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Macroeconomics

Seasonal weakness has likely arrived as MACD makes bearish crossSeasonal investors who follow the "Stock Trader's Almanac" approach to investing use June's first downward cross on the MACD indicator as their signal to exit the market until October. We got that all-important signal this week, which suggests that we have now entered the period of seasonal weakness. My experience is that there's money to be made by investing in July, August, and September, but it takes a different mindset, because the dips are a lot bigger than they are the rest of the year, so you have to wait a little longer before buying dips. I think we'll see some mid-month doldrums here in June, as coronavirus case counts continue to rise. Arizona is facing a crisis because it's out of ventilators and ICU beds, and Twin Cities, MN and Dallas, TX are on the verge of a similar crisis. LA County expects to run out of beds in 2-4 weeks. The public pressure is all toward reopening, but I suspect that some of the big liberal cities will actually tighten distancing rules this month to slow the growth of new cases. A bigger problem for the stock market is that we're probably headed toward some kind of reckoning for debt. Deferment periods have lulled us all into a false sense of security, but those deferments are now ending, and we're seeing rising numbers of defaults, layoffs, and bankruptcies. I wouldn't be surprised to see a housing market crash or a weakening of the jobs recovery in the coming months. Unfortunately I can't guess when it might hit. In early July we will probably see a rally, as Congress considers another stimulus bill, movie theaters look to reopen, and the first vaccine human trials get started. We could see more volatility in August as the first trial results come in. There's probably about a 75% chance that one of the vaccine candidates passes in human trials, in which case the market could rally very strongly into the end of the year. The next two years will then be a period of seasonal weakness, as the first couple years of a presidential term usually are. The market will also be reckoning with the lingering effects of high unemployment and a loss of consumer confidence and consumer demand.
AMEX:SPY
by ChristopherCarrollSmith
PETER SCHIFF VS JEFF SNIDER!THIS POST WILL HELP YOU UNDERSTAND THE COMPETING VIEW POINTS ON THE FUTURE PERFORMANCE OF THE U.S. DOLLAR RELATIVE TO OTHER CURRENCIES! JEFF SNIDER'S POSITION ON THE DOLLAR: THE U.S. DOLLAR IS STRONG BECAUSE OF A SHORTAGE OF DOLLARS WORLDWIDE TO CONDUCT GLOBAL TRADE IN, DUE TO TO FED'S INABILITY TO TRULY SATISFY DEMAND FOR U$Ds, AND WILL CONTINUE TO STRENGTHEN AS LONG AS FOREIGN CURRENCIES ARE SOLD TO BUY U$Ds. PETER SCHIFF'S POSITION ON THE DOLLAR: THE U.S. DOLLAR IS STRONG BECAUSE OF AN IRRATIONAL FAITH IN THE U.S. ECONOMY BY FOREIGNERS AND THE WILLINGNESS OF PRODUCTIVE ECONOMIES WORLDWIDE TO USE AND ACCEPT PRINTED U.S. DOLLARS IN GLOBAL TRADE, SUBSIDIZING THE CONSUMPTION AND TRADE DEFICIT OF THE U.S. JEFF SNIDER'S POSITION ON U.S. TREASURIES: THE U.S. GOVERNMENT BOND MARKET HAS BEEN BID HIGHER FOR DECADES AS U.S. TREASURIES PROVIDE THE SAFEST SOURCE OF U$Ds AND ARE THE MOST ACCEPTED FORM OF COLLATERAL FOR U$D LEVERAGE. IF U$D LIQUIDITY BECOMES CONSTRAINED ENOUGH WORLDWIDE, A SELL-OFF IN THE GLOBAL U.S. TREASURY MARKET CAN OCCUR AS AS THEY ARE SOLD FOR THE IMMEDIATELY NEEDED U$Ds, RAISING INTEREST RATES THROUGHOUT THE FINANCIAL SYSTEM AND THE ECONOMY. PETER SCHFF'S POSITION ON U.S. TREASURIES: THE FEDERAL RESERVE'S ARTIFICIAL SUPPRESSION OF INTEREST RATES SINCE THE 1990's THROUGH QE, COUPLED WITH THE USE OF U$Ds IN GLOBAL TRADE AND THE IRRATIONAL FAITH