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What If Ukraine Wins?When the Russia-Ukraine conflict first broke out, world markets were in a complete shock. Equities fell and commodities rose as geopolitical tension became the dominant price driver. As fighting dragged on from weeks to months, other important factors took over. Besides the traditional supply and demand variables, we have witnessed a record shattering inflation rate, aggressive rate hikes by the Fed and ECB, and growing worry of a global recession. While geopolitical risk has been put in the back burner, it never went away. In recent days, Ukrainian forces launched a military offensive and retook Kharkiv, a Russia-occupied stronghold in eastern Ukraine. Would this be a breakthrough in the 200-day war? How would it impact world markets? Should we adjust previously employed strategies given this new development? To answer these questions, let’s first revisit our Three-factor Asset Pricing Model: Asset Price = Intrinsic Value + Market Sentiment + Crisis Premium Where, • Asset Price – Expected Price of an asset at time t, • Intrinsic Value – Trader defined fair value. It could be estimated by fundamental supply and demand factors or technical indicators. If you don’t have one, simply use the market price. This is our baseline price. • Market Sentiment – Bullish or Bearish sentiment. This can be considered the supply and demand of investor money. More buying pulls the price up above the intrinsic value. More selling pushes the price down. • Crisis Premium – When a crisis breaks out, it could introduce an “Event shock” to the market. It is a dummy variable, with 1 denoting a crisis, and 0 indicating the lack of it. In our exploration of event-driven strategies on binary outcomes on June 16th ( ), we defined the Russia-Ukraine Conflict by two possible outcomes: War and Peace . War includes all scenarios that the Ukraine conflict would continue or intensify. For the second outcome, how could peace be restored? It could come as a Russian victory (Win), a peace deal between Russia and Ukraine (Draw) or a Russian defeat (Loss). The recent Ukrainian military advances raise the possibility of an armistice. Would we see a reversal of the initial crisis shock if peace is in reach? Let’s examine the following commodities. Wheat CBOT:ZW1! In 2021, Russia accounted for 17% of global wheat export, while Ukraine had a 11% share. CBOT Wheat Futures shot up 75% two weeks after the conflict started. The price shock was a market response to “perceived” loss of 28% of global wheat supply in a worst-case scenario. Market panic tends to over-shoot. Irrational price movement could be totally out of proportion of the actual supply loss. As the conflict continued, Russian wheat found new markets in China and Iran, despite an international sanction in place. In August, Ukrainian grains resumed shipping through the Black Sea thanks to a Russia-Ukraine deal brokered by Turkey. Wheat price pulled back to below $8 a bushel as investor realized that this big portion of wheat supply is not totally wiped out even the fighting never stopped. CBOT Wheat is quoted at $8.69 a bushel last Friday, almost at the same price level when the conflict started. Where will it go next? • If fighting intensifies (War), wheat price could possibly go higher on the back of high energy price and high interest rate. • However, if a peace deal is struck (Peace), release of huge supply from both Russia and Ukraine could send wheat price sharply down. We employed a Strangle Option Strategy on CBOT Wheat Futures in June, which carried an out-of-the-money (OTM) Call option and an OTM put option. We expected a big price move as imminent, but its direction uncertain. It appears that we are in a similar situation again. Natural Gas NYMEX:HH1! NYMEX Henry Hub Natural Gas Futures was trading at approximately $4.50 per MMBtu before the conflict. It went up 70% in the following two months and was more than doubled to $9.2 by early June. After recession fear sent natural gas price down to $5.5, it has come back up above $8.00 as Russia cut off natural gas supply