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Macroeconomic Analysis And Trading Ideas

Technical Breakdown in DXY. STRONG & GROWING Fundamental DriversCheck out my DXY chart from November. DXY fell from 99, just under 100, all the way down to 95/94 in ~2 weeks. High correlation with the Fed cutting rates and yields falling. With the twin deficits set to GROW not shrink and the Fed's balance sheet set to GROW not shrink, and with interest rates set to FALL not rise, the path for the US dollar is looking more and more clear. Weakening dollar will mean foreign markets outperform US markets and rising commodity prices. Markets can still crash but they will crash in terms of gold. Look at the DJI to Gold ratio for reference. Quantitative easing from 2011-2015 did not work. For that reason I think we can easily take out 80 and 70 in the DXY. For the DXY to go on another bull market cycle there would have to be decent growth expectations in the US behind that. That's not happening. We are loaded up on massive amounts of debt. Growth rates are going lower not higher. Central bank balance sheet expansion (Counterfeiting/money printing) is going higher.
INDEX:DXYLong
by Ludwig_Von_Mises
Prepare to Buy the Dips in Gold & Gold StocksKirkland Lake is down 40% from gold's September high of 1550 yet Gold is pushing $1700. Its down 18% from the market meltdown. I suspect this means that if gold gets sold in the coming crash that the dip in gold and gold mining stocks will be limited not extended. It won't be like 2008. A 60% correction from September's high puts Kirkland at $20/share. I will be buying that if we even get that low. If we get lower than that consider it a blessing. Kirkland has some really amazing All-In-Sustaining-Costs to getting gold out of the ground. $2000 - $3000 gold will be incredible for Kirkland lake.
KLong
by Ludwig_Von_Mises
1
Why central bank policy is terrible but you have to deal with itIt’s just like in a comedy movie. And to me it looks like that the people have absolutely no idea about the monetary policy and how they handle it. So yes we have a crisis right now and that is something that also our big central banks from the US and Europe already have recognized. But the effectiveness of their tools to support the economy is pretty bad. Why is that so ? Well if we look a little bit deeper into our current crisis which has appeared by the consequences of the corona virus we can see that we have to deal with a double shock from the supply and demand site. This is something we haven’t seen in the last 100 years in the market and so it is a new phenomenon for all people who participate in the markets. But the central bank policy is pretty easy to understand: We print more money and increase the money supply to keep our market liquid. Moreover we put interest rates near zero and start quantitative easing to support the bond market which also leads to more money supply in the stock market. But does that really work ? As I menaced before we have a supply and demand shock that means people are fearful to make any new investments one the one site and on the other site these people can’t also go to work to earn some money and pay the bills. So a pretty dramatic situation like we have it never seen before. What really helps are not the actions by the FED or the ECB. In my view it’s about the activities made by the federal government. Many companies are already under water and don’t know how to pay the bills and if they’re able to recover from this hick any time soon. What these companies really need are direct payments and tax suspensions by the government. The government has to give these companies some kind of stability right now and this could also lead to more stability in the financial markets. The central banks already gave the market the signal that they will do everything that is possible to keep the markets liquid. And thats pretty much everything that they can do right now. The real challenge will face the governments of this world if they have to accomplish the way from crisis to recovery in aspect of the worldwide economy. We see pretty bad numbers at the moment especially the job numbers in the US. Time for the markets to react on it in a proper way.
OANDA:SPX500USD
by macrolukas
Gold Continuation, Silver Catch-Up in Loose-Money Election YearIn a year that will likely be mired with rate cuts, QE, and rising budget deficits - expect gold to continue its 2019 breakout. Fibonacci, trendline, and XAUJPY calculations give us a target range of 1711-1823 in the price of gold. In achieving this target we expect silver to catch up at least to the low 20's. This move looks highly likely in 2020 and will result in significant repricing in silver junior miners. Keep accumulating ounces and company shares. Heading into the top of this move we will be taking defensive action as we expect a significant correction to occur. It won't be a straight move through $2,000 gold. Given that: 1. The miners and silver have been severely lagging gold which has NEVER been a positive sign for a sustainable multi-year bull market 2. large resistance exists at the 1800-1900 level 3. Monetary policy lags the market, meaning the Fed rarely moves quickly in a straight line. there's a solid chance the Fed bluffs a hawkish stance, causing a temporary gold sell-off It is likely we will correct and consolidate prior to breaking through 1900. Other Thoughts: Monetary policy operates with a lag, which means the rate hikes and QT from 2017-2018 is still creating headwinds for this market. Although the market odds have not yet priced it in, it is almost certain the Fed will not hike in 2020, and it is increasingly likely they will cut rates at least 1-2 times. QE is likely here to stay and expand. The Fed wants a weaker dollar, Trump wants a weaker dollar, and the global markets want a weaker dollar. Expect a weaker dollar unless the Fed wants a liquidity problem. Monetary policy, more than ever, is the driver of this market. I could be wrong and gold could fall - but that would require a very tight monetary policy which would almost certainly cause problems in stocks and debt markets. So be watching the Fed, listening very closely, and watching how the markets respond. Earnings have never mattered so little. All that matters now is central bank liquidity.
