (PTON) rallied all the way up to $171 this time last year before steadily falling back. The stock has now totally retraced all of the pandemic gains and then some. In that respect, investors may be tempted to buy into the name as subscribers in 2019 totaled just over 500,000, whereas currently Peloton has 2.77 million subscribers. From the weekly chart, we can see the power of volume gaps we often talk about. Peloton broke sharply once it entered the light volume zone from $81 to $37. Now it has stabilized at a high volume zone and the point of control. This does set a potential base for the stock. (https://www.fxstreet.com/markets/equities) Peloton (PTON) chart, weekly The daily chart below shows we have had a bullish divergence on the Relative Strength Index (RSI) since the last earnings despite the share price continuing to slide. $23 remains support with first resistance at $46. This latest move is likely to calm down unless more takeover talk surfaces. If the price move does calm, then holding above $30 is key to keeping the bottom in place. Peloton (PTON) chart, daily  
Dogecoin price prediction: DOGE to first tank 7%, before rallying 40%

Dogecoin price prediction: DOGE to first tank 7%, before rallying 40%

FXStreet News FXStreet News 14.02.2022 15:59
Dogecoin price action is under pressure as global markets are nervous about a possible escalation between Ukraine and Russia. DOGE looks set to break the low from the previous week and dip towards $0.1357 Expect once DOGE price reaches that level to see a rally into the weekend that could hold 40% gains. Dogecoin (DOGE) is set for a solid rally but first needs to face the most vital forces with global markets pressing on all assets with a mood of risk-off, as today and tomorrow could be the tipping point in the escalation towards a war between Russia and Ukraine. As tailwinds are just too big a force to face, DOGE will dip further towards solid support at $0.1357. Once bulls enter, expect a big rally that could swing up to 40% towards $0.19. Time for the bulls to stake a step back and look at the bigger picture Dogecoin is under pressure as the overall cryptocurrency space joins global markets rattled by a crucial moment in the Russia-Ukraine development. As Russian army exercises near the Ukrainian border are set to end tomorrow, the crucial moment for a possible invasion to take place before then. This is putting markets on edge with risk-off across the board and EU equities down more than 3%. This risk sentiment is weighing on DOGE price action with the low of last week being tested, and bears using the entry-level from Sunday at $0.1594 where the 55-day Simple Moving Average and the pivotal historical level delivered a firm rejection to the upside. With that, expect this downtrend to continue today and dip towards $0.1357, which already proved its support at the end of January. Once there, expect bulls to jump on the opportunity and lead a rally that could jump as much as 40% towards $0.19 once the geopolitical rhetoric dies down and cools off. DOGE/USD daily chart Should Russia engage in war with Ukraine and invade, expect this to pull the trigger for investors to flee the markets and cause a fire sale across the board. For DOGE this would mean that it could tank another 24% on top of the 7% forecasted for today. That would bring DOGE price action down to around $0.1030, where the monthly S1 support level is situated, the red descending trendline and the $0.1000 psychological level – providing three elements that could catch the falling price action.
Tesla Stock News and Forecast: TSLA, RIVN or LCID stock, which is the best buy?

Tesla Stock News and Forecast: TSLA, RIVN or LCID stock, which is the best buy?

FXStreet News FXStreet News 16.02.2022 16:18
Tesla bounces strongly on Tuesday as risk assets surge. TSLA stock gains just over 5% on Tuesday. Geopolitical tensions falling help risk appetites return. Tesla (TSLA) shares bounced strongly on Tuesday, eventually closing up over 5% in a strong day for equities. The stock market was buoyed by news of some Russian deployments returning to their bases. Russia then appeared to confirm this as hopes grew for a diplomatic solution. This saw an obvious bounce in equities (https://www.fxstreet.com/markets/equities) with the strongest names being those that were previously the weakest. Understandable, but is this gain sustainable? NATO this morning has said it sees no sign of Russian troops pulling back from the Ukraine border. NATO has said it sees Russian troop numbers still growing along the Russian-Ukraine border. This news (https://www.fxstreet.com/news) still has legs. Volatility has been high as a result and will likely continue that way. Tesla Stock News The latest quarterly SEC filings have provided much information to pore over. In particular, Tesla, they do note some hedge fund selling. This is not too surprising given the record highs TSLA stock pushed on to before Elon Musk sold a stake. Benzinga reports that the latest filing shows Ray D'Alio's Bridgewater cutting its stake in Tesla. Cathie Wood of ARK Invest was regularly top-slicing her firm's stake in Tesla recently. CNBC also reported yesterday that hedge fund Greenlight Capital had made a bearish bet on Tesla shares. Greenlight, according to the report, has been a long time Tesla bear. Apart from those snippets though, macroeconomic factors are the main driver of the Tesla stock price currently. Electric vehicle stocks have not been a strong sector so far in 2022 as growth, in general, is out of favor with investors. This has led to steep falls in other names such as Rivian (RIVN) and Lucid (LCID). Both are at a much earlier stage of development than Tesla (TSLA) and on that basis, we would favor Tesla (TSLA) over them. But we must stress we would ideally avoid the sector entirely until perhaps the second quarter. Once markets have adjusted to the prospect of higher rates, some high-growth stocks may benefit. historical in a Fed (https://www.fxstreet.com/macroeconomics/central-banks/fed) hiking cycle the main indices do advance but growth sectors struggle. Rivian so far is down 36% year to date, Lucid is down 24% while Tesla is the outperformer, down 12% for 2022. Tesla Stock Forecast We remain in the chop zone between the two key levels of $945 and $886. Breaking $945 should lead to a move toward $1,063. That would still be consistent with the longer-term bearish trend. Nothing goes down or up in a straight line. TSLA is unlikely to be able to fight the current overpowering macroeconomic backdrop of rising rates (https://www.fxstreet.com/rates-charts/rates) hitting high growth stocks. But breaking $945 is still significant in the short term and should see some fresh momentum. While $886 is significant, the 200-day moving average at $826 should have our real attention on the downside. Tesla has not closed below this level in over 6 months, so that would be significant and again lead to a fresh influx of momentum. Just this time though, it would be selling momentum. Tesla (TSLA) chart, daily Short-term swing traders should note the volume momentum behind moves. Once volume dries up, Tesla tends to fall off intraday. From the 15-minute chart below, we have an opening gap from Tuesday down to $880. This is short-term support, but a break will see the bottom of Monday's range at $840 tested. Tesla (TSLA) 15-minute chart
Is It Worth Adding Gold to Your Portfolio in 2022?

Is It Worth Adding Gold to Your Portfolio in 2022?

Arkadiusz Sieron Arkadiusz Sieron 17.02.2022 16:29
  Gold prices declined in 2021 and the prospects for 2022 are not impressive as well. However, the yellow metal’s strategic relevance remains high. Last month, the World Gold Council published two interesting reports about gold. The first one is the latest edition of Gold Demand Trends, which summarizes the entire last year. Gold supply decreased 1%, while gold demand rose 10% in 2021. Despite these trends, the price of gold declined by around 4%, which – for me – undermines the validity of the data presented by the WGC. I mean here that the relevance of some categories of gold demand (jewelry demand, technological demand, the central bank’s purchases) for the price formation is somewhat limited. The most important driver for gold prices is investment demand. Unsurprisingly, this category plunged 43% in 2021, driven by large ETF outlfows. According to the report, “gold drew direction chiefly from inflation and interest rate expectations in 2021,” although it seems that rising rates outweighed inflationary concerns. As the chart below shows, the interest rates increased significantly last year. For example, 10-year Treasury yields rose 60 basis points. As a result, the opportunity costs for holding gold moved up, triggering an outflow of gold holdings from the ETF. As the rise in interest rates is likely to continue in 2022 because of the hawkish stance of the Fed, gold investment may struggle this year as well. The end of quantitative easing and the start of quantitative tightening may add to the downward pressure on gold prices. However, there are some bullish caveats here. First, gold has remained resilient in January, despite the hawkish FOMC meeting. Second, the Fed’s tightening cycle could be detrimental to the US stock market and the overall, highly indebted economy, which could be supportive of gold prices. Third, as the report points out, “gold has historically outperformed in the months following the onset of a US Fed tightening cycle”. The second publication released by the WGC last month was “The Relevance of Gold as a Strategic Asset 2022”. The main thesis of the report is that gold is a strategic asset, complementary to equities and bonds, that enhances investment portfolios’ performance. This is because gold is “a store of wealth and a hedge against systemic risk, currency depreciation, and inflation.” It is also “highly liquid, no one’s liability, carries no credit risk, and is scarce, historically preserving its value over time.” Gold is believed to be a great source of return, as its price has increased by an average of nearly 11% per year since 1971, according to the WGC. Gold can also provide liquidity, as the gold market is highly liquid. As the report points out, “physical gold holdings by investors and central banks are worth approximately $4.9 trillion, with an additional $1.2 trillion in open interest through derivatives traded on exchanges or the over-the-counter (OTC) market.” Last but not least, gold is an excellent portfolio diversifier, as it is negatively correlated with risk assets, and – importantly – this negative correlation increases as these assets sell off. Hence, adding gold to a portfolio could diversify it, improving its risk-adjusted return, and also provide liquidity to meet liabilities in times of market stress. The WGC’s analysis suggests that investors should consider adding between 4% and 15% of gold to the portfolio, but personally, I would cap this share at 10%.   Implications for Gold What do the recent WGC reports imply for the gold market? Well, one thing is that adding some gold to the investment portfolio would probably be a smart move. After all, gold serves the role of both a safe-haven asset and an insurance against tail risks. It’s nice to be insured. However, investing in gold is something different, as gold may be either in a bullish or bearish trend. You should never confuse these two motives behind owning gold! Sometimes it’s good to own gold for both insurance and investment reasons, but not always. When it comes to 2022, investment demand for gold may continue to be under downward pressure amid rising interest rates. However, there are also some bullish forces at work, which could intensify later this year. If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today! Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Trade Zone Week Ahead with David Floyd (Aspen Trading): 21st – 25th February - 21.02.2022

Trade Zone Week Ahead with David Floyd (Aspen Trading): 21st – 25th February - 21.02.2022

8 eightcap 8 eightcap 21.02.2022 08:36
We begin to wrap up David Floyd’s coverage of the Eightcap Trade Zone this February, as he tackles this week’s trading week ahead and notes the levels we should be taking note of as markets open today. If you trade the S&P500, or have an interest in Forex pairs you won’t want to miss his latest insight! David Floyd is the Founder of Aspen Trading Group. He started his career in the trading industry in 1993. His focus eventually shifted to equities and spent the next years trading on a proprietary equities desk. In 2002, Floyd started Aspen Trading and has grown from a pure prop trading firm into becoming the leading provider of expert FX research and analytics worldwide. With over two decades of expertise in global fundamentals and technical analysis, Floyd has been profiled in RealVision TV, CNBC, and Bloomberg. Important Data Releases & Events this Week Monday EUR Manufacturing PMIs from Germany, France and Eurozone USD Bank holiday in observance of US Presidents’ Day GBP Manufacturing and Services PMI from UK Tuesday EUR German Ifo Business USD Consumer Confidence (CB), Flash Services and Manufacturing PMIs and S&P/CS House Price Index Wednesday NZD RBNZ Interest Rate Decision, Rate Statement and Press Conference Friday USD Preliminary GDP, unemployment claims and new home sales GBP BOE Gov Bailey speaks EUR ECB President Lagarde speaks Saturday USD Fed Monetary Policy Report The post Trade Zone Week Ahead with David Floyd (Aspen Trading): 21st – 25th February appeared first on Eightcap.
Positions of large speculators according to the COT report as at 15/2/2022

Positions of large speculators according to the COT report as at 15/2/2022

Purple Trading Purple Trading 22.02.2022 11:48
Positions of large speculators according to the COT report as at 15/2/2022 Total net speculator positions in the USD index rose by 1,621 contracts last week. This change is the result of an increase in long positions by 1,979 contracts and an increase in short positions by 358 contracts. Growth in total net speculator positions occurred last week in the euro, the British pound and the New Zealand dollar. Decrease in total net positions occurred in the Australian dollar, the Japanese yen, the Canadian dollar, and the Swiss franc. In the event of a Russian invasion to Ukraine, markets would move into risk-off sentiment. This means that investors would sell risk assets, which include stock indices, and shift their resources into assets that are considered as safe havens in such situations, which include US government bonds and gold. In currency terms, this means that the US dollar, the Japanese yen and the Swiss franc in particular could then appreciate in such a situation. Commodity currencies (especially AUD, NZD) might weaken. The positions of speculators in individual currencies The total net positions of large speculators are shown in table 1: If the value is positive then the large speculators are net long. If the value is negative, the large speculators are net short. Table 1: Total net positions of large speculators Date USD Index EUR GBP AUD NZD JPY CAD CHF Feb 15, 2022 35386 47581 2237 -86694 -9333 -66162 12170 -9715 Feb 08, 2022 33765 38842 -8545 -85741 -10366 -59148 14886 -9399 Feb 01, 2022 34571 29716 -23605 -79829 -11698 -60640 18264 -8239 Jan 25, 2022 36861 31560 -7763 -83273 -10773 -68273 12317 -8796 Jan 18, 2022 36434 24584 -247 -88454 -8331 -80879 7492 -10810 Jan 11, 2022 37892 6005 -29166 -91486 -8604 -87525 -7376 -7660 Note: The explanation of COT methodolody is at the end of this report. Notes: Large speculators are traders who trade large volumes of futures contracts, which, if the set limits are met, must be reported to the Commodity Futures Trading Commission. Typically, this includes traders such as funds or large banks. These traders mostly focus on trading long-term trends and their goal is to make money on speculation with the instrument. ​The total net positions of large speculators are the difference between the number of long contracts and the number of short contracts of large speculators. Positive value shows that large speculators are net long. Negative value shows that large speculators are net short. The data is published every Friday and is delayed because it shows the status on Tuesday of the week. The total net positions of large speculators show the sentiment this group has in the market. A positive value of the total net positions of speculators indicates bullish sentiment, a negative value of total net positions indicates bearish sentiment. When interpreting charts and values, it is important to follow the overall trend of total net positions. The turning points are also very important, i.e. the moments when the total net positions go from a positive value to a negative one and vice versa. Important are also extreme values ​​of total net positions as they often serve as signals of a trend reversal. Sentiment according to the reported positions of large players in futures markets is not immediately reflected in the movement of currency pairs. Therefore, information on sentiment is more likely to be used by traders who take longer trades and are willing to hold their positions for several weeks or even months.   Detailed analysis of selected currencies   Explanations:   Purple line and histogram: this is information on the total net position of large speculators. This information shows the strength and sentiment of an ongoing trend. It is the indicator r_COT Large Speculators (by Kramsken) in www.tradingview.com. Information on the positions of so-called hedgers is not shown in the chart, due to the fact that their main goal is not speculation, but hedging. Therefore, this group usually takes the opposite positions than the large speculators. For this reason, the positions of hedgers are inversely correlated with the movement of the price of the underlying asset. However, this inverse correlation shows the ongoing trend less clearly than the position of large speculators.​ We show moving average SMA 100 (blue line) and EMA 50 (orange line) on daily charts. ​Charts are made with the use of www.tradingview.com. The source of numerical data is www.myfxbook.com Euro   date Open Interest Specs Long Specs Short Specs Net positions change Open Interest change Long change Short change Net Positions Sentiment Feb 15, 2022 702047 217899 170318 47581 1949 -1074 -9813 8739 Bullish Feb 08, 2022 700098 218973 180131 38842 14667 5410 -3716 9126 Bullish Feb 01, 2022 685431 213563 183847 29716 2479 155 1999 -1844 Weak bullish Jan 25, 2022 682952 213408 181848 31560 -8930 1507 -5469 6976 Bullish Jan 18, 2022 691882 211901 187317 24584 9589 7540 -11039 18579 Bullish Jan 11, 2022 682293 204361 198356 6005 4075 5288 -2271 7559 Bullish         Total change 23829 18826 -30309 49135     Figure 1: The euro and COT positions of large speculators on a weekly chart and the EURUSD on D1 The total net positions of speculators reached 47,581 contracts last week, up by 8,739 contracts compared to the previous week. This change is due to a decrease in long positions by 1,074 contracts and a decrease in short positions by 9,813 contracts. Total net speculators positions have increased by 49,135 contracts over the past 6 weeks. This change is due to speculators closing 30,309 short positions and adding 18,826 long positions. This data suggests continued bullish sentiment for the euro. However, the rising open interest, which increased by 1,949 contracts in the last week, shows the opposite, as the euro fell down last week and this decline is supported by the rising number of open interest contracts. So more bearish traders were in the market. So we have conflicting information here. The euro weakened slightly last week on fears of an escalation of the conflict between Russia and Ukraine. Long-term resistance: 1.1461 – 1.15 Support: 1.1280 - 1.1300. Next support is near 1.1220 - 1.1240. A strong support is in 1.1120-1.1140. The British Pound   date Open Interest Specs Long Specs Short Specs Net positions change Open Interest change Long change Short change Net Positions Sentiment Feb 15, 2022 195302 50151 47914 2237 -2646 5442 -5340 10782 Bullish Feb 08, 2022 197948 44709 53254 -8545 13941 15112 52 15060 Weak bearish Feb 01, 2022 184007 29597 53202 -23605 1967 -7069 8773 -15842 Bearish Jan 25, 2022 182040 36666 44429 -7763 -1194 -3094 4422 -7516 Bearish Jan 18, 2022 183234 39760 40007 -247 -17259 9254 -19665 28919 Weak bearish Jan 11, 2022 200493 30506 59672 -29166 486 4526 -5479 10005 Weak bearish         Total change -4705 24171 -17237 41408     Figure 2: The GBP and COT positions of large speculators on a weekly chart and the GBPUSD on D1 The total net positions of speculators reached 2,237 contracts last week, up by 10,782 contracts compared to the previous week. This change is due to an increase in long positions of 5,442 contracts and a decrease in short positions of 5,340 contracts. Total net positions have increased by 41,408 contracts over the past 6 weeks. This change is due to speculators exiting 17,237 short positions and adding 24,171 long positions. This data suggests bullish sentiment for the pound. Open interest, which fell by 2,646 contracts last week, is indicating that the bullish price action that occurred in the pound last week was not supported by volume and therefore it is weak. Risk off sentiment in US equities could have a negative effect on the Pound as well as the Euro, which could then send the Pound towards support which is at 1.3380. Long-term resistance: 1.3620-1.3640. Next resistance is near 1.3680 – 1.3750. Support: 1.3490 – 1.3520. A next support is near 1.3320 – 1.3380 and then mainly in the zone near 1.3200. The Australian dollar   Date Open Interest Specs Long Specs Short Specs Net positions change Open Interest change Long change Short change Net Positions Sentiment Feb 15, 2022 192578 11692 98386 -86694 -3825 -5631 -4678 -953 Bearish Feb 08, 2022 196403 17323 103064 -85741 -510 -1512 4400 -5912 Bearish Feb 01, 2022 196913 18835 98664 -79829 6893 3714 270 3444 Weak bearish Jan 25, 2022 190020 15121 98394 -83273 8884 6070 889 5181 Weak bearish Jan 18, 2022 181136 9051 97505 -88454 -4317 -3332 -6364 3032 Weak bearish Jan 11, 2022 185453 12383 103869 -91486 5346 -249 1871 -2120 Bearish         Total change 12471 -940 -3612 2672     Figure 3: The AUD and COT positions of large speculators on a weekly chart and the AUDUSD on D1 Total net speculator positions last week reached -86,694 contracts, down 953 contracts from the previous week. This change is due to a decrease in long positions of 5,631 contracts and a decrease in short positions of 4,678 contracts. This data suggests continued bearish sentiment on the Australian dollar, which is confirmed by the downtrend. Total net positions have increased by 2,672 contracts over the past 6 weeks. This change is due to speculators exit of 3,612 short contracts while exiting 940 long contracts at the same time. However, last week saw a decrease in open interest of 3,825 contracts. This means that the upward price action that occurred last week was weak in terms of volume because new money did not flow into the market. The Australian dollar is very sensitive to the international geopolitical situation. If the conflict between Russia and Ukraine escalates, we can expect it to weaken especially on the AUDUSD pair and also the AUDJPY. Long-term resistance: 0.7200-0.7250 and especially near 0.7270-0.7310. Long-term support: 0.7085-0.7120. A strong support is near 0.6960 – 0.6990. The New Zealand dollar   Date Open Interest Specs Long Specs Short Specs Net positions Change Open Interest Change Long Change Short Change Net Positions Sentiment Feb 15, 2022 64105 24923 34256 -9333 9228 7755 6722 1033 Weak bearish Feb 08, 2022 54877 17168 27534 -10366 -3590 -2037 -3369 1332 Weak bearish Feb 01, 2022 58467 19205 30903 -11698 5151 3257 4182 -925 Bearish Jan 25, 2022 53316 15948 26721 -10773 8589 4336 6778 -2442 Bearish Jan 18, 2022 44727 11612 19943 -8331 2661 652 379 273 Weak bearish Jan 11, 2022 42066 10960 19564 -8604 1764 1543 1302 241 Weak bearish         Celková změna 23803 15506 15994 -488     Figure 4: The NZD and the position of large speculators on a weekly chart and the NZDUSD on D1 The total net positions of speculators reached a negative value last week - 9,333 contracts, having increased by 1,033 contracts compared to the previous week. This change is due to an increase in long positions by 7,755 contracts and an increase in short positions by 6,722 contracts. This data suggests that the bearish sentiment for the New Zealand Dollar continues, but has started to weaken over the past week. Total net positions have declined by 488 contracts over the past 6 weeks. This change is due to speculators adding 15,994 short positions and adding 15,506 long positions. Open interest rose significantly last week, increasing by 9,228 contracts. The rise in the NZDUSD price action that occurred last week is therefore supported by volume and therefore the move was strong. The reason for the NZD strengthening last week is that the Reserve Bank of New Zealand is likely to raise interest rates to 1% on Feb 23, 2022. However, if the conflict in Ukraine escalates further, the NZDUSD could more likely weaken. The reason for the NZDUSD's decline from a technical analysis perspective could also be that the NZDUSD price has reached horizontal resistance and also the upper downtrend line from the daily chart. Long-term resistance: 0.6700 – 0.6740 and then 0.6850 – 0.6890. Long-term support: 0.6590-0.6600 and the next support is at 0.6500 – 0.6530. Explanation to the COT report The COT report shows the positions of major participants in the futures markets. Futures contracts are derivatives and are essentially agreements between two parties to exchange an underlying asset for a predetermined price on a predetermined date. They are standardised, specifying the quality and quantity of the underlying asset. They are traded on an exchange so that the total volume of these contracts traded is known.   Open interest: open interest is the sum of all open futures contracts (i.e. the sum of short and long contracts) that exist on a given asset. OI increases when a new futures contract is created by pairing a buyer with a seller. The OI decreases when an existing futures contract expires at a given expiry time or by settlement. Low or no open interest means that there is no interest in the market. High open interest indicates high activity and traders pay attention to this market. A rising open interest indicates that there is demand for the currency. That is, a rising OI indicates a strong current trend. Conversely, a weakening open interest indicates that the current trend is not strong. Open Interest Price action Interpretation Notes Rising Rising Strong bullish market New money flow in the particular asset, more bulls entered the market which pushes the price up. The trend is strong. Rising Falling Strong bearish market Price falls, more bearish traders entered the market which pushes the price down. The trend is strong. Falling Rising Weak bullish market Price is going up but new money do not flow into the market. Existing futures contracts expire or are closed. The trend is weak. Falling Falling Weak bearish market Price is going down, but new money do not flow into the market. Existing futures expire or are closed, the trend is weak.   Large speculators are traders who trade large volumes of futures contracts, which, if the set limits are met, must be reported to the Commodity Futures Trading Commission. Typically, this includes traders such as funds or large banks. These traders mostly focus on trading long-term trends and their goal is to make money on speculation with the instrument. Traders should try to trade in the direction of these large speculators. The total net positions of large speculators are the difference between the number of long contracts and the number of short contracts of large speculators. Positive value shows that large speculators are net long. Negative value shows that large speculators are net short. The data is published every Friday and is delayed because it shows the status on Tuesday of the week. The total net positions of large speculators show the sentiment this group has in the market. A positive value of the total net positions of speculators indicates bullish sentiment, a negative value of total net positions indicates bearish sentiment. When interpreting charts and values, it is important to follow the overall trend of total net positions. The turning points are also very important, i.e. the moments when the total net positions go from a positive value to a negative one and vice versa. Important are also extreme values ​​of total net positions as they often serve as signals of a trend reversal. The COT data are usually reported every Friday and they show the status on Tuesday of the week. Sentiment according to the reported positions of large players in futures markets is not immediately reflected in the movement of currency pairs. Therefore, information on sentiment is more likely to be used by traders who take longer trades and are willing to hold their positions for several weeks or even months.
Explained: When bonds and stocks trade in tandem and when the correlation is inverse

Explained: When bonds and stocks trade in tandem and when the correlation is inverse

FXStreet News FXStreet News 22.02.2022 15:58
In times of trouble, bonds are seen as a safe haven and yields fall with stocks.Normally, lower yields boost stocks, an inverse correlation.Understanding the situation is key to trading markets. Could you explain to me the relationship between the movement of 10-year US government bonds and US stock indices? This is a question we have received from a user and the answer is complicated – it depends on the current market focus.Markets are currently in times of trouble, with Russia and Ukraine apparently on the brink of war. Every negative headline prompts investors to sell stocks and buy bonds – moving yields down. So, yields and shares move in tandem. One example is the announcement by Russian President Vladimir Putin about the recognition of the breakaway Donetsk and Luhansk regions. Every optimistic headline sends money to stocks and away from Treasuries, pushing yields up, alongside equities. Examples include announcements of high or top-level meetings trying to resolve the situation. Headline-driven markets tend to experience this straightforward correlation between yields and stocks.However, the correlation is inverse when fear of war does not grip markets. In such situations, investors focus on the Federal Reserve. If they think there is a higher chance of more rate hikes, they sell both stocks and bonds – with yields rising to reflect expectations of elevated borrowing costs. Statements about the need for a 50 bps rate hike or strong economic data are examples of such behavior. When some Fed official says the path of rate hikes is slower, investors are happy to push yields lower by buying bonds and they also purchase stocks, which have a bigger advantage when the comparative safe investment in Treasuries results in a lower yield. A comment by a Fed official about settling for a standard 25 bps rate hike triggers such a reaction. Normal markets tend to experience an inverse correlation between bonds and stocks.
Gold Price Analysis: XAU/USD underpinned above $1900 as Russia/Ukraine crisis escalates

Gold Price Analysis: XAU/USD underpinned above $1900 as Russia/Ukraine crisis escalates

FXStreet News FXStreet News 22.02.2022 15:58
After hitting fresh multi-month highs at $1914, spot gold is consolidating above $1900 as the Russia/Ukraine crisis escalates.As traders worry about the rising risk of a full-scale Russian military incursion into Ukraine, gold will likely remain supported.As the Russia/Ukraine crisis continues to escalate, most recently with Russia recognising the independence of and moving troops into two separatist regions in eastern Ukraine, prompting NATO nations to announce/prepare new sanctions on Russia, gold has moved back above $1900. Spot prices (XAU/USD) hit fresh multi-month highs at $1914 on Tuesday and, though pulling back from these highs printed during Asia pacific trade as dip-buying facilitating an intra-day rebound in global equities markets, has remained above the key $1900 level.With market participants nervous that Russia/pro-Russia separatists in Eastern Ukraine could initiate further hostilities against Ukraine, thus further escalating the risk of an all-out Ukraine/Russia conflict, gold is likely to remain well underpinned this week. Brent oil spiked to close to $100 per barrel on Tuesday and EU natural gas prices were up sharply as Germany pledged not to approve the Nord Stream 2 pipeline that would bring gas directly to Germany from Russia. The upside risks posed to global inflation from any continued spike in energy prices as a result of further Russia/Ukraine crisis escalation is likely boosting demand for gold as an inflation hedge.Recent Fed speak and US data releases have not had much of an impact on gold in recent days as price action takes its cue from geopolitics. Hawkish commentary from Fed’s Michelle Bowman on Monday, who essentially said she was still undecided as the whether the Fed should hike rates by 25 or 50bps in March, was roundly shrugged off. That suggests that other Fed speak this week is also likely to be ignored, or, at least, play second fiddle, with this also likely the case for Friday’s January US Core PCE inflation data. Ahead of that, traders should keep an eye on upcoming US PMI and CB Consumer Confidence surveys, both the flash readings for February.
Is It Like XAUUSD Is Supported By Everything? How Long Will The Strengthening Last?

Is It Like XAUUSD Is Supported By Everything? How Long Will The Strengthening Last?