BY FOREIGNERS THAT THE FEDERAL RESERVE COULD SHRINK ITS BALANCE SHEET AND NORMALIZE INTEREST RATES HAS LED TO FOREIGN CAPITAL BIDDING UP THE PRICE OF U.S. GOVERNMENT BONDS. ONCE THAT FAITH IN THE DOLLAR'S SCARCITY IS DIMINISHED AND PRODUCTIVE ECONOMIES WORLDWIDE REFUSE TO HOLD/ACCEPT U$Ds AND SUBSIDIZE AMERICAN CONSUMPTION, U.S. TREASURIES WILL BE SOLD-OFF, RAISING INTEREST RATES THROUGHOUT THE FINANCIAL SYSTEM AND THE ECONOMY. JEFF SNIDER'S VIEW ON THE FUTURE OF THE DOLLAR: AS LONG AS THE FEDERAL RESERVE FAILS TO ADDRESS THE COMPLEX NEED FOR U$Ds AND AS LONG AS THE U$D REMAINS THE WORLD RESERVE CURRENCY, DEMAND WILL OUTPACE SUPPLY, AND THE U$D WILL CONTINUE TO STRENGTHEN AGAINST OTHER CURRENCIES UNTIL A CULMINATION OF DEFAULTS AND RESTRUCTURING RAVAGES THE COUNTRIES WITH THE MOST SEVERE LACK OF U$Ds, SENDING THE U$D SKY HIGH, LEADING TO AN ABANDONMENT OF THE U$D AS WORLD RESERVE CURRENCY. PETER SCHIFF'S VIEW ON THE FUTURE OF THE DOLLAR: ONCE PRODUCTIVE COUNTRIES WORLDWIDE BECOME DISILLUSIONED WITH THE AMOUNT OF EASILY CREATED U$Ds CHASING PRICES, THE APPETITE TO ACCEPT THOSE U$Ds IN EXCHANGE FOR GOODS/SERVICES AT CURRENT PRICES WILL DIMINISH, ALONG WITH THE DESIRE TO HOLD U$Ds, U.S. ASSETS AND U.S. TREASURIES. ONCE U$Ds AND U$Ds OBTAINED THROUGH THE SALE OF U.S. ASSETS AND U.S. TREASURIES ARE SOLD FOR OTHER CURRENCIES, THE U$D WILL WEAKEN SIGNIFICANTLY, FURTHER INCREASING THE PRICES OF IMPORTED GOODS/SERVICES, SENDING THE U$D INTO AN INFLATIONARY SPIRAL, MARKING ITS END AS THE WORLD RESERVE CURRENCY. IN THIS CASE, IF THE FEDERAL RESERVE MONETIZED THE SOLD U.S. TREASURIES TO PREVENT INTEREST RATES FROM RISING, THIS COULD EASILY LEAD TO HYPERINFLATION. -IT IS IMPORTANT TO NOTE THAT THE 0% YIELD ON U.S. 10 YEAR GOVERNMENT BOND IS A DANGER ZONE IN EITHER CASE, AS FOREIGN ENTITIES WILL NO LONGER HAVE AN INCENTIVE TO HOLD U.S. TREASURIES, PREFERRING CASH, GOLD OR OTHER ASSETS OVER A NEGATIVE YIELDING BOND. -THE NOTES ON THE CHART OFFER CONTRIBUTING FACTORS AS TO WHY YIELDS BOTTOMED OR PEAKED AT VARIOUS POINTS DURING THIS BOND BULL MARKET.
TVC:US10YEducation
by UnknownUnicorn4195243
Weekly Preview: Good News Keep Coming!The market is coming back to its previous bullish trend, two proves of that: - Nasdaq is already in neutral territory YTD - Volatility is around 48%, well below its peaks - Some companies, specially American technology are regaining ground effectively sooner than expected which is also good news. The two pillars within this environment that are working are two: 1./ Central bank aid (this was expected to work immediately) Stimulus from central banks and governments has brought confidence to the market 2./ Covid-19 numbers Trend of better daily numbers of new cases are consolidating and some businesses are starting to reopen - Bearing in mind this, the market doesn’t react to an economy, it foresees what the economy will do and act base on that. Current Context: March was harmful, April is better with consolidation taking place. Even times are going better than expected with numbers improving faster than expected. Again, Nasdaq has already recovered those YTD loses and this is important because normally it brings the rest of indexes with it. First the DOJ, which represents more classic companies with high dividends, and after Europe. Then, short term facts are being positive too. 1. Gilead Sciences has reported successful treatment of Covid patients and can be a ray of hope. 2. American attitude, they are focused in reopening the economy and that creates big expectations. To finish, we´ll have some economic indicators with more government meetings that will still bring more confident to the market and strengthen this faster than expected recovery.