FX_IDC:XAUUSDLong
by Ludwig_Von_Mises
6
BAILOUTS FOR GOVERNMENTS ARE THE REAL PROBLEM!I SEE MANY PEOPLE COMPLAINING ABOUT BAILOUTS FOR THE PRIVATE SECTOR! HOW ABOUT THE REAL PROBLEM: BAILOUTS FOR GOVERNMENTS! I WOULD BET MY LIFE SAVINGS THAT THE ECB WILL GUARANTEE THAT ITALIAN (AND EVERY OTHER EUROPEAN NATION'S) BOND YIELDS REMAIN SUPPRESSED BY SACRIFICING THE VALUE OF THE SAVINGS OF EVERY PERSON IN EUROPE! UNTIL GOVERNMENTS ARE ALLOWED TO DEFAULT, WE WILL CONTINUE A STEADY MARCH TOWARDS GLOBAL COMMUNISM! WESTERN CIVILIZATION, THE FREEST AND MOST PROSPEROUS COLLECTION OF INDIVIDUALS IN THE HISTORY OF THE PLANET, WAS BUILT ON PRIVATE SAVINGS ACCRUED THROUGH EXCESS PRODUCTIVITY (ACCUMULATED CAPITAL)! THE RIGHTS OF THOSE INDIVIDUALS AND THE VALUE OF THAT CAPITAL IS ON THE VERGE OF DESTRUCTION!
TVC:IT10YShort
by UnknownUnicorn4195243
1
Yellow Metal Losing the Shine?It was fishy already the moment when I realized how people being greedy over equities TVC:SPX | TVC:DJI . Knowing much of major steps already taken in action from global governments and central banks all those honchos working together to save their own country equally from this pandemic created financial crisis let me think at least once that something is coming better for the future even if it's not soon but later for sure! I have already realized some good changes around which I don't like to mention here but take it optimistic for now and know that the shine of this yellow metal may no longer be brighter then past if the whole world are about to contain this virus inside a box!
FOREXCOM:XAUUSDShort
by Anatta0
5
AUDJPY Probabilities Price DirectionThis is an easy game to know how the global pandemic isn't settled yet and knowing how all big central banks honchos cooperated together to fight against this pandemic by deciding to lower OCR rates equally to combat against the corona virus. State & Europe are new continents who are for now struggling and combating strongly against this pandemic. I hope they win this battle soon but for now, commodities are hampered badly it seems a pity moment to even know how badly supply chain distortion has ruin commodities overall. Comdolls have very fewer probabilities at this hard period of time to even think that they may rise back. They need some pure remedy like " vaccine development " good reports to bring back optimistic. The move upward may only be some correction or retracement on price but it will be hard to think if it is an overall reversal in trend. We all know oil has been the most interesting commodity lately and knowing how it heavily plunged due to the pandemic case so I have not much good faith over comdolls bullish sentiment at least for now. One interesting thing which I would like to talk about is how New Zeland trying to combat strongly lately knowing how it cuts the rate below RBA (which was emergency cut in the weekend, Sunday) seeing that RBA has still room, for now, to get equal to its neighboring country which probably is a case market participant may price in lower for further remaining rooms for cuts (still 0.25 bp room left comparing to other). And lastly, how could I close my idea without mentioning our China which plays the main role over this global pandemic case. If you knew the more china in hurt or the escalation of spreading the virus rate and death counts then remember it will equally hurt Australia and Newzealand businesses as well so keep in that mind. Be sensitive over global risk news updates. This is all some beyond technical analysis thoughts from my side to this pair and if you find this idea valuable don't forget to support me with providing a thumps up! Peace :)
Short
by Anatta0
3
Gold Miners Set to Outperform US Stock MarketTechnical breakout and retest. My expectation for 2020 is a volatile market for both the US indices and for the gold miners. I think gold miners will actually outperform US stocks to the downside here and then will explode higher once we reach full ZIRP and QE5++. The SPX and other US indices could take a major blow in terms of gold which will drag down gold miners a bit but they won't get killed like in 2008. I think miners are waiting for gold to clear $2000/oz, then they will soar like you cannot believe. I think we can get $2000/oz A LOT faster than seems possible. Gold miners are at historical lows relative to the rest of the US economy. Be snagging shares during this period of correction. I ultimately think XAU could surpass all-time highs or at least surpass 0.2 on this ratio but even if we don't get that and all we get is 0.1, we will still make a killing in gold miners. if we go to .2 or higher we will make a fortune.
NASDAQ:XAULong
by Ludwig_Von_Mises
1
Dow Jones to Gold Ratio - Major Trend Shift UnderwayLook for gold to perform similarly to how it behaved from 2009-2011. I believe a significant part of gold's bear market from 2011-2015 was due to the world placing trust in the Central Banks and believing the lie that the Central banks had saved the day. That trust is fading quickly, evidenced from gold's move from 1180 to 1700 in the last 15 months. When ZIRP and QE forever becomes a reality gold will already be past $2000/oz and will make up for the years of underperformance. This is not a pie in the sky prediction, this is real life. Every day the markets are getting closer and closer to fully pricing this reality in. Lets do a quick comparison. 2008 Crash: - dollar soared - stocks fell - gold fell, and less than stocks - gold stocks fell worse than US stocks - Emerging market stocks fell worse than US stocks 2020 Crash so far: - dollar falling - stocks falling - gold holding steady - gold stocks falling but more relative strength than US stocks - Emerging markets falling but more relative strength than US stocks What's different now? The dollar is getting ready for a big fall and the central bank balance sheets are getting ready to explode. 85 DXY wouldn't surprise me in 2020.