Arkadiusz Sieron Arkadiusz Sieron 22.02.2022 16:01
  The current military tensions and the Fed’s sluggishness favor gold bulls, but not all events are positive for the yellow metal. What should we be aware of? It may be quiet on the Western Front, but quite the opposite on the Eastern Front. Russia has accumulated well over 100,000 soldiers on the border with Ukraine and makes provocations practically every day, striving for war more and more clearly. Last week, shelling was reported on Ukraine’s front line and Russia carried out several false flag operations. According to Linda Thomas-Greenfield, the U.S. Ambassador to the United Nations, “the evidence on the ground is that Russia is moving toward an imminent invasion.” Meanwhile, President Biden said: “We have reason to believe they are engaged in a false flag operation to have an excuse to go in. Every indication we have is they're prepared to go into Ukraine and attack Ukraine.” Of course, what politicians say should always be taken with a pinch of salt, but it seems that the situation has gotten serious and the risk of Russian invasion has increased over recent days.   Implications for Gold What does the intensifying conflict between Russia and Ukraine imply for the gold market? Well, the last week was definitely bullish for the yellow metal. As the chart below shows, the price of gold (London P.M. Fix) rallied over the past few days from $1,849 to $,1894, the highest level since June 2021; And he gold futures have even jumped above $1,900 for a while! Part of that upward move was certainly driven by geopolitical risks related to the assumed conflict between Russia and Ukraine. This is because gold is a safe-haven asset in which investors tend to park their money in times of distress. It’s worth remembering that not all geopolitical events are positive for gold, and when they are, their impact is often short-lived. Hence, if Russia invades Ukraine, the yellow metal should gain further, but if uncertainty eases, gold prices may correct somewhat. To be clear, the timing of the current military tensions is favorable for gold bulls. First of all, we live in an environment of already high inflation. Wars tend to intensify price pressure as governments print more fiat money to finance the war effort and reorient their economies from producing consumer goods toward military stuff. Not to mention the possible impact of the conflict on oil prices, which would contribute to rising energy costs and CPI inflation. According to Morgan Stanley’s analysts, further increases in energy prices could sink several economies into an outright recession. Second, the pace of economic growth is slowing down. The Fed has been waiting so long to tighten its monetary policy that it will start hiking interest rates in a weakening economic environment, adding to the problems. There is a growing risk aversion right now, with equities and cryptocurrencies being sold off. Such an environment is supportive of gold prices. Third, the current US administration has become more engaged around the world than the previous one. My point is that the current conflict is not merely between Russia and Ukraine, but also between Russia and the United States. This is one of the reasons why gold has been reacting recently to the geopolitical news. However, a Russian invasion of Ukraine wouldn’t pose a threat to America, and the US won’t directly engage in military operations on Ukrainian land, so the rally in gold could still be short-lived. If history is any guide, geopolitical events usually trigger only temporary reactions in the precious metals markets, especially if they don’t threaten the United States and its economy directly. This is because all tensions eventually ease, and after a storm comes calm. Hence, although the media would focus on the conflict, don’t get scared and – when investing in the long run – remember gold fundamentals. Some of them are favorable, but we shouldn’t forget about the Fed’s tightening cycle and the possibility that disinflation will start soon, which could raise the real interest rates, creating downward pressure on gold prices. If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today! Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Digital World Acquisition Corp Stock News and Forecast: Premarket more bullish on DWAC than regular session

Digital World Acquisition Corp Stock News and Forecast: Premarket more bullish on DWAC than regular session

FXStreet News FXStreet News 23.02.2022 16:05
DWAC stock spiked 28% in Tuesday's premarket after TRUTH Social began accepting users.Tuesday's regular session, however, saw DWAC jump only half as high.Digital World Acquisition Corp's share count is expected to more than quadruple one month after merger closes.Digital World Acquisition Corp (DWAC) stock could not compete in Tuesday's regular session with its performance in the premarket. DWAC shares exploded 28% to $108 before the markets opened on Tuesday. Once the public session got under way, however, DWAC could not even break $100. The Special Purpose Acquisition Vehicle (SPAC) slated to take former President Donald Trump's Trump Media & Technology Group (TMTG) public in the next month still closed up 10.2% to $92.90 on a day when most equities sold off due to tensions on the Ukraine-Russia front.Donald Trump's social media startup, TRUTH Social, began allowing app downloads on Apple devices on Sunday, February 20, which caused the price to spike on Tuesday when markets opened after the Presidents' Day holiday.Digital World Acquisition Corp Stock News: 172K waitlistedOn Tuesday, Newsweek reported that more than 172,000 accounts had been waitlisted, and other sources said many of those seeking to gain access had received error messages. Research firm Apptopia estimated there were 170,000 downloads on Monday in the US. The app was the top free download in Apple's App Store on Monday.This was good news for the most part since trouble accessing a new app due to popularity is normally a sign that it is a hit. Traders, however, began taking profits almost immediately when DWAC shares popped to $99 at the open.A steady drip of new download figures should buoy the stock in the coming days as the company has said it may take 10 days to onboard all the early adopters. The only major worry going forward is the coming share count increase. Thirty days after the merger is completed, separate shares owned by insiders, underwriters, and private investors who invested in the SPAC's separate PIPE deal (Private Investment in Public Equity) will be allowed to trade. This means that the current 37 million-odd shares will grow overnight to more than 170 million. Though this is not a standard dilution event, the increase may put downward pressure on the share price.Additionally, another 40 million "earnout" shares might be earned by company insiders and owners if the share price remains above $15, $20 or $30 a share on average in the month after the merger. Then there are the 15 million warrants that could get exercised in September 2022. By the end of the year, there could be 225 million total shares. Digital World Acquisition Corp Stock Forecast: Two top trend linesAfter opening on Tuesday at $99, the stock immediately sold down to $85.67 before rebounding throughout the rest of the day. Twice during Tuesday's session, DWAC faced resistance near $96.DWAC is trading within an ascending price channel, which gives the market confidence to hold out for higher prices. Traders should note that there are two separate possible top trend lines available to them. The first one (yellow) is the more recent trend that began on January 24. It is much steeper and takes a trajectory aimed at the 161.8% Fibonacci level at $134.90. The other (blue) began back on December 8 and takes a more conservative and gradual aim at the $120 level, which was significant during the first rally in price action back during late October.The swing highs from January 19, February 7 and 22 are all slightly higher than one another, demonstrating that and uptrend is definitely motion no matter which top trend line is preferred. Support sits at $78, $60 and $38. DWAC 1-day chart
Rivian Automotive Stock News and Forecast: RIVN has more room for downside

Rivian Automotive Stock News and Forecast: RIVN has more room for downside

FXStreet News FXStreet News 01.03.2022 16:01
Rivian stock surged over 6% on Monday as EV stocks looked to Lucid as savior. Nasdaq: RIVN will collapse on Tuesday as reality sets in. Rivian shares still look way too high in our view. Time for a continued dose of reality for EV investors as the market continues to gyrate nervously on geopolitical events. This is not the time to be dabbling in high-growth names with little to no profits. The geopolitical backdrop is challenging with various headlines emanating from the Russia-Ukraine crisis daily. However, no clear path out of conflict currently appears evident. All this has ramped up the negative macroeconomic backdrop for equities. We entered 2022 knowing that central banks were going to struggle with inflation, and data in January confirmed this. We assumed robust economic growth in the major economies would allow the main central banks to raise rates without causing a recession. Bets on rate rises soared and global yields moved up sharply in the first two months of 2022. This hit growth stocks hard in early 2022. Now though the Russia-Ukraine situation has given inflation a further boost but raised the possibility of a recession in Europe and also the US. The huge bull run in equities seen since the 1990s has been helped to a large extent by the huge boost from globalization. This resulted in lower costs and huge new markets from many companies. Global trade increased markedly. Already we have seen efforts to reduce globalization from Trump tariffs to Brexit and now to worldwide sanctions. This is making equity investing more difficult and more specific. All this means growth stocks, the darling sector of 2021, are likely to suffer as 2022 progresses. Rivian as we know is a poster child of high growth stocks. It IPO'd in November in a blaze of publicity and quickly become one of the largest automakers in the world by market cap despite not having much of any production. Rivian Stock News Rivian (RIVN) stock reports its earnings next week on March 10 but peer Lucid (LCID) released its earnings after the close on Monday. These earnings were frankly terrible, missing on EPS and revenue while also slashing 2022 production numbers only two months into the year. As result, Lucid stocks have fallen sharply and are likely to fall more as the week progresses. Rivian and other EV names will get dragged lower as a result. For some reason, optimism was abounding yesterday as EV stocks rallied. Lucid closed up nearly 10% so the risk-reward was always skewed to the downside. We could see a fall of 20% today for Lucid if momentum picks up. Rivian will not be able to avoid contagion effects and will also likely suffer heavy losses on Tuesday. Rivian Stock Forecast Keep an eye on the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI) here. Both are in an uptrend but will likely correct today. This could be the signal for more losses. The rally in the RSI failed to even get above 50, showing how weak Rivian stock's momentum is. Only if Rivian breaks $71 do we see any chance, but the risk-reward is firm to the downside. Any positive news regarding Russia and Ukraine would see a violent reaction, but this is likely to be short-lived. The macro environment is getting even more challenging as mentioned. Rivian stock chart, daily
Equities Of Europe Are Under Pressure

Equities Of Europe Are Under Pressure

Peter Garnry Peter Garnry 07.03.2022 15:17
Equities 2022-03-07 14:45 7 minutes to read Summary:  In today's equity note we show how European equities are being pushed to new lows relative to US equities as the maximum uncertainty in Europe is driving down equity valuation through the precautionary principle. Equities are about the future of cash flow and if the future has become totally unpredictable then investors must lower valuations on European equities driving up the equity risk premium. European equities are now valued at a 30% discount to US equities but it is still difficult to argue that this is a buying opportunity in European equities. We also cover the agriculture chemicals industry where especially American and Canadian fertilizer producers are reaping massive tailwinds from lower natural gas prices compared to competitors in Europe. Can you model the future amid the war in Ukraine? Global equities are only down 11% as of Friday’s close prices despite galloping commodity markets and large scale war on European soil. The probability of a recession has gone and the range of outcomes in the Ukraine war is almost infinite. It is the true definition of maximum uncertainty, which is a huge liability for equity valuations as equities are discounting growth and future cash flows. In its essence the war in Ukraine is the collapse of the future because the future has become so uncertain that under the precautionary principle of risks equity valuations have no other way than to go lower pushing up the equity risk premium. The war in Ukraine has pushed European equities to a new relative low against US equities measured in EUR total return terms since 1999. It really has been 15 years of hardship for European companies in terms of performance against the US and at one point investors will consider the opposite trade, but in the short-term European equities are too uncertain. In today’s session we were much lower in European before news came that Russia would cease its war on Ukraine if the Ukraine would make a change to its constitution to ensure neutrality (not entering any blocs such as NATO or EU), acknowledge Crimea as Russian territory, and recognize Luhansk and Donetsk as independent states. These demands are essentially the same as previously communicated by Russia, but the market is relieved sending equities higher because it is being interpreted as an opening for potential peace in Ukraine. Intraday volatility today shows that short-term sentiment is driving everything because “the future cannot be priced”.Source: BloombergSource: Bloomberg European equities are now valued at a 30% discount to US equities on a 12-month forward EV/EBITDA which of course reflects that the US economy is better shielded against the fallout from the war in Ukraine. The US has less risks in terms of energy and food security. One thing to note when seeing these European vs US equity valuation spreads is that the US equity market has a much larger share of technology stocks and which has increased over time. The best comparison is to take an entire sector. If we compare European industrials vs their peers in the US we see that the market was pricing European industrials higher throughout the pandemic indicating that things were improving relatively better for European industrials compared to US industrials. The trade reversed the summer 2021 as the energy crisis in Europe accelerated and the war in Ukraine has blown out the discount to almost 20% again and a new record low. Is it time to buy European equities? Given the maximum uncertainty regarding the outcomes of the war in Ukraine and sanctions against Russia we believe the most prudent thing is to be overweight US equities vs European equities. However, there are pockets in the European equity market that will do well such as green energy, defense, and mining companies. Agriculture chemical companies are a hedge amid food crisis As we have pointed out in several of our latest equity notes, the commodity sector, logistics, cyber security and defense stocks are the themes investors are rotating into. Inside the commodity trade and the energy crisis in Europe, an opaque industry such as agriculture chemicals is doing well. Or the US companies are doing well. Fertilizer prices have exploded higher over the past year due to the higher natural gas prices which is a key input in making fertilizer. However, the increasing spread between natural gas prices in the US and Europe, have given US and Canadian fertilizer producers an advantage over their European competitors which can also be seen in their relative performance. As long as the Ukraine war continues and we have upward price pressure on agriculture crops then this is trade that investors will continue to make. The jump higher in food prices has the unfortunate unintended consequence of potentially creating a humanitarian crisis around food security and this mobilize political forces to end the war in Ukraine as food security is a serious game for any country. The table below shows the companies in the agriculture chemicals industry with a market value above $5bnSource: Bloomberg
Ukraine’s Defense Shines ‒ and So Does Gold

Ukraine’s Defense Shines ‒ and So Does Gold

Arkadiusz Sieron Arkadiusz Sieron 08.03.2022 17:37
  Russian forces have made minimal progress against Ukraine in recent days. Unlike the invader, gold rallied very quickly and achieved its long-awaited target - $2000! Nobody expected the Russian inquisition! Nobody expected such a fierce Ukrainian defense, either. Of course, the situation is still very dramatic. Russian troops continued their offensive and – although the pace slowed down considerably – they managed to make some progress, especially in southern Ukraine, by bolstering air defense and supplies. The invaders are probably preparing for the decisive assault on Kyiv. Where Russian soldiers can’t break the defense, they bomb civilian infrastructure and attack ordinary people, including targeting evacuation corridors, to spread terror. Several Ukrainian cities are besieged and their inhabitants lack basic necessities. The humanitarian crisis intensifies. However, Russian forces made minimal ground advances over recent days, and it’s highly unlikely that Russia has successfully achieved its planned objectives to date. According to the Pentagon, nearly all of the Russian troops that were amassed on Ukraine’s border are already fighting inside the country. Meanwhile, the international legion was formed and started its fight for Ukraine. Moreover, Western countries have recently supplied Ukraine with many hi-tech military arms and equipment, including helicopters, anti-tank weapons, and anti-aircraft missiles, which could be crucial in boosting the Ukrainian defense.   Implications for Gold What does the war in Ukraine imply for the precious metals? Well, gold is shining almost as brightly as the Ukrainian defense. As the chart below shows, the price of the yellow metal has surged above $1,980 on Monday (March 7, 2022), the highest level since August 2020. What’s more, as the next chart shows, during today’s early trading, gold has soared above $2,020 for a while, reaching almost an all-time high. In my most recent report, I wrote: “as long as the war continues, the yellow metal may shine (…). The continuation or escalation of Russia’s military actions could provide support for gold prices.” This is exactly what we’ve been observing. This is not surprising. The war has increased the safe-haven demand for gold, while investors have become more risk-averse and have continued selling equities. As you can see in the chart below, the S&P 500 Index has plunged more than 12% since its peak in early January. Some of the released funds went to the gold market. What’s more, the credit spreads have widened, while the real interest rates have declined. Both these trends are fundamentally positive for the yellow metal. Another bullish driver of gold prices is inflation. It’s already high, and the war in Ukraine will only add to the upward pressure. The oil price has jumped above $120 per barrel, almost reaching a record peak. Higher energy prices would translate into higher CPI readings in the near future. Other commodities are also surging. For example, the Food Price Index calculated by the Food and Agriculture Organization of the United Nations has soared above 140 in February, which is a new all-time high, as the chart below shows. Higher commodity prices could lead to social unrest, as was the case with the Arab Spring or recent protests in Kazakhstan. Higher energy prices and inflation imply slower real GDP growth and more stagflationary conditions. As a reminder, in 2008 we saw rapidly rising commodities, which probably contributed to the Great Recession. In such an environment, it’s far from clear that the Fed will be very hawkish. It will probably hike the federal funds rate in March, as expected, but it may soften its stance later amid the conflict between Ukraine and the West with Russia and elevated geopolitical risks. The more dovish Fed should also be supportive of gold prices. However, when the fighting cools off, the fear will subside, and we could see a correction in the gold market. Both sides are exhausted by the conflict and don’t want to continue it forever. The Russian side has already softened its stance a bit during the most recent round of negotiations, as it probably realized that a military breakthrough was unlikely. Hence, when the conflict ends, gold’s current tailwind could turn into a headwind. Having said that, the impact of the conflict may not be as short-lived this time. I'm referring to the relatively harsh sanctions and high energy prices that may last for some time after the war is over. . The same applies to a more hawkish stance toward Russia and European governments’ actions to become less dependent on Russian gas and oil. A lot depends on how the conflict will be resolved, and whether it brings us Cold War 2.0. However, two things are certain: the world has already changed geopolitically, and at the beginning of this new era, the fundamental outlook for gold has turned more bullish than before the war. If you enjoyed today’s free gold report, we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today. If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today! Arkadiusz Sieron, PhDSunshine Profits: Effective Investment through Diligence & Care
Russia-Ukraine is there any hope for the markets

Russia-Ukraine is there any hope for the markets

Alex Kuptsikevich Alex Kuptsikevich 09.03.2022 11:23
The Russian rouble remains under pressure, while all the new controls on currency transactions in Russia are alienating the exchange rate at home and on global FX. The 12% commission on currency purchases explains the difference between the external and domestic exchange rates. That said, one must realise that "catching the bottom" of the ruble is hardly wise when new sanctions are imposed almost on a daily basis. The economic landslide continues with extreme speed. Across the other EM markets, there is a concern or even pessimism about the medium-term outlook, and some relative easing of the fear level is striking in the stock markets today. Commodity markets, which continued their move towards new extremes yesterday, have encountered substantial selling, which continues today. Some reduction in the excitement can be attributed to hopes of progress towards a peaceful resolution of the conflict between Russia and Ukraine.Nevertheless, the conditions already prevailing in commodity markets are putting serious pressure on EM equities and currencies. EM populations are more vulnerable to soaring basic food and energy prices and currencies to capital outflows due to flight to safety. All of this is tightening financial conditions is undermining the economic recovery that investors had hoped for at the start of the year because of the retreat of the pandemic. While the end of last year and the beginning of this one were sentiments that growth momentum was shifting from the US to Europe and emerging markets, events in recent weeks have not only returned EM markets to the downward trend but again show that US markets are the best refuge for capital. For example, Chinese indices are losing 35% (Hang Seng) to 43% (China H-star) from their February 2021 peak. And this trend will not quickly reverse even if the military conflict in Eastern Europe ends right now because economic and reputational damage has already been done, which will take months or even years to undo.
The Commodities Feed: Anticipating LNG Strike Action and Market Dynamics

AMC Stock Price: AMC Entertainment spikes 8% on Wednesday

FXStreet News FXStreet News 17.03.2022 08:29
AMC stock gains on Tuesday as equities and growth stocks rally. More gains are likely on Wednesday for AMC shares as peace hopes rise for Ukraine. AMC Entertainment also saw increased attention from its investment in Hycroft Mining. AMC shares are up 8% to $15.65 as better prospects for peace in Ukraine seem to be lifting up the entire market. The Nasdaq has risen an optimistic 2.7% about one hour into Wednesday's session. Further positivity is in motion with the start of the Federal Reserve's Federal Open Market Committee two-day meeting that is expected to usher in a 25 basis point rise in the fed funds rate. The rise in interest rates should slow this year's hike in inflation. This price action is certainly exciting for AMC apes, who have witnessed AMC stock drop to the low $13s earlier this week. AMC Entertainment did benefit in Tuesday's afternoon session from its acquisition of Hycroft Mining, but it seems the stock is gaining more interest on Wednesday for this buy. Now its acquisition target, HYMC, has seen its shares go in the opposite direction on Wednesday. HYMC stock is trading down 9% at $1.37 at the time of writing. AMC stock closed higher on Tuesday as investors took comfort from the continued collapse in oil prices and hoped for some form of peace in Ukraine. It was oil that was the big driver for equity markets, and growth stock, in particular, bounced hard as this sector had seen the bigger losses since the year began. It is hard to see guess whether this movie can be sustained long term though as yields have once again moved up. This should stall growth stocks. A peace deal would see further gains for all sectors, but then these may be capped if yields keep rising. The Fed decision later on Wednesday will give us more clarity on this. AMC Stock News The big news yesterday though for AMC apes was the investment in Hycroft Mining by AMC. This was right out of left field and remains a puzzling one to say the least. Hycroft Mining is a gold and silver miner with one mine in Nevada. The company has not turned a profit since 2013 and last November said it may need to raise capital to meet future financial obligations. The company also laid off over half of its workforce at the mine last November. This is a pretty high-risk investment and perhaps AMC and AMC apes are used to that. It was only a small outlet as CEO adam Aron alluded to. Nevertheless, the Hycroft Mining (HYMC) stock price soared as retail investors piled into the name. By the opening of the regular session on Tuesday, HYMC stock was trading nearly 100% higher, but it closed only 9% higher at $1.52 having traded up to $2.97. The reason for the dramatic turnaround was probably a bit of reality set into investors once they had a look at Hycroft Mining and its financial condition. The main reason was a Bloomberg report saying that Hycroft Mining could do a $500 million share sale by as early as next Tuesday. We understand the sale is ongoing and being led by B.Riley Securities. AMC Stock Forecast We were quite negative on this deal on Tuesday and remain so. At least it is not a big investment for AMC, but it still reads poorly. This will not endear AMC stock to further credibility in our view. CNBC carried out a report yesterday about the surge in price and volume trading in HYMC stock before the AMC announcement: "Small mining firm with troubled history saw big spikes in stock price, trading volume ahead of AMC deal." Tuesday's move took AMC back up to our resistance level at $14.54, which was a key breakdown level. Below this and AMC remains bearish. Above $14.54 is neutral. We remain bearish on AMC with a target price of $8.95. AMC stock chart, daily Prior Update: AMC stock opened higher on Wednesday as the stock market remains on edge over the potential for some form of a peace deal in Ukraine. Oil prices falling sharply has also helped investor sentiment. AMC is currently trading at $14.77 for a gain of exactly 2% after 5 minutes of the regular session on Tuesday. Hycroft Mining (HYMC) stock is trading 4% lower at the same stage on Wednesday. Later we get the Fed interest rate decision which may hamper more progress from growth stocks but for now, it is full steam ahead. AMC is back among the top trending stocks on social media sites and interest seems high. $14.54 remains a key level for AMC to hold above if it wants to have put a bottom formation in place. Otherwise, it will return to the bearish trend and look to target $8.95 in our view.
Trade Zone Week Ahead with Boris Schlossberg (BK Forex): 21st – 25th March

Trade Zone Week Ahead with Boris Schlossberg (BK Forex): 21st – 25th March

8 eightcap 8 eightcap 20.03.2022 21:19
As expected, The Fed came out last week and approved a quarter percentage point interest rate rise,  its first since December 2018 and possibly one of many more to come as the U.S. faces up to rampant inflation. With that big decision now priced into the markets, all eyes will be on whether stocks will be able to sustain last week’s fresh gains into a second week. There are still many headlines to be written and with the Ukrainian conflict entering its second month, there may be many more twists and turns. In today’s Trade Zone Trading Week Ahead, we look ahead at potential moves in equities, oil, gold, Bitcoin and also discuss why forex might now be an interesting play. Watch the video below to get this week’s latest insights. REGISTER FOR THIS WEEK’S LIVE MARKET UPDATE WITH BORIS AND KATHY Join us at 10 PM AEDT (11 AM GMT) this Wednesday as Boris and Kathy once again take you through another midweek live market update, discussing the key assets and price points to be looking at as the weekend approaches. It’s the perfect session to get valuable insight into what’s currently hot in the financial markets, as well as an opportunity for you to ask your own questions to the experts in a live Q&A. Registration is free. Click below to secure your seat. Boris Schlossberg is Managing Director of FX Strategy for BK Asset Management, Co-Founder of BKForex.com, and Managing Editor of 60secondinvestor.com. Widely known as a leading foreign exchange expert, Boris has more than three decades of financial market experience. In 2007, while still at FXCM, Boris started BKForex with Ms. Kathy Lien. A year later, Boris joined Global Futures & Forex Ltd as director of currency research where he provided research and analysis to clients and managed a global foreign exchange analysis team with Kathy Lien. Since 2012 Boris has focused exclusively on running BKForex.com where he generates trade ideas and designs algorithms for the FX market in partnership with Ms. Lien. He is the author of “Technical Analysis of the Currency Market” and “Millionaire Traders: How Everyday People Beat Wall Street at its Own Game”, both of which are published by Wiley. In 2020 Mr. Schlossberg started www.60secondinvestor.com a free website that distils the best of institutional investment research for retail investors. Important Data Releases & Events this Week Monday EUR ECB President Lagarde Speaks Tuesday USD Fed Chair Powell Speaks Wednesday EUR ECB President Lagarde Speaks GBP CPI GBP BoE Gov Bailey Speaks USD Fed Chair Powell Speaks Thursday USD Crude Oil Inventories CHF SNB Interest Rate Decision, Monetary Policy Assessment, SNB Press Conference EUR German Manufacturing PMI GBP Composite, Manufacturing and Services PMI EUR EU Leaders Summit USD Core Durable Goods Orders USD Initial Jobless Claims Friday GBP Retail Sales EUR German Ifo Business Climate Index EUR EU Leaders Summit The post Trade Zone Week Ahead with Boris Schlossberg (BK Forex): 21st – 25th March appeared first on Eightcap.
At The Close On The New York Stock Exchange Indices Closed Mixed

S&P500 tests latest rally

Alex Kuptsikevich Alex Kuptsikevich 21.03.2022 16:17
Having added more than 8.2% to Tuesday's lows last week through Friday, S&P500 futures have surpassed the 50-day moving average and are testing the 200-day average by the start of US trading. We mentioned last week that the "death cross" should not be taken as a sell signal this time because it took place after a comparatively long decline. It was a repeat of 2020 when the cross appeared after the market bottomed. The recovery rally of the last week is undergoing an important test. If the S&P500 manages to get above 4500 today or tomorrow, firmly entrenched above the 200-day moving average (currently at 4480), we can confidently talk about breaking the correction. In that case, there is a potential for a quick rally towards 4600 already this week, 4800 over the next 2-3 months, and up to 5000 by the end of 2022. Looking only at the news headlines, the military action in Europe and the tightening of monetary policy by the Fed are not conducive to buyers' optimism. But, paradoxically, we are now in a situation where pessimism has reached or is close to its peak. Managers surveyed by Bank of America note the maximum pessimism since April 2020, which is near historical turning points. The only exception to the last 25 years was in 2007-2008 when pessimistic expectations persisted for an extended period due to banking sector problems. The Fear & Greed Index continues to improve from 16 (extreme fear) a week ago to 40 (fear) now. It has turned solidly around from the extreme lows, but equities are still an impressive distance from the highs at the beginning of the year, which leaves considerable room for growth from current levels. A strong sell-off in US equities from current levels and a consolidation below 4400 on the S&P500 could be a strong bearish signal, indicating an inability for the market to develop the offensive, which risks putting it back into a rapid decline situation.
Bitcoin Price Hits $42k, ETH And AVAX Have Decreased, Polkadot (DOT) Gained

Bitcoin Price Hits $42k, ETH And AVAX Have Decreased, Polkadot (DOT) Gained

Alex Kuptsikevich Alex Kuptsikevich 23.03.2022 09:12
BTC rose 3.5% on Tuesday. At the peak of the day, the rate exceeded $43.2K, but by Wednesday morning, it rolled back to $42K, demonstrating a 0.7% correction. Growth without solid reasons? Bitcoin tested 19-day highs above $43,000 supported by stock indexes with Chinese equities predominantly pulling it. BTC rose sharply during the Asian session, adding about $2,000 in a few hours, although a corrective mood then prevailed. Bitcoin clearly doesn't have a reason for a solid establishment on the path of growth yet. Ethereum is losing 1% over 24 hours, while other leading altcoins from the top ten showed mixed dynamics yesterday: from a decline of 2.7% (Avalanche) to a rise of 3.8% (Polkadot). According to CoinMarketCap, the total capitalization of the crypto market decreased by 0.5%, to $1.91 trillion. The Bitcoin dominance index fell by 0.1% to 41.9%. The Cryptocurrency Fear and Greed Index added another 5 points to 31, although it remains in a "fear" state. BTC is ready for sharp swing At the moment, on-chain metrics are consistent with a bear market, Glassnode notes. The rise in implied volatility and higher leverage in the derivatives market point to the possibility of a sharp swing in bitcoin. However, the sell-off in "defensive" developed-country government bonds continues in financial markets as investors park their money in stocks and commodities that provide the best hedge against prolonged and high inflation. At the same time, there are no clear signs of an economic and financial catastrophe that could hurt stocks or commodities. The world's largest hedge fund Bridgewater Associates plans to invest in one of the third-party crypto funds, pointing to the risks for fiat currencies, which lose sharply during periods of military and economic wars.
The Gold Rally Is Continuing To Stall, This Could Be A Good Year For Crude Oil