from the Nord Stream 1 pipeline. This triggered a major energy crisis across Europe. What would happen next? • War: Natural gas price will surge higher. Liquified natural gas from the US is more expensive, and not adequate to replace the Russian supply. Europe will be looking at an extremely cold winter. • Peace: Sanctions will be ended. The huge oil and gas supply from Russia would flow back to global market, sending energy price sharply down. Similar to CBOT Wheat, we may consider a Strangle Option Strategy on NYMEX Henry Hub Natural Gas Futures, and to buy OTM call option and OTM put option simultaneously. This trade is based on our expectation that a big price move is imminent, but its direction is uncertain. Euro-USD Exchange Rate CME:6E1! Interest rate parity (IRP) states that the interest rate differential between two markets is equal to the differential between the forward exchange rate and the spot exchange rate. As Federal Reserve started raising interest rates in March, Euro has seen the biggest depreciation against the dollar in 20 years. The battle between USD and Euro may also be viewed as a game of relative strength. • US could raise interest rates faster than Europe; • US could control inflation better than Europe; • US unemployment could be lower than Europe; • US economy could perform better than Europe, soft landing vs. hard landing; • Energy crisis could worsen in Europe as winter approaches. A peace deal could change everything. It would validate the strength of European nations in support of Ukraine. Market confidence and bullish investor sentiment would be powerful enough to reverse the steady decline of Euro currency. Peace, Euro up. War, Euro down. It looks like a Strangle option strategy to me again. The Equity Market CME_MINI:ES1! Up to this point, I have been fairly bearish about US Equity Indexes. Based on the Discounted Cash Flow (DCF) asset pricing model, I expect Fed Rate Hikes and High Inflation to suppress stock valuation. • High interest rate increases the discount factor WACC (Weighted Average Cost of Capital), the denominator of the DCF equation • High inflation increases production cost and reduces sales volume, which results in smaller free cash flow (CF), the numerator of the same equation • The combined effect is a lower stock valuation Small-cap stock indexes such as the Russell 2000 could be in a dire situation when the fear of recession becomes a real one. Smaller companies tend to have higher cost of capital and could suffer bigger profit loss compared to the Blue Chips. New developments in Ukraine could mean an end of the war. In our three-factor model, the crisis premium could go to zero. Typically, only one factor dominates the market at any given time. In this case, a bullish sentiment could take over. It could drive stock price higher. Investors in a celebratory mood simply discount all the bad news for a while. Geopolitical dynamics is a game changer that investor can’t afford to ignore. Recent development in Ukraine has put a new layer to the series of discussions around “The Great Wall Street Repricing”. If you have made directional bets, this may be a good time to take cover. Financial market is extremely volatile this year. Getting an information edge increases your odds of success in managing risk. I suggest leveraging real-time market data for a better gauge of market situation. Tradingview users already have access to delayed data. A Pro user could upgrade to real-time CME market data for only $4 a month, a huge discount at the time of high inflation. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CBOT:ZW1!
by JimHuangChicago
44
NZD/USD for long? There is a potential inverted head and shoulders pattern on the nzd/usd chart. So it all depends on the CPI numbers; if we see a price drop to the 0.6060 area, and if the CPI numbers come in lower than expected, we can consider the scalp long position relatively safe at that point. Higher CPI numbers are very likely to extend USD strength (in which case you can wait for the bullish pattern to fail and go short), so don't anticipate the numbers and wait for clarity.