FX_IDC:XAUUSDLong
by Ludwig_Von_Mises
3
US Dollar Crisis - Alert!It looks like we're seeing the beginning of a new financial crisis. Don't be fooled, this historical collapse of the market isn't because oil prices, but because of simultaneous bubbles popping, starting with the stock market bubble, Federal Reserve Bubble, and debt bubble. If we take a look at the response from the government, its horrifying. They are taking steps that will inflate this bubble beyond comprehension. Based on what the government and the private Federal Bank have said we should soon see: Imminent Rate Cuts - Negative Rates High Possibility. $150 Billion QE Liquidity - As a start, which can easily double. Stimulus to private sector, small businesses, and even corporations. Pay-roll Tax Cuts - Even less income, higher debt and more printing. This is very bad. All of these steps will expand the Feds sheet massively, eclipsing what took place in 2008. This entire economy is based on this cheap money that has been pumped all over the world under during the last administration and Fed chair. This time, 0% interest rate and QE won't stop the bubble from popping. The Federal Reserve will resort the helicopter money, and in the end, the results are going to be a loss of confidence in fiat. You will soon see failures of fiat starting with the Euro, then by Yen, next will come the US Dollar. This bubble of debt including derivatives is somewhere passed $250 TRILLION. This stack of cards is coming down hard, and the more the central banks do, the bigger the problem is. In fact, the more involvement they have, the greater the collapse is. From here, the domino effect gets greater as consumer spending collapses, taking down housing, autos, and stock prices. This leads to closures, which leads to layoffs, which leads to high unemployment, which leads to welfare, which leads to more printing of money. So, where do we go from here? Safe havens. First and foremost gold and silver, as these will break out of central bank's manipulation hold. Next, for a quick profit taking, gold mining stocks see a massive rally (200-800%) during any economic, geopolitical, political issues, or elections. Check chart history on ASM, NGD, BTG and others to prove it. These stocks are massively undervalued in comparison to gold. Do I suggest Bitcoin? Absolutely not. From what we've seen today, along with numerous other selloffs, crypto has been falling WITH the stock market. From here, metals, and honestly, some prepping for inflation. Buy things now before hyper inflation kicks in. All of this money printing WILL show itself in inflation. Lastly, in a word of opinion.. this next crash will be the death of fiat. Central banks have been foaming at the mouth over digital money for a long time but infrastructure hasn't been there. The evidence is everywhere, as cash is disappearing. China is seeking to digitize their currency. Sweden is the most cashless nation on earth. P2P payment systems and companies are sprouting everywhere. The signs are there, if you care to look.
TVC:DXYShort
by WorldEconomics
What does a market reaction to the Fed's decision say?Since yesterday, by and large, was the first full day of working out the Fed’s emergency decision to lower the rate by 0.5%, today some results can be summed up. And they are generally disappointing for optimists. In theory, stock markets should have perked up and provoked a sharp increase in stock indices. But this did not happen, that is, there was growth, but not at the scale that could be expected. In theory, the pressure on the dollar should have intensified. But yesterday, the Dollar Index rose. In theory, the Fear Index was to drop significantly. But according to the results of yesterday, the decrease was insignificant. What are all these signals talking about? The magic of Central banks no longer works the way it used to. Lower rates no longer automatically resolve existing problems. And this is a very alarming signal for stock market buyers, gold sellers, and other optimists. It seems that the bubble is nevertheless broken and the air, despite all the efforts of its creators, is gradually coming out. In general, monetary policy has exhausted itself and this is an extremely alarming signal: if the situation worsens, it will not be possible to resolve the situation with the usual methods. The consequences of the coronavirus have not even begun to appear, and Nasdaq is quoted 10% below the maximum and, it seems, can no longer grow with the certainty with which it was literally a couple of weeks ago. So in everything that happens, we see the strongest confirmation of our basic investment ideas: sales on world stock markets, and especially on the US stock market; gold purchases and sales of risky assets (such as the Russian ruble). But back to the events of yesterday, which was very full of news. The Bank of Canada lowered the rate immediately by 0.5%. The Canadian dollar obediently worked this out, losing about 100 points paired with the dollar. But in general, the reaction was relatively calm at such a massive reduction in rates. US employment data from ADP turned out to be quite good: +183K with a forecast of +170K. What sets in a positive mood against the dollar ahead of Friday's official statistics. The ISM Index in the non-productive sphere also pleasantly surprised: 57.3 points with a forecast of 54.8 points. But the Eurozone indices traditionally fell short of expectations and for the most part, came out worse than forecasts. Well, the results of super-Tuesday played into the hands of the dollar, on which Biden won quite unexpectedly, who is considered a more adequate option from the Democrats as opposed to the “left” Sanders. In general, our desire to sell a pair of EURUSD intensified up to the recommendation to sell the pair from the current ones with the addition of any attempt to grow. Oil stocks in the United States have grown quite slightly, but all the attention of oil market participants has been riveted to the OPEC meeting and OPEC+ decisions. It is very likely that today some specific information will appear that could provoke strong movements in the oil market. If OPEC+ decides on additional reductions (ideally about 1 million b/d), oil has a chance of growth. The main stumbling block is Russia and its unwillingness to scale up the reduction.