Tesla Stock Price Rallies, Inflation, Fed And Crudeo Oil Price - Swissquote's MarketTalk

Swissquote Bank Swissquote Bank 23.03.2022 14:44
Equities rallied and treasuries dived yesterday, as a sign that investors are cheering the Federal Reserve’s (Fed) plan to deal more aggressively with the skyrocketing inflation – which is certainly more toxic in the longer run than higher rates for the economic tissue. The S&P500 had another strong session yesterday gaining more than 1%, and Nasdaq rallied close to 2% as technology stocks led the rally. Tesla gained close to 8%, GameStop soared more than 30% as AMC gained 15%. Chinese stocks had another great day as well. Alibaba rallied 11% yesterday, and more than 55% since last week. Meanwhile, oil trading is hectic these days, as prices swing between those who rush to sell the top near the $115pb level, and those who rush to buy below $110pb. The news that Germany and Hungary are willing to put the brakes on a potential Russian oil embargo softens the bulls’ hands in the short run, as the long-term outlook remains positive. Bitcoin struggles to clear the 100-DMA resistance, and Cable tests 1.33 after inflation data surprised to the upside this morning. Watch the full episode to find out more! 0:00 Intro 0:27 Market update 2:37 Tesla rallies, Elon dances 4:28 GameStop, AMC, Alibaba & Tencent gain, but optimism may not last! 6:11 Bitcoin struggles near 100-DMA 6:46 Oil undecided near $110ob as the West prepares more sanctions 8:28 Cable tests 1.33 as UK inflation advances to 6.2% Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020.
Falling Japanese yen suggests a changing world order

Falling Japanese yen suggests a changing world order

Alex Kuptsikevich Alex Kuptsikevich 24.03.2022 15:23
The collapse of the Japanese yen continues, and so far, there are no signs of a trend reversal. The rise in the Yen is often linked to capital flight from risky assets, and the weakening is a sign of increased demand for risky assets. But that explanation hardly fits with what is happening now. We likely see the start of a significant reassessment by the markets of Japan's position in the financial system. In a worst-case scenario, this may turn into a debt crisis in the Land of the Rising Sun and be an even bigger disaster for financial markets than the eurozone debt crisis of a decade ago.The starting point for the weakening of the Yen was at the start of February. At that time, equities were in demand as a haven for capital to maintain the purchasing power of investments. The flow into equities was interrupted by the war in Ukraine but accelerated in the last couple of weeks on signs that these events have hyped up the processes that were taking place before. And these processes are now most visible in the dynamics of the Japanese yen against those currencies where the central bank can respond adequately to inflation.Since the start of February, the USDJPY has risen by 6.5%, and almost all of this increase has taken place since March 7th, taking the pair back to levels last seen at the end of 2015. A much more impressive rally is taking place in the Aussie and Kiwi against the Yen. Since the start of February, they have soared by more than 12%. So far this month, the strengthening is the largest in 11 years for AUDJPY and in more than 12 years for NZDJPY.The interest rate differential game, which was so beloved by traders in Japan before the global financial crisis, has found a second life. Australia and New Zealand have the economic potential to raise interest rates, as they are experiencing a surge in exports due to the boom in their export prices. However, the situation in Japan looks considerably more alarming, as Japan's debt-to-GDP ratio has risen by 77 percentage points to 170% since the financial crisis. Permanent QE from the Bank of Japan has kept government debt costs down but doesn't solve the problem.In the last decade, Japan has turned into a net commodity importer due to its growing dependence on energy and metals and increasing competition from China and Korea. The exchange rate should act as a natural mechanism to stabilise trade in this situation.But this adjustment is difficult for debt-laden Japan because selling currency would de facto mean selling bonds denominated in that currency. Under these circumstances, the Bank of Japan will either have to openly accept that it will finance the government (i.e. increase purchases despite inflation) or soften QE. The first option risks triggering a historic revaluation of the Yen. The second option would deal a blow to the economy and finances by raising questions about whether Japan can service its debt.
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Cryptos on the front foot as rebound turns into new uptrend

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Cryptos on the front foot as rebound turns into new uptrend

FXStreet News FXStreet News 24.03.2022 16:22
Bitcoin price set to touch $45,000 by tomorrow if current tailwinds keep supporting price action. Ethereum price set to rally another 12%, with bulls targeting $3,500.00XRP price undergoes consolidation as the next profit level is $0.90.Bitcoin price, Ethereum and other cryptocurrencies are enjoying a calm week with tailwinds finally able to thrive without constant interruption from headlines about Ukraine or Russia. Markets are also starting to adjust to the situation, with no immediate or significant movements anymore triggered by headlines coming out. Expect to see more upside with several possible cryptocurrencies eking out the best week of the year thus far.Bitcoin price has a defined game plan with $44,088 as the target for today and $45,261 by the weekendBitcoin (BTC) price is on the front foot for a third consecutive day as the rally turns into a broader uptrend. The crucial thing will be to see where BTC price will close this week, as bears need to get weakened with several short squeezes and breakouts running stops from short-sellers. Despite being elevated, the Relative Strength Index (RSI) is still not near the 'overbought' level, providing enough incentive for bulls and investors to keep buying BTC price action.BTC price is set to hit $44,088.73 today, the level of the March 03 highs. If that is gained – and given the current tailwinds – markets will start to expect Bitcoin to eke out new highs for the month with still a week to go. This additional bullish element should help conclude a daily close above $44,088.73. A support test on that same level will trigger new inflows from investors and provide the needed juice to pump price action up to $45,261.84, topping $45,000.00.BTC/USD daily chartA tail risk comes from the big joint meeting today in Brussels, with Biden meeting NATO, the G7 and E.U. leaders. An embargo on gas is on the table and could roil markets if the E.U. decides to walk away from Russian gas supplies, opening up the possibility of further Russian retaliation in Ukraine. That would make global markets move back to risk-off mode, with Bitcoin price dropping back to support at $39,780.68, and intersecting with the green ascending trend line. Ethereum price targets $3,500 after bulls force a daily close above $3,018.55Ethereum (ETH) price is performing a 'classic long' trading plan today after bulls pushed a daily close above $3,018.55. With price action in ETH opening slightly above this level, this morning, the price has faded slightly back towards that same $3,018.55 level to find support and offer the opportunity for new bulls and investors to enter the market. Ethereum price will move back to the upside and continue its rally, which is currently looking more and more like an uptrend that could continue over a broader time frame.ETH price will therefore need to find support around $3,018.55 as the fade will need to be kept in check, as too large a fade could spook investors. Seeing as the current favourable tailwinds are quite broadly present in global markets, expect to see another uplift towards $3,200 and $3,391.52 depending on the number of new positive headlines acting as additional accelerators. With those moves, at least new highs for March will be printed and possibly for February, depending on how steep the rally can continue.ETH/USD daily chartThe risk for Ethereum price is that price action slips back below $3,018.55. That could open the door for bears to jump in again and run price action back to $2,835.83, which is the low of March 21 and the monthly pivot. An additional fail-safe system is the 55-day Simple Moving Average at $2,808.84 as an additional supportive factor to take into account.https://youtu.be/wgpCSH70SIQXRP price undergoes consolidation as the bullish breakout hits $0.90Ripple's (XRP) price has bears and bulls being pushed towards each other as the bodies of the candles from the past two sessions grow very thin. This points to bulls and bears fighting it out and neither yet having the upper hand. Bears are defending the area above $0.8390 from bulls running to $0.8791, and bulls are trying to defend their support at $0.7843. With lower highs and higher lows, the stage is set for a breakout that, seeing the current tailwinds, will probably favour bulls, and result in a quick move towards $0.8791.XRP price is thus set to print new highs for March. With the stock markets having their best performing week for this year, expect to see even more tailwinds spilling over to cryptocurrencies and bulls targeting $0.9110. At that level, bulls will run into the 200-day SMA which will possibly be the halting point of the current uptrend as investors will need to reassess the situation before they advance. Where global markets are at that point and how far off a peace treaty is between Russia and Ukraine will determine if bulls will advance towards $1.00 in XRP price.XRP/USD daily chartAlthough several statements suggest it is unlikely, should Putin be backed further into a corner, the use of nuclear weapons could cast a dark shadow on markets. Expect a massive drop in equities and cryptocurrencies with those headlines coming out, where XRP price will fall towards $0.7843 or even $0.7600. In the first case, the historic pivotal level will provide support and further down, the monthly pivot is set to intertwine with the 55-day SMA, which should be enough to catch any falling-knife action. https://youtu.be/ZWrKMd2CiL8
Volatility Retreats As Stocks & Commodities Rally

Volatility Retreats As Stocks & Commodities Rally

Chris Vermeulen Chris Vermeulen 28.03.2022 21:32
The CBOE Volatility Index (VIX) is a real-time index. It is derived from the prices of SPX index options with near-term expiration dates that are utilized to generate a 30-day forward projection of volatility. The VIX allows us to gauge market sentiment or the degree of fear among market participants. As the Volatility Index VIX goes up, fear increases, and as it goes down, fear dissipates.Commodities and equities are both showing renewed strength on the heels of global interest rate increases. Inflation shows no sign of abating as energy, metals, food products, and housing continues their upward bias.During the last 18-months, the VIX has been trading between its upper resistance of 36.00 and its lower support of 16.00. As the Volatility Index VIX falls, fear subsides, and money flows back into stocks.VIX – VOLATILITY S&P 500 INDEX – CBOE – DAILY CHARTSPY RALLIES +10%The SPY has enjoyed a sharp rally back up after touching its Fibonacci 1.618% support based on its 2020 Covid price drop. Money has been flowing back into stocks as investors seem to be adapting to the current geopolitical environment and the change in global central bank lending rate policy.Resistance on the SPY is the early January high near 475, while support remains solidly in place at 414. March marks the 2nd anniversary of the 2020 Covid low that SPY made at 218.26 on March 23, 2020.SPY – SPDR S&P 500 ETF TRUST - ARCA – DAILY CHARTBERKSHIRE HATHAWAY RECORD-HIGH $538,949!Berkshire Hathaway is up +20.01% year to date compared to the S&P 500 -4.68%. Berkshire’s Warren Buffet has also been on a shopping spree, and investors seem to be comforted that he is buying stocks again. Buffet reached a deal to buy insurer Alleghany (y) for $11.6 billion and purchased nearly a 15% stake in Occidental Petroleum (OXY), worth $8 billion.These acquisitions seem to be well-timed as insurers and banks tend to benefit from rising interest rates, and Occidental generates the bulk of its cash flow from the production of crude oil.As technical traders, we look exclusively at the price action to provide specific clues as to the current trend or a potential change in trend. With that said, Berkshire is a classic example of not fighting the market. As Berkshire continues to make new highs, its’ trend is up!BRK.A – BERKSHIRE HATHAWAY INC. - NYSE – DAILY CHARTCOMMODITY DEMAND REMAINS STRONGInflation continues to run at 40-year highs, and it appears that it will take more than one FED rate hike to subdue prices. Since price is King, we definitely want to ride this trend and not fight it. It is always nice to buy on a pullback, but the energy markets at this point appear to be rising exponentially. The XOP ETF gave us some nice buying opportunities earlier at the Fibonacci 0.618% $71.78 and the 0.93% $93.13 of the COVID 2020 range high-low.Remember, the trend is your friend, as many a trader has gone broke trying to pick or sell a top before its time! Well-established uptrends like the XOP are perfect examples of how utilizing a trailing stop can keep a trader from getting out of the market too soon but still offer protection in case of a sudden trend reversal.XOP – SPDR S&P OIL & GAS EXPLORE & PRODUCT – ARCA – DAILY CHARTKNOWLEDGE, WISDOM, AND APPLICATION ARE NEEDEDIt is important to understand that we are not saying the market has topped and is headed lower. This article is to shed light on some interesting analyses of which you should be aware. As technical traders, we follow price only, and when a new trend has been confirmed, we will change our positions accordingly. We provide our ETF trades to our subscribers, and somewhat surprisingly, we entered five new trades last week, four of which have now hit their first profit target levels. Our models continually track price action in a multitude of markets, asset classes, and global money flow. As our models generate new information about trends or a change in trends, we will communicate these signals expeditiously to our subscribers and to those on our trading newsletter email list.Sign up for my free trading newsletter so you don’t miss the next opportunity! Furthermore, successfully trading is not limited to when to buy or sell stocks or commodities. Money and risk management play a critical role in becoming a consistently profitable trader. Correct position sizing utilizing stop-loss orders helps preserve your investment capital and allows traders to manage their portfolios according to their desired risk parameters. Additionally, scaling out of positions by taking profits and moving stop-loss orders to breakeven can complement ones’ success.WHAT STRATEGIES CAN HELP YOU NAVIGATE The CURRENT MARKET TRENDS? Learn how we use specific tools to help us understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, we expect very large price swings in the US stock market and other asset classes across the globe. We believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals will likely start to act as a proper hedge as caution and concern begin to drive traders/investors into Metals and other safe-havens.We invite you to join our group of active traders and investors to learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com
The Recent Rally Of Bitcoin Had Been Capped, The Digital Yuan (eCNY) Has Received Upgrades

Crypto Update: Bitcoin minor correction or something more?

8 eightcap 8 eightcap 06.04.2022 12:09
Looking at Bitcoin, we are seeing a few things to keep an eye on. So far, crypto markets look to be following equities lower after yesterday’s Fed shock around inflation worries and policy adjustment to try and correct it (rate rises). Today has seen a second straight day off losses for Bitcoin as sellers continue to hold sway. Fed members shocked risk markets yesterday after reports showed US inflation had climbed to 40-year highs. Their comments came in aggressive and suggested they’re ready to take action to try and rein in the current inflation problem. That normally means rate rises, and comments suggested a more aggressive approach could be coming soon. Bitcoin has been patchy at best over the last 5-trading days, with more of a range forming after the late March first leg lower. That leg broke the fast trend, and we saw an LH form after that break. These one-two patterns can be a good sign of further weakness coming. Selling continued (yesterday and today), confirming the pattern. That brings us to the level/area we are watching, and we have marked it with a green box on the D1 chart. This level is a demand area, and we can see this when buyers held firm on a few occasions. This area is important to us moving forward. If buyers can hold, we are looking at a possible minor correction in play which could turn into a new continuation higher. A move through the area and we could have a deeper move lower on our hands, and we will have to look and wait for when or if price can set a new higher low above or around the new trend line. Bitcoin D1 Chart The post Crypto Update: Bitcoin minor correction or something more? appeared first on Eightcap.
The Swing Overview - Week 13 2022

The Swing Overview - Week 13 2022

Purple Trading Purple Trading 11.04.2022 06:41
The Swing Overview - Week 13 Equity indices closed the first quarter of 2022 in a loss under the influence of geopolitical tensions. The Czech koruna strengthened as a result of the CNB raising interest rates to 5%, the highest since 2001. The US supports the oil market by releasing 180 million barrels from its strategic reserves. War in Ukraine   The war in Ukraine has been going on for more than a month and there is still no end in sight. Ongoing diplomatic negotiations have not led to a result yet. Meanwhile, Russian President Putin has decided that European countries will pay for Russian gas in rubles. This has been described as blackmailing from Europe's point of view and is not in line with the gas supply contracts that have been concluded. A way around this is to open an account with Gazprombank where the gas can be paid for in euros. Geopolitical tensions are therefore still ongoing and are having a negative effect on stock markets.   Equity indices have had their worst quarter since 2020 US and European equities posted their biggest quarterly loss since the beginning of 2020, when the COVID-19 pandemic broke out and the global economy was in crisis. Portfolio rebalancing at the end of the quarter boosted demand for bonds and kept yields lower.   On Tuesday, the yield curve briefly inverted, meaning that short-term bonds yields were higher than  long-term bonds. An inverted yield curve is a signal of a recession according to many economists. It means that future corporate profits should be rather behind expectations and stock prices might reflect it.    On Thursday, the S&P 500 index fell 1.6%. The Dow Jones industrial index also fell by 1.6% and the Nasdaq Composite index fell by 1.5%. The European STOXX 600 index closed down by 0.94%. Even after last week's rally, as investors celebrated signs of progress in peace talks between Russia and Ukraine, the S&P 500 index is still down 5% for the first three months, its worst quarterly performance in two years.  Figure 1: SP 500 on H4 and D1 chart   The SP 500 index reached the resistance level at 4,600, which it broke, but then closed below it. This indicates a false break. The new nearest resistance is in the range of 4,625 - 4,635. Support is at 4,453 and then significant support is at 4,386 - 4,422.   German DAX index The DAX index has rallied since March 8 and has reached the resistance level which is in the 14,800 - 15,000 range.  However, the index started to weaken in the second half of the week. The news that Russia will demand payments for gas in rubles, which Western countries refuse, contributed to the index's weakening. The fear of gas supply disruption then caused a sell-off.    Figure 2: German DAX index on H4 and daily chart Resistance is between 14,800 - 15,000 according to the daily chart. The nearest support according to the H4 chart is at 14,100 - 14,200.   The euro remains in a downtrend The euro was supported at the beginning of the week by hopes for peace in Ukraine. However, by the end of the week, the Ukrainian President warned that Russia was preparing for more attacks and the Euro started to weaken. News of Russia's demand to pay for gas in rubles had a negative effect on the euro as well. Figure 3: The EURUSD on the H4 and daily charts. From a technical point of view, we can see that the EURUSD according to the daily chart has reached the resistance formed by EMA 50 (yellow line). The new horizontal resistance is in the area of 1.1160 - 1.1180. Support is at 1.0950 - 1.0980. The euro still remains in a downtrend.   CNB raised the interest rate In the fight against the inflation, the CNB decided to further raise the interest rate by 0.50%. Currently, the base rate is at 5%, where it was last in 2001. The interest rate hike is aimed at slowing inflation by slowing demand through higher borrowing costs.   Figure 4: Interest rate developments in the Czech Republic In addition, a strong koruna should support the slowdown in inflation. The koruna could appreciate especially against the euro due to higher interest rates. However, the strengthening of the koruna is conditional on the war in Ukraine not escalating further.  We can see that the koruna against the euro is approaching a support around 24.30. The low of this year was 24.10 korunas for one euro. Figure 5: USD/CZK and EUR/CZK on the daily chart. The koruna is also strengthening against the US dollar. Here, however, the situation is slightly different in that the US Fed is also raising rates and is expected to continue raising rates until the end of the year. Therefore, the interest rate differential between the koruna and the dollar is less favourable than between the koruna and the euro. The appreciation of the koruna against the dollar is therefore slower.   Currently, the koruna is at the support of 22 koruna per dollar. The next support is at 21.70 and then 21.10 koruna per dollar, where this year's low is.   Oil has weakened Oil prices saw the deep losses after the news that the United States will release up to 180 million barrels from its strategic petroleum reserves as part of measures to reduce fuel prices. US crude oil fell 5.4% and Brent crude oil fell 6.6% on Thursday after the news. Figure 6: Brent crude oil on a monthly and daily chart We can see that a strong bearish pinbar was formed on a  monthly chart. The nearest support is in the zone 103 – 106 USD per barel. A strong support is around 100 USD per barel which will be closely watched.  
The Swing Overview - Week 16 2022

The Swing Overview - Week 16 2022

Purple Trading Purple Trading 22.04.2022 15:00
The Swing Overview - Week 16 Jerome Powell confirmed that the Fed will be aggressive in fighting the inflation and confirmed tighter interest rate hikes starting in May. Equity indices fell strongly after this news. Inflation in the euro area reached a record high of 7.4% in March. Despite this news, the euro continued to weaken. The sell-off also continued in the Japanese yen, which is the weakest against the US dollar in last 20 years.  The USD index strengthens along with US bond yields Fed chief Jerome Powell said on Thursday that the Fed could raise interest rates by 0.50% in May. The Fed could continue its aggressive pace of rate hikes in the coming months of this year. US 10-year bond yields have responded to this news by strengthening further and have already reached 2.94%. The US dollar has also benefited from this development and has already surpassed the value 100 and continues to move in an uptrend. Figure 1: US 10-year bond yields and USD index on the daily chart Earnings season is underway in equities Rising interest rates continue to weigh on equity indices, which gave back gains from the first half of the last week and weakened significantly on Thursday following the Fed’s information on the aggressive pace of interest rate hikes.   In addition, the earnings season, which is in full swing, is weighing on index movements. For example, Netflix and Tesla reported results last week.   While Netflix unpleasantly surprised by reducing the number of subscribers by 200,000 in 1Q 2022 and the company's shares fell by 35% in the wake of the news, Tesla, on the other hand, exceeded analysts' expectations and the stock gained more than 10% after the results were announced. Tesla has thus shown that it has been able to cope with the supply chain problems and higher subcontracting prices that are plaguing the entire automotive sector much better than its competitors.   The decline in Netflix subscribers can be explained by people starting to save more in an environment of rising prices. Figure 2: The SP 500 on H4 and D1 chart The SP 500 index continues to undergo a downward correction, which is shown on the H4 chart. The price has reached the resistance level at 4,514-4,520. The price continues to move below the SMA 100 moving average (blue line) on the daily chart which indicates bearish sentiment.  The nearest resistance according to the H4 chart is at 4,514 - 4,520. The next resistance is around 4,583 - 4,600. The support is at 4,360 - 4,365.   The German DAX index The DAX is also undergoing a correction and the last candlestick on the daily chart is a bearish pin bar which suggests that the index could fall further. Figure 3: The German DAX index on H4 and daily chart This index is also below the SMA 100 on the daily chart, confirming the bearish sentiment. The price has reached a support according to the H4 chart, which is at 14,340 - 14,370. However, this is very likely to be overcome quickly. The next support is 13 910 - 14 000. The nearest resistance is 14 592 - 14 632.   The DAX is affected by the French presidential election that is going to happen on Sunday April 24, 2022. According to the latest polls, Macron is leading over Le Pen and if the election turns out like this, it should not have a significant impact on the markets. However, if Marine Le Pen wins in a surprise victory, it can be very negative news for the French economy and would weigh on the DAX index as well.   The euro remains in a downtrend The Fed's hawkish policy and the ECB's dovish rhetoric at its meeting on Thursday April 14, 2022, which showed that the ECB is not planning to raise rates in the short term, put further pressure on the European currency. The French presidential election and, of course, the ongoing war in Ukraine are also causing uncertainty.  Figure 4: The EURUSD on the H4 and daily charts. The inflation data was reported last week, which came in at 7.4% on year-on-year basis. The previous month inflation was 5.9%. This rise in inflation caused the euro to strengthen briefly to the resistance level at 1.0930 - 1.0950. However, there was then a rapid decline from this level following the Fed's reports of a quick tightening in the economy. A support is at 1.0760 - 1.0780.   The sell-off in the Japanese yen is not over The Japanese yen is also under pressure. The US dollar has already reached 20-year highs against the Japanese yen (USD/JPY) and it looks like the yen's weakening against the US dollar could continue. This is because the Bank of Japan has the most accommodative monetary policy of any major central bank and continues to support the economy while the Fed will aggressively tighten the economy. Thus, this fundamental suggests that a reversal in the USD/JPY pair should not happen anytime soon. Figure 5: The USDJPY on the monthly chart In terms of technical analysis, the USD/JPY price broke through the strong resistance band around the price of 126.00 seen on the monthly chart. The currency pair thus has room to grow further up to the resistance, which is in the area near 135 yens per dollar.  
The Swing Overview – Week 17 2022

The Swing Overview – Week 17 2022

Purple Trading Purple Trading 03.05.2022 11:04
The Swing Overview – Week 17 Major stock indices continued in their correction and tested strong support levels. In contrast, the US dollar strengthened strongly and is at its highest level since January 2017. The strengthening of the dollar had a negative impact on the value of the euro and commodities such as gold, which fell below the $1,900 per ounce. The Bank of Japan kept interest rates low and the yen broke the magic level 130 per dollar. The USD index strengthened again but the US GDP declined The US consumer confidence in the month of April came in at 107.3, a slight decline from the previous month when consumer confidence was 107.6.   The US GDP data was surprising. The US economy decreased by 1.4% in 1Q 2022 (in the previous quarter the economy grew by 6.4%). This sharp decline surprised even analysts who expected the economy to grow by 1.1%. This result is influenced by the Omicron, which caused the economy to shut down for a longer period than expected earlier this year.    The Fed meeting scheduled for the next week on May 4 will be hot. In fact, even the most dovish Fed officials are already leaning towards a 0.5% rate hike. At the end of the year, we can expect a rate around 2.5%.   The US 10-year bond yields continue to strengthen on the back of these expectations. The US dollar is also strengthening and is already at its highest level since January 2017, surpassing 103 level.  Figure 1: US 10-year bond yields and the USD index on the daily chart   Earnings season is underway in equities Earnings season is in full swing. Amazon's results were disappointing. While revenue was up 7% reaching $116.4 billion in the first quarter (revenue was $108.5 billion in the same period last year), the company posted an total loss of $8.1 billion, which translated to a loss of $7.56 per share. This loss, however, is not due to operating activities, but it is the result of the revaluation of the equity investment in Rivian Automotive.   Facebook, on the other hand, surprised in a positive way posting unexpectedly strong user growth, a sign that its Instagram app is capable of competing with Tik Tok. However, the revenue growth of 6.6% was the lowest in the company's history.    Apple was also a positive surprise, reporting earnings per share of $1.52 (analysts' forecast was $1.43) and revenue growth of $97.3 billion, up 8.6% from the same period last year. However, the company warned that the closed operations in Russia, the lockdown in China due to the coronavirus and supply disruptions will negatively impact earnings in the next quarter.   Figure 2: The SP 500 on H4 and D1 chart In terms of technical analysis, the US SP 500 index is in a downtrend and has reached a major support level on the daily chart last week, which is at 4,150. It has bounced upwards from this support to the resistance according to the 4 H chart which is 4,308 - 4,313. The next resistance according to the H4 chart is 4,360 - 4,365.  The strong resistance is at 4,500.   German DAX index German businessmen are optimistic about the development of the German economy in the next 6 months, as indicated by the Ifo Business Climate Index, which reached 91.8 for April (the expectation was 89.1). However, this did not have a significant effect on the movement of the index and it continued in its downward correction. Figure 3: German DAX index on H4 and daily chart The index is below the SMA 100 on both the daily chart and the H4 chart, confirming the bearish sentiment. The nearest support according to the H4 is 13,600 - 13,650. The resistance is 14,180 - 14,200. The next resistance is 14,592 - 14,632.   The euro has fallen below 1.05 The euro lost significantly last week. While the French election brought relief to the markets as Emmanuel Macron defended the presidency, geopolitical tensions in Ukraine continue to weigh heavily on the European currency. The strong dollar is also having an impact on the EUR/USD pair, pushing the pair down. The price has fallen below 1.05, the lowest level since January 2017.    Figure 4: EURUSD on H4 and daily chart The euro broke through the important support at 1.0650 - 1.071, which has now become the new resistance. The new support was formed in January 2017 and is around the level 1.0350 - 1.040.   Japan's central bank continues to support the fragile economy The Bank of Japan on Thursday reinforced its commitment to keep interest rates at very low levels by pledging to buy unlimited amounts of 10-year government bonds daily, sparking a fresh sell-off in the yen and reviving government bonds. With this commitment, the BOJ is trying to support a fragile economy, even as a surge in commodity prices is pushing the inflation up.   The decision puts Japan in the opposite position to other major economies, which are moving towards tighter monetary policy to combat soaring prices. Figure 5: The USD/JPY on the monthly and daily chart In fresh quarterly forecasts, the central bank has projected core consumer inflation to reach 1.9% in the current fiscal year and then ease to 1.1% in fiscal years 2023 and 2024, an indication that it views the current cost-push price increases as transitory.   In the wake of this decision, the Japanese yen has continued to weaken and has already surpassed the magical level 130 per dollar.   Strong dollar beats also gold Anticipation of aggressive Fed action against inflation, which is supporting the US dollar, is having a negative impact on gold. The rising US government bond yields are also a problem for the yellow metal. This has put gold under pressure, which peaked on Thursday when the price reached USD 1,872 per ounce of gold. But then the gold started to strengthen. Indeed, the decline in the US GDP may have been something of a warning to the Fed and prevent them from tightening the economy too quickly, which helped gold, in the short term, bounce off a strong support. Figure 6: The gold on H4 and daily chart Strong support for the gold is at $1,869 - $1,878 per ounce. There is a confluence of horizontal resistance and the SMA 100 moving average on the daily chart. The nearest resistance according to the H4 chart is 1 907 - 1 910 USD per ounce. The strong resistance according to the daily chart is then 1 977 - 2 000 USD per ounce of gold. Moving averages on the H4 chart can also be used as a resistance. The orange line is the EMA 50 and the blue line is the SMA 100.  
USD/JPY Technical Analysis: Awaiting Breakout from Consolidation Range

Asian equities follow Wall Street lower | Oanda

Jeffrey Halley Jeffrey Halley 10.05.2022 11:05
Asian markets fall, ex-China Wall Street suffered another day of recession fears overnight, with equities slumping once again, relying on Bostic’s comments to salve the wounds and cap US yield rises and the US dollar rally. The S&P 500 retreated by 3.20%, with the Nasdaq slumping by 4.29%, and the Dow Jones losing 1.97%. No sector was spared, notably, and despite high inflation, cash is increasingly becoming King. The rot has stopped in Asia, with US futures attempting to claw back some of the overnight losses as the bottom-feeders come out to play. S&P 500 futures have risen by 0.60%, Nasdaq futures have jumped by 0.95%, and Dow futures have gained 0.45%.   In Asia, equity markets initially tumbled in response to the Wall Street moves, in a rerun of yesterday. However, the recovery by US futures this morning seems to have taken the edge of the sell-off, with Asian markets recouping some of their earlier losses. Japan’s Nikkei 225 is now down just 0.44%, with South Korea’s Kospi down 0.47%,   Meanwhile, after a tough session yesterday, the intraday rally in sentiment has pushed mainland China exchanges well into positive territory. The Shanghai Composite and CSI 300 have rallied by 1.0%. Hong Kong was pummelled earlier today but has also recovered somewhat, but it remains 2.25% lower for the day.   In regional markets, Singapore is still down by 1.20%, while Kuala Lumpur is unchanged, and Jakarta has slumped by 2.90% led by resource stocks. Taipei has retreated by 1.65%, while Manila is down 1.0% post-election, with Bangkok managing a 0.30% gain. Australian markets are also in retreat, the ASX 200 and All Ordinaries falling by 1.30%.   What makes the session odd is that markets with a high sensitivity to the China slowdown are the worst performing in Asia today, but mainland equities have rallied. The cynic in me suspects that China’s “national team” are busy today supporting the market, especially as covid-zero policies remain in force and nerves are rising around mainland property developers once again.   European markets will struggle to construct a bullish case today as well, also President Putin not declaring a was on Ukraine at yesterday’s May Day parades could be a straw to grasp. The question is really whether the bounce in US equity futures today is the start of a recovery or merely a corrective bounce to short-term oversold indicators. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Fed Expectations Amid Mixed Data: Wishful Thinking or Practical Pause?