by merjemascerija
Commodities: Tug of War between Tight Supply and Weak DemandThis is the 2nd installment of “The Great Wall Street Repricing” series. The price of a commodity is determined by the interaction between the demand and supply of its market. This year, such interaction acts like a Tug of War. On the one hand, tight supply pushes commodity price upward; on the other hand, weak demand pulls the price back down. Commodity prices swing wildly as each side battles for supremacy. News that signals supply disruption sends prices flying. It could be geopolitical tension, bad weather, restrictive government policy, or an oil tanker stuck in the Suez Canal. Meanwhile, high inflation, weak housing market, disappointing retail sales, and Fed rate hikes all raise worry of a global recession and the consequential demand reduction. Not all commodities are created equal. I have made some interesting observation: Commodities primarily used as a production input hold up much better than those being consumed by end users. To prove my point, let’s review the price data at market close on September 2nd. In the energy market: • WTI crude oil ( NYMEX:CL1! ) is settled at $86.4 per barrel, down 11.9% month-to-date (MTD) • RBOB gasoline ( NYMEX:RB1! ) closes at $2.38 a gallon, down 23.3% MTD • Oil Supply: There is no elasticity. Crude oil production capacity is capped in any given year • Demand elasticity: Consumers could adjust their driving habit in response to inflation American Automobile Association (AAA) reports today that national average retail price of regular gasoline is $3.809, down 9.1% MTD, but diesel, at $5.067 a gallon, is down less than 4% MTD. Why? Diesel is mainly used for highway transportation of goods by trucks. Delivery routine has less flexibility to change comparing to consumer driving behavior. In the food market: • Corn ( CBOT:ZC1! ), a main ingredient in livestock and poultry feed, closed at $6.58 per bushel, up 6.7% MTD • Lean hog ( CME:HE1! ) is settled at $0.919 per pound, down 3.7% MTD • Corn price is vert sensitive to supply factors such as plant acreage, weather, and yield • Hog price is more correlated to demand factors, including export of US pork, and consumer seasonal changes of dietary habit • Pork has substitutes. When it gets expensive, consumers could switch to cheaper meat. People in poorer countries could simply reduce meat consumption On August 2nd, I expressed my view in a trade idea titled “Short the Hog Margin if You Expect Lower Pork Price” In the metals market: • High Grade Copper ( COMEX:HG1! ) closed at $3.408 per pound, down 4.2% MTD • Silver ( COMEX:SI1! ) is settled at $17.655 per troy ounce, down 12.6% MTD • Both copper and silver are industrial materials. They declined in response to economic slowdown, but there is a significant difference • About 50% of silver supply is used in industrial applications, with the other 50% being used as a previous metal or for daily use • Consumers will buy less silver jewelry in tough times. This explains why silver declined three times as much as copper. In the credit market: • 2-Year Treasury yield ( CBOT_MINI:2YY1! ) closed at 3.514%, up from 2.950% last month • 10-Year Treasury yield ( CBOT_MINI:10Y1! ) settled at 3.272%, up from 2.727% last month • Both went up in response to Fed’s rate hikes, but there is a difference • 2-Year Note has a direct relationship with Fed Funds rate. It reflects the cost of money (rate hike) and the supply of money (quantitative tightening) • The yield of 10-Year Note also reflects money demand in addition to money supply • In an economic downturn, businesses and consumers will reduce borrowings. The spread between deposit interest and lending rate will be tightened • This makes sense – with lower loan volume, banks are willing to make less What about High Interest Rate and High Inflation In the first installment, we discussed the impact of high rate and high inflation from the perspective of discounted cash flow valuation model. • High interest rate increases the discount factor, the denominator of the equation • High inflation increases production cost and reduces sales, which results in smaller free cash flow, the numerator of the same equation • The combined effect is a lower stock valuation Aligning with what we discuss today, we may find the inflationary impacts differ depending on whether the commodities are industrial materials or bulk consumer products. Inflation means higher price. It is generally good for those commodities primarily used as production input, such as natural resources. Energy producers, metal dealers and mining companies have all made record profit this year. However, if persistent inflation eventually leads to a recession, commodity price would fall due to lower demand. It’s an entirely different story for companies producing bulk consumer products. As we discussed earlier, hog farmers get squeezed by higher feed cost and lower meat price. Jewelers would find customer traffic significantly reduced due to higher prices of gold and silver jewelry. The impact of higher interest rates is more uniform for most commodities. It increases the borrowing costs on anyone engaged in producing, processing, transporting, and using the commodities. Higher cost results in lower usage, which would depress commodity price. In addition, a strong dollar raises the price for overseas consumers when they pay with a weaker foreign currency. I think we have covered a lot today. Let’s take some time to digest and identify market opportunities with these observations. Financial market is extremely volatile this year. Getting an information edge increases your odds of success in managing risk. I suggest leveraging real-time market data for a better gauge of market situation. TradingView users already have access to delayed data. A Pro user could upgrade to real-time CME market data for only $4 a month, a huge discount at the time of high inflation. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
NYMEX:CL1!Short
by JimHuangChicago
2
The Only Chart That Matters for The Next DecadeConsumer Price Index Year over Year (CPI YOY) vs 2 Year Yield (2YY) vs Fed Funds. To even begin to arrest inflation, the Fed has to get Fed Funds above the 2YY. To break the back of inflation, the Fed must get Fed Funds above CPI YOY. Does the most recent drop in CPI YOY mean that peak inflation is already in? People forget that when inflation runs hot, so does its volatility. For lasting inflation reduction, the Fed has to get to the real neutral rate. And consider that the CPI formula you are seeing in this chart has been altered numerous times, proponents would say to better reflect productivity gains, critics would say to mask real inflation to benefit the government. Whatever you believe, if we calculated CPI the way we did in 1980 it would be nearing 18% . So it's much, much worse than this. This is the only chart that matters for the next decade.