FX:NAS100Long
by PepeMafia
GET READY: A big fortnight ahead!This is an educational post - compliant with the house rules on text-based contributions - showing some of the tension between monetary policy taken by the FED and real world fiscal issues at deeper levels. Click and drag chart if all text does not show. Thanks. The tension has caused whipsaws in the US Dollar, and price of Gold. The IMF has declared a global recession and several countries have gone into recession. Reputable opinion out there is that the world is heading for an economic depression based on a 50 to 75 year cycle, which is coinciding with a 10 year recessionary cycle. I have no doubt that central banks around the world will have limited success in propping up economies. I'm more concerned for the longer term view. Last week extreme volatility took a break compared to the previous week. The next 2 weeks could see a return of volatility to indices and forex markets. Stay safe, fellow traders.
FOREXCOM:US30Education
by Captain_Walker
3
EURUSD Short Swing PlanEuro is in manipulation prolly due to the global condition at the moment by this pandemic. Trillions and billions of moolah been printed out from global center banks are just an rotten news at this point and everyone is racing against to combat the virus and protecting their own plunging economy. System has already cracked and no idea how long it might be going this way. Debt rising eventually in all nations but could help escalate back the economy for some strong nations who are good at credit ratings. Sorry I was falling into macros by the way talking about euro technically it's been in a huge bearish trend for months or even a year in higher time frame. Don't get excited with ups and down in lower pictures young boys and girls. The reason only it was doing fine against king (buck) at small timeframes were when low yielding had charms like babe yellow metal in shine! I have figure out closely like a head and shoulder pattern in 2 hour resolution and I reckon if this pattern workout it might move price upward making the right shoulder. But....!!! a big but!!! If this head and shoulder doesn't workout in first place and price plunge lower with strong bearish momentum (after all the broad picture is either way a bearish trend) without making any sign of creating right shoulder then our short bias can workout smoothly. The good thing about this trade plan is that it's guaranteed that either you make money or lose money as it's so transparent that if price make right shoulder which will equal to stopped out! We got an edge i mean even if we get right and even if we get wrong we will know it clearly ahead that what we have to prepare for! Thanks for reading my idea and I hope you enjoyed and if you think it added some value in your trading don't forget to support me by hitting a thumbs up button! (LIKE)
Short
by Anatta0
17
Week Results: Virus, NFP, Pound & Investor ConcernsA week in the financial markets was held in the chronicles of the coronavirus. The epidemic is still under development. The number of deaths exceeded 700, and the number of deaths approached 40,000. A number of quarantined cities in China, many plants are idle, are already starting to disrupt the functioning of the global economy: some companies outside of China cannot continue the production process, since components from China do not arrive, some ( like Toyota and Honda) temporarily shut down their Chinese capacities and sharply lose in production volumes, some (like Apple) close their stores in China. And if on Monday and Tuesday last week, the markets still tried to pretend that they did not notice this, then towards the end of the week even excellent NFP figures could not inspire American investors to buy on the stock market. And although the VIX Fear Index fell by 15% over the week, there is a feeling that the time of unbridled euphoria in financial markets is coming to an end. And this means that now is the time to start opening short against risky assets. Moreover, the markets marked the highs, respectively, the points for placing stops are obvious, and the stops themselves are small especially with respect to the goals that can and should be set. The week as a whole turned out to be very successful for the dollar and ended on a major note: NFP figures came out well above market expectations (+225K with a forecast of +165K). In principle, employment data from ADP (+291K) were prepared by the markets for good numbers, but until the very last it was difficult to believe in them. The overall view was somewhat spoiled by weaker than expected growth rates of hourly wages, as well as unemployment, which went above forecasts. The main losers in the foreign exchange market were the euro and the pound. Traditionally, the reason for the sale of the euro was the weak macroeconomic statistics from the Eurozone. So German industrial production in December literally collapsed by 3.5% during a month, recalling that the recession is not just an economic term, but also one of the aspects of reality. As for the pound, the pressure on it was due to growing fears that the UK and the EU would not be able to agree on a trade agreement until the end of 2020. Our trading plan for this week is next. We continue to look for points for purchases of gold and the Japanese yen anyway (unless an ultra-effective vaccine is found and the epidemic of coronavirus is quickly over). We will wait until the euphoria around the dollar subsides, and we will look for points for its sales. The pound is not bad, the Canadian dollar looks interesting. We won’t touch the euro - the single European currency seems too toxic in the light of the latest data from Germany. While oil is below 51.20 (WTI benchmark) - we sell it with stop-flips above 52. In general, the situation with oil looks rather uncertain. OPEC +’s decision to expand the decline in oil production by 600K bd is, under normal conditions, the strongest bullish signal.