(EUR/USD) Euro To US Dollar Hasn't Fluctuated Significantly, US Non-farm Payrolls Coming! Easing Lockdown In China | Asia Morning Bites - 30/05/22 | ING Economics

ING Economics ING Economics 30.05.2022 08:21
A positive start to the week in Asia is helped by easing movement restrictions in China, but US payrolls and quantitative tightening could test that resolve later on... Source: shutterstock Macro Outlook Global: It is the US Memorial day holiday today (Monday), and equity markets rallied into the long weekend, providing a positive tone at the start of this week in Asia markets. News channels this morning noted that the equity rally took place on thin volumes, which is a bit of an exaggeration, though volumes were a bit below average, while the sell-offs recently seem to have more conviction. News stories trying to pinpoint the bottom for markets are still talking about equities approaching average forward P/E valuations. Though surely just touching an average from above is not sufficient to call a trough – averages don’t work that way – at least not if they are stationary. What are they teaching people in maths classes these days? Aside from the rally in stocks, most markets were fairly rangebound on Friday. EURUSD remained at about 1.0727, though looked to push above 1.0770 and below 1.0700 – both without success. AUD has clambered back to 0.7158, and there were also widespread gains amongst the Asian FX pairs, led by the KRW and CNY. Treasury yields were little changed on the previous day’s close. This week we get US non-farm payrolls, which could stir things up a bit. We also get the start of “Quantitative Tightening” (QT) from mid-week on, as the US Fed starts to draw down on its bloated balance sheet at a $30bn monthly rate for Treasuries and $17.5bn monthly rate for agency MBS. This will show just what impact (if any) actual selling has on the market, or whether this is entirely in the price. We also get Eurozone CPI inflation for May tomorrow (Tuesday). Consensus sees this rising to 7.8%YoY from 7.5% in April. And yet the ECB is still purchasing assets and is not expected to start raising rates until July. Enough said.  China: Shanghai announced approval for the resumption of work and production as a sign that it is lifting its lockdowns. However, workers still need a pass to leave their homes for work. Currently, permission is only granted to leave home a few times a week. This situation will change, but it will need to change quickly to be consistent with the resumption of work. In Beijing, the lockdown has been relaxed in the Chaoyang CBD area. The same problem is that workers who do not live in Chaoyang may not be able to get to their workplaces. Meanwhile, other cities are adopting regular and frequent Covid testing to try to detect positive cases early enough to stop the chain of transmission of the virus. As for stimulus measures, in addition to last week's national-level stimuli, Shanghai has offered more incentives, mainly to boost consumption, especially on pure electric vehicles. What to look out for: US non-farm payrolls Philippines bank lending (30 May) Fed Waller speech (30 May) South Korea industrial production (31 May) Japan retail sales and job-applicant ratio (31 May) China PMI manufacturing (31 May) Thailand trade balance (31 May) US Conference board expectations (31 May) Fed Williams speech (1 June) South Korea trade (1 June) Regional PMI manufacturing (1 June) Australia 1Q GDP (1 June) US ISM manufacturing (1 June) Fed Bullard speech (2 June) Indonesia CPI inflation (2 June) Australia trade balance (2 June) US ADP jobs, initial jobless claims, durable goods orders (2 June) South Korea CPI inflation (3 June) US non-farm payrolls and ISM services (3 June) Fed Mester speech (3 June) Read this article on THINK TagsEmerging Markets Asia Pacific Asia Markets Asia Economics Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
The Swing Overview – Week 20 2022

The Swing Overview – Week 20 2022

Purple Trading Purple Trading 02.06.2022 16:36
The Swing Overview – Week 20 The markets remain volatile and fragile, as shown by the VIX fear index, which has again surpassed the level 30 points. However, equity indices are at interesting supports and there could be some short-term recovery. The euro has bounced off its support in anticipation of tighter monetary policy and the gold is holding its price tag above $1,800 per troy ounce. Is the gold back in investors' favor again? Macroeconomic data The week started with a set of worse data from the Chinese economy, which showed that industrial production contracted by 2.9% year-on-year basis and the retail sales fell by 11.1%. The data shows the latest measures for the country's current COVID-19 outbreak are taking a toll on the economy. To support the slowing economy, China cut its benchmark interest rate by 0.15% on Friday morning, more than analysts expected. While this will not be enough to stave off current downside risks, markets may respond to expectation of more easing in the future. On a positive note, data from the US showed retail sales rose by 0.9% in April and industrial production rose by 1.1% in April. Inflation data in Europe was important. It showed that inflation in the euro area slowed down a little, reaching 7.4% in April compared to 7.5% in March. In Canada, on the other hand, the inflation continued to rise, reaching 6.8% (6.7% in March) and in the UK inflation was 9% in April (7% in the previous month). Several factors are contributing to the higher inflation figures: the ongoing war in Ukraine, problems in logistics chains and the effects of the lockdown in China. Concerns about the impact of higher inflation are showing up in the bond market. The benchmark 10-year US Treasury yield has come down from the 3.2% it reached on 9 May and is currently at 2.8%. This means that demand for bonds is rising and they are once again becoming an asset for times of uncertainty.  Figure 1: US 10-year bond yields and USD index on a daily chart   Equity indices on supports Global equities fell significantly in the past week, reaching significant price supports. Thus, there could be some form of short-term bounce. Although a cautious rally began on Thursday, which was then boosted by China's decision to cut interest rates in the early hours of Friday, there is still plenty of fear among investors and according to Louis Dudley of Federated Hermes, cash holdings have reached its highest level since September 2001, suggesting strong bearish sentiment. Supply chain problems have been highlighted by companies such as Cisco Systems, which has warned of persistent parts shortages. That knocked its shares down by 13.7%. The drop made it the latest big-stock company to post its biggest decline in more than a decade last week. The main risks that continue to cause volatility and great uncertainty are thus leading investors to buy "safe" assets such as the US bonds and the Swiss franc. Figure 2: The SP 500 on H4 and D1 chart From a technical analysis perspective, the US SP 500 index continues to move in a downtrend as the market has formed a lower low while being below both the SMA 100 and EMA 50 moving averages on the H4 and daily charts. The nearest resistance is 4,080 - 4,100. The next resistance is at 4,140 and especially 4,293 - 4,300. Support is at 3,860 - 3,900 level. German DAX index The index continues to move in a downtrend along with the major world indices. The price has reached the support which is at 13,680 – 13,700 and the moving average EMA 50 on the H4 chart is above the SMA 100. This could indicate a short-term signal for some upward correction. However, the main trend according to the daily chart is still downwards. The nearest resistance is at 14,260 - 14,330 level. Figure 3: German DAX index on H4 and daily chart The euro has bounced off its support The EUR/USD currency pair benefited last week from the US dollar moving away from its 20-year highs while on the euro, investors are expecting a tightening economy and a rise in interest rates, which the ECB has not risen yet as one of the few banks. Figure 4: The EURUSD on H4 and daily chart   Significant support is at the price around 1.0350 - 1.040. Current resistance is at 1.650 - 1.700.   The Gold in investors' attention again The gold has underperformed over the past month, falling by 10% since April when the price reached USD 2,000 per ounce. But there is now strong risk aversion in the markets, as indicated by the stock markets, which have fallen. The gold, on the other hand, has started to rise. Inflation fears are a possible reason, and investors have begun to accumulate the gold for protection against rising prices. The second reason is that the gold is inversely correlated with the US dollar. The dollar has come down from its 20-year highs, which has allowed the gold to bounce off its support.  Figure 5: The gold on H4 and daily chart The first resistance is at $1,860 per ounce. The support is at $1,830 - $1,840 per ounce. The next support is then at $1,805 - $1,807 and especially at $1,800 per ounce.
West Texas Intermediate (WTI) Price Analysis: The Oil Price Has Corrected And Dropped

Crude Oil Price Probably Not Reach 100$(USD) Shortly

Swissquote Bank Swissquote Bank 18.08.2022 15:56
The equity rally in the US didn’t pick up momentum after the Federal Reserve (Fed) released its latest meeting minutes, which sounded more hawkish-than-expected, or more hawkish-than-what-was-needed-to-give-another-boost to the US stock markets. The biggest take was that the Fed will continue tightening its policy until it sees that inflation is ‘firmly on path back to 2%’. The S&P500 fell 0.72% as Nasdaq gave back 1.20%, although the jump in the US 2-year yield was relatively soft, and the Fed funds futures scaled back the expectation of a 75 bp hike in the next meeting. Crude price completed an ABCD pattern, and it is more likely than not we see the price rebound to the $100 level in the medium run. In China, Tencent announced its first ever revenue drop as government crackdown continued taking a toll on its sales, and the pound couldn’t gain even after the above 10% inflation data boosted the Bank of England (BoE) hawks and the call fall steeper rate hikes to tame inflation in the UK. Watch the full episode to find out more! 0:00 Intro 0:28 As expected, Fed minutes were more hawkish-than-expected 3:39 Crude oil has more chance to rebound than to fall 6:02 Tencent posts first-ever revenue drop 7:14 Apple extends gains, but technicals warn of correction 8:38 Pound unable to extend gains despite rising Fed hawks’ voices Ipek Ozkardeskaya has begun her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked at HSBC Private Bank in Geneva in relation to high and ultra-high net worth clients. In 2012, she started as FX Strategist at Swissquote Bank. She worked as a Senior Market Analyst in London Capital Group in London and in Shanghai. She returned to Swissquote Bank as Senior Analyst in 2020. #Fed #FOMC #minutes #USD #GBP #inflation #Tencent #Alibaba #earnings #crude #oil #natural #gas #coal #futures #SPX #Dow #Nasdaq #investing #trading #equities #stocks #cryptocurrencies #FX #bonds #markets #news #Swissquote #MarketTalk #marketanalysis #marketcommentary ___ Learn the fundamentals of trading at your own pace with Swissquote's Education Center. Discover our online courses, webinars and eBooks: https://swq.ch/wr ___ Discover our brand and philosophy: https://swq.ch/wq Learn more about our employees: https://swq.ch/d5 ___ Let's stay connected: LinkedIn: https://swq.ch/cH
Crude Oil Upward Trend Remains Limited

Recessionary Fears And A Higher US Dollar Are Causing Selling In Oil

Saxo Bank Saxo Bank 07.12.2022 08:57
Summary:  There is a lot to be said about stepping back and reflecting on what’s driving markets. The most selling over the last few sessions has been stocks and sectors that will likely come under pressure from rates staying higher for longer, combined with a slowdown in US GPD. As such a Tech names like Atlassian, to EV makers including Lucid are down 10% this week. While the most upside in stocks and sectors are in those that will likely benefit from increased consumption in China and increased commodity demand with the nation continuing to map out further easing of restrictions. Here is what you need to watch in markets, in this seven minute video           Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) head lower ahead of Fed decision next week The S&P500 continued to fall below its 200-day average, slipping 1.4% on Tuesday, taking the four-day loss to 3.4%, with the next level of support at perhaps 3900. The Nasdaq 100 fell 2%, taking its three-day fall to 4%. The most selling over the last few sessions has been stocks that will likely come under pressure from rates staying higher for longer, combined with a slowdown in consumption. Luxury EV maker- Lucid Group, team software company-Atlassian, and online dating company Match, have fallen over 10% this week. While stocks exposed to China, such as Baidu and JD.com have rallied over 3%. For more inspiration of other stocks doing well this month, likely to benefit from China easing restrictions; see Saxo’s China Consumer and Technology basket. What’s driving markets and shareholder returns right now? Fed hiking Vs China easing covid restrictions Firstly – what's pressuring stocks is the hotter than expected US service sector, showing the US economy is strong enough for the Fed to keep hiking interest rates to slow inflation. While major investment banks are saying 2023 will be a downbeat year. Goldman’s David Solomon says a US recession is possible, with smaller bonuses and job cuts expected. Morgan Stanley says it will reduce its global workforce by about 2,000, (2% of the total), while BofA’s chief Brian Moynihan says his bank slowed hiring and JPMorgan’s Jamie Dimon warned of a "mild to hard recession" in 2023, saying the economic clouds "could be a hurricane." So damp sentiment is causing bond yields to move higher again, the US 10-year yield hit 3.53%, while the US dollar is rising again - on track to make its biggest weekly gain in almost 12 weeks. Secondly, what’s driving upside in markets is the easing of restrictions in China, with the country preparing to ease further. This is benefiting forward looking Chinese consumption and commodities, as there is expectations demand will pick up. Refer to Saxo’s China Consumer and Technology basket and Saxo’s Australian Resource basket for stock inspiration. In commodities, iron ore heads back to its highest level since August as China prepares to ease Oil pulled fell 3.5% to $74.25 with hedge funds continuing to sell oil amid nervousness about the Fed’s interest rate decision next week, and its path ahead. Recessionary fears and a higher US dollar are also causing selling in oil. The next level of support is perhaps around $71.74. There is talk in Europe the market has shifted toward supply not being as tight. Engie said Europe may pull through this winter and next as it replaces dwindling Russian natural gas flows, with European refiners making more gasoline than the continent needs. Read our head of commodity strategy’s latest update. The precious metal, gold, rose 0.3% to $1769. While the big news of the day, is that Iron Ore (SCOA) price advanced as China is preparing to ease restrictions further, moving iron ore’s price up 0.7% to $108.95 (its highest level since August). Australia’s iron ore kings roar back to six-month highs; Australia’s economy grows, but less than expected The Australian benchmark index, the ASX200 (ASXSP200.1) lost 0.6% on Wednesday, taking its week to date loss to 1%. However, after the iron ore price advanced, iron ore players tested six-month highs; Fortescue Metals, Champion Iron, BHP and RIO shares are all higher. In other parts of the market, insurance companies continued to shine, as they traditionally do when interest rates are rising. QBE and IAG rose almost 2% today taking their YTD gains to over 14% each. In terms of economic news out today; Australian economic growth showed an improvement in in the third quarter of 2022, but the growth was weaker than expected. GDP grew from 3.6% YoY in the 2nd quarter to 5.9% YoY. But more growth was expected (6.3% YoY). The Aussie dollar rose slightly, gaining 0.2% to 67.02 US cents. Also remember services are the biggest drivers of GDP in Australia; and as GDP is expected to slowly grind higher over current quarter, watch travel stocks, such a Flight Centre, Corporate Travel Management, Webjet, Auckland International Airport and Qantas. Also keep an eye on stocks affiliated with dining out such as Endeavour Group, Treasury Wine, and Metcash which owns Celebrations, IGA Liquor and Bottle-O.       For a weekly look at what to watch in markets - tune into our Spotlight.For a global look at markets – tune into our Podcast.
Analysis Of Tesla: A Temporary Corrective Rally Should Not Come As A Surprise

Saxo Bank Podcast: Look At Tesla Posting New Cycle Lows, Equity Market Upside Fading Quickly And More

Saxo Bank Saxo Bank 14.12.2022 13:06
Summary:  Today we look at yesterday's reaction to the softer than expected US November CPI data, with equity market upside fading quickly even as the reaction in US yields and the US dollar was stickier. We also discuss today's upcoming FOMC meeting, with the Fed facing a tough task if it wants to push back against easing market conditions and policy expectations today. We also look at Tesla posting new cycle lows and concerns for the stock and EV market, Apple, Inditex, crude oil, precious metals, and more. Today's pod features Peter Garnry on equities, Ole S Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: Podcast: FOMC will have a hard time moving the needle today | Saxo Group (home.saxo)
Fed's "favourite gauge of inflation" - Core PCE - reached 4.7%

Fed's "favourite gauge of inflation" - Core PCE - reached 4.7%

Ipek Ozkardeskaya Ipek Ozkardeskaya 27.12.2022 09:30
It has been quite a quiet start to the week with many major markets still closed for Xmas holiday, but no one saw Santa coming this year, have you?  On the contrary, the Bank of Japan led drama across the global financial markets reminded that the year will certainly not end on a positive footage, even though the last trading week of the year is expected to be marked by a 'Santa rally'.  A few encouraging news, however, could give a minor boost to equity markets.  Read next: Residents Of Brazil Will Not Be Able To Use Cryptocurrencies As Legal Tender| FXMAG.COM First, released last Friday, the US PCE data, the Federal Reserve's (Fed) favourite gauge of inflation fell to 5.5% in November, the core PCE slipped below 5% to 4.7%. Still more than twice the 2% policy target, but on the right path after all the tightening drama of 2022.   The latter gave a very small boost to US equities before Xmas, but it really didn't help the S&P500 to reverse weekly losses. The index closed the week 0.20% lower than where it started. It is now below the major 38.2% Fibonacci retracement, meaning that we are now in the bearish consolidation zone and could expect a further and possibly a sustainable selloff below 3796, which is the 50% retracement level.  Second, the Chinese reopening continues, with news that the country will scrap Covid quarantines and lower Covid to a lower-threat disease. The news help the Chinese stocks gain at the start of the week. Yet, there is reportedly around 250 million new cases since the reopening, which will likely throw a shadow on the reopening glow.  But crude oil is up by around 15% since the December dip, and the Chinese reopening news could give a helping hand to oil bulls for an extension of the rally to the $88pb level.
Why India Leads the Way in Economic Growth Amid Global Slowdown

Alibaba And Its Share Buyback Program Which Is Supported By Ryan Cohen, Microsoft Corp. Plans To Incorporate AI Tools

Kamila Szypuła Kamila Szypuła 17.01.2023 11:44
Activist investor Ryan Cohen Activist investor Ryan Cohen is pushing the Chinese e-commerce giant to accelerate and further strengthen its share buyback program. Microsoft Corp. plans to incorporate AI tools such as ChatGPT into all its products and make them available as platforms for other companies. Alibaba Share buybacks Share buybacks can support equities by reducing the supply of traded shares and increasing earnings per share. Investors often treat them as a bullish signal because they suggest that executives are optimistic about their company's prospects and confident about its financial situation. Cohen, with a net worth of over $2.5 billion and a stock portfolio that includes Apple Inc. and Wells Fargo & Co. and Citigroup Inc., first contacted Alibaba's management in August to voice his opinion that the company's stock is deeply undervalued based on his belief that he could achieve double-digit sales and nearly 20% free cash flow growth over the next five years. Cohen also expressed confidence that Apple, in which he owns more than $800 million, could provide a roadmap for Alibaba. The Active Investor also expressed admiration for management's ability to drive earnings growth while accumulating high-quality assets. While the stakes are small compared to Alibaba's market capitalization of nearly $300 billion, Cohen has a large following among individual investors who often follow in his footsteps. Following Cohen's initial announcement, Alibaba announced in November that its board of directors had approved expanding the company's share buyback program by $15 billion to $40 billion. Cohen told Alibaba's board of directors that the share buyback plan could be increased by another $20 billion to about $60 billion. Alibaba shares rose about 67% from a multi-year low in October. At that time, the share price was 63.22. After that, they increased from November, and the new year brought positive signals and the BABA price reached 117.01. OpenAI and Microsoft OpenAI has been at the center of a recent spike in artificial intelligence in the tech industry, and Microsoft is in advanced talks to increase investment in the startup. Speaking on Tuesday at the Wall Street Journal panel at the World Economic Forum's annual event in the Swiss mountains, Nadella said his company will quickly move to commercialize OpenAI tools, the research lab behind the ChatGPT chatbot, as well as the Dall-E 2 image generator. Nadella said in in an interview that the new excitement about tools is due to the rapid growth in their capabilities last year, which he said he expects to continue. Those in office jobs engaged in so-called knowledge-based work should embrace the new tools rather than assume they'll steal their jobs, Nadella said, citing the example of computer software developers now using tools to help them generate some of the code they write. Microsoft's CEO was also optimistic about the wider economic potential of tools like ChatGPT that can quickly generate fluent-sounding text based on short queries or prompts. Microsoft recently said it was giving more customers access to the software behind these tools through its Azure cloud computing platform. After falling to the level of 222.31, Microsoft stock prices are rising and recently reached the level of 239.18. Source: wsj.com, finance.yahoo.com
GBP: Approaching 1.2000 Level Amid Rate Dynamics

Saxo Bank Podcast: The Strong Comeback In Equity Markets, Inflation Expectations, China's Policy Signals And More

Saxo Bank Saxo Bank 06.03.2023 11:25
Summary:  Today we look at the strong comeback in equity markets Friday as yields dipped sharply, providing some relief after the recent strong ramp higher. Still, it is interesting to note that inflation expectations may be undergoing a sea change as well, which has come to the aid of gold. Elsewhere, we gauge the market reaction to China's policy signals, note the busy week ahead on the central bank front, with the RBA up tonight, Fed Chair Powell out speaking in testimony before Congressional panels tomorrow and Wednesday and the Bank of Japan on Friday, which will be Governor Kuroda's final meeting. This and much more on today's pod features Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.     Source: Podcast: Bulls celebrate yield dip. Heavy central bank calendar this week | Saxo Group (home.saxo)
Breaking Business News: Aaron Rodgers' Shocking Exit, Google's Defense, and Central Banks' Inflation Battle

BioMaxima's 1Q23 Results Fall Short of Expectations, Expansion and Development Initiatives in Progress

GPW’s Analytical Coverage Support Programme 3.0 GPW’s Analytical Coverage Support Programme 3.0 05.06.2023 15:56
The Company’s 1Q23 revenues at PLN 11.1 million were materially below our forecast at PLN 13.3 million. EBITDA, EBIT, and NI at PLN 1.0 million, PLN 0.5 million, and PLN 0.5 million, respectively, were lower than we expected, albeit nominal differences were small.   The results are not comparable yoy due to record high figures reported in 1Q22 when the Company’s results were supported by the agreement for a huge SARS-CoV-2 tests delivery. The low profitability observed in the last 3 quarters stems from the inflationary growth of costs which has not been reflected yet in the Company’s pricelists. 1Q23 EBITDA and EBIT margins grew qoq from 5% and 1% to 9% and 4%, respectively. The Company’s 1Q23 operating cash flows were negative, at PLN -3.1 million, which resulted from a material growth of inventories coupled with lower trade liabilities. Net working capital increased from PLN 15.5 million at 2022-end to PLN 18.8 million. 1Q23 capex reached PLN 2.4 million in 1Q23 and net cash at the end of the discussed quarter fell to PLN 1.8 million from PLN 7.7 million at 2022-end.   Production capacity expansion BioMaxima informed that the construction of a new production facility was completed and in a purchased building the warehouse and office space was adapted. The new building will house a production of the assortment related to antibiotic susceptibility testing (AST). The last stage of the production capacity BioMaxima expansion will be modernization of the existing building which should finish in 3Q23. We estimate this year’s total capex at over PLN 8 million.   Development works BioMaxima has been working on the new technology to manufacture tests using blood and other body fluids and tests to be implemented in the industry. The Company has been developing their technologies in cooperation with the Medical This report is prepared for the Warsaw Stock Exchange SA within the framework of the Analytical Coverage Support Program 3.0.   Coverage Program Analytical WSE 3 BioMaxima University in Lublin and the Warsaw University; the latter and BioMaxima work on the creation of molecular tests to detect Salmonella spp. and Listeria spp. which are at the moment scarce on the diagnostic testing market.   Changes in forecasts Following lower than expected 1Q23 financial results we cut slightly down our forecasts of the Company’s revenues and profits for this year and onwards. In the LT perspective we raise the EBITDA margin assuming that along with an increasing scale of BioMaxima’s operations it will draw near the level achieved by considerably bigger companies from the peer group (27-28%). We adjust the capex to the level currently expected and increase the net working capital expected at this year’s end given its material growth in 1Q23.      Our 12M valuation is negatively impacted by (i) peer multiples lowering and (ii) lower ST financial forecasts while (i) expected rise of margins in the LT perspective, (ii) 10Y PLGB yields decline, and (iii) valuation horizon shift in time have a positive impact. Ultimately, our 12M valuation of Biomaxima’s equities representing a 50%-50% mix of the outcomes of the DCF valuation and peer comparison (with a 10% discount) stays intact.  
Czech Republic Economic Outlook: Anticipating the First Rate Cut

Bank of Canada Decision: A Close Call with Hawkish Expectations

ING Economics ING Economics 07.06.2023 08:45
FX Daily: A close call on the Bank of Canada today We expect a hawkish hold by the Bank of Canada today, but pressure on policymakers to hike has risen and it’s admittedly rather a close call. We don’t think it’s a make-or-break event for CAD – but we should keep an eye on the implications of a hike for the broader market and the dollar. In the CEE region, the main focus will be the NBP press conference.   USD: Lack of domestic factors A quiet data calendar has left the pricing for the Federal Reserve's June meeting little changed, with a 20-25% implied probability of a hike after the soft ISM services figures on Monday. That and the generally supported environment for equities haven’t triggered any substantial dollar correction though.   The market’s bearish mood on European currencies remains the prevailing theme, and the dollar’s resilience probably denotes reluctance to add dollar shorts ahead of the US CPI risk event on 13th June – which is still seen as having the potential to tilt the balance to a hike the following day.   We think markets will watch the Bank of Canada decision (which we discuss in detail in the CAD section below) with great interest today. Following the Reserve Bank of Australia rate hike yesterday, another hawkish surprise from a developed central bank in the run-up to the FOMC meeting could cause the revamp of some hawkish speculation, especially considering Canada’s economic affinity with the US.   Given the lack of other market-moving events today, a BoC hike could end up supporting the USD too. But, as discussed in our BoC preview, we expect a hawkish hold – in which case the spill-over into the dollar may not be very material given that should be insufficient to prompt markets to price out the implied chances of a Fed June hike currently embedded in the USD curve.
Worrying oil weakness against the news. Oil Faces Uncertainty: Worrying Weakness and Contradictory Signal

Worrying oil weakness against the news. Oil Faces Uncertainty: Worrying Weakness and Contradictory Signal

Alex Kuptsikevich Alex Kuptsikevich 13.06.2023 13:05
Oil lost more than 4% since the start of Monday, retesting the lower end of its range for the last three months. WTI briefly traded below $67.0 and Brent below $72.   On Tuesday, oil is enjoying buying at the lower end of the range, gaining more than 1.5% since the start of the day. However, there are big questions about whether the current rally can gain traction. Over the past three months, oil has repeatedly found itself close to current levels, from which it has bounced on technical factors (accumulated local oversold conditions) and several announcements of production cuts by OPEC+ members. More interestingly, the current sell-off in oil is going against the news. Prices peaked locally shortly after Saudi Arabia announced a voluntary production cut of 1m BPD and Russia's plans to cut production from next year. In addition, the US government announced at the end of last week that it would begin buying oil for the Strategic Petroleum Reserve. According to Baker Hughes data released on Friday, the number of active rigs (oil + gas) fell by a further 1 to 695.     More interestingly, the sharp fall in oil prices since mid-April has been accompanied by impressive demand for equities on the back of strong macro data. It is no coincidence that OPEC+ is so strongly defending current levels. The $65 area has acted as an important mode switch for oil. A break below triggered a bullish capitulation that halved the price before a steady move higher in 2008, 2014 and 2020. The ability to hold higher triggered a rally that doubled the price in 2007, 2010 and 2021.     The fact that the 200-week moving average is being fought over adds to the epochal nature of the current battle between the bulls and bears. And the persistent, repeated attempts to break below this line since February is more of a bearish signal. Graphically, it looks more like what we saw in 2008. And that is an argument for oil to head towards $30 now, although it would still be prudent to wait for consolidation below $60 to gain more confidence in a downside move.  
EIA Crude Oil Inventory Report Awaited as API Draw Boosts Prices; Fed's Rate Path Influences Gold; Bitcoin Momentum Capped on BlackRock ETF Expectations

Asia Morning Bites: China's Stimulus and FOMC Meeting Set Positive Tone for Risk Assets

ING Economics ING Economics 14.06.2023 08:27
Asia Morning Bites China's monetary stimulus and lower US inflation provide a positive backdrop for risk assets ahead of tonight's FOMC meeting.   Global Macro and Markets Global markets:  Equities seemed to like the continued decline in US inflation yesterday, as it bolsters the case for a pause from the Fed (next decision at 02:00 SGT Thursday). The S&P500 rose 0.69% yesterday, and the NASDAQ added another 0.83%. Chinese stocks also rose, helped by yesterday’s unexpected PBoC rate cut. Still, despite the lower inflation print, US Treasury yields rose some more – the yield on 2Y notes rose 8.9bp to 4.666%, and the 10Y bond yield rose 7.8bp to 3.813%. Once the Fed is out of the way, and the market has settled, perhaps with an even slightly higher bond yield, this might well feel excessively high, given that inflation for July will probably come in at the low 3% level. EURUSD rose a little yesterday, reaching 1.0789, Other G-10 currencies also made gains, though the JPY continues to look soft at 140.18.  The KRW was the standout in Asia yesterday, gapping lower to 1271.50, possibly helped by hawkish comments from the latest BoK minutes. Strong labour data just out will also likely help (see below).   G-7 macro: Yesterday’s US inflation figures for May came out more or less in line with expectations. Headline inflation dropped to just 4.0% from 4.9%, while the core fell a little less, reaching 5.3% (it was 5.5% previously). James Knightley’s note on what this means is worth a close read. But the short version is that it boosts the chances of a Fed pause tonight – even if they indicate further hikes in the dot-plot (we don’t think they will ultimately deliver).  US May PPI data due out should add to the case for falling pipeline inflation pressures. UK April industrial production will not make pleasant reading, though the index of services could be a bit stronger. The ECB meets to decide on rates tomorrow. There is a wide consensus for a further 25bp of tightening.   South Korea: The jobless rate unexpectedly fell to 2.5% in May (vs 2.6% in April, 2.7% market consensus). Employment of services such as whole/retail sales, recreation, and transportation, led the improvement. One interesting thing is that job growth in ICT and professional, scientific& technical activities has been particularly strong over the past several months, despite the recent weakness in the semiconductor business. We think this is not directly related to semiconductor manufacturing itself but more related to platform services and software development, including AI technology. We believe that the tech sector has held up relatively well. Meanwhile, the construction industry shed jobs for the second consecutive month, and real estate also cut jobs.  We think that despite weakness in manufacturing and construction, service-led labour market improvements have continued, and this probably supports the hawkish tone of the BoK. In a separate data release, import prices dropped significantly to -12.0% YoY in May (vs -6.0% in April), mostly due to falling commodity prices. We expect consumer inflation to decelerate further in the coming months and to reach the 2% range as early as June.     What to look out for: FOMC meeting South Korea unemployment (14 June) India Wholesale prices (14 June) US PPI inflation and MBA mortgage applications (14 June) FOMC policy meeting (15 June) New Zealand GDP (15 June) Japan core machine orders (15 June) Australia unemployment (15 June) China industrial production and retail sales (15 June) Indonesia trade (15 June) India trade (15 June) Taiwan policy meeting (15 June) ECB policy meeting (15 June) US retail sales and initial jobless claims (15 June) Singapore NODX (16 June) BoJ policy meeting (16 June) US University of Michigan sentiment (16 June)
Why the Bank of England is Cautious about Endorsing a 6% Bank Rate: Assessing the Impact on Homeowners and the Mortgage Market

Analyzing the Fed's Decision. Gold Market in Turmoil!