FRED:FEDFUNDS
by UnknownUnicorn1334230
Euro inflation rises, but euro yawnsThe euro continues to have a calm week. In the North American session, EUR/USD is showing little movement as it trades a whisker above the parity line. Inflation in the eurozone continues to move higher. In August, CPI rose to 9.1%, up from the July gain of 8.9%, which was a record high. Core inflation climbed to 4.3%, up from 4.0%. With both the headline and core readings exceeding the forecast of 9.0% and 4.1%, respectively, there will be additional pressure on the ECB to tighten policy more at an accelerated pace. The central bank has been slow to shift its accommodative policy, which was in place for years in order to support the eurozone economy. The ECB now finds itself playing catch-up with inflation, and is also far behind in the tightening cycle compared to other major central banks, with a benchmark rate of just 0.50%. Inflationary pressures remain broad-based, which means inflation is well-supported and unlikely to decline anytime soon. The eurozone inflation report comes just a day after Germany, the largest economy in the bloc, reported that August inflation jumped to 7.9%, up from 7.5% in July and nudging above the forecast of 7.8%. The central bank meets next on September 8th, and there is a strong possibility that the ECB could come out with guns blazing and deliver a super-size 75 basis point increase. A potential energy crisis in Europe continues to hover like a dark cloud, and the uncertainty over whether Moscow will weaponise energy exports remains a massive concern. The Nord Stream 1 pipeline has been shuttered for a scheduled three-day maintenance, but there are fears that Russia will find some excuse and not renew gas flows on Saturday. Any disruptions would likely push European gas prices even higher. In the meantime, the waiting game is on, with Western Europe on edge while it anxiously waits for the gas taps to be turned back on. EUR/USD has support at 0.9985 and 0.9880 1.0068 is a weak resistance line, followed by 1.0173
by OANDA
Hawkish FED Keeps USD In UptrendUnfortunately, stock markets are where they are, and we cannot force them to move in a particular direction. We see a neutral status at the end of the summer, but this volatility may come back in September. We may see some interesting price action already this week when US will release its important jobs data. Fed watches this data closely, but what’s important is that they were very clear lately and said that they will stay hawkish even if FED’s actions will cause some harm to the US economy . So for now, the USD remains in uptrend because of US yields. From an Elliott wave perspective, we see US yields trying to break higher into a fifth wave now, so this can cause even more weakness XXX/USD pairs. But when the fifth wave will hit a new high on yields, that’s when we should be aware of a new change in cycle, ideally later this year. But any major reversals in cylce will not happen that easily, especially now with current FEDs actions and potential bad data. Bad or good data; it doesn’t really matter; the stock market will have a hard time turning back to the highs. Yes, stocks can stabilize if we see bad data, but if we will start seeing bad data week after week then this means a big economic slowdown and a potential recession. Expensive capital, inflation, and economic downturn is a bearish case for stocks. There is simply no "free" cash available to be invested in the stock market.