by Trade24Fx
Fed`s surprise, coronavirus chronicles, ADP numbersThe main event of yesterday was the Fed’s decision to urgently reduce the rate by 0.5%. The central bank did not wait on March 18 and caught many by surprise. The reaction of the financial markets as a whole seemed logical: the US stock market went up, the dollar was falling, gold was growing. The whole question is whether these trends will continue. We practically do not doubt gold and put on its further growth. The US stock market may well grow by a further wave of optimism by a few percents. But the closer he gets closer to historical highs, the stronger will be our desire to sell. The dollar will be able to take revenge on Friday, but more on that below. In the meantime, we traditionally continue to review the news from epidemic fronts. The epidemic in China has virtually disappeared (130 new cases), but in the world, everything is in full swing (almost 2000 new cases per day). G7 countries, meanwhile, held an emergency meeting at which they firmly decided to confront the economic consequences of the epidemic. Inspired by this news, as well as information about a possible massive easing of monetary policies around the world (the Central Bank of Australia also lowered the rate yesterday and thereby confirmed reasonable expectations), investors again breathed a sigh of relief and rushed to buy cheaper assets. We traditionally do not share this optimism and consider it clearly premature. The consequences are just beginning to manifest. So in the next month, depressing news will be enough. On the foreign exchange market yesterday there was a certain return of common sense. In terms of the fact that the euro stopped growing at the end of the day (even against the background of information about the Fed’s rate reduction of 0.5%), the pound seemed to have found some ground under its feet. All the attention of traders is focused on the first rand of trade negotiations between the EU and the UK. The results will not be earlier than Thursday. So far, we generally consider all this to be nothing more than noise, which can only give the best entry points. Really, nothing will be solved now, which means you should not worry about anything. Recall that our position on the pound is medium-term purchases. Justification - The EU and the UK will eventually be able to agree again. As for the euro, it seems that there was a less clear explanation for its growth in recent days. In addition to the classic for almost any strong movement of triggering stop loss and buy-stop, analysts call the curtailment of the trade due to the coronavirus epidemic as the main reason for the sharp strengthening of the euro against the dollar. For those who are not in the know, we explain that the ultra-low rates in the Eurozone made it possible to borrow money there and invest them in markets with higher returns (for example, the USA). Which naturally led to a depreciation of the euro. Curtailment is marked by opposite trends, respectively, the euro strengthened. Rumors that the Fed will sharply reduce the rate in March and may reduce the rate even later in 2020 provoked the start of the process of curtailing the trade, which was especially clearly reflected in the EURUSD pair. News about the epidemic has recently monopolized the information space so much that it’s easy to miss important news that does not have the word coronavirus or something like that in the headline. We mean that on Friday statistics on the US labor market will be published. This news is traditionally one of the main ones for financial markets. Considering how sensitive markets are now to any deviations from the norm, these data are of increased importance. But the numbers on the NFP will be published only on Friday, but for now, today we are waiting for data from ADP.
Short
by Trade24Fx
China problems, Central Banks & euro riseThis week begins to give a first idea of ​​the economic consequences of the epidemic (so far in the context of China). We are talking about the manufacturing PMI index for China, which fell to 35.7 in February (compared to 50 in January). The non-manufacturing index came out even worse, showing a value of 29.6 (the lowest in history). Recall that any value below 50 indicates a decrease in economic activity. And this is only the first swallow. Then there will be new indicators, and each of them will plunge financial markets into an ever greater depression, at least for some time. Meanwhile, in China itself, the epidemic continues to decline rapidly. In Wuhan (the epicenter of the epidemic), they even began to close the first temporary hospitals due to the lack of patients. But the relay race in China is confidently intercepted by the world as a whole. South Korea, Italy, Iran - current epicenters, which are also not localized, but, on the contrary, spread the virus to other countries. If we draw an analogy with China, then at best for the next month we will find exclusively disappointing news. So you should not count on something good from March. Accordingly, the outcome from risky assets is likely to continue, respectively, gold and other safe-haven assets will find fundamental support. This week we will continue to use the bundle of buying gold - buying USDJPY as a promising medium-term position. In our opinion, the strengthening of the yen, if it continues, will be limited, but the opportunities for gold growth look much more extensive in this regard. Our disbelief in the significant strengthening of the yen is due to the fact that Japan is experiencing serious economic difficulties and traditionally one of the components of the equation to solve them was the devaluation of the yen, so the Bank of Japan is either around 107 or about 105, but most likely it will intervene and prevent the yen from strengthening. In general, central banks are again in the spotlight. Everyone expects salvation from them. As it was during the crisis of 2007-2009. So far, they live up to expectations, since all key central banks have noted rather aggressive statements about their readiness to act. Markets traditionally focus on the Fed. This is mainly due to the current difficulties of the dollar and the frank success of the EURUSD pair. With each new hundred growth points of EURUSD, our desire to sell a pair grows stronger, as does our desire to increase transaction volumes for sale. Part of the dollar’s problems lies in the plane of the presidential election. We try to minimize the analysis of the political plane, focusing on the economy. But today is the so-called Super Tuesday. The day when 1344 of the 1991 Democratic Party delegates cast their ballots for a particular candidate. So far, Sanders is the undisputed leader (probability of victory = 57%), but Biden still has chances (probability of victory = 31%). So the day for the US political sphere is very significant. The pound was under pressure yesterday due to the negotiation process between the UK and the EU on a trade agreement. There is already a familiar game of tug of war and trade for the best conditions, tied to mutual threats. As in the case of Brexit, we prefer to see not the current noise, but the perspective. And it is such that the parties are likely to agree in one form or another. Accordingly, the pound will receive its positive sooner or later. So in the medium term, we do not see any problems for medium-term purchases of the British pound. Rather, on the contrary, we see good shopping opportunities. In current conditions, sales of the EURGBP pair seem ideal to us.