Marco Turatti Marco Turatti 15.06.2023 13:29
In the wake of the recent Federal Reserve (Fed) decision and its implications for the financial markets, we reached out to experts, analysts, and economists from HF markets to gain their insights on the current situation. Our focus revolves around two key areas: the Fed's decision and its impact on the gold market. With these topics in mind, we explore the potential outlook for gold prices in the coming weeks and discuss the market's response to the FOMC (Federal Open Market Committee) decision.   Gold Market Analysis When considering the trajectory of gold prices in the near future, experts express skepticism regarding the likelihood of reaching a new all-time high for XAU. While certain central banks, including Turkey, China, and India (which added 2 tonnes to its reserves in May), have increased their gold purchases to diversify their reserves away from the US dollar, investors, speculators, and hedge funds focus on other factors. Notably, gold is currently trading at a premium compared to its valuation against the US 10-year real interest rate. Recent price movements indicate a potential further decline, with a possible target range of $1860 or even lower to $1785. FXMAG.COM: Could you give as your point of view about how the gold prices would behave in next weeks? Is there a chance that there will be new ATH? Marco Turatti – HFM Market Analyst: It seems unlikely that we will see a new all-time high for XAU soon. Its price has so far been supported by increased purchases by certain central banks, such as Turkey, China and others (India added 2 tonnes to its reserves in May). The aim is to differentiate its reserves from the USD.  But investors, speculators and hedge funds look at other fundamentals and gold is very expensive compared to where it should trade against, for example, the US 10-year real interest rate. Just today it broke $1940, and could continue to the $1860 zone, if not lower to $1785.    Fed's Decision and Market Reaction Regarding the FOMC decision, experts highlight the surprise factor. Many anticipated that the Fed would approach the peak and initiate rate cuts in the coming months. However, the Fed's stance indicates that the official rate could reach 5.75% in 2023, with Chairman Jerome Powell stating that no cuts are expected for approximately two years. This stands in contrast to the Dot Plot projections. The Fed also expressed optimism regarding the new growth and job outlook.     FXMAG.COM: Could you please comment on the FOMC decision? Marco Turatti – HFM Market Analyst: The Fed really surprised: a lot of people thought we were close to the peak and ready to cut rates this year, but this is not the case. The official rate will probably reach 5.75% in 2023 and Jerome Powell says there will be no cuts for about 2 years (which is different from what the Dot Plot says).  They were also quite optimistic about the new growth/jobs outlook. The market didn't really go anywhere: yes, there was a lot of up and down movement in both indices and the USD, but at the end the day it ended with the US500 flat and the USDIndex having recovered 103.  Now there will be time in the coming hours to better process the central bank's message. Today (15/06) we are seeing declines in the stock market futures and this makes sense for equities (also given the emphasis on labour market monitoring, the Fed wants it weaker).  One direct and clear reaction we are noticing, however, has obviously been the rise in rates along the whole curve, which is weighing on gold.
Assessing the Path: Goods and Shelter Inflation and the Fed's Pause Decision

The Resilience of Equities and Bond Correlation: Fed Testimony, Inflation Pressures, and Housing Market Surprises

Ipek Ozkardeskaya Ipek Ozkardeskaya 21.06.2023 08:33
Risk takers are not out dancing on the Wall Street this week before the Federal Reserve (Fed) President Powell's semiannual congressional testimony scheduled for today and tomorrow. Equities are down, oil is down, sovereign bonds are up. And the rally in equities versus a selloff in sovereign bonds is a pattern that we have been seeing since the rebound following the mini banking crisis, and the correlation between stocks and sovereign bonds are reestablished, again, after last year's visit to the positive territory.   This – the return of negative equity-bond correlation - is what we expected to happen this year, but for the exact opposite reason. We were expecting the sovereign bonds to recover, as the US was supposed to be in recession by now, whereas the sovereign bonds were supposed to find buyers as a result of softening, and even reversing Fed policy. But none of it happened. Equities rallied, the Fed became more aggressive on tightening its monetary policy, and now the American housing market starts printing surprisingly positive data, with housing starts and building permits flashing strong figures for May, defying the rising mortgage rates in the US due to the rising Fed rates. I mean housing starts jumped more than 20% in May, but loans for residential real estate slumped. We no longer know what to do with this data, and that's a cause for concern per se... not understanding the data.     What we know and understand very well, however, is, a strong housing market and tight jobs market will encourage Fed to hike more, and encourage other central banks to do more, as well. But not everyone is as lucky as Powell, because in Britain, the skyrocketing mortgage rates are turning into a serious headache that no one can solve for now. The UK home-loan approvals have been dropping after a post-pandemic peak, the refinancing costs took a lift, and political dispute is gaining momentum with Liberal Democrats asking for a £3 billion mortgage protection package to help people keep their homes, and their mortgages, while Jeremy Hunt says there is no money in the coffers for such fiscal support. The 2-year gilt yield slid below 5% yesterday, as a result of a broad-based flight to safer sovereign bonds, but the relief will likely remain short-lived and the outlook for Gilt market will likely remain negative with further, and significant rate hikes seen on the BoE's horizon.   Released this morning, the British inflation was expected to ease from 8.7% to 8.4% but did not ease... while core inflation unexpectedly jumped past the 7% mark again. These numbers warn that inflationary pressures in the UK are not under control and call for further rate hikes which will further squeeze the British households, without a guarantee of easing inflation. We will see what the BoE will do and say tomorrow, but we know that they now have a few doubts regarding the reliability of their inflation model which was pointing at a steep fall in H2 this year – a scenario that is unlikely to happen.   Cable jumped past the 1.28 mark following the inflation data, then rapidly fell back to the pre-data levels. The short-term direction will depend on a broad US dollar appetite, yet the medium-term outlook for the pound-dollar remains positive on the back of more hawkish BoE expectations, compared to the Fed's, and an advance toward the 1.30 is well possible, especially if the dollar appetite remains soft.     In the US, profit taking and flight to safety before Powell's testimony sent the S&P500 and Nasdaq stocks lower yesterday. The S&P500 slipped below the 4400 mark, while Nasdaq 100 tipped a toe below the 15000 mark but closed above this level.    The US dollar index traded higher for the 3rd session and is now testing the 50-DMA to the upside, while gold pushed below the 100-DMA as rising US yields and stronger dollar weigh on appetite for non-interest-bearing gold.    Yet, any hawkishness from Powell's testimony will likely be tempered by counter-expectation that the Fed may be going too fast too far, and could stop hiking before materializing the two rate hikes they revealed last week in their dot plot. It's true that the surprising data on housing and jobs front don't give a respite to the Fed, but a part of it is still believed to be the post-pandemic effect. For housing for example, insufficient number of homes due to the rising WFH demand, the retreat in material costs that exploded during the pandemic and the fading supply chain pressures help to explain why the market is not responding to the skyrocketing mortgage rates.   But the risk is there – it's not even hidden, and the meltdowns tend to happen without telling.   I mean, no one could tell that the US regional banks would go bankrupt a week before they did! Anyway, the risks are there, but the resilient eco data hints that Jerome Powell will confidently remain hawkish, and that could lead to some further downside correction in US big stocks which are now in overbought market. 
Bank of England Confronts Troubling Inflation Report; Fed Chair Powell's Testimony Echoes Expected Path

Bank of England Confronts Troubling Inflation Report; Fed Chair Powell's Testimony Echoes Expected Path

Ipek Ozkardeskaya Ipek Ozkardeskaya 22.06.2023 08:07
BoE decides after another bad inflation report.     Federal Reserve (Fed) Chair Powell didn't say anything we didn't know, or we wouldn't expect in the first day of his semiannual testimony before the American lawmakers yesterday. He said that the Fed will continue hiking rates, but because they are getting closer to the destination, it's normal to slow down the pace. He repeated that two more hikes are a good guess, and that the economy will suffer a period of tight credit conditions, below-average growth, and higher unemployment to return to lower inflation.   The US 2-year yield pushed higher. The 10-year yield was flat given that higher short term yields point at higher recession odds for the long term. The gap between the 2 and the 10-year yield is again at 100bp.  In equities, the S&P500 gave back some field, but not all sectors suffered. Tech stocks pulled the index lower, financials and real estate were down, but energy stocks led gains as US crude jumped past $72pb on news that the US inventories dipped by around 1.2 mio barrel last week. Industrial, materials and utilities were up, as well, as a sign that a rotation toward the laggards could be happening rather than a broad-based moody selloff.  In currencies, the US dollar fell and is now testing the April-to-date ascending base - not because the Fed's Powell sounded more dovish, but because what's happening beyond the US borders makes the Fed look more dovish than what it really is.     By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank
Navigating Australia's Disinflationary Path: RBA Rates, Labor Market, and Inflation Outlook

Asia Morning Bites: Central Banks, Global Markets, and Key Economic Data

ING Economics ING Economics 26.06.2023 07:58
Asia Morning Bites Markets are still digesting the more hawkish central bank backdrop and events in Russia over the weekend. More central bank flavour will come this week from the Sintra ECB event, where Powell, Lagarde, Bailey and Ueda will be speaking. US PCE data rounds off the week.   Global Macro and Markets Global markets: Equities finished in the red on Friday. There was not much upside. Bourses opened down and then stayed down for most of the session. The S&P 500 fell 0.77%, and the NASDAQ fell 1.01%. Digesting the Fed’s recent comments about further rate hikes, and also the similar noises coming from the ECB and the Bank of England's surprise 50bp hike, together with anxiety about the unfurling events in Russia would all have weighed on sentiment. US equity futures are looking a bit brighter this morning. China was still on holiday at the end of last week. US Treasury yields dropped last Friday. The 2Y US Treasury yield fell 5bp to 4.741%. 10Y UST yields fell 6bp to 3.735%. EURUSD moved lower on Friday, falling to 1.0845 intraday before recovering to just above 1.09. The AUD was also weaker against the USD, falling to 0.668. Sterling was steadier, but Cable also lost ground to 1.2728, and the JPY was also weaker, rising to 143.521. Friday was a poor day for Asian FX, with declines across the board except where markets were closed for public holidays. The KRW, SGD, THB and MYR all lost 0.5% or more.   G-7 macro: US PMI data showed some signs of weakness on Friday. The Manufacturing PMI slid further into contraction territory, dropping to 46.3 from 48.4, while the service sector PMI softened to 54.1 from 54.9, though remains in expansion mode. Germany’s Ifo survey is about all we have to get excited about today. The ECB’s Central Bank forum in Sintra kicks off today.  The end of the week will be more interesting, with another dose of PCE data from the US.   Singapore:  Industrial production data will be released later this afternoon.  The market consensus points to another month of contraction (-7.1%YoY) as production tracks the struggles on the trade front.  We can expect this trend to continue in the near term given the outlook for global trade.    Philippines: President Marcos appointed former Monetary Board Member Remolona to take over as Bangko Sentral ng Pilipinas (BSP) Governor next week.  We are not expecting any major shifts in policy thinking from incumbent BSP Governor Medalla and we expect the BSP to match any moves by the Fed in the coming months.      What to look out for: Singapore industrial production and Powell's comments later in the week Singapore industrial production (26 June) Taiwan industrial production (26 June) Japan leading index (27 June) Hong Kong trade balance (27 June) US durable goods orders, new home sales and Conference Board consumer confidence (27 June) Australia CPI inflation (28 June) Philippines bank lending (28 June) US MBA mortgage applications and wholesale inventories (28 June) Fed’s Powell speaks (28 June) Japan retail sales (29 June) Australia retail sales (29 June) US initial jobless claims and pending home sales (29 June) Fed’s Powell and Bostic speak (29 June) South Korea industrial production (30 June) Japan labour market data (30 June) China PMI manufacturing (30 June) US personal spending and Univ of Michigan sentiment (30 June)
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Market Reaction and Potential Implications: Wagner Group's Rebellion, Inflation Reports, and Central Bank Policies

Ipek Ozkardeskaya Ipek Ozkardeskaya 26.06.2023 08:06
Slow start following an eventful weekend.    The weekend was eventful with the unexpected rebellion of the Wagner Group against the Kremlin. Yevgeny Prigozhin's men, who fight for Putin in the deadliest battles in Ukraine walked towards Moscow this weekend as Prigozhin accused the Kremlin of not providing enough arms to his troops. But suddenly, Prigozhin called off the attack following an agreement brokered by Belarus and agreed to go into exile. The Kremlin took back control of the situation, but we haven't seen Vladimit Putin, or Prigozhin talk since then. The Wagner incident may have exposed Putin's weakness, and was the most serious threat to his rule in two decades. It could be a turning point in the war in Ukraine. But nothing is more unsure. According to Volodymyr Zelensky, there are no indications that Wagner fighters are retreating from the battlefield.  The first reaction of the financial markets to Wagner's mini coup was relatively calm. Gold for example, which is a good indication of market stress at this kind of moment, remained flat, and even sold into the $1930 level. The dollar-swissy moved little near the 90 cents level. Crude oil was offered into the $70pb level, as nat gas futures jumped more than 2% at the weekly open, and specific stocks like United Co. Rusal International, a Russian aluminum producer that trades in Hong Kong, gapped lower at the open but recovered losses.  Equities in Asia were mostly under pressure from last week's selloff in the US, while US futures ticked higher and are slightly positive at the time of writing.    The Wagner incident will likely remain broadly ignored by investors, unless there are fresh developments that could change the course of the war in Ukraine. Until then, markets will be back to business as usual. There is nothing much on today's economic calendar, but the rest of the week will be busy with a series of inflation reports from Canada, Australia, Europe, the US, and Japan.     Except for Japan, where the Bank of Japan (BoJ) doesn't seem urged to hike the rates, higher-than-expected inflation figures could further fuel the hawkish central bank expectations and add to the weakening appetite in risk assets.     The Federal Reserve (Fed) will carry its annual bank stress test this week, to see how many more rate hikes the baking sector could take in and the potential for changes in capital requirements down the road. The big banks are likely not very vulnerable to higher capital requirements, yet the profitability of the US regional banks could be at jeopardy and that could cause investors to remain skeptical regarding the US banking stocks altogether. Invesco's KBW bank ETF slipped below its 50-DMA, following recovery in May on the back of decidedly aggressive Fed to continue hiking rates, and stricter requirements could further weigh on appetite.    Zooming out, the S&P500 is down by more than 2% since this month's peak, Nasdaq 100 lost more than 3% while Europe's Stoxx 600 dipped 3.70% between mid-June and now on the back of growing signs that the aggressive central bank rate hikes are finally slowing economic activity around the world. A series of PMI data released last Friday showed that activity in euro area's biggest economies fell to a 5-month low as manufacturing contracted faster and services grew slower than expected. The EURUSD tipped a toe below its 50-DMA last Friday but found buyers below this level. Weak data weakens the European Central Bank (ECB) expectations, but that could easily reverse with a strong inflation read given that the ECB is ready to induce more pain on the Eurozone economy to fight inflation.     Across the Channel, the picture isn't necessarily better. Both services and manufacturing came in softer than expected. And despite the positive surprise on the retail sales front, retail sales in Britain slumped more than 2% in May, due to the rising cost of living that led the Brits back from loosening their purse string. One thing though. UK's largest lenders agreed to give borrowers a 12-month grace period if they missed their mortgage payments as a result of whopping costs of keeping their mortgages due to the aggressively rising interest rates. Unless an accident – in real estate for example, the Bank of England (BoE) will continue hiking the rates and reach a peak rate of 6.25% by December.   The only way to slow down the pace of hikes is to find a solution to the sticky inflation problem. And because the BoE has limited influence on prices, Jeremy Hunt will meet industry regulatory this week to discuss how they could prevent companies from taking advantage of inflation and raising prices more than needed, which adds to inflationary pressures through what we call 'greeflation'. But until he finds a solution, the BoE has no choice but to keep hiking and the UK's 2-year gilt yield has further to run higher, whereas the widening gap between the 2 and 10-year yield hints at growing odds of recession in the UK, which should also prevent the pound from gaining strength on the back of hawkish BoE. Cable will more likely end up going back to 1.25, than extending gains to 1.30.       By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank  
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Market Focus: CNY Surge, Global Macro Trends, and Key Data Releases

ING Economics ING Economics 27.06.2023 10:41
Asia Morning Bites CNY pushes up to 7.24. Next stop 7.30?   Global Macro and Markets Global markets:  Eclipsing other market moves on Monday, the sharp upwards shift of the CNY after China returned from public holidays last week is the obvious starting point for today’s reflection. The CNY had last traded at 7.18 on 21 June, but it gapped higher immediately on opening yesterday and kept climbing to finish at 7.24. The October 2022 peak of 7.30 is now firmly in focus, the main question for many will now be how quickly it gets there, and whether the PBoC tries to slow the ascent or add some two-way risk. So far, the PBoC seem to be pretty relaxed about the moves, which are sizeable, but orderly. The rest of Asia has been able to shrug off much of the CNY move. The TWD weakened 0.32% yesterday, moving slightly less than the CNH on the day. Other Asian FX saw small losses for the most part, but nothing major. Indeed, as we observed in a recent note, the correlations between CNY moves and other Asian FX seem to have fallen substantially recently. In G-10 currency space, there was little going on. EURUSD was almost unchanged at 1.0908. Other G-10 currencies were fairly muted yesterday. Equities didn’t deliver the increase that had been promised by futures this time yesterday, and US stocks suffered another decline. The S&P 500 fell 0.45% while the NASDAQ dropped 1.16%. Both are still up strongly year-to-date (12.74% and 27.41% respectively) so can absorb some further losses. Chinese stocks were also down. The CSI 300 fell 1.41% and the Hang Seng was down 0.51%. US Treasury yields were little changed across the curve. The 10Y yield is now 3.721%.   G-7 macro:  It was a very quiet day for macro on Monday. Germany’s Ifo survey delivered another set of weak numbers. Carsten Brzeski suggested that Germany’s recovery was over before it really began in a note yesterday. Today we get US durable goods orders data for May, together with US house price data for April from CoreLogic. The Durable goods numbers are exceptionally choppy and most of the relevant detail will lie buried in the core orders and shipments numbers. The house price data have been firming lately, which doesn’t make Fed forecasting any easier. Still, some good news is that Bloomberg reports rents falling according to a national survey by Realtor.com.  Actually, other industry data had already been giving that message, but it is helpful to have further corroboration.  Conference Board consumer confidence as well as some regional US activity surveys complete the data calendar for the day.      What to look out for: US durable goods and consumer confidence Japan leading index (27 June) Hong Kong trade balance (27 June) US durable goods orders, new home sales and Conference Board consumer confidence (27 June) Australia CPI inflation (28 June) Philippines bank lending (28 June) US MBA mortgage applications and wholesale inventories (28 June) Fed’s Powell speaks (28 June) Japan retail sales (29 June) Australia retail sales (29 June) US initial jobless claims and pending home sales (29 June) Fed’s Powell and Bostic speak (29 June) South Korea industrial production (30 June) Japan labour market data (30 June) China PMI manufacturing (30 June) US personal spending and Univ of Michigan sentiment (30 June)
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Asia Morning Bites: China PMI Report Indicates Slowdown in Non-Manufacturing Sector Growth; US GDP Revision Spurs Surge in Bond Yields

ING Economics ING Economics 30.06.2023 09:36
Asia Morning Bites China's PMI report could show non-manufacturing sector growth slowing. US GDP revision causes bond yields to surge.   Global Macro and Markets Global markets:  US Treasuries did not like the upward revision to the US 1Q23 GDP figures. 2Y yields soared by 14.9bp to 4.859%, and 10Y yields rose an equally eye-popping 13.1bp to 3.838%. Markets are now pricing in an 83.5% chance of a 25bp rate hike in July, though they seem to think that might be it, with only about a 36% chance of a subsequent hike after that. Equities weren’t quite sure which way to turn. Stronger growth – good. Higher rates – bad. The S&P 500 rose 0.45% while the NASDAQ remained unchanged at the close. Chinese stocks fell. The Heng Seng Index fell 1.24%, while the CSI 300 dropped 0.49%. The USD showed no signs of weakening yesterday, given the support from rising yields. EURUSD has fallen to 1.0866. The AUD is back down to the low 66-cent range. Cable drifted slightly lower to 1.2612 and the JPY resumed its ascent, rising to 144.777. Asian currencies were mostly weaker against the USD. The CNY was only fractionally higher at 7.2475, aided by another stronger-than-expected daily fixing. The KRW has moved up to 1317.   G-7 macro: Yesterday’s third revision to the 1Q23 GDP numbers should not have been a market-moving event. But the scale of the revision higher, from 1.3% to 2.0% will be taken by some to mean that the Fed still has a lot of work to do. Today, we get the May personal income and spending figures, together with their associated price indices. The market consensus expects headline PCE inflation to fall from 4.4% to 3.8%YoY, but the core deflator to stay at 4.7%. Final June University of Michigan confidence figures are also released.  In the Eurozone, May inflation data could shed some light on the ECB’s next moves. There is a growing divergence in the path of inflation across the region, which is leading to some disagreement about the right path for policy. Though one suspects that the response will be, if in doubt, hike.   China: Official PMI data out this morning will likely show the manufacturing sector remaining in modest contraction, but could show non-manufacturing sector growth slowing as pent-up demand works its way through the system and more normal spending levels return.   Japan: IP output was weaker than expected, declining by 1.6% MoM, sa (vs 0.7% in April, -1.0% maket consensus), recording the first decline in four months. Motor vehicle production fell unexpectedly. But, the survey of production forecast shows that production is expected to rise in June by 5.6%. Consequently, we interpret today’s weak data as a temporary drop and expect the underlying growth trend to continue.   Tokyo consumer inflation unexpectedly slowed to 3.1% YoY in June (vs 3.2% in May, 3.4% market expectation), mainly due to base effects. In a monthly comparison, inflation rose 0.2% MoM sa, reversing May’s 0.1% decline. Details showed that inflationary pressure mainly increased in commodity prices (0.4%) while service prices (0.0%) remained little changed. This month's electricity bill hike was the main reason for the monthly rise. Meanwhile, the labour market remained relatively tight, with the jobless rate staying at 2.6%. Today’s data from Japan signals that the BoJ will continue to be patient on policy making.   South Korea: Monthly activity data was surprisingly strong, with rising industrial production (3.2% MoM sa), retail sales (0.4%), and investment (equipment 3.5%, construction 0.5%). The decline in service activity (-0.1%) for the third month shows that the service-led growth trend is fading. Based on today’s better-than-expected activity data, we will revise our 2Q23 GDP forecasts higher. But, at the same time, forward-looking data, such as machinery orders (-11.7% YoY) and construction orders (-27.8% YoY), weakened further and soft service activity in accommodation and restaurants suggest weaker consumption and investment in 2H23. Thus, we are going to downgrade the 2H23 growth forecasts.   In manufacturing activity data, the upside surprise mainly came from semiconductors, which rose by 4.4%, which is quite puzzling, as it contrasts with major chipmakers' commitments to cut production. It usually takes 6 months to reduce production, thus the production cut is not fully reflected in the May output figures. Also, the recent strong demand for AI chips may have had some positive impact.   What to look out for: China PMI South Korea industrial production (30 June) Japan labour market data (30 June) China PMI manufacturing (30 June) US personal spending and Univ of Michigan sentiment (30 June)
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Equities Defy Expectations: A Strong First Half for Stocks and Bond Market Struggles