TVC:US10Y
by ew-forecast
4
Is it almost time for Bitcoin to fly again?Hey Traders. I'm bringing you a mid-week update for a couple of reasons: 1. I will be OoO (Out of Office) the remainder of the week. 2. Many indicators are showing me we are getting very near a bottom here. 3. I want to prepare you to move when the market moves. This could happen while I am OoO. 4. I want to show you the trades I am still in and what I am looking at next. For the record, I closed my Matic short for profit. And I am still long Doge, Gods, NWC. The spreadsheet has been updated with all of the most recent data. And if you don’t have time to watch it, basically, the short and skinny is that we are drawing near to that Sept 13 date when new CPI data is released and the FED makes further commentary on it. All the charts and indicators point to some big moves happening around that time frame. Could go either way but I am fairly optimistic about what the charts are showing me. Take a look at Bitcoin for instance: Here is our longer-term (10 months plus) bullish descending wedge which we are nearing the end of. And inside of this bullish wedge is another bullish wedge: More and more signals are beginning to show green lights soon. Let’s pay attention here. Stew
COINBASE:EOSUSDLong
by stewdamus
2
Why Crude Oil is Trending Higher Again, Breaking Above US$100In this tutorial, I will explain both its fundamental and technical reasons for crude oil likely to break above and stay above US$100. I am having two portfolios at all times, one for long-term investing and the other for short-term trading. For the long-term I am mindful the current global inflationary pressure is real and it may last many months or even years ahead. Therefore, my current investment mandate: • U.S. stock markets – To trade them • Commodities – To buy them Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. For your reference: NYMEX Crude Oil $0.01 = US$10 Example: From $94.00 to $100.00 (10000-9400) x US$10 = US$6,000
NYMEX:CL1!Education
by konhow
1
Bitcoin, 1 pump chump bound for correction not sustained pump. BTCUSD 3D Chart - Currently maintaining its validity inside of the bear flag, Bitcoin may be out of steam regardless of the "risk on" morning Crypto had after the CPI release. Looking over the past 50+ days we can see Bitcoin has had a pretty consistent 2 up, 2 down timed count with the exception of 1 data point. Now this is a small sample size but we are in a Bear Market even if the micro trend has been upwards/Bullish. With that said, its not as likely that Bitcoin will just continue to climb and climb and the odds will favor Bearish moves. Currently, in the 2nd candle of the upswing with a lower high we could see 2 consecutive down candles. Upside levels to watch - pivot high at 24.6k or closing above 25.5k for a shot at 28k+ Downside levels to watch - pivot low at 22.4k and the 2017 cycle high of 19.5k.... Keeping in mind anything below roughly 22k becomes outside of the Bear Flag depending on what time frame you are looking at. Anything lower than 25.5k I remain Bearish on Bitcoin.
INDEX:BTCUSD
by jlouvierobv
4
$EUR - Be prepared...!$EUR - Be prepared...! $EUR - What a mess! We've shifted gears this morning. Fundamental reasons as I stated in my previous posts and various others there is no good data coming out of EUR. Now as you look across the board its DXY move and you have precious metals, crypto, Indices and majors under pressure. This could continue! However, further insight will be happening at Jackson Hole. Which is another event to see what Powell has to say - Dovish or Hawkish. Europe shot themselves in the foot when it comes to further sanctions, as Europe overall heads into an energy crises. Germany & French electricity prices keep climbing, hit fresh records. German year-ahead power is on a nine-day rising streak. Contract rose 1.4% to record 545 euros per MW/h. Europe year-ahead coal futures climbed 2.1% to a record $311.50 a ton, and the river Rhine having issues due to low levels and lastly German producer prices on record (+5.3% MoM). It really doesn't look very pretty at all! Have a great weekend, TJ
by Trade_Journal
Market Impacts of the US Mid-term ElectionsCME: S&P 500 CME_MINI:ES1! ; NYMEX: WTI NYMEX:CL1! and Henry Hub NYMEX:NG1! ; COMEX: Copper COMEX:HG1! and Aluminum COMEX:ALI1! The 2020 U.S. presidential election put Democrats in control of the White House and both branches of the Congress. In the upcoming mid-term elections, if Democrats retain their majority, Joe Biden will become the most powerful U.S. president in the 21st century. Donald Trump, his predecessor, enjoyed a Republican-led Congress in the first two years. However, after Democrats took back the House in 2018, Mr. Trump found himself fighting with Speaker Nancy Pelosi daily, all the way to a presidential impeachment in 2020. President Obama faced a divided Congress in six of eight