Short
by Trade24Fx
2
S&P 500 versus GoldThe 1.5-year-old declining resistance line (magenta) has proven too strong for the 4 year rising support (blue) which was broken just last week due to the record drop in the US indices. The drop was due to a combination of a market that had been overzealous and priced to perfection in an increasingly deteriorating economic environment. The coronavirus certainly added fear to the markets as it is looking increasingly likely that the service sector globally is going to get hit pretty hard in the coming months. This break-down of a 5-year consolidation, especially with an initial fake breakdown and fake breakout attempt, appears to be hinting at gold outperformance over stocks over the next 12-24 months. The ratio needs to continue putting in lower highs and lower lows to validate the gold>SPX thesis. Central banks response to the carnage in stock markets is going to tell us a lot. How stocks and gold respond to the shift in monetary policy will also be extremely valuable data. I want to stress that with this SPX to Gold Ratio, SPX/XAUUSD ratio, is that we don't know if this pattern is going to break higher or break lower. Breaking higher into a hyper mania similar to 2000 Dotcom is still possible, the next few months will be telling us, but it's also possible we're near the limit that this current stock bubble can maintain. Rates and economic growth were a lot higher in the 90s which you could argue enabled/justified the massive overvaluation. And by many measures (not at all) the current markets are the most overstretched that they've ever been. For example value versus growth is the most skewed its ever been in favor of growth. Commodities are basing at 40-year lows. The gold mining sector versus their own product is the most undervalued it has ever been. If you think gold has the potential to rise 20%, 50%, 150% or more in the coming 1-5 years, then a position in both the metal and the mining sector is a no brainer. Utilizing funamdental and technical analysis we can find the best companies and make timely and strategic purchases over time. Your odds of making a profit are better when you buy something when it is cheaper than normal. Everyone's piling into what's done well for the past several years - that's classic momentum investing and can cost you dearly if we're near a significant top in US indices. I much prefer buying things when they're on fire sale. Be watching how central banks respond and how gold and spx respond to the central banks. This multi-year triangle consolidation is coming to an end and when these triangles breakout in a direction, it is not uncommon for it to be followed by extremely volatile moves in the direction of the breakout that can last for years.
TVC:SPXShort
by Ludwig_Von_Mises
2
Beating continues, what to do with euro, yen & poundYesterday was largely typical of the current week: investors continued exodus from risky assets and increased positions in safe-haven assets. Perhaps the main result of the day can be considered the return of the yen to the fold of safe-haven assets. Recall that last week, after the devastating data on Japan's GDP, there was talk that the yen could no longer be a full-fledged refuge. But, judging by its growth yesterday, it’s quite possible for itself. True, such a strong growth of the yen raises questions, but are its buyers too carried away? In the end, no one canceled the failed GDP data, as did the fact that the country was one step away from the recession. So today we are inclined to look for points for purchases of a pair of USDJPY. Meanwhile, a survey of European companies operating in China showed that 577 out of 577 respondents surveyed expect their performance to worsen due to the epidemic and the downtime of the Chinese economy. The results, although obvious, are no less indicative of this. The epidemic continues to expand around the world (the number of new cases in the world steadily exceeded the number of new cases of infection in China) and the point is not even the increase in the number of new cases, but the fact that an increasing number of countries are taking certain preventive measures, including restricting travel, school closures, etc. All this, ultimately, will lead to an increase in the scale of economic losses. Well, the list of companies that have publicly announced the deterioration of their financial results in the future has been replenished with such titans as Microsoft, Anheuser-Busch InBev, etc. Actually, as we predicted in our previous reviews. Investors, meanwhile, are urgently reviewing their expectations regarding the actions of the Central Banks. In particular, 90% of traders expect a Fed rate cut in April. So yesterday's dollar difficulties in the foreign exchange market are generally understandable. Nevertheless, the growth of the euro against the dollar seems very abnormal to us and we are inclined to sell a pair of EURUSD today in double, if not triple volumes. Recall that the Eurozone economy continues to experience serious difficulties, and this is still without the consequences of a coronavirus. The situation in Italy also does not contribute to the purchase of the euro. Therefore, we sell the euro against the dollar at full capacity. As for the general list of our positions for today, it is generally unchanged: we are looking for points for buying gold (but we are careful - we buy on the slopes with mandatory stops), we sell oil, we sell EURUSD, we buy GBPUSD. The only sales of USDJPY today we are replacing with the purchase of a pair with small stops.