Ipek Ozkardeskaya Ipek Ozkardeskaya 03.07.2023 09:30
The first half of the year ends on a positive note for equities and not so much for the bonds. This is the exact opposite of what was predicted. The bond markets were supposed to recover due to economic pains which should have led to a more dovish central bank landscape, while equities should have suffered due to the economic woes, slowing spending and recession. But no. Equities did well. Even though profits fell, they fell less than expected and more importantly, AI saved the day sending the Big Tech stocks to a nice bull market. Bonds on the other hand tumbled as US spending and growth remained resilient. The latter convinced the Federal Reserve (FeD) that it should keep hiking the interest rates. The spread between the US 2 and 10-year yield hit nearly 110bp, as an indication of recession in the coming months.  But last week's strong economic data released in the US, combined with Friday's softer-than-expected PCE figures supported, yet again, the idea of a soft landing and further fueled the rally in stocks. As such, the S&P500 hit a fresh year high at the last trading day of the first half and gained more than 17% so far this year, while Nasdaq 100 soared more than 40%! Apple hit $194 per share, and closed last week with a valuation above $3 trillion.   Of course, this incredible performance makes many investors wonder whether the equit rally could continue in the second half.     On the data dock  The Reserve Bank of Australia (RBA) is expected to keep its rate unchanged at this week's policy meeting, after being partly responsible of the latest hawkish spree in global central bank expectations when it raised rates unexpectedly the last time. A no action from the RBA could calm down the nerves this week. But for that, we must also see loosening in US jobs data. Due Friday, the US NFP is expected to print more than 220K nonfarm job additions in June, with steady wage growth of around 0.3% over the month. The best scenario for stock investors is a strong NFP read combined with softening wages growth.   In China, Caixin manufacturing index for China came in slightly better than expected, and slightly above the 50 threshold, though sentiment weakened to an 8 month low and new orders rose at a softer pace. China could recover in the H2 amid People's Bank of China's (PBoC) efforts to boost growth, but we won't get the growth bang that we were looking for. That means that we will probably bypass a dangerous long-lasting rally in energy and commodity prices, which could help central banks contain inflationary pressures with more success.   For now, oil prices remain mostly ranged despite OPEC's malicious efforts to boost them artificially. The barrel of crude jumped past the $70 level on the back of a broad-based risk rally following the US softer than expected PCE read, which fueled some dovish central bank expectations. The Chinese data also give some support this morning, but the 50-DMA, near $71.30pb will likely act as a solid resistance. This week, risks remain tilted to the upside, as OPEC meets with the industry heads. This week's meeting is not a policy meeting so there won't be any production cuts, or any important decision from OPEC, but what we could well hear slowing demand forecasts, which would then bring traders to assess another production cut from OPEC down the road. In all cases, we have seen clearly that cutting production hasn't been enough for a sustained price rally so far. Therefore, any rally triggered by comments could be interesting top selling opportunities for short-term traders.   Tesla delivered a record number of cars worldwide in Q2, something like 466K cars, as Elon Musk is up to aggressively cutting prices to boost volume. It looks like it is paying off. The latest figures will likely keep Tesla shares on a positive path to challenge the $280 level again. But competition is not far. The Chinese BYD did better than Tesla, selling more than 700K cars last quarter, its best-ever quarter as well. BYD shares jumped 2.70% in Hong Kong.   
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Global Manufacturing Hubs Show Weakness, US and Japan Stocks Bullish Despite Recession Risk

Kelvin Wong Kelvin Wong 03.07.2023 11:03
Global manufacturing hubs; South Korea, Singapore & China continued to indicate a weaker external demand environment. Several key stock markets; US & Japan are on bullish footing, ignoring global recession risk. Higher US consumer confidence & more positive earnings guidance are required to maintain the bullish animal spirits. Higher cost of funding & a deeply inverted US Treasury yield curve are key hurdles for the bulls. The great divergence continues between the state of the real global economy and risk assets such as equities. Latest data from key global manufacturing hubs in Asia have indicated more potential weakness ahead in the external demand environment for the second half of 2023. South Korea, a key provider of semiconductors and smartphones for the global economy saw its latest full monthly exports figure decline to -6% year-on-year in June, a lower magnitude of -15.2% recorded in May but lower than expectations of a 3% drop. Overall, it’s nine consecutive months of contraction for South Korea’s exports. In addition, soft data from South Korea’s Manufacturing PMI which tends to have a lead time over exports figures has remained in contraction mode for twelve consecutive months; it fell to 47.8 in June from 48.4 in May. Data from China’s Caixin Manufacturing PMI which provides coverage for small and medium enterprises fared slightly better than the official NBS Manufacturing PMI for June but remained lackluster; it dipped to a neutral level of 50.5 from 50.9 recorded in May and came in slightly above expectations of 50.2. Singapore’s non-oil domestic exports (NODX) slumped by 14.7% year-on-year in May, worse than forecasts of an 8.1% decline after a 9.8% reading in April; so far it has marked its eighth consecutive month of contraction.   US Nasdaq 100 and Japan Nikkei 225 were star performers in H1 2023   Fig 1: Key cross-assets performances as of 30 Jun 2023 (Source: TradingView, click to enlarge chart   Fig 2: Nasdaq 100 long-term secular trend as of 30 Jun 2023 (Source: TradingView, click to enlarge chart) In contrast, several major benchmark stock indices have continued to shrug off these “real negative growth backdrop”, entered bull market territories, and staged stellar performances. The top performer was the US Nasdaq 100 assisted by the Artificial Intelligence (AI) equity theme play rocketed to a gain of 38.75% in the first half of 2023 and outperformed the MSCI All-Country World Index which recorded a positive return of 13.03% over the same period. Japanese equities also performed well in the first half; the Nikkei 225 rallied by 27.19%, and the bulk of H1 2023 gains came from Q2 (+18.36). Thanks to a change in corporate governance that favoured shareholders’ activism, lower valuation over the US stock market, and rosy foreign funds’ inflows reinforced by prominent value investor, Warren Buffet’s increased stakes in several major Japanese trading firms made over the first six months.     In contrast, other Asian stock markets in general have been trapped in a muted tone due to a slowing China economy after a diminished growth spurt from the removal of stringent Covid-19 lockdown measures and rather lukewarm monetary and fiscal stimulus measures being implemented at this juncture. The MSCI All Country Asia ex-Japan has managed to score only a meagre gain of 2.55% in the first half, which still has a significant gap to cover to recoup its annual loss of -21.66% posted in the prior year. Over in Europe, Germany’s DAX managed to squeeze an H1 2023 return of 15.98% but do take note the bulk of its gain came in Q1 as the lackluster external growth environment has triggered a negative ripple effect where the DAX’s Q2 performance only stood at 3.32% that’s a huge gap of around 1,180 basis points over Nasdaq’s Q2 return of 15.16%. Markets are always forward-looking, around the end of Q1 2023, the bullish camp for equities had a “Fed Pivot” narrative where there were significantly high odds being priced into the Fed funds futures market that advocated rate cuts of 75 bps to 100 bps in the second half of 2023. Right now, given the Fed’s latest monetary policy guidance is to have “higher interest rates for longer periods”, rate cuts pricing in the futures market for H2 has evaporated, and even though further hikes may not be implemented in 2024 after two more hikes on the Fed funds rate that are being priced in before 2023 ends to bring its likely terminal rate to 5.50% to 5.75%, the start of an easing cycle may only kick in during the second half of 2024 based on latest data from CME FedWatch tool at this time of the writing. Thus, with the liquidity punch bowl being taken away for now. What are the possible catalysts that can continue to drive the positive animal spirits in the US stock market that can increase the odds of spreading to the rest of the world?   Higher consumer confidence and better-than-expected earnings guidance So far, US consumer confidence has been trending up modestly since July 2022. The final June reading of the University of Michigan Consumer Sentiment Index has been revised higher to 64.4, its highest level in four months. Higher consumer confidence tends to lead to higher consumer spending in the US where the US consumers may take on a similar pre-pandemic role of the “global consumer” for goods and services. Q2 2023 earnings reporting season in the US will go full fledge in around two weeks. Based on FactSet data as of 30 June 2023, its estimated earnings decline compiled from analysts for the S&P 500 is at -6.8% year-on-year, a further drop from Q1’s -2% y/y. The key will be the number of positive earnings forward guidance from the cyclical sectors such as Industrials and Consumer Discretionary to take over the baton from Information Technology. So far, there is more positive earnings guidance for FY 2023/2024 in Industrials as the mix is 65% positive and 35% negative whereas else Consumer Discretionary share of positive guidance is only 48% (52% negative).   Higher cost of funding and a deeply inverted US Treasury yield curve are key hurdles for the bulls The bond market seems to be not “buying” into the H1 2023 bullish narrative seen in the stock market. On the last trading day of H1, the US Treasury yield curve spread (10-year minus 2-year) continued to invert deeply to -1.06%, its lowest level since March during the onset of the US regional banking turmoil which indicates an increase odd of a hard landing in the US economy coupled with a higher level of interest rates environment for a longer period that can drive up the cost of leverage and borrowings for corporates and depress profit margins. If such a scenario materializes, current lofty bullish expectations in the US stock market may see a swift downward adjustment that is at risk of spreading to the rest of the world, and to prevent such occurrences, perhaps China needs to implement more aggressive expansionary monetary and fiscal policies to fill up the liquidity punchbowl given that inflationary pressures are benign in China.  
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Asia Morning Bites: Korean Authorities Limit Fallout as MGCCC Branches Close, US Non-Farm Payrolls in Focus

Michael Hewson Michael Hewson 07.07.2023 08:48
Asia Morning Bites Korean authorities give a strong deposit protection message to limit fallout as it closes some branches of MGCCC. US non-farm payrolls later - and a big number is expected following the ADP release.   Global Macro and Markets Global markets:  Strong US labour data ahead of today’s payrolls release caused US Treasury yields to move higher again yesterday. US 2Y yields rose a further 3.6bp while those on 10Y USTs rose 9.8bp taking them to 4.029% for the first time since early March. Equities didn’t respond well to the stronger-than-expected data. The S&P 500 fell 0.79%, while the NASDAQ dropped by 0.82%. Chinese stocks were also down. The Hang Seng fell 3.03%, while the CSI 300 fell a more modest 0.67%. In spite of the rise in yields, the USD lost a little ground to the EUR, and EURUSD moved up to 1.0894. The AUD was weaker though, falling back to 0.6630, while the GBP moved a little higher to 1.2743, and the JPY also made some gains, moving to just below 144. Most of the Asian FX pack was weaker against the USD yesterday G-7 macro: Yesterday’s market-moving release was the US ADP survey, which showed a 497 thousand increase in private employment in June. This was more than twice what had been expected and could set the market up for an upside surprise to the 230 thousand payrolls median forecast today. There was also a stronger-than-expected reading from the service sector ISM index, with both headline and employment indices rising a lot. It is going to be quite hard for the Fed to ignore these numbers at its 27 July meeting. As well as payrolls today, we also get hourly earnings data, which is expected to show a slight moderation from the 4.3% rate of annual growth in May. The unemployment rate, however, is thought likely to go down, not up. Korea: The risk of a bank run emerged suddenly as the delinquency rates of MGCCC rose sharply and a couple of branches decided to close. The government has issued a strong message that deposits will be protected. The BoK will keep rates on hold as financial market stress is expected to continue for a while. Please see details. Taiwan: Trade figures for June could show rates of decline moderating in year-on-year terms, though they are likely to remain in a double-digit descent. In USD terms, Taiwan’s exports have been steadily declining since August 2022, and today’s reading may simply signal that the rate of decline has eased slightly. This would be in line with what we see in other regional peers like South Korea.   What to look out for: US jobs report South Korea BOP balance (7 July) Taiwan trade (7 July) US non-farm payrolls (7 July)
Challenges Ahead: Tense Social Climate and Weak Outlook for the French Economy

USD Struggles to Gain Traction Despite Strong Data: FX Daily Analysis

ING Economics ING Economics 07.07.2023 09:29
FX Daily: Dollar late to the party Treasuries are hitting key levels on big US data surprises, but the dollar is not finding real support. The dollar may be mirroring some lingering reluctance to align with the dot plot’s two hikes, but market conditions point to a stronger greenback in the near term, barring a substantial downside surprise in payrolls today. Watch jobs numbers in Canada too.   USD: Surprisingly soft The large and unexpected jump to almost 500k in ADP private payroll numbers yesterday left clear marks across asset classes. Despite some recovery later in the session, US equities took a hit, and European ones closed with a nearly 3.0% loss. Treasuries are now trading around the two key benchmarks: 5.0% for the 2Y and 4.0% for the 10Y after a disastrous session for bonds. This would appear to be the perfect recipe for a substantial dollar rally, which hasn’t materialised however, and we are observing instead some dollar selling this morning. Indeed, the dollar had already moved in advance of yesterday’s release as the minutes had offered clear hawkish hints on Wednesday. Incidentally, markets still appear unconvinced to fully price in two rate hikes by the Fed despite the strong ADP (which arguably aren’t hard data, and have been misleading at times) and ISM services figures. The Fed funds curve has not shifted particularly higher, with the peak rate still seen at 36bp from here, so 14bp short of dot plot projections. In a way, the dollar might still be mirroring that lingering market pricing-dot plot gap. At the same time, the market backdrop does seem to point at dollar strength at this juncture, as we doubt this morning’s mild USD correction will have legs unless US payrolls released later today move in the direction of ADP figures and surprise on the downside. The consensus for the headline jobs number is 230k, but may be higher after the strong ADP read. Unemployment is also expected to tick lower to 3.6% and some focus will, as usual, fall on wage growth. Barring major disappointments, it should not take much to keep the Fed’s hawkish narrative going, and markets should have room to keep inching closer to the pricing in two rate hikes. The path for a more supported dollar in the near term appears to be the most obvious one, in our view, and a return above 104.00 in DXY in the coming days looks likely.
Challenges Ahead: Tense Social Climate and Weak Outlook for the French Economy

USD Struggles to Gain Traction Despite Strong Data: FX Daily Analysis - 07.07.2023

ING Economics ING Economics 07.07.2023 09:29
FX Daily: Dollar late to the party Treasuries are hitting key levels on big US data surprises, but the dollar is not finding real support. The dollar may be mirroring some lingering reluctance to align with the dot plot’s two hikes, but market conditions point to a stronger greenback in the near term, barring a substantial downside surprise in payrolls today. Watch jobs numbers in Canada too.   USD: Surprisingly soft The large and unexpected jump to almost 500k in ADP private payroll numbers yesterday left clear marks across asset classes. Despite some recovery later in the session, US equities took a hit, and European ones closed with a nearly 3.0% loss. Treasuries are now trading around the two key benchmarks: 5.0% for the 2Y and 4.0% for the 10Y after a disastrous session for bonds. This would appear to be the perfect recipe for a substantial dollar rally, which hasn’t materialised however, and we are observing instead some dollar selling this morning. Indeed, the dollar had already moved in advance of yesterday’s release as the minutes had offered clear hawkish hints on Wednesday. Incidentally, markets still appear unconvinced to fully price in two rate hikes by the Fed despite the strong ADP (which arguably aren’t hard data, and have been misleading at times) and ISM services figures. The Fed funds curve has not shifted particularly higher, with the peak rate still seen at 36bp from here, so 14bp short of dot plot projections. In a way, the dollar might still be mirroring that lingering market pricing-dot plot gap. At the same time, the market backdrop does seem to point at dollar strength at this juncture, as we doubt this morning’s mild USD correction will have legs unless US payrolls released later today move in the direction of ADP figures and surprise on the downside. The consensus for the headline jobs number is 230k, but may be higher after the strong ADP read. Unemployment is also expected to tick lower to 3.6% and some focus will, as usual, fall on wage growth. Barring major disappointments, it should not take much to keep the Fed’s hawkish narrative going, and markets should have room to keep inching closer to the pricing in two rate hikes. The path for a more supported dollar in the near term appears to be the most obvious one, in our view, and a return above 104.00 in DXY in the coming days looks likely.
FX Daily: Evaluating Short-Term Dollar Bearishness and Potential for Rebound

FX Daily: Evaluating Short-Term Dollar Bearishness and Potential for Rebound

ING Economics ING Economics 10.07.2023 10:57
FX Daily: Short-term dollar bearishness remains unconvincing We remain a bit reluctant to chase the dollar lower. The greenback still has to catch up with recent market dynamics – higher US rates in particular – and the scope for further dovish repricing in the USD curve is not broad. This week’s US CPI is undoubtedly a risk event, but we don’t see a EUR/USD move above 1.1000 as being very sustainable just yet.   USD: Room for a rebound Last week saw the dollar trade on the soft side amid mixed data from the US. The latest and most important release, the US payrolls figures for June, came in a bit weaker than expected, but the jobs market likely remains too tight for the Fed to backtrack on a July hike. After all, the headline print was solid (+209k) and with wages remaining high and unemployment moving lower, there aren’t many strong dovish arguments to be extrapolated from the June jobs report. We are still reluctant to chase the dollar lower from this point – not particularly because we expect incoming data (US CPI above all) to surprise on the upside, but because the dollar still has to catch up with some recent market dynamics. Front-end US treasuries arrested their selloff, but remain very close to 5.0%, and 10Y UST are at the 4.0% benchmark level. Equities have also shown some signs of instability since the start of July. All of this should, in theory, put the dollar in a solid position to rebound from the current levels – especially given there isn’t much room for a further dovish re-pricing in the USD swap curve. That currently factors in 35bp of tightening to the peak, still short of the 50bp signalled by the Fed in the latest dot plot. The big risk event for the dollar this week is the June inflation report on Wednesday. Our economist expects a consensus 0.3% month-on-month core read, which should keep providing encouraging news on the disinflationary story – but should still fall short of tweaking the Fed narrative or convincing markets to price out a July hike. A downside inflation surprise could see DXY test the 101.00 April lows, but we think that the dollar could instead find some support into the CPI release and stabilise in the second half of the week. Today’s calendar includes some Fed speakers: Michael Barr, Mary Daly, Loretta Mester and Raphael Bostic. Elsewhere, we expect the Bank of Canada to hike by 25bp this week. This is far from a consensus view, with the pool of economists split between a hold and a hike and markets pricing in around 67% of implied probability of an increase. We explain our reasons in our latest Bank of Canada meeting preview.
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Waning Historical Correlation Between Gold and US Treasury 10-Year Real Yield Amid Geopolitical Risk

Kelvin Wong Kelvin Wong 11.07.2023 14:02
Historical tightly inverse correlation between gold (XAU/USD) and US Treasury 10-year real yield (TIPS) has started to wane in the past four weeks. An uptick in geopolitical risk may be the factor that is supporting a resilient movement in gold despite higher 10-year TIPS. Watch the US$1,940 key intermediate resistance on gold (XAU/USD) for a potential bullish breakout. In the past week, a higher momentum movement is seen in longer-term sovereign yields over their shorter-term durations where the US Treasury 10-year yield recorded a weekly gain of 23 basis points (bps) over a meager return of + 5 bps seen on the US Treasury 2-year yield. If we stripped out inflation expectations, the US Treasury 10-year real yield, derived from the 10-year Treasury Inflation Protected Securities (TIPS) yield has a higher momentum intensity over the US Treasury 10-year nominal yield.     US Treasury 10-year real yield has broken above its Oct 2022 major swing high     Fig 1: US Treasury 10-year real & nominal yields major trends of 11 Jul 2023 (Source: TradingView, click to enlarge chart) Based on last Friday, 7 July closing prices, the US Treasury 10-year real yield increased to 1.79% and broke above its prior October 2022 key major swing high of 1.69% while the 10-year nominal yield rose to 4.07% but still below its October 2022 key major swing high of 4.22%. Thus, given the higher positive momentum factor seen in the longer-term real risk-free interest rate; US Treasury 10-year real yield, the opportunity costs of holding other long-duration riskier assets in fixed income and equities have increased which reinforced their weak performances seen last week; iShares Investment Grade Corporate Bond ETF (-2.40%), iShares High Yield Corporate Bond ETF (-1.63%), and iShares PHLX Semiconductor ETF (-2.54%). Interestingly, another “competing” asset, gold priced in US dollars (XAU/USD) did not record a similar magnitude of loss last week. In contrast, spot gold (XAU/USD) recorded a gain of +0.31% for the week ending 7 July.   The prior high degree of inverse correlation between gold and 10-year TIPS has waned   Fig 2: US Treasury 10-year real yield correlation trend with Gold (XAU/USD) as of 11 Jul 2023 (Source: TradingView, click to enlarge chart) The correlation between gold (XAU/USD) and US Treasury 10-yield real yield (TIPS) tends to be tightly inversely correlated in the past ten years; when 10-year TIPS rose, the price of gold (XAU/USD) staged a decline and vice versus due to zero interest income earned from holding gold and as a hedge on US government bonds, as gold has no counterparty risk. The 20-period rolling correlation coefficient between gold and the 10-year TIPS has been reduced to -0.60 from a recent high level of -0.84 recorded in early May 2023. What causes the current breakdown in the historical long-term tightly inverse correlation between gold and 10-year TIPS? It is likely due to the geopolitical risk factor where the price of gold, acting as a safe haven asset tends to increase when geopolitical risk increases. Before the Russian invasion of Ukraine that occurred on 24 February 2022, in the prior two months, the high degree of indirect correlation between gold and 10-year TIPS have dissipated as both started to move in direct correlation.   Geopolitical risk has ticked up to an eight-month high     Fig 3: Geopolitical Risk Index as of 30 Jun 2023 (Source: MacroMicro, click to enlarge chart) Based on quantified measures of geopolitical risk, the latest reading of the Geopolitical Risk Index (GPR) for the month of June 2023 compiled by US Federal Reserve economists Dario Caldara and Matteo lacoviello has started to tick up above the 100 level to 103.10, its highest level in eight months. The GPR measures the social mood of impactful geopolitical events, threats, and conflicts since 1985 by counting the keywords used in the press.     Watch the US$1,940 key intermediate resistance on gold (XAU/USD) for potential bullish breakout   Fig 4: Gold (XAU/USD) medium-term trend of 11 Jul 2023 (Source: TradingView, click to enlarge chart) Thus, the recent resilient price movement of gold (XAU/USD) that has managed to hold at the US$1,913/1,896 key medium-term support despite the steep up move seen in the 10-year TIPS is likely attributed to an uptick in geopolitical risk. Based on technical analysis, clearance above the US$1,940 key intermediate resistance sees the next resistance coming in at US$1,990 in the first step supported by a positive momentum reading seen in the daily RSI oscillator. On the flip side, a break below the US$1,896 key medium-term pivotal support invalidates the bullish tone to expose the next support at US$1,856 (also the 200-day moving average).
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US Dollar Plunges: Implications for Global Markets

Ipek Ozkardeskaya Ipek Ozkardeskaya 13.07.2023 08:36
US dollar plunges  The selloff in the US dollar accelerates post-CPI, with the dollar index approaching the 100 level with big and steady steps. This is good news for inflation in the rest of the world, because the softer the US dollar, the softer the energy and raw material prices negotiated in terms of US dollars. In the same way the dollar appreciation fueled inflation globally, its depreciation could help ease it as well.   The EURUSD spiked to 1.1150, Cable advanced past the 1.30 level, while the dollar-yen extended losses below the 140 psychological mark. In precious metals, gold is thriving on the back of softer yields and the softer dollar. The price of an ounce rallied past $1960 and consolidates near $1955 at the time of writing.   In energy, oil bulls target the 200-DMA, that stands near the $77pb level, yet the $77/80 range will be hard to drill as the higher the energy the prices, the higher the inflation expectations, and the higher the inflation expectations, the tighter the Fed policy. The tighter the Fed policy, the stronger the odds of recession, and the stronger the odds of recession, the softer the global energy demand, and the softer the energy prices.        In equities, soft US inflation and decline in US yields pushed the S&P500 to a fresh high since April 2022. The index flirted with the 4500 level on expectation that the Fed will hike one more time and stop, and that the actual tightening cycle could very well end with a soft landing. Nasdaq 100, on the other hand, rallied to the highest levels since the beginning of last year. Meta for example jumped 3.70% on the back of inflation optimism and the news that its Threads platform is growing while dampening traffic on rival Twitter.  On a side note, because Nasdaq 100 is now over-concentrated in Mega Cap stocks, there will be a rebalancing in the weightings of the index. Nasdaq has a rule stating that the aggregate total of individual weights above 4.5% in the index shouldn't exceed 48% of the total weighting. And today, the Magnificent Seven is worth around 55% of Nasdaq 100. So, the changing weights could weigh on Nasdaq, as the best performing stocks will see their weight drawn down.    
Dollar Dips on Disinflation Trade: Impact and Potential Trends

Dollar Dips on Disinflation Trade: Impact and Potential Trends

ING Economics ING Economics 13.07.2023 08:50
FX Daily: Dollar drops on the disinflation trade The downside surprise in US June CPI inflation has seen the dollar drop to new lows for the year. Over recent months we had been speculating that clear signs of US disinflation - and a weaker dollar - may emerge in 3Q23 and yesterday's moves could well be the start of an important market adjustment. Look out for US PPI and US initial claims today.   USD: The start of something It has been a long time coming, but yesterday's surprisingly soft US June CPI numbers may be the first sign this year that sharp Fed rate hikes are finally starting to bite. As our US economist, James Knightley, notes, there were welcome declines in all of the key categories of inflation. He does not think this will prevent another 25bp Fed rate hike at the 26 July meeting, but it will add weight to the view that the July hike may indeed be the last in the cycle. The data could also herald a change in the Fed narrative from frustration that inflation has not fallen as quickly as expected to a more welcoming approach to recent data releases.  We had discussed the potential FX market impact of a soft US CPI print in yesterday's FX Daily and the soft CPI has driven more benign pricing around the world - i.e. bullish steepening of yield curves, higher equities, narrower credit spreads, and a weaker dollar. FX price action has all the hallmarks of a position unwind, where those currencies sold on a bearish/hard landing scenario (e.g. Norway's krone, Sweden's krona, and to a lesser degree some other commodity currencies) have now made a very strong comeback. Indeed, both the NOK and SEK had been extremely undervalued in our medium-term valuation models and are now finding room to breathe. For the big dollar trend, this may be the start of the long-awaited cyclical decline. There are parallels to the dollar sell-off last November and December (when it fell 8% in two months), but the difference now is; i) positioning, where speculators are not as heavily long dollars as they were last October, and ii) the China and European growth stories do not seem due as much of a re-rating as they enjoyed last November. That said, we prefer to run with the dollar bearish story for the time being, where DXY should press big psychological support at 100.00. The next target would be 99.00 on a breakout. For today, look out for US June PPI and the weekly initial claims number. A further decline in PPI and a rise in claims could see dollar losses extend.
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China Big Tech Drives Momentum-Driven Rally in Stock Market

ING Economics ING Economics 13.07.2023 11:09
China Big Tech is leading the current momentum-driven rally in China stock market. Supported by a weaker USD/CNH that broke below key near-term support of 7.2160. Further hints from China’s top policymakers that the prior 3-year of stringent regulatory crackdowns on China’s leading technology companies have ended. Current momentum-driven rally of China Big Tech may still see a bumpy ride due to a weak external demand environment. Prior to yesterday’s release of the key US consumer inflation data for June that came out cooler than expected, China’s proxies stock indices have crept up higher since the start of this week; from Monday, 10 July to Wednesday, 12 July, the Hang Seng Index recorded a gain of 2.06%, Hang Seng Tech Index (+3.45%), Hang Seng China Enterprises Index (+2.3%). A higher positive momentum intensity is being seen in the Hang Seng TECH Index which comprises China’s Big Tech firms that reintegrated back above its 50 and 200-day moving averages. Also, a significant price action development in terms of relative momentum has taken shape on China’s Big Tech equities listed in the US stock exchanges (the ADRs) that have continued their outperformance over its peers, the US Big Tech since last week.   Relative positive momentum seen in China Big Tech The KraneShares CSI China Internet exchange-traded fund (ETF) has recorded an accumulated gain of 8% since the week of 3 July 2023 till yesterday, 12 July over a return of +0.86% seen in the Nasdaq 100 over the same period.       Fig 1:  Relative momentum trends of KraneShares CSI China Internet ETF & other China equities ETFs as of 12 Jul 2023 (Source: TradingView, click to enlarge chart) Also, positive relative momentum can also be seen against global equities, the ratio of the KranShares CSI China Internet ETF over the MSCI All Country World Index ETF has notched up four consecutive sessions of positive momentum readings based on a five-day rolling basis. Inter-market and sentiment are likely the factors that are the key catalysts for the ongoing short-term outperformance since in China Big Tech that is driving the momentum-induced rally in the Hang Seng benchmark stock indices.     USD/CNH broke below 7.2160 support triggering a positive feedback loop into China equities   Fig 2:  USD/CNH short & medium-term trends as of 13 Jul 2023 (Source: TradingView, click to enlarge chart)     Fig 3:  USD/CNH correlation with HSCEI & HSCTECH as of 13 Jul 2023 (Source: TradingView, click to enlarge chart) The USD/CNH (offshore yuan) foreign exchange rate has a high degree of inverse correlation with the Hang Seng benchmark stock indices and China Big Tech theme play ETF; a rise in the USD/CNH (a weaker yuan) tends to see a fall the above-mentioned indices and ETF, and vice versa. In the past five days, the USD/CNH has inched lower since its seven-month high of 7.2745 printed on 6 July and broke below key near-term support of 7.2160 (also the 20-day moving average that price actions have traded above it since 19 April 2023) on the onset of yesterday’s US CPI data release. Also, reinforced by the narrowing of the premium of the US Treasury 2-year yield over China’s 2-year sovereign bond yield. These observations suggest a potential short-term downtrend phase is in progress for USD/CNH which triggers a positive feedback loop into the Hang Seng bench stock indices and China Big Tech equities.    
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Assessing the Implications of the US CPI Reading on Fed Monetary Policy

Marco Turatti Marco Turatti 13.07.2023 12:00
The recent US Consumer Price Index (CPI) reading has caused some ripples in the market, prompting discussions on its implications for future monetary policy by the Federal Reserve. We reached out to Marco Turatti, an expert in the field, to shed light on the matter. According to Turatti, the CPI numbers came as a downside surprise, with both the headline and core components showing a decline on both monthly and annual bases. This decline in prices has been even faster than the previous rise, with the Producer Price Index (PPI) leading the way. Despite the rally in equities and bonds, Turatti notes that there has been minimal change in rate expectations. The likelihood of a 25 basis points hike this month remains unchanged at 92%, and the terminal rate is only down by 3 basis points to an expected level of 5.37% by November.     FXMAG.COM: Please comment on the US CPI reading. What does it mean in terms of further Fed monetary policy?   Marco Turatti:  The CPI number yesterday was a downside ''surprise'' in both its headline and core components, both on a monthly and annual basis. The decline in prices is even faster than the previous rise, with the PPI leading the way. Despite the equity and bond rally, very little has changed in terms of rate expectations: the chance of a 25 bps hike this month is unchanged at 92%, as is the terminal rate, down only 3 bps to the 5.37% level expected for November (meaning a second hike is not yet priced in). Prices are going down but wages (and second hike effects) may worry: their real growth is now at the highest since March 2021 (1.2%).
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Disinflationary Narrative Mispriced as Weak US Dollar Boosts Commodities and Inflation Expectations