years. The only lasting impact of his presidency may be Obamacare, besides his own legacy as the first African American president in U.S. history. United We Act, Divided We Fight Looking back on the 90 years since Franklin D. Roosevelt first became president: • We had Party Government for 44 years. The term refers to where the president, the house and the senate are controlled by the same political party. • For 14 years, we had a Divided Government , where only one branch of the Congress aligned with the president. • The remaining 32 years were Opposing Government , where the president and the Congress came from opposing parties. A divided or an opposing government tends to spend too much time on political infight. It’s difficult to reach a consensus to do big things. Major bills usually got approved in a unified government, and their impact extends far beyond the four-year presidency. For proof, we only need to look at how government spends money. In 2022, Medicare is the biggest expense item in the $6 trillion federal budget. Medicare Act was introduced in 1965 under President Johnson and a Democrat-led Congress. More than half a century later, it now costs $1.44 trillion or 24% of government spending. Social Security is the second largest expense item. The program was enacted in 1935 by a Democrat-led Congress as part of President Roosevelt’s New Deal. Social Security costs $1.13 trillion in 2022, or 19% of federal budget. Biden Administration’s Achievements What did the Biden Administration accomplish? One may point out the embarrassing retreat from Afghanistan in 2021 and the runaway inflation in 2022. However, Mr. Biden has been very effective in pushing legislative agenda. In just 1-1/2 years, four major bills with a $4 trillion total budget have been signed into law. A month after Biden took office, Congress passed a $1.9 trillion American Rescue Act on March 11, 2021. Most Americans received a $1,400 check from the Treasury Department. Millions of small businesses got approved for much needed loans. Government bailout prevented the economy from going into recession in the depths of a pandemic, even though it might have paved the groundwork for hyperinflation we are experiencing now. On November 15, 2021, Congress passed a $1.2 trillion Infrastructure Investment and Jobs Act. Among the biggest items, $110 billion are allocated to upgrade the country’s roads and bridges, $66 billion to renovate passenger and freight railways, and $65 billion to revamp the electric grid. U.S. unemployment rate stays very low this year, thanks in part to the new jobs created from government funded programs. On August 9th, Biden signed into law the U.S. Chip and Science Act, which has a $280 billion price tag for ten years. Just a week later, He approved the $737 billion Inflation Reduction Act. Most economists agree that bill has little chance of reducing inflation. The real purpose is to fund climate programs. To be budget-neutral, high-income earners will see a tax hike. Investment carry interest will be taxed. And there is a 15% minimum corporate tax. Mid-term Outcomes and their Implications to Financial Market The 2022 mid-term elections consist of 36 senate races, 435 house races, and 36 gubernatorial elections. There are thousands more at state and local government levels. Depending on their political leanings, different polling agencies have very different mid-term predictions. Here, I would like to explore the impact of the mid-term elections on financial markets based on the three states of governing: • A one-party government • A divided government • A lame duck government One-Party Government The Democrats currently control the Presidency, the House of Representatives, and the Senate. A united government could do big things and spend big money. If Biden’s party win in the midterm, the Administration would continue its path to "Build Back Better ". The Winners: • The stock market: My chart shows correlation of market turning and passage of big bills. Government investment creates jobs and supports business expansion. If you expect Democrats to win, you could express this view by a bullish equity index trade. Suggested strategy: Long CME E-Mini S&P 500 Futures. • Base Metals: Massive infrastructure programs call for more use of industrial materials. This is Bullish for NYMEX Copper and Aluminum. • Climate programs will provide more subsidies to clean energy, electric car, and new investment to support an ambitious carbon reduction goal. The Losers: • Fossil energy: Traditional oil and gas industry would face more government restrictions. This is bad for stocks in the energy sector, but Bullish for NYMEX WTI crude oil and Henry Hub natural gas. Less domestic drilling means less energy supply. • High net-worth investors: Higher tax rate on people earning $400,000 or more. New taxes on investment carry interest. This will be bad for