by Trade24Fx
Macro Deep Dive - SPX, Initial Claims, Yield Curve and Fed FundsCharts: - Top left = SPX - Bottom left = Initial jobless claims (unemployment metric) - Top right = US 10 year and US 2 year spread (Yield curve inversion metric) - Bottom right = Fed funds rate (short-term interest rates) It is no secret that US equities are grossly overvalued, from Warren Buffet to Stanley Druckenmiller to Ray Dalio, the smart money has made their case for why US stocks simply cannot justify their valuations indefinitely. Yet Stocks continue higher, largely due to massive CB liquidity, spurred on from fears of a global slowdown and the ensuing economic impact this would have on such indebted nations and consumer, this coupled with the supply chain shock that the Corona-Virus is undoubtedly having on global trade is a recipe for disaster. So what are the macro/ recession indicators saying? They are flashing red. The Initial claims are at record lows, which sounds fantastic, until you realize that most major recessions and even depressions are accompanied with low, not high, unemployment. Recessions strike when everyone is complacent, when they are fat and happy and when they have their blinders on. I will be watching the initial claims and will look for the the claims to spike and reverse trend, as this is a much stronger indicator of structural weakness within the economy. Moving over the the US10y/ US02y spread, it is well known that the yield curve briefly inverted in 2019, however, the initial inversion is not the point to sell, this is due to the yield curve inversion being a leading indicator of recession. Historically, from the point of first inversion to the inevitable decline in equities, is roughly 12 months to 18 months. We are 7 months into the initial inversion and the yield curve looks like it is going to invert yet again. Finally we have the Fed funds rate, the targeted overnight lending rate for the Federal Reserve. The trend is clearly down, down, down with rates this has been rocket fuel for bonds which are now traded akin to equities for capital appreciation, rather than the interest bearing assets they were designed as. Furthermore, and perhaps most interestingly, it is not the point where rates are raised that signal trouble for stocks, but rather once the Fed pivots and reverses course and begins easing and lowering rates, THIS, not the rate hikes is the signal to watch for. It comes as no surprise then, that interest rate cuts have not only begun, but are in full swing, with further rate cuts this year, already being priced in. The macro outlook looks bleak, this bubble CANNOT last forever, however i firmly believe that the Banksters will not let this bubble burst without a fight, a global slowdown, coupled with global equity markets crashing would cause widespread panic and in some places, riots. So keep an eye out for the helicopter drop of money coupled with bail ins, bail outs and of course, more QE. -TradingEdge
TVC:US10Y
by Profit_Link
4
The yen could not stand it, investors relaxed againYesterday was the day of reckoning for the Japanese yen. We already wrote this week about the failure in the country's economy, but we perceived the lack of reaction of the foreign exchange market as the general inability of the yen to fall due to increased demand for safe-haven assets (see the dynamics of gold prices). As yesterday showed, we were wrong. The markets harbored a strong grudge against the yen, but they lacked reason. After another wave of optimism arose in connection with the improvement of the epidemiological situation and measures to stimulate the economy from China, the yen strongly recalled everything. How deservedly the Japanese currency has suffered is a moot point, but the fact remains that the yen lost a lot yesterday. Although, again, in terms of facts, then 2,000 deaths (+136 new) and 75,000 (+1872 new) cases of infection are no reason for optimism to grow. But the yen was sold, and US stock indexes updated another historic high. What is happening in the financial markets continues to be puzzling, because, looking at the dynamics of gold, there is a feeling that investors are worried about the coronavirus and its consequences, but an analysis of the yen and US stock index charts suggests that the epidemic is a definite plus for the world economies and a reason for purchases even in excess of overbought assets. Meanwhile, inflation in the UK, USA, and Canada was above forecasts. This, by and large, was to be expected: it is impossible to inflate markets with money without consequences for years - sooner or later the time of reckoning will come. It is likely that we have the first signals. Just in case, we note that central banks will be required to respond to rising inflation. They will do this by curtailing the operations of quantitative easing and other cash injections, for example, in the repo market, as well as by raising rates. Rising rates will provoke a chain reaction in the economy and lead to the collapse of bubbles. If 3 years ago, the Fed clearly hoped to gradually blow out a bubble in the US stock market, now it has clearly given up on this hand. That is, the explosion will be very loud. However, so far the markets do not care about this, but now they do not care. I do not care that Apple will fail the first quarter in financial results, that Adida’s economic activity in China has fallen by 85%, that the head of the IMF calls coronavirus the main threat to the global economy, as well as hundreds and thousands of other facts. Going against such a train is generally ungrateful. But to buy Nasdaq above 9700 with such a fundamental background, the hand categorically does not rise. Perhaps the only option to save the rest of common sense in trading and not to merge the deposit is intraday trading with hard stops. So today we will sell oil, USDJPY and EURUSD pairs, buy GBPUSD with small stops, and also look for opportunities for buying gold.
Short
by Trade24Fx
1