Kelvin Wong Kelvin Wong 14.07.2023 16:02
Current up moves in long-duration equities and fixed income came at the expense of a weaker US dollar. A persistent weak US dollar may lead to an upside revival in commodities prices. Inflationary expectations may creep up again due to higher oil/commodities prices. Disinflationary narrative seems premature and may be mispriced.   Market participants have taken a “disinflation ecstasy pill”, bidding up long-duration equities and fixed income in the past two sessions after the latest June US CPI data came in below expectations with the headline print dipped to 3% year-on-year, its slowest rate of growth seen in two years. The core consumer inflation rate (excluding food & energy) also slowed to 4.8% year-on-year from 5.3% recorded in May and dipped below the current Fed Funds rate of 5% to 5.25%. In terms of week-to-date performances as of 13 July, higher beta and long-duration equities outperformed, and the Nasdaq 100 rallied by +3.56%, just 7.7% away from its November 2022 all-time high. Over in the fixed income space, last week’s losses were almost recouped; iShares 20+ Year Treasury Bond exchange-traded fund (ETF) recorded a week-to-date gain of 2.84%, iShares Investment Grade Corporate Bond ETF (+2.61%), and iShares High Yield Corporate Bond ETF (+2.44%). This latest bout of “disinflationary optimism” has revived the “Fed Pivot” narrative where participants are now anticipating that the upcoming July FOMC meeting will likely see the last interest rate hike of 25 basis points (bps) to end this current cycle of monetary policy tightening in the US and negate the current “higher interest rates for a longer period” guidance advocated by Fed officials.   US Dollar Index’s major downtrend was reinforced via a break below 100.95 key support   Fig 1:  US Dollar Index medium-term and major trend as of 14 Jul 2023 (Source: TradingView, click to enlarge chart) The current disinflationary theme play has come at the expense of a weaker US dollar that sank to a 15-month low, the US Dollar Index has tumbled by -2.52% for this week, set for its worst weekly performance since the week of 7 November 2022 as it broke below the key medium-term support of 100.95. Right now, there are second-order effects at play where significant global financial market movements are likely to spiral into the real economy in the months ahead. A weaker US dollar may translate to higher commodities prices as most commodities; physical and paper (futures contracts) are priced in US dollars. This above-mentioned linkage of a weaker US dollar to higher commodities prices seems to be emerging in the financial markets; the week-to-date performance of WTI crude oil futures is up by +4.1% and a broader basket of commodities as measured by the Invesco DB Commodity Index Tracking Fund has rallied by 3.6% for this week.     Inflationary expectations may start to creep up     Fig 2:  WTI crude oil correlation with US 5-YR & 10-YR breakeven inflation rates as of 13 Jul 2023 (Source: TradingView, click to enlarge chart) Commodity prices such as oil have a high degree of direct correlation with forward-looking inflationary expectations. In the past three years, the price actions of WTI crude oil have moved in lock-step with the US Treasury’s 5-year and 10-year breakeven inflation rates (a measurement of inflationary expectations). If WTI crude oil can maintain its current upward trajectory, inflationary expectations may creep higher from this juncture.   Potential upside momentum in commodities may spark another ascend in US CPI       Fig 3: Invesco DB Commodity Index Tracking Fund major trend with US CPI as of 13 Jul 2023 (Source: TradingView, click to enlarge chart) In addition, from a momentum perspective, an imminent trend change may start to take shape for commodities prices after close to one year of downtrend since June 2022 using Invesco DB Commodity Index Tracking Fund (DBC) as a commodities benchmark. The current weekly MACD trend indicator of the DBC has just flashed a bullish crossover signal below its centreline that suggested that the major downtrend of DBC in place since the June 2022 high may have ended which in turn increases the odds of a bullish reversal for commodities prices. A similar MACD bullish crossover observation on the DBC occurred in early June 2020 that spiralled into the real economy where inflationary pressures; headline and core US CPI started their ascend. Therefore, a potential uptick in inflationary expectations coupled with the current positive momentum in commodities prices may put a halt to the current inflationary slowdown trajectory seen in the latest US CPI prints. The ongoing disinflationary narrative may be premature and mispriced at this juncture.
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The Weaker US Dollar and Potential Upside in Commodities Spark Inflationary Expectations

Craig Erlam Craig Erlam 17.07.2023 09:33
Current up moves in long-duration equities and fixed income came at the expense of a weaker US dollar. A persistent weak US dollar may lead to an upside revival in commodities prices. Inflationary expectations may creep up again due to higher oil/commodities prices. Disinflationary narrative seems premature and may be mispriced.   Market participants have taken a “disinflation ecstasy pill”, bidding up long-duration equities and fixed income in the past two sessions after the latest June US CPI data came in below expectations with the headline print dipped to 3% year-on-year, its slowest rate of growth seen in two years. The core consumer inflation rate (excluding food & energy) also slowed to 4.8% year-on-year from 5.3% recorded in May and dipped below the current Fed Funds rate of 5% to 5.25%. In terms of week-to-date performances as of 13 July, higher beta and long-duration equities outperformed, and the Nasdaq 100 rallied by +3.56%, just 7.7% away from its November 2022 all-time high. Over in the fixed income space, last week’s losses were almost recouped; iShares 20+ Year Treasury Bond exchange-traded fund (ETF) recorded a week-to-date gain of 2.84%, iShares Investment Grade Corporate Bond ETF (+2.61%), and iShares High Yield Corporate Bond ETF (+2.44%). This latest bout of “disinflationary optimism” has revived the “Fed Pivot” narrative where participants are now anticipating that the upcoming July FOMC meeting will likely see the last interest rate hike of 25 basis points (bps) to end this current cycle of monetary policy tightening in the US and negate the current “higher interest rates for a longer period” guidance advocated by Fed officials.     US Dollar Index’s major downtrend was reinforced via a break below 100.95 key support   Fig 1:  US Dollar Index medium-term and major trend as of 14 Jul 2023 (Source: TradingView, click to enlarge chart) The current disinflationary theme play has come at the expense of a weaker US dollar that sank to a 15-month low, the US Dollar Index has tumbled by -2.52% for this week, set for its worst weekly performance since the week of 7 November 2022 as it broke below the key medium-term support of 100.95. Right now, there are second-order effects at play where significant global financial market movements are likely to spiral into the real economy in the months ahead. A weaker US dollar may translate to higher commodities prices as most commodities; physical and paper (futures contracts) are priced in US dollars. This above-mentioned linkage of a weaker US dollar to higher commodities prices seems to be emerging in the financial markets; the week-to-date performance of WTI crude oil futures is up by +4.1% and a broader basket of commodities as measured by the Invesco DB Commodity Index Tracking Fund has rallied by 3.6% for this week.   Inflationary expectations may start to creep up   Fig 2:  WTI crude oil correlation with US 5-YR & 10-YR breakeven inflation rates as of 13 Jul 2023 (Source: TradingView, click to enlarge chart) Commodity prices such as oil have a high degree of direct correlation with forward-looking inflationary expectations. In the past three years, the price actions of WTI crude oil have moved in lock-step with the US Treasury’s 5-year and 10-year breakeven inflation rates (a measurement of inflationary expectations). If WTI crude oil can maintain its current upward trajectory, inflationary expectations may creep higher from this juncture.   Potential upside momentum in commodities may spark another ascend in US CPI   Fig 3: Invesco DB Commodity Index Tracking Fund major trend with US CPI as of 13 Jul 2023 (Source: TradingView, click to enlarge chart) In addition, from a momentum perspective, an imminent trend change may start to take shape for commodities prices after close to one year of downtrend since June 2022 using Invesco DB Commodity Index Tracking Fund (DBC) as a commodities benchmark. The current weekly MACD trend indicator of the DBC has just flashed a bullish crossover signal below its centreline that suggested that the major downtrend of DBC in place since the June 2022 high may have ended which in turn increases the odds of a bullish reversal for commodities prices. A similar MACD bullish crossover observation on the DBC occurred in early June 2020 that spiralled into the real economy where inflationary pressures; headline and core US CPI started their ascend. Therefore, a potential uptick in inflationary expectations coupled with the current positive momentum in commodities prices may put a halt to the current inflationary slowdown trajectory seen in the latest US CPI prints. The ongoing disinflationary narrative may be premature and mispriced at this juncture.      
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Asia Morning Bites: Bank of Japan's YCC Policy Change Amid Tokyo Inflation Surge

ING Economics ING Economics 28.07.2023 08:44
Asia Morning Bites Expectations for a tweak to the Bank of Japan's (BoJ) yield curve control (YCC) policy rise as Tokyo inflation remains high in July.   Global Macro and Markets Global markets:  The main market development yesterday stemmed from the more dovish commentary from the ECB, which in contrast to the attempt by Jay Powell the previous day to keep thoughts of tightening alive, seemed to suggest that this may be the peak in Europe. EURUSD dropped to 1.0978, and this pulled most other G-10 with it, helped also by stronger-than-expected GDP figures out of the US that dampened thoughts of rate cuts next year. The AUD dropped to 0.6709, Cable fell to 1.2794. But the JPY, bucked this trend, with possible tweaks to the yield curve control program at today’s Bank of Japan (BoJ) meeting (see also below), the JPY has strengthened to 139.271. The MYR and THB also made some decent gains yesterday, but the CNY weakened 0.34% to 7.1675 as optimism about stimulus measures continued to fade. Bond markets saw the spread of US yields widen over European yields. Germany’s 2Y govt yields fell 5.2bp yesterday to 3.033%, while US 2Y Treasury yields rose 7.7bp to 4.928%. And there was a large rise in US 10Y yields too, which pushed up 13.1bp to just under 4% and briefly traded above the 4% level. The equivalent German bond yield fell 1bp to 2.467%. Equities did not like the prospect that rates in the US may stay elevated thanks to rising prospects of a soft landing. Here, a bit of bad news might actually go down better than continued macro resilience. Both the S&P 500 and NASDAQ dropped by 0.64% and 0.55% respectively. Chinese stocks were mixed. The Hang Seng made a decent gain of 1.41%, but the CSI 300 lost 0.13% on the day. G-7 macro:  There was no shortage of macro excitement yesterday - first the ECB meeting which is covered by our European team here. Europe’s main policy rate is now 3.75%, which remains well below inflation, so on some measures, is barely even restrictive, and one of the reasons why our Eurozone economists don’t believe the ECB is done with hikes just yet. Christine Lagarde may not have shut the door to further hikes, but she has undoubtedly opened one to possible pauses should that be deemed appropriate by the run of data. One other tweak to their policy was to reduce the remuneration of minimum reserves to zero. The 2.4% annualized GDP growth rate from the US was also a surprise yesterday. The consumer spending figures did slow from 1Q23, but at 1.6%, were better than had been forecast. And the continued signs of slowing inflation were evident in the decline in the PCE deflator’s annualized growth rate to 3.8% from 4.9%. James Knightley describes this “Goldilocks: release here.    Japan: Tokyo inflation stayed at 3.2% YoY in July for a third month, which was higher than the market consensus of 2.9%. Even more surprising is that core inflation, excluding fresh food and energy, actually rose to 4.0% YoY (vs 3.8% in June, 3.7% market consensus). This shows that, unlike other major economies, Japan’s inflation hasn’t yet reached its peak. The only item to fall was utilities (-10.8%) thanks to the continued energy subsidy program. On a monthly comparison, inflation accelerated 0.3% MoM sa in July (vs 0.2% in June) and we saw a pickup in service prices of 0.4% while goods prices continued to rise 0.2%.  Headline inflation will continue to go down slowly due to base effects and falling global commodity prices, but core inflation will remain high for a considerable time. The BoJ is set to announce its policy decision in a few hours later today following this inflation surprise. We expect the BoJ to leave its policy rates unchanged, but we think there is a good chance of a YCC policy change at today’s meeting, which is a non-consensus view - the market believes that October is more likely. If the BoJ seeks to normalize its policy in the future, we think that delaying a YCC policy adjustment will create a larger burden for them. For a more detailed view of BoJ policy, please see here. The BoJ will also release its quarterly macro outlook today, and the focus will be the inflation outlook for 2024. We think that this is how the BoJ will assess the sustainability of inflation in this cycle and will be a good indicator against which to estimate the timing of the BoJ’s first rate hike move. South Korea:  Industrial production fell -1.0% MoM sa in June (vs revised 3.0% in May and -0.9% market consensus). Semiconductor output has now increased for four months in a row which is quite different from the industry’s reduction plan, and inventory data suggest that high-value chip output may have increased while general chip production slid. Also, shipments of semiconductors rose 41.1%. We believe that the chip cycle is bottoming out slowly. Meanwhile, vehicle output dropped quite sharply -12.9% but after having risen solidly for the previous three months, it seems likely that the auto sector is taking a breather for the time being. Forward-looking investment data were soft, which suggests that investment in the current quarter will continue to contract.   What to look out for: The BoJ and US core PCE Japan BoJ policy (28 July) Australia PPI (28 July) US personal spending, core PCE, University of Michigan sentiment (28 July)
Upcoming Corporate Earnings Reports: Ashtead, GameStop, and DocuSign - September 5-7, 2023

China's Unexpected Rate Cuts Reflect Growing Concerns Amidst Data Weakness

Michael Hewson Michael Hewson 16.08.2023 11:57
05:50BST Tuesday 15th August 2023 UK wage growth set to give Bank of England an extra headache  By Michael Hewson (Chief Market Analyst at CMC Markets UK)     European markets underwent a modestly positive start to the week despite concerns over the Chinese real estate sector which weighed on the FTSE100, as equities tried to bounce back after two weeks of declines. US markets initially struggled during the first half of the session before rallying strongly into the close, led by the Nasdaq 100. Asia markets, which started the week badly have been more mixed today after Japanese GDP beat forecasts, due to a boom in auto exports and tourism, and poor Chinese economic numbers, which once again disappointed.   Despite a strong start to the year Chinese retail sales have struggled to match the performance seen in April when retail sales rose 18.4%. Since that solid gain spending patterns have struggled despite the weak comparatives of an economy that was, for the most part, subject to lockdowns and restrictions.     The May numbers saw a gain of 12.7% when the same rules applied, while June saw another slowdown to 3.1%, as the Chinese economy showed lacklustre growth of 0.8% in Q2, a sharp slowdown from the 2.2% seen in Q1. With the start of Q3 the picture hasn't got any better with July retail sales falling short of expectations, rising 2.5%, instead of the 4% rise expected. Industrial production also came up short, rising 3.7% instead of the 4.3% expected. The statistics bureau also didn't include the figures for youth unemployment, which has risen sharply in recent months, with the 16-24 cohort reaching 21.3% in the June numbers. In a sign that the numbers were going to be poor, or simply because of concerns over the property sector just before the numbers were released, Chinese authorities reduced one-year loan rates by 15bps and reduced the seven-day reverse repo rate by 10bps.       It's set to be an important week for the UK economy, and more importantly for the Bank of England in the context of how many more rate hikes they feel will be necessary in the face of sticky core inflation and record wages growth. Today's wages and unemployment numbers for the 3-months to June are set give the central bank an additional headache as it looks to try and play catch-up after being slow to react to the initial inflation surge. We've already seen the UK unemployment rate rise from 3.7% to 4% in the 3-months to May, since the start of the year as more people return to the workforce as the cost-of-living squeeze pushes people out of retirement. While the unemployment rate has risen from the lows of 3.5% back in August, wage growth has also risen quite sharply over the same period, hitting a record high of 7.3% at the most recent set of numbers, and looks set to rise to a new record of 7.4% today.     Various Bank of England policymakers have expressed concern that higher wages are making it more difficult to rein in core inflation, and that workers should refrain from asking for large pay rises. This tone-deaf response somewhat ignores the Bank of England's role in fuelling this trend in that the reason people are asking for these pay rises is because of the central bank's failure to nip inflation in the bud, when it became apparent to almost everyone except them, that the rise in prices was anything but transitory.     There is a sense now, however, that inflation has peaked, and although still elevated, that upward pressure on wages should start to slow, although it's not likely to happen quickly, with inflation still over 3 times the central bank's target, although it should slow quite sharply when the July figures are released tomorrow.     It's also a big week for the US consumer with the release of US retail sales for July later today, and then the latest earnings numbers from Target and Walmart later this week. After a steady Q2, the US consumer has shown little sign of slowing down when it comes to spending and today's July numbers aren't expected to be any different with a rise of 0.4% expected.     EUR/USD – slid below the 50-day SMA yesterday falling to the 1.0875 area. The main support remains at the 1.0830 area and July lows. Still feels range bound with resistance at the 1.1030 area.     GBP/USD – slipped back to the 1.2615 area yesterday but continues to find support above the 1.2600 area. A break below 1.2600 targets 1.2400. Until then the bias is for a move back above the 1.2800 area through 1.2830 to target 1.3000.        EUR/GBP – came under further pressure yesterday with the 100-day SMA acting as resistance at the 0.8670/80 area. Support comes in at the 0.8580 area with a break below targeting the 0.8530 area. Above the 100-day SMA targets the 0.8720 area.     USD/JPY – has broken above the previous peaks this year at 145.10, opening up the prospect of further gains towards 147.50. Support remains back at the 143.80 area; however, we could also find support at the 144.80 area.     FTSE100 is expected to open 14 points higher at 7,521     DAX is expected to open 44 points higher at 15,948     CAC40 is expected to open 23 points higher at 7,371  
Pound Slides as Market Reacts Dovishly to Wage Developments

The Everything Selloff: Examining Global Market Trends Amidst Growing Concerns

Ipek Ozkardeskaya Ipek Ozkardeskaya 18.08.2023 08:00
The everything selloff By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   The global selloff intensified yesterday, after the FOMC minutes released Wednesday highlighted that the Federal Reserve (Fed) continues to see significant risks to inflation. And if that's not enough, Atlanta Fed's GDPNow printed an eye-popping growth forecast of 5.8% for Q3 on Wednesday, up from 5% printed a day before. Atlanta Fed computes this number using the data available to them at a time t, therefore the number is not necessarily accurate, but it reflects the positive data released lately, and fuels worries that with such a strong growth, the US inflation could only make a U-turn and take a lift. Yesterday, the Philly Fed index printed a surprisingly strong number, as well. This is why, we continue to see the upside pressure in yields persist, in the US and around the world, though we saw some respite in the US 2-year yield that bounced lower from the 5% mark earlier in the week, and the 10-year yield spiked above 4.30% before falling back to 4.25% this morning.   But note that there is more to this story. Long story short, the US Treasury has been printing a lot of T bills lately, and fell well behind the government bond issuance, and the latter helped keeping US liquidity well contained since the US exited its debt ceiling crisis after which the Treasury started refilling its general account. That was supposed to pull liquidity away from the market. But in the meantime, the Fed was pushing liquidity into the system by reverse repo operations, allowing the money market funds to buy T bills and release cash. The problem is, nowadays, the percentage of T bills approaches the 20% level, which is a self-induced limit for the Treasury, and the Treasury will shift back to issuing bonds, instead of T bills. The latter will increase the amount of sovereign bonds in the system at a time the Fed is decreasing its balance sheet by QT, and the banks don't necessarily want to buy bonds either. So, the increasing supply, and the decreasing demand for US sovereigns will be one major force pushing the US yield curve higher. And if the strong economic data translates into higher inflation, the impact on yields will likely be higher. So, yes, the US 30-year yield is at the highest levels since 2011 and that looks appetizing, especially if the risk sentiment sours – due to multiple reasons ranging from geopolitical tensions to China worries – but the downside risks in the US sovereign bonds market prevails. And Bill Ackman said earlier this month that the 30-year yield could hit the 5% mark.  And the upside pressure in sovereign yields is true for other parts of the world as well, because obviously when the US coughs the world catches a cold. More precisely, higher US yields also translate into a stronger US dollar, and a stronger US dollar is inflationary for the rest of the world. If nothing, the energy and raw material prices that are negotiated in USD terms on international markets simply become more expensive when imports are reverted back to local currencies, and that, alone, is enough to push inflation higher in the rest of the world when the US dollar appreciates. The EURUSD fell to 1.0856, the AUDUSD slipped below 64 cents and the USDJPY spiked above 146.50. The correction is in play this morning and we could see the US dollar retreat further into the weekly closing bell, but the stronger dollar trend is clearly in play and it is worrying. Looking at yields elsewhere the US, the 10-year gilt yield has now surpassed the levels last seen during the Liz Truss induced disaster peak and is headed toward the 5% psychological mark while the German 10-year yield hit 2.70%, a level last seen in 2011 as well. Even the Japanese 10-year yield, which is controlled by the BoJ and should not exceed the 50bp benchmark by 'too much', goes up significantly.  As a result, the selloff in equities deepens. The S&P500 sank to 4370 yesterday and is getting ready to test the minor 23.6% Fibonacci retracement on October to July rally, and the base of that positive trend, while Nasdaq 100 is no more than 8 points from its own 23.6% retracement and already fell below the ascending trend base. The Stoxx600 slumped below the 200-DMA and is flirting with its own 23.6% retracement level, and the Japanese Nikkei, which was one of the rising stars of the year, and which recorded a rally past 30% since January, has fallen below its 23.6% retracement and is preparing to test the 100-DMA.   And note that this simultaneous selloff in stocks and bonds is a sign that the market liquidity is draining. Bitcoin, which is a gauge of market liquidity, slumped more than 7% yesterday and traded close to the $25K level. According to CoinGlass, $1 billion left cryptocurrencies over the past 24 hours and Bitcoin suffered almost half of the liquidations.   
Economic Uncertainty: PMI Contractions and Rate Reassessments

Economic Uncertainty: PMI Contractions and Rate Reassessments

ING Economics ING Economics 24.08.2023 11:00
Rates Spark: Not the end of the story Yields dropped after very weak PMIs. In the US, the narrative of economic resilience that has been the main driver of higher rates over recent months has been challenged. It is but one data point and Fed Chair Powell will also have a word to say at Jackson Hole.   Disappointing PMIs upends the resilience narrative The broader rise in rates had largely been driven by the narrative surrounding a surprisingly resilient US economy. So, when that narrative gets challenged, a large market reaction can be expected. For the US, PMIs would not have been the usual suspect, but when the disappointment in the data is as large as today – and also happening on a global scale – the market takes note. The UST curve bull flattened with 10Y UST yields falling more than 13bp to below 4.2%. With the data miss as large as it was, the possibility of Fed cuts was priced back in, and the December 2024 SOFR future's implied yield dropped 12bp. The very near-term policy outlook did not change that much – a pause in September is a tad more likely at close to 90% implied probability, with a hike thereafter still being attached to around a 40% probability.   Fed cuts are priced back in, but the trough is still not materially below 4%   Weak eurozone PMIs but persistent inflation pressures cause ECB headaches Yesterday’s rally, however, began in Europe with the services PMIs coming in a lot weaker than anticipated and falling into contractionary territory. Bunds rallied, pulling USTs alongside, but with the gap widening temporarily to over 170bp in 10Y.   As bleak as the macro outlook that yesterday’s PMIs painted appears, inflationary concerns are not going away. The PMI reports indicated an upturn in service sector input cost inflation, i.e. rising wage pressures. Add to this that the market's long-run inflation expectations have also not come down much – 5y5y forward inflation still stands at a historically elevated 2.6% after dropping 3bp yesterday – and it remains an overall uncomfortable situation for the European Central Bank. The ECB hawks may still be tempted to push through a final hike before it is too late.   As for the ECB pricing, markets now see a greater chance for a pause in September. Ahead of yesterday markets were looking for a slightly greater than 50% chance for a hike, now that stands at 30%. it’s now the overall probability for a hike before year-end that stands at 50%, having been close to fully priced in the days before.     More ECB tightening is seen as less likely Today's events and market view Should one data point be enough to upend the narrative that has driven the rise in US rates and turn the tide? The 20Y UST auction showed overall yield levels were high enough to attract decent demand again, but a good amount of short covering seems to have been at play in yesterday’s reversal as well. When it comes to risk assets, the bad news was good news with equities looking up. In the end, that can also help dampen the bull flattening move.     On the other side, inflation is still residing at elevated levels above the Fed’s target. Despite the more encouraging dynamics of late, it is too early to declare victory. With that in mind, we head into the Jackson Hole symposium with the spotlight on Fed Chair Powell’s speech tomorrow. The general sentiment appears to be for him to stick to the recent Fed script, if anything with a slightly hawkish risk of more pushback against the pricing of rate cuts. Today’s data slate sees the release of the US initial jobless claims and durable goods orders as the main highlights. After yesterday's data, it seems markets will be more sensitive to any signs of weakness. In primary markets, the US Treasury will sell 30Y inflation-linked bonds.      
BOJ Verbal Intervention Sparks Market Reactions and Sets Stage for Eventful Week

BOJ Verbal Intervention Sparks Market Reactions and Sets Stage for Eventful Week

Ed Moya Ed Moya 12.09.2023 10:35
Post-BOJ Initial reaction – yen jumped, dollar fell, gold rallied, and equities rose. Some of these moves have started to reverse Japan’s Overnight Swap Indexes have an implied rate of 0.042% by the January 23rd BOJ policy meeting US 3-year Treasury attracts highest yield since 2007 (4.660% vs 4.650% pre-sale) The Japanese yen surged in Asia following BOJ Governor Ueda’s verbal intervention. Ueda noted that the BOJ might know enough about wage pressures by year-end, in other words if they could be ready to abandon negative rates.  The BOJ blackout period typically starts two days before the first policy meeting, which means we could have a full week of verbal intervention before the September 21st policy meeting starts. Japan officials will likely hesitate to actually intervene until some of the major US risk events are behind us. ​ No sense in selling dollars before seeing the latest US inflation report, which could easily upend any action. ​ A new week is here, and it looks like financial markets were ready for a major reset. Dollar-yen bearishness could also gain momentum if risk appetite deteriorates here. The yen got a boost after some weekend reading reaffirmed Wall Street’s belief that the Fed will pause rate increases in September, then review the latest economic data and assess if more rate hikes are needed in November/December.  The WSJ’s Nick Timiraos, who’s also known as the Fed whisperer has markets convinced that officials view the risks as more balanced, so a September surprise is very unlikely. It seems many risk events are on this week’s calendar, so we could see other drivers besides more chatter from Japanese officials and US CPI/retail sales data/inflation expectations.  The $AAPL This will be a big week for tech given the recent slide with some of the mega-cap tech stocks.  Apple was in the headlines after they decided to stick with Qualcomm’s 5G modems for their smartphones. Apple was trying to produce similar chips as soon as 2024, but it seems they aren’t there just yet.  The Qualcomm deal for Snapdragon 5G Modem-RF Systems will cover smartphone launches in 2024, 2025 and 2026.  This is great news for Qualcomm shares, while Apple shares will mostly await what happens with Tuesday’s important launch event.  Expectations are for Apple to unveil the new iPhone 15 and show how AI will be used.   $TSLA Tesla is also getting a boost after Morgan Stanley upgraded the EV giant and raised their price target from $250 to a street-high $400 a share.  The upgrade was driven by hopes that their Dojo supercomputer could help accelerate the adoption of robotaxis and network services.   Equities and risk appetite will have a handful of events to determine if a rebound is justified: Tuesday is all about the Apple event. Wednesday focuses on the US inflation report, which should show rising gasoline prices sent headline inflation higher, but the core readings are likely to remain subdued.  Thursday will be busy with the UAW strike deadline, a potential pause by the ECB, slight labor weakness from jobless claims data, and a soft retail sales report.  For Wall Street, Thursday’s focus should fall on the UAW strike deadline, which falls a minute before midnight.  A potential UAW strike of 10 days could trigger a recession for the Michigan economy and cost $5.6 billion in US GDP.  Friday contains the release of the University of Michigan inflation expectations, which are important for the higher for longer trade. Any yen strength could be short-lived until we get beyond some of the big market events of the week.   USD/JPY Daily Chart      Bearish price on USD/JPY , a daily chart of which is shown, is tentatively respecting key trendline support that started from the July 28th low.  The knee-jerk selloff spurred from BOJ Governor Ueda’s verbal intervention might not be the beginning of a new trend just yet.  Given the state of the US economy and its resilience, it appears that Japan’s central bank remains very concerned with the yen’s levels.  If USD dollar strength reemerges, the 147.80 level remains critical resistance.  On the other hand, if risk aversion runs wild, the 145.00 level provides initial support, followed by the 143.75 level.  
RBI's Strategic INR Support: Factors Behind India's Stable Currency Amidst Global Challenges