hedge funds, private equity, and venture capital funds. • The 15% minimum corporate tax will affect multinational corporations and high-tech companies which frequently use offshore tax haven. • While government spending may help pop up the S&P, the Tech-heavy NASDAQ 100 may be a loser with the higher corporate tax rates. I am concerned about the long-term ramifications of the new taxes on innovations. Government investment could not replace the role of venture capital. The former tends to be risk-adverse and the latter has more risk appetite to fund early-stage companies. They may find ten losers before running into a blockbuster. If you cut off the incentive by taxing the winner, venture capitalists will no longer fund the Apple or Google of tomorrow. Divided Government If Republican retakes either the House or the Senate, but not both, the Administration would face challenges mainly in government spending and taxes. New legislation may be stalled at a Republican-led House or Senate. I don’t see any clear winners or losers in this scenario. The Administration would turn its focus on implementing the bills already passed, such as the CHIP Act and the Inflation Reduction Act. Fewer new legislations are on the horizon. Lame Duck Government If Democrats lose control of both the House and the Senate, we may well expect a lame duck government in the next two years. A Republican-led Congress would launch attack on “Build Back Better” and roll back progressive policies enacted by the Democrats. The Winners: • Oil and gas. Domestic drilling will resume in full speed. • The rich. New taxes will be rolled back. The Losers: • Climate programs. Funding will be stripped out or watered down. • New energy and electric car. Subsidies will be reduced and restricted. Voters have short memory. What happened in 2020 and 2021 will be ancient history. What will happen in the next two months – the economy, jobs, inflation, gas price – will dominate voters’ mode when they come out to vote on November 8th. So, it’s fair to say it is still too early to predict which state of government would prevail in the next two years. Financial market is extremely volatile this year. Getting an information edge increases your odds of success. I suggest my readers subscribe to CME market data. Tradingview users already have access to delayed data. A Pro user could upgrade to real-time CME market data for only $4 a month, a huge discount at the time of high inflation. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CME_MINI:ES1!Long
by JimHuangChicago
36
$ES - What to do now?$ES - What to do now? This weekend, I present you many ideas in various assets and here's one chart of $ES is last and its important chart I am keeping an eye on for LT positioning. We've had great bullish momentum due to 'we are at neutral rates', CPI steady - For now and all data is excelling perfectly this week we do have FOMC minutes and as have US Retail sales. The key areas I am keeping in mind when it comes to fundamentals is the factoring in credit cards, has been escalating further and real estate is in trouble due to obviously high rates. There are many other bearish fundamental factors but then we have the bullish momentum side technically - ES is bullish and the fundamentals less rate hikes of hights 75 is less anticipated and further slow down leading DXY to pull back and ES, RYT, NQ & even looking at QQQ to excel further and this could be the bottom of 3700 areas for ES. Technically - we are a trendline resistance which comes at the levels of: 4300-4200 areas. A key pull back towards areas of support of: 4180, 4000 & 3900. Are the areas I am keeping an eye on. TJ
CME_MINI:ES1!
by Trade_Journal
EURUSD To Potentially Fall After US Core CPI SpikeThe result of today's US Core Cpi data both monthly and yearly: (Core CPI (MoM) (Jul) Act: 0.3% Cons: 0.5% Prev.: 0.7%- Core CPI (YoY) (Jul) Act: 5.9% Cons: 6.1% Prev.: 5.9%) showed a strong sentiment of bearishness in regards to the US dollar. Monthly data showed decreasing inflation from the previous month's data and also was less than expected. Yearly data showed inflation flattening out and also was less than expectations. Across the whole foreign exchange market and main pairs the dollar fell short. There are some good opportunities today for a day trade for pairs such as EURUSD, GBPUSD, AUDUSD, NZUUSD shorts, and USDJPY, USDCHF, USDCAD long positions. There should be a market correction after the big US dollar sell off. I will be looking for a 4 hour short on EURUSD and long for USDJPY soon, along with the other currency pairs mentioned. In regards to the stock market, the S&P500 and NDX100 saw big gains and should continue to see bullishness with inflation decreasing. This is beneficial for the stock market. Meta saw shares rise today increasingly. $EUR/USD$ $S&P 500$ $Nasdaq 100$ Ilyas Khan Top1 Markets
Short
by Seafair-Capital-Management