Accelerating Inflation is the Elephant in the Room Back in early October I posted a commodities chart. On that chart I shared my thesis that Gold's 6-year breakout in May would retest and commodities would follow on the next leg up. I later posted that "unofficial QE would add fuel into inflationary forces". With Gold breaking out of its healthy correction, inflation hitting 9-year highs, the Fed saying they will not raise rates until they see and significant and sustained increase in inflation and the fundamentals deteriorating, I see the potential for a huge surge in inflation in 2020 and 2021. Especially because its the trade that is most unhedged. Most investors are prepared for deflation - aka if stocks and real estate fall. Almost none are prepared for a rally in inflation, falling dollar, and surging commodities. Strong breakout in TIP with very strong volume. The TIP Bond ETF is a way to hedge yourself against rising inflation and as a way to visualize inflation sentiments in the market. Notice the 3 lows at support coincided with Gold's low in 2013, generational low in 2015, and then in late 2018 when the Fed was being very hawkish, talking about autopilot QT and 4 rate hikes in 2019. Additionally, the moving averages and volume are showing there's more room for growth. The more I look at the facts, rates of change, and the charts, the more I'm convinced the US dollar simply cannot maintain its current level. The Dollar has been flat at 96-97 in 2019, which is impressive given all that has happened. Fed promising to not raise rates until we see a significant and sustained rise in inflation. Federal debt is growing at an unsustainable rate. All-time high twin budget deficits. Additionally, the Fed did a massive U-turn and provided massive liquidity to the market in 2019 due to the 3 rate cuts and QE on emergency levels. Silent QE is growing faster than during official QE. The fiscal stimulus from record spending and tax cuts plus the massive monetary stimulus has helped push us to 9-year highs in rate of change for CPI inflation. Since Q4 2018, Gold has increased from 1180 to 1550 with a high correlation to the TIPS ETF and gold stocks have outperformed the S&P500. The inflation move has already started and few are seeing it, but most investors remain oblivious or unprepared for a significant and sustained increase in inflation. With the rate of change for inflation rising and the relevant fundamentals deteriorating and 2020 being an election year for Trump, this inflation or "reflation" trend that began in Q4 of 2018 looks to pick up speed in 2020. The Fed wants a cheaper dollar to satisfy the Repo market and Trump wants a cheaper dollar to "stimulate" the economy enough to get reelected. With these strong fundamental drivers and technical confirmations, look for the DXY to continue to build a downward trend as it heads to 93 and lower. Those that think central banks can do QE forever without creating inflation and devaluing the currency are wrong. Commodities have shown signs of life at times over the last few months - platinum, silver, copper, some agriculture. I just want to reiterate - with the fundamentals worsening and the rate of change for inflation increasing - in addition to a break out on the TIP chart, highly bullish breakouts in Gold, breakout in Feds balance sheet, and breakout in government spending- there's a good chance we can get big surges in inflation assets in 2020 and 2021. Things to watch out for: - Pay close attention to interest rates and the Fed. The better we can understand the Fed's intentions the better we can trade and invest accordingly. - The Fed has said they will not raise rates until they see significant and sustained inflation. Keep an eye on how fast inflation rises. If inflation surges and the Fed doesn't hike and potentially cuts, gold and commodities will fly. - The "market" needs debt expansion to keep itself sustained. Keeping rates flat and doing a certain amount of QE per month will eventually be insufficient to keep stocks and bonds propped up and rates suppressed. Over the next 6-12 months keep an eye on the Fed's operations, any changes or growth, and any liquidity crunches. The Fed may front-run any liquidity crunch by announcing an official QE program. This is bullish Gold. Watch what they do. If they are slow to act or become hawkish, they could deflate the bubble. - Watch the price action and trend shifts on the DXY.
AMEX:TIPLong
by Ludwig_Von_Mises
9
STRUCTURE UNCERTAINTY.OPTIMISTIC OUTLOOK.Massive structure formed on the weekly chart. I am full of optimism for Bitcoin and the crypto marketplace in general. So I am quite bullish and expect the green arrows to win so to speak, which means we might see 100k per Bitcoin some time in the future given the debasement of the currencies that is going on all around the world, with the central banks pumping liquidity into the system. Bitcoin can protect your savings from the artificial inflation. No to the big government. Yes to bitcoin. Guys, thanks for reading, be safe be good, I’ll talk to you later.
COINBASE:BTCUSDLong
by FxRage
5
Oil and world are in danger, a pound in anticipationTraditionally, we start the review with news about the coronavirus epidemic. Once again, we note that the matter is even on its scale - thousands of times more people die from ordinary flu, and hundreds of thousands of times more get sick each year. The point is the problems that this epidemic has on the global economy. A number of key industrial centers in China have been completely or partially idle for the third week. Each such day is further destruction of the global supply chain, and if there are still enough stocks in warehouses, then every day the risk of a shortage of materials to continue the activities of companies becomes higher, as well as the scale of losses. One of the main victims this week maybe oil. We wrote that last week OPEC+ was able to tentatively agree to reduce oil production by another 600K b/d. But yesterday information appeared that Russia could refuse this. And here, even in Libya, the warring parties are close to signing a peace treaty, which is fraught with the return of several hundred thousand barrels per day to the oil market. And all this is happening against the backdrop of a sharp drop in oil demand from China. Not surprisingly, some experts predict an oil drop of at least 10% in the foreseeable future. In general, oil sales this week remain our basic trading idea. Returning to the current figures on the scale of the epidemic, we note that the number of deaths is approaching 1,000, and the number of cases is close to 50,000. Once again, we recall that these are official statistics. The main mass of experts converges in opinion, that the figures are underestimated by several times to several tens of times. In connection with such a development of events, we cannot but recall our recommendation to sell the Russian ruble. The conditions for this are almost ideal, especially when you consider that the Central Bank of the Russian Federation lowered the rate again last week and plans to do this further in 2020. Today, in terms of macroeconomic statistics, it will be interesting primarily for the British pound. Data on GDP and industrial production can trigger a surge in volatility in pound pairs. Given that in recent days, the pound was already under strong downward pressure, weak data will almost certainly trigger a new wave of sales. But at the same time, good numbers can give a start for strengthening the pound - points for its purchases are very attractive. In general, today you can try news trading, with pending orders or enter after the news, playing back a fundamental positive or negative.