The Impact of Global Developments on Financial Markets: Oil Prices, Inflation, and Equities

Saxo Bank Saxo Bank 13.09.2023 13:49
 Following on from weakness in the US and Europe, stocks in Asia fell across the board as oil prices extended gains ahead of today’s key US inflation report. The weakness in US stocks was led by technology companies with Apple dropping almost 2%. The potentially tightest oil market in a decade lifted oil prices while raising fresh inflation concerns saw the 2-year Treasury yield back above 5%, while the dollar traded mixed against its G10 peers after seeing broad gains on Tuesday. US CPI the focus today given the current 50/50 split on whether the FOMC will hike rates one more time.   Equities: Nasdaq 100 futures are sliding further this morning to the 15,478 level as Apple’s iPhone event last night failed to muster any excitement, which means that the market is now in a wait-and-see mode ahead of today’s US inflation report. Energy stocks continue to be in focus given the rally in Brent crude on estimated oil supply shortfall due to Saudi Arabia’s oil production cuts. FX: Higher crude oil prices made CAD the G-10 outperformer with USDCAD down to 1.3550 from 1.3590 but EUR attempted to catch up in late NY/early Asian hours on ECB leak that inflation forecasts may be raised higher which are seen to be raising the prospect of a hike this week. EURUSD jumped higher to 1.0770 with EURGBP above the 0.86 hurdle as GBPUSD dipped below 1.25 on not-so-hawkish labor market. USDCNH takes another leg lower below 7.29 but AUDUSD also dipped to 0.64 handle in Asia. Commodities: Saudi Arabia’s ‘stable market’ reason for cutting production rings increasingly hallow after OPEC in their monthly report said the market may experience a shortfall of 3.3m b/d in the fourth quarter. With the EIA meanwhile only predicting a 230k b/d shortfall, OPEC could find themselves being accused of trying to inflate prices to meet big spending plans among its members. IEA’s report will be on watch today ahead of the US CPI print and EIA’s weekly stock report which according to API’s figures may show a rise. Oil’s rally to a fresh 10-month high and the stronger dollar saw gold drop below 200DMA as inflation concerns returned, bringing more fear of rate hikes. Fixed income: European sovereign curves are likely to bear-flatten this morning after Reuters reported that the ECB expects inflation to remain above 3% next year and growth to be downgraded for this and next year. Despite the upcoming forecasts painting the perfect stagflation picture for the eurozone, policymakers will weigh their options carefully and tilt towards a hawkish pause rather than a hike. Yet, they might need to reinforce their message by ending reinvestments under the PEPP facility. That would buy them enough time to wait for rate hikes to feed through the economy instead of adding pressure to the German and Dutch recessions. The focus today is on the US CPI numbers and the 30-year US Treasury auction. Volatility: VIX traded 43 cents higher at 14.23, but more importantly the VIX futures traded 1.31 higher, up to 15.95, indicating there is some uncertainty about the upcoming US inflation report. Adobe, which is scheduled to release its earnings report later this week, closed lower yesterday. Options traders were divided on the stock, with the put/call ratio at 1, indicating that equal amounts of calls and puts were traded. This might suggest that there is no clear consensus on how the earnings report will be received.  Macro: ECB’s new 2024 inflation projection could be raised above 3% vs 3% in June, firming case for interest rate hike. ECB also to cut 2023 and 2024 economic growth projections to broadly in line with market expectations. UK labor report was mixed with headline earnings up 8.5% YoY in July vs. 8.2% expected. For more, read our latest Macro/FX Watch. In the news: Europe's high gas prices hit industrial output – full story on Reuters. Apple unveiled four new iPhone models with a muted reaction from investors in extended trading – full story in FT. Technical analysis: S&P 500 rejected at 4,540 resistance level, expect set back, support at 4,340.Nasdaq 100 rejected at 15,561 key resistance level. USDJPY uptrend eyeing 149-150. EURUSD downtrend, support at 1.0685, Expect short-term bounce to 1.08. Brent oil uptrend potential to 98.50 Macro events: UK Industrial Production (Jul) exp. -0.7% m/m vs 1.8% prior (0600 GMT), US CPI (Aug) exp. 0.6% m/m and 0.2% core vs 02% and 0.2% prior (1230 GMT), US 30-year T-bond auction ($20 billion) Commodities events:  IEA’s Oil Market Report (0900 GMT), EIA’s Weekly Crude and Fuel Stock Report (1430 GMT) Earnings events: Inditex F424 1H results, which have already reported with EPS at €0.81 vs est. €0.80 and a small positive revenue surprise.  
FX Markets React to Rising US Rates: Implications and Outlook

FX Markets React to Rising US Rates: Implications and Outlook

ING Economics ING Economics 25.09.2023 11:07
FX Daily: Re-pricing for a world of higher US rates FX markets are settling down after a big week of central bank policy announcements. Perhaps the biggest story is that the world's 10-year benchmark borrowing rate is pressing at 4.50% – seemingly on the view that a new neutral rate for Fed Funds may be 4%, not 2.5%. Expect the dollar to hold gains as Europe braces for another soft run of PMI data.   USD: 4.50% on the US 10-year yield could pressure risk assets US interest rates continue to grind higher. Overnight, the US 10-year Treasury yield has edged up to 4.50% – the highest since 2007. Driving the move continues to be a re-assessment of the Fed's higher-for-longer policy. Looking out along the USD OIS curve, investors struggle to see short-term US rates (one month OIS) below the 4.00% area over the next 15 years. Our rates strategy team argues that it is fair to see a modest positively sloping yield curve over that period and the 10-year priced 50bp above this 4% low point. This grind higher in US yields – marking higher risk-free rates – creates headwinds for risk assets such as equities, credit and emerging markets. Indeed, even the AI-powered S&P 500 is having a bad month, though it is still up 12.8% year-to-date. This equity correction is supportive news for the dollar, where any move to cash will mostly end up in the liquid dollar that pays 5.30% overnight rates. For today, another bleak run of PMIs in Europe may well keep European currencies soft and the dollar bid. The US data calendar today sees the flash PMIs for September, where the composite PMI remains just above 50. This data has not been market-moving recently. More important was yesterday's release of the lowest weekly jobless claims since January which suggested there are very few signs of a robust US labour market turning.  Expect DXY to remain bid and there is a scenario where the dollar stays strong into mid-October, when large US corporates based in California need to pay their taxes.
Global Markets Shaken as Yields Soar: Dollar Surges, Stocks Slump, and Gold Holds Ground Amid Debt Concerns and Rate Hike Expectations

Global Markets Shaken as Yields Soar: Dollar Surges, Stocks Slump, and Gold Holds Ground Amid Debt Concerns and Rate Hike Expectations

Saxo Bank Saxo Bank 26.09.2023 15:25
Asian stocks fell with US futures as yields on 10-year Treasuries reach a 16-year high above 4.54% while China Evergrande Group missed a debt payment adding to fears about the sectors massive debt pile. Broad dollar strength continues with the greenback trading at its highest level since December as another Fed member said another rate hike this year will be needed. Crude oil trades softer amid macroeconomic concerns and a stretched speculative long while gold holds support despite multiple headwinds. The Saxo Quick Take is a short, distilled opinion on financial markets with references to key news and events. Equities: S&P 500 futures are under pressure this morning with the US 10-year yield hitting 4.55% extending its relentless move higher. If the US 10-year yield moves to 4.75% we will most likely begin seeing widening cracks in equities as the prevailing narrative of falling inflation collapses. Yesterday’s session saw no meaningful rotation between defensive and cyclical sectors. Today’s key events are US consumer confidence figures and Costco earnings tonight after the market close. FX: Higher Treasury yields, particularly in the long end, pushed the dollar higher to extend its gains. USDCHF rose to near 4-month highs of 0.9136 with immediate target at 0.9162 which is 0.382 retracement level. EURUSD broke below 1.06 support despite better-than-expected German Ifo. USDJPY attempted a move towards 149 with verbal intervention remaining lacklustre. AUD slipped on China woes while NZD and CAD were relative gainers, and the outperformer was SEK with the Riksbank starting its FX hedging today. Commodities: Crude trades lower for a second day with macroeconomic concerns, a stronger dollar and a stretched speculative long and easing refinery margin weighing on prices. Gold prices continue to defy gravity, holding above $1900 support with demand for stagflation protection offsetting the current yield and dollar surge. LME copper is trading at the widest contango (oversupply) since at least 1994 as inventories expand and China demand concerns persist. Wheat continues to face downward pressure from huge Russian harvest despite weather related downgrades in Australia. Fixed Income. The Federal Reserve’s higher-for-longer message reverberates through higher long-term US Treasury yields. Unless there is a sign that the job market is weakening significantly or that the economy is slowing down quickly, long-term yields will continue to soar. With 10-year yields breaking above 4.5% and selling pressure continuing to mount through an increase in coupon supply, quantitative tightening, and waning foreign investors demand, it’s likely to see yields continue to rise until something breaks. This week, our attention turns to US PCE numbers and Europe CPI data while the US Treasury will sell 2-, 5- and 7-year notes. It will be interesting to see if investors buy the belly of the yield curve as a sign that they are preparing for a bull rather than a bear-steepening. Overall, we continue to favour short-term maturities and quality. Volatility: VIX Index still sits at around the 17 level, but the downward pressure in equity futures this morning could push the VIX much higher. This could be a cycle where the market tests the 20 level. Macro: Fed’s Goolsbee (voter) kept the door open for more rate hikes while emphasizing higher-for-longer. Moody’s warned of a protracted government shutdown saying that it could weigh on consumer confidence and markets. Meanwhile, after PMIs, Germany’s Ifo also showed a slight improvement in business outlook to 85.7 vs. 85.2 expected, while the previous was revised higher to 85.8. There were several ECB speakers once again. Lagarde largely repeated what was said at the ECB Press Conference, noting policy rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to target. Schnabel said there is not yet an all-clear for the inflation problem. In the news: Interest rates will stay high 'as long as necessary,' the European Central Bank's leader says (Quartz), Teetering China Property Giants Undercut Xi’s Revival Push (Bloomberg), Russia dodges G7 price cap sanctions on most of its oil exports (FT), Global trade falls at fastest pace since pandemic (FT), Dimon Warns World Not Ready for 7% Fed Rate: Times of India via Bloomberg Technical analysis: S&P500 downtrend support at 4,328 & 4,200. Nasdaq 100 support at 14,687 &14,254. DAX downtrend support at 14,933. EURUSD below strong support, resuming downtrend to 1.05. GBPUSD downtrend strong support at 1.2175. Gold rangebound 1,900-1,950. Crude oil correction: WTI expect to 87.58. Brent to 80.62. US 10-year T-yields 4.55, uptrend but expect minor correction Macro events: US New Home Sales (Aug) exp 699k vs 714k prior (1400 GMT), US Consumer Confidence (Sep) exp 105.5 vs 106.1 prior. Speeches from Fed’s Bowman (voter) as well as ECB’s Lane, Simkus and Muller. Earnings events: Costco reports FY23 Q4 earnings (aft-mkt) today with estimated revenue growth of 8% y/y and EPS growth of 14% y/y. H&M reports FY23 Q3 earnings (bef-mkt) with estimated revenue growth of 7% y/y and EPS growth of 47% y/y. Micron Technology reports FY23 Q4 earnings (aft-mkt) with estimated revenue growth of -41% y/y and EPS of $-1.18 vs $1.37 a year ago. Accenture reports FY23 Q4 earnings (bef-mkt) with estimated revenue growth of 4% y/y and EPS unchanged from a year ago. Nike reports FY24 Q1 earnings (aft-mkt) with estimated revenue growth of 3% y/y and EPS growth of –20% y/y.
Uncertain Waters: Saudi's Oil Production Commitment and Global Economic Jitters

Uncertain Waters: Saudi's Oil Production Commitment and Global Economic Jitters

Ipek Ozkardeskaya Ipek Ozkardeskaya 05.10.2023 08:17
Saudi's commitment is not written into a law By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   Markets are on an emotional rollercoaster ride this week. The slightest data is capable of moving oceans. Yesterday, the significantly softer-than-expected ADP report, and the announcement that 75'000 healthcare workers at Kaiser went on strike sparked a positive reaction from the market in a typical 'bad news is good news' day. The US economy added only 89K new private jobs in September, much less than 153K penciled in by analysts. It was also the slowest job additions since January 2021. The rest of the data was mixed. US factory orders were better than expected in August, but the services PMI came close to slipping into the contraction zone, and the ISM's non-manufacturing component also hinted at slowing activity. Mortgage activity in the US fell to the lowest levels since 1995, as the 30-year mortgage rates spiked higher toward 8%. Housing and services are among the biggest contributors to high inflation besides energy prices, therefore, seeing these sectors cool down has a meaningful impact on inflation expectations, hence on Federal Reserve (Fed) expectations. As such, yesterday's soft-looking data tempered the Fed hawks, after the stronger-than-expected JOLTs data triggered panic the day before. The US 2-year yield took a dive toward the 5% mark, the 10-year yield bounced lower after flirting with the 4.90% level, while the 30-year hit 5% for the very first time since 2007 before bouncing lower on relieving news of soft job additions. Hallelujah.  The US dollar index retreated across the board, and equities rebounded. The S&P500 jumped from the lowest levels since the beginning of June. The score is now one to one. One good news for the US jobs market, and one bad news. Everyone is now holding his or her breath into Friday's jobs data, which will determine whether we will end this week with a sweet or a sour taste in our mouth. Sweet would be loosening jobs data, sour would be a still-strong jobs data which would fuel the hawkish Fed expectations and further boost US yields while the US yields are at a critical moment.   For the first time since 2002, the US 10-year yield comes at a spitting distance from the S&P500 earnings. The index is just about 60 points above its critical 200-DMA. Looking at the seasonality chart, the S&P500 could dip at about now. In this context, there is a chance that soft jobs data from the US marks a dip in the S&P500 selloff. But one thing is sure: the yields and the US dollar must come down to keep the S&P500 on a rising path. Profits at the S&P500 companies are inversely correlated with the US dollar as their international profits account for about a third of the total. If the yields and the US dollar continue to rise, the S&P500 will face severe headwinds into the year end.    Oil fell nearly 6%!  Rising suspicions that the global economy is headed straight into a wall didn't spare oil bulls yesterday. The barrel of American crude dived almost 6%, slipped below the 50-DMA ($85pb), and below the positive trend base building since the end of June. The 6.5-mio-barrel build in gasoline stockpiles last week helped bring the bears back to the market even though the data also showed a more than 2-mio-barrel draw in crude inventories over the same week.   Yesterday's move shows that what matters the most for intraday moves is the rhetoric. This summer, the market focus was on the tightening global oil supply and how the US will 'soft land' despite the aggressive Fed tightening. Now we start talking about slowing economies and recession worries.   OPEC decided to maintain its oil production strategy unchanged at yesterday's decision. Saudi and Russia repeated that they will keep their production restricted to maintain the positive pressure on oil. But if global demand cools down and volumes fall, both Saudi and Russia will be tempted to increase profits by selling more oil at a cheaper price. Saudi Arabia shouldering all the production cuts for OPEC is not written into a law, it could become uncertain if market conditions turn sour.
Taming Inflation: March Rate Cut Unlikely Despite Rough 5-Year Auction

US Yields Surge, Equities Drop, and Oil Rebounds: A Market Recap

Ipek Ozkardeskaya Ipek Ozkardeskaya 10.11.2023 09:58
US yields spike, equities fall, oil rebounds By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   Bad. Yesterday's 30-year treasury auction in the US was bad. And this time, the bad auction got the anticipated reaction. The US Treasuries saw a sharp selloff - especially in the 20 and 30-year papers. The US 30-year yield jumped 22bp, the 20-year yield jumped more than 20bp, while the 10-year yield jumped 18bp to above 4.60%.   Then, the Federal Reserve (Fed) Chair Jerome Powell's speech at an IMF event was hawkish. Powell repeated that the FOMC will move 'carefully' and that the Fed won't hesitate to raise the interest rates again, if needed. The US 2-year yield is back above the 5% level.   Of course, the sudden jump in US yields hit appetite in US stocks yesterday. The S&P500 fell 0.80%, and Nasdaq fell 0.82%. The US bond auction brought along a lot of volatility, questions, and uncertainty.  At 5%, the US 2-year yield is still 50bp below the upper limit of the Fed funds target range. Therefore, if the Fed could convince investors that the rates will stay high for long, this part of the curve has potential to shift higher. On the longer end, we could reasonably expect the US 10-year yield to remain below the 5% mark – and even ease gently if economic growth slows and the job market loosens. A wider inversion between the US 2-10-year yield should boost the odds a higher of US recession. But hey, we are used to the inverted yield curve, and we believe that it won't necessarily bring along recession. Goldman sees only a 15% chance of US recession next year. 
Navigating Uncertainty: Insights into U.S. Yields, Equities, and the Nvidia Conundrum

Navigating Uncertainty: Insights into U.S. Yields, Equities, and the Nvidia Conundrum

Ipek Ozkardeskaya Ipek Ozkardeskaya 16.11.2023 12:01
Therefore, the US 2-year yield may have bottom at 4.80% level and should be headed back toward 5%. The US 10-year yield should hold ground above 4.50%. As per equities, the direction is unclear to everyone, but the recent dovish shift in Fed expectations and the dropping yields gave a great energy boost to the US stocks. The S&P500 jumped more than 10% since end of October, the rate-sensitive Nasdaq 100 is now flirting with the highest levels since summer while the Russell 2000 index is having a blast since its October dip. The index rallied almost 12% in 3 weeks, pulled out the 50-DMA, the major 38.2% Fibonacci retracement and consolidated gains in the medium-term bullish consolidation zone yesterday.   As equities move higher and inflation slows, the anxiety regarding short positions mount – hence short covering is adding to the positive pressure.   The Big Short's Micheal Burry reportedly exited his short position against SPDR's P&P500 and Invesco's QQQ and began betting against semiconductor stocks, including Nvidia.   Nvidia, on the other hand, is flirting with its ATM levels near the $500 per share level. A quick glance at Nvidia's long-term price chart clearly suggests that the chances are that we are in the middle of an AI-led bubble and that the exponential move cannot extend infinitely. Yes, AI is boosting Nvidia's revenue and profits, but the revenues that will flow into the pockets of Nvidia thanks to AI are already embedded in the share price, and we will likely see the price bubble burst. But there are two things to keep in mind when you bet against a bubble. 1. A bubble is a bubble only when it bursts – it's like 'you are innocent until proven guilty'. And 2. You can wait a while before the market comes back to its senses. For now, we are in the middle of making eye-popping predictions and beating them. The company is due to release earnings on November 21st.  One big risk for Nvidia is the tense relations between the US and China, and the extension of chip export curbs to a bigger range of Nvidia chips. This week's meeting between Biden and Xi carried hope that the high-level communication could help melting ice. There has apparently been some 'real progress' in restoring military communication and foreign policy... Then, Joe Biden said that Xi is a dictator.
Crude Oil Eyes 200-DMA Amidst Positive Growth Signals and Inflation Concerns

Soft Australian 3Q23 GDP and Moody's Negative China Outlook Shape Market Sentiment

ING Economics ING Economics 12.12.2023 12:36
Asia Morning Bites Australian 3Q23 GDP comes in soft; Moody's negative China outlook will likely dominate risk sentiment today. Taiwan CPI out later.   Global macro and markets Global markets:  US Treasury markets continued to rally on Tuesday, helped by declines in Eurozone bond yields as one of the ECB’s more hawkish board members (Isabel Schnabel) noted that further hikes were “unlikely”. US yields were then given an additional downward push by some soft JOLTS job opening figures. 2Y Treasury yields fell 5.9bp to 4.577%, while 10Y yields fell 8.8bp to 4.165%. The slightly bigger falls in Eurozone bond yields helped EURUSD to decline to 1.0793 and that has also led AUD to decline to 0.6553, Cable to drop to 1.2593, while the JPY stayed fairly steady at 147.18. As the EURUSD move has more to do with EUR weakness than USD strength, these G-10 moves look unnecessary, and a case could probably be made for these other currencies to appreciate against both the EUR and USD, especially those where rate cuts are not on the agenda (JPY) or will be later and probably less than in the US (AUD). The KRW also weakened on Tuesday, rising back to 1311.20. The IDR was also softer at 15505, as were most of the other Asian FX pairs. There may be a bit of further weakness today, though for the same arguments as for the G-10, the rationale for this is quite weak, and we wouldn’t be totally surprised to see this go the other way. Equities didn’t know which way to turn yesterday, given the weak labour demand figures but the lower bond yields, and the S&P 500 ended the day virtually unchanged. The NASDAQ made a small gain of 0.31%. Chinese stocks were battered by the outlook shift to negative from Moody’s, which pointed to the rising debt levels and higher deficits China is adopting to try to underpin the property sector. Though the decision on Evergrande’s winding up was postponed until January, which could have provided some relief. The Hang Seng fell 1.91% and the CSI 300 fell 1.90%.   G-7 macro:  As mentioned, the JOLTS job openings data showed a large decrease in vacancies, to 8733K in October (for which we already have non-farm payroll data) from 9553K in September. The service sector ISM index was actually a little stronger than in October, rising to 52.7 from 51.8, and the employment subindex rose to 50.7 from 50.2, though this has little correlation with month-on-month directional payrolls trends. After a rare “hit” with its weak reading last month, attention may revert back to the ADP employment data later today.  A 130K  increase is the latest consensus estimate. The consensus for Friday’s non-farm payrolls is higher at 187K, with an unchanged unemployment rate of 3.9%. Outside the US, German factory orders and Eurozone retail sales are the main releases, along with a Bank of Canada rate decision (no change expected to the 5% policy rate).   Australia: 2Q23 GDP slowed from a 0.4%QoQ pace in 2Q23 to only 0.2% in 3Q23, weaker than the 0.5% consensus estimate (ING f 0.3%). A more negative contribution to GDP from net exports in data revealed yesterday was the main clue that the figure was going to undershoot. Yesterday’s RBA no change statement showed no additional sign that the RBA is done hiking rates and merely repeated the previous language. Today’s GDP data slightly increases the probability that rates have peaked – however.   Taiwan:  November CPI inflation should show a further moderation, dropping to 2.80% from 3.05% in October. We don’t see this having any impact on the central bank’s policy rates for the time being though.   What to look out for: Australia GDP and US jobs numbers Australia GDP (6 December) Taiwan CPI inflation (6 December) US ADP employment and trade balance (6 December) Australia trade (7 December) China trade (7 December) Thailand CPI inflation (7 December) US initial jobless claims (7 December) Japan GDP (8 December) India RBI meeting (8 December) Taiwan trade (8 December) US NFP (8 December)
Brazilian Shipping Disruptions Propel Coffee Prices Higher in Agriculture Market

The EURUSD Enters Bearish Consolidation Zone Amid Dovish ECB Tone

ING Economics ING Economics 12.12.2023 12:41
The EURUSD slips into bearish consolidation zone ECB's Isabel Schnabel, who has been one of the most hawkish voices during the bank's latest monetary policy tightening campaign, started to sound dovish this week. Schnabel said that inflation is slowing at a 'remarkable' pace. The 10-year bund yield melted to 2.23% level – last seen back in June.   Yes, but Schnabel also said that officials 'have been surprised many times in both directions'. But traders are now set to sell the euro on dovish ECB expectations until inflation proves the contrary. The EURUSD slipped below 1.08 and to the 100-DMA, where it found some support. Following yesterday's selloff below the major 38.2% Fibonacci retracement, the pair is now in the bearish consolidation zone, with a strengthening bearish momentum that hints that the selloff could continue to 1.07/1.0730. Note that the market could absorb a further selloff at the current levels as the RSI is now at a mid-range: we are far from oversold conditions.   Gold sees support near the $2000 per ounce as falling US yields and fading appetite for equities continue to push capital into the precious metal.  Crude oil remains sold in a lower-highs-lower-lows pattern that paves the way for a further fall to the $70pb target, and China is not happy because Moody's cut its outlook for the Chinese sovereign bonds to negative warning that the country's usage of fiscal stimulus to support local governments and its spiraling property downturn pose risks to its economy. The Chinese CSI 300 fell to the lowest levels in almost 5 years, and nothing helps to undo the damage that government crackdowns and the COVID-zero policy have inflicted on investor confidence. China's stimulus measures brought Moody's to cut its sovereign debt outlook but couldn't bring investors or homebuyers back to the market. 
Eurozone PMIs: Tentative Signs of Stabilization Amid Ongoing Economic Challenge

Surprise Surge in UK Inflation Triggers Market Response

Ipek Ozkardeskaya Ipek Ozkardeskaya 17.01.2024 15:55
UK inflation unexpectedly rises By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   Yesterday was just another day where another policymaker pushed back on the exaggerated rate cut expectations. Federal Reserve's (Fed) Christopher Waller said that the Fed should go 'methodically and carefully' to hit the 2% inflation target, which according to him is 'within striking distance', but 'with economic activity and labour markets in good shape' he sees 'no reason to move as quicky or cut as rapidly as in the past', and as is suggested by the market pricing. So that was it. Another enlightening moment went down the market's throat in the form of a selloff in both equities and bonds. The US 2-year yield – which captures the rate expectations rebounded 12bp, the 10-year yield jumped past the 4%, the US dollar index recovered to a month high and is testing the 200-DMA resistance to the upside this morning, while the S&P500 retreated 0.37%.   Waller spoke from the US yesterday, but many counterparts are wining, dining and speaking in the World Economic Forum in Davos this week, which doesn't only offer snowy and a beautiful scenery this January, but it also serves as a platform to many policymakers to bring the market back to reason. Expect more comments of this hawkish kind during this week. It turns out that one of the most popular topics of this year's WEF is rising inflationary risks due to the heating tensions in the Red Sea which disrupt the global trade roads and explode the shipping costs.  
Hawkish Notes and Global Markets: An Overview

Hawkish Notes and Global Markets: An Overview

Ipek Ozkardeskaya Ipek Ozkardeskaya 25.01.2024 12:37
Say something hawkish, I'm giving up on you By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank   The week started on a positive note on both sides of the Atlantic Ocean. Equities in both Europe and the US gained on Monday. The tech stocks continued to do the heavy lifting with Nvidia hitting another record. The positive chip vibes also marked the European trading session; the Dutch semiconductor manufacturer ASML regained its status as the third-largest listed company in Europe, surpassing Nestle, thanks to an analyst upgrade.  Moving forward, the earnings announcements will take the center stage, with Netflix due to announce its Q4 results today after the bell. The streaming giant expects to have added millions more of new paid subscribers to its platform after it scrapped password sharing last year.   Away from the sunny US stocks, the situation is much less exciting for China. Right now, the CSI 300 stocks trade near 5-year lows and Chinese stocks listed in Hong Kong are trading with the deepest discount to the mainland peers in 15 years, as the Chinese interventions are said to be less felt in Hong Kong than in the mainland. Today, though, the Chinese stocks are better bid because Chinese Premier Li Qiang called for more effective measures to stabilize the slumping Chinese stocks, but the truth is, investors left Chinese stocks because of the ferocious government crackdown on most loved Chinese companies. Nothing less than drastic financial support would be enough to bring investors back.  The Japanese stocks continue to be the bright spot among the Asian equity markets. The Bank of Japan's (BoJ) negative interest rates, the cheap yen and the positive outcomes of the tech war between the US and China have been pushing the Japanese Nikkei index to multi-decade highs, and these factors are not ready to reverse just yet. Today, the BoJ didn't only announce that it would keep the interest rates unchanged at -0.10% and the upper band for the 10-yer yield steady at 1%, but the bank lowered its inflation forecasts citing the decline in oil prices. We haven't heard the BoJ presser at the time of writing but lowering inflation forecast highlights that there is no emergency to make any changes to the BoJ policy, even less so after a powerful earthquake hit the island at the very beginning of the year. On the contrary, if inflation – which is the bad side of low rates – is under control, the bank would do better to keep the rates low and its economy supported. As such, the USDJPY remains bid above the 148 level after the BoJ decision and before the post-decision presser. The long yen trade looks much less appetizing today than it did by the end of last year. Yet going short the yen is a risky option considering the rising risk of a verbal intervention when the USDJPY approaches the 150 level. Therefore, the USDJPY will likely waver between the 145/150 range, until there is more clarity about the timing of the BoJ normalization.   Elsewhere, the day is expected to unfold slowly. Investors will monitor the Richmond manufacturing index and await Netflix's earnings release. Additionally, attention is on Donald Trump, who has gained favoritism after Ron DeSantis withdrew his support and endorsed Mr. Trump for this year's presidential race. The potential impact of a Trump victory on financial markets is challenging to quantify; he may adopt a tougher stance on China, implement tax cuts, and increase spending, leading to mixed effects.   For those who missed out on the meme stock frenzy, it's however intriguing to observe Trump's special-purpose acquisition company, DWAC, which surged nearly 90% yesterday.  

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