Long
by Trade24Fx
POV 4Y in a nutshell & what matters if you trade equity indicesThe following is just my point of view and not the single source of truth. Hence, I would appreciate any comment which would lead to a fruitful discussion. When you are trading equity indices, you are simply trading a bundle of cashflows (compromised by the companies within the index). If you are not a scalper (I am not) but rather a swing trader (what I try to do to finance my living/ family) you would do your analysis based on 4H, daily and weekly charts. But apart from that, the most important question is, is there any event, which affects the cashflows within the index. Then, is this effect temporary or permanent. Typical events which affects more or less all cashflows within an index: Interest rate (central banks) GDP (incl. e.g. unemployment rate...) Inflation (defines the price for goods, hence the cashflow) Costs (incl. e.g. workforce costs...) Solvency (i.e. of your customers and the solvency is driven by market liquidity and interest rates) Uncertainty (these are mainly political risks like war, trade war etc. but sometimes also natural disasters and usually temporary even if they last for 1-2 years) To better understand these cashflow drivers, lets take as an example - the DJ and lets walk through 4 years and a couple of events, which drove the ups/downs in the DJ (from my POV): When Mr. Trump won the election in 2016 he soon started to initiate a very important law, the corporate tax law . Which would reduce the corporate tax significantly, hence has a hugh positive impact on the cashflows. Today, companies profit significantly from the law and uses the profit to buyback own shares or just pay higher dividends. Many companies have chosen the first option, which has two effects: First, higher demand for the own shares (which usually increases prices) and secondly, every share which they buy increases the profit of the company since dividendes paid are paid to the company and increases the income of the company (cashflows from financial activities), which increases the value of the company. The market anticipated the new law and consequently increased the valuation of the companies, knowing (or betting) that the law would effect the cashflow positively and smooth out any overvaluation in the future. This explains why we saw such an increase in asset prices starting in July 2017 (6 months before the law would come into effect). This is why we have left the Obama-Trend Channel moved to the Corporate-Tax-Cut-Trend-Channel . Then two things happend at the same time , which was not anticipated by the market: Trump started a trade war with China in Feb. 2018 and the FED announced, that it would start the process of balance sheet normalization , hence reduce the liquidity in the market. Both have negative effect on corporate cashflows. At that time, nobody knew how much liquidity would be reduced by the FED, how many rate hikes we would see and how long the trade war would last and would the consequences would be. After 4 rate hikes and further escalation of the trade war, everyone in the markets was nuts. Apart from the fact, that sentiments were in panic modus due to uncertainty , you could not see such negative effects in the cashflow of the "healthy" companies, but companies with a lot of debt were in panic modus, because money became more and more expensive (keep in mind, we have a lot of zombie companies, i.e. negative cashflows. These companies hope to pay back the corporate debt with own share (actually they sell these share to us) or some of them really believe, they will become profitable in the future). On the peak of this panic modus Mr. Mnuchin organized a call with the CEO of the 6 major US banks . The day after, they started to buy like crazy (here I have to guess: probably Mr. Mnuchin told them, that the gov would increase the pressure on the FED to lower interest rates and that before the next election Mr. Trump would find a solution (interim solution) regarding the trade war.) During this 12 months many traders made a fortune or maybe have lost a lot, this mainly to uncertainty. So never underestimate uncertainty and try to keep calm. When the FED announced the end of the balance sheet normalization and induced afterwards USD 400 billion into the markets again, the current rally started, which was just shortly stopped by the coronavirus. In my opinion, the market (nobody want to say that) hopes, that Mr. Trump will be re-elected and that he is going to do even more tax cuts, this time for the middle class in order to boost demand, this would again lead us to a new trend channel: The "Corporate Tax Cut and Middle Class Tax Cut" trend channel. If he does not win the election, we would have again some uncertainty in the market. I focus on these above mentioned "cashflow drivers", but I do not care so much on all the little indicators (these may change sometimes daily/weekly. Nevertheless I have build a heat map, showing me, when to many indicators are declining). But I use also the technical analysis, especially to define when to enter a trade and when to exit a trade. And I am not always right, just recently I posted a trade (S&P) which proved how wrong someone can be (in this case I had underestimated the PBOC and the ECB). I hope you like my thoughts, if you disagree, just leave a comment and let's share our thoughts.
OANDA:US30USDEducation
by Chimbarosa
Week results - between Brexit the NFPThe main event of the previous week was not a meeting of the Bank of England or even a decision of the Fed (both the Central Banks left monetary policy parameters unchanged). This is not data on US GDP (annual growth rates have been the weakest since 2016: 2.3% in 2019 compared to 2.9% in 2018), but the coronavirus epidemic in China. Yes, so far the epidemic has been localized in China. But this is not easier. The magnitude of the coronavirus epidemic has already exceeded the 2003 SARS. And the World Health Organization declared the outbreak of coronavirus a global emergency. So last week, the markets were busy on the one hand counting the victims of the epidemic (more than 300 deaths and more than 15,000 cases), and on the other hand, counting the economic damage. China extended the New Year weekend for another week. That is, another week 2/3 of the Chinese economy will be closed. The magnitude of the losses is not yet clear, as the epidemic continues, but it is already clear that we are talking about tens of billions of dollars. The chances of China's GDP growth rate dropping below 6% now seem almost 100%. So the fears and concerns of the global recession have intensified. The Chinese stock market today is trading in a deep minus (about -8%) despite all the efforts of the Government and the Central Bank. Despite such a regrettable situation, trading is an opportunity that can and should be taken advantage of. For the long-term, it is worth selling in super bought stock markets, but in the medium-term and locally, the purchase of safe-haven assets (gold and the Japanese yen) and the sale of risky assets such as the Russian ruble look great. Actually, we voiced this plan last week, but as the epidemic grows, the relevance of our positions only grows. Another significant event of the past week was Brexit. On January 31, Great Britain officially left the EU. We already wrote that buying pounds remains one of the best trading opportunities at FOREX in terms of potential in 2020. Whether it is implemented or not will show the progress of trade negotiations between the UK and the EU. But if successful, a pound above 1.40 could very well become a reality. The upcoming week will be saturated with various kinds of macroeconomic statistics. But the main attention will still be focused on Friday statistics on the US labor market and NFP figures. Our thoughts and forecasts on this subject will be described closer to Friday. In the meantime, we continue to monitor the development of the epidemic and investor sentiment.
FOREXCOM:XAUUSDLong
by Trade24Fx
2