Short
by Trade24Fx
Ambiguous NFP and a busy week aheadLast week ended for the dollar is not the best way. Statistics on the US labor market came out slightly worse than expected: +145K new jobs outside agriculture instead of the expected +160K. On the one hand, it’s okay, but on the other hand, after +200K of employment from ADP, it seems to be not enough. On the whole, our predictions for NFPs based on statistical laws can be justified: two excesses by the fact of the forecast must be followed by lag from expectations. Perhaps the most annoying thing for us happened in the USD/CAD pair. Recall, we recommended news trading. And the news came out almost ideal for reducing the pair: relatively weak data on the USA against the background of strong data on Canada (employment +35K with a forecast of +25K). But the decline in USD/CAD was very limited and earnings of 15-20 points cannot be considered as such. Total, the week is clearly an asset to the dollar, but so far we see the growth of the dollar exclusively as an opportunity for its sales to be more expensive. And the numbers on the NFP have more likely confirmed our position than disproved. So this week we will continue to look for opportunities for dollar sales. The main candidates for this are the pair with the Japanese yen and the British pound. The first is interesting to us as an asset-refuge and just the entry points themselves are magnificent. As for the British pound, Brexit is confidently moving in the right direction, but the pound has lingered. Accordingly, we expect that already this week he will rush to catch up. In our opinion, another interesting asset for trading this week is gold. The inability of sellers to sell 1550 is the best confirmation of the appropriateness of buying gold. In any case, the deal is worthwhile: with relatively small stops (placed below 1440), goals can be set very ambitiously. Recall, we believe that gold should test 1800 this year. The new week promises to be quite saturated with macroeconomic statistics, especially in the USA and Great Britain. Which, again, will almost certainly be accompanied by the appearance of points for entering positions.
Short
by Trade24Fx
4
OPEC meeting, Bank of Canada decision and Eurozone GDPWe start with macroeconomic statistics, it is worth noting the extremely weak employment rate from ADP: +67 thousand jobs with a forecast of +135 thousand. So, buyers of the dollar should at least focus, because if similar statistics come out on Friday on the NFP, the dollar may well be sold out. Statistics on business activity in the Eurozone came out surprisingly good, which intensified the talks that the European economy was beginning to recover. The pound also got its reason for growth, as the UK business activity index also exceeded forecasts. Although we note that it was still below 50. It is rather symptomatic that the pound continues to grow without waiting for the election results. The markets decided that Brexit’s fate is predetermined (there will be no way out without a deal), but the pound is still very cheap, you need to buy it before it’s too late. We have long been bulls as for pound, so nothing surprising happens to us. We only note that a daily close above 1.30 is a strong bullish signal. And the pound may grow more than one hundred pips. So we are looking for points for his purchases. The Bank of Canada did not change the rate yesterday but was quite optimistic in its comments, which contributed to the growth of the Canadian dollar. So those readers who were following our recommendations could put in their piggy bank a good profit. Despite the extremely frightening information at the beginning of the week, the negotiation process between the US and China continues. And according to its participants, by December 15, the first phase should be completed. As for today the macroeconomic statistics, the news of the day will be the publication of Eurozone GDP. The fact may likely be higher than forecasts. This means that the euro may well strengthen up to 1.1160 paired with the dollar. Well, the main event of the week, at least for the oil market, will be the beginning of the OPEC meeting in Vienna. The most likely scenario is an attempt to leave everything as it is. That is, they will adhere to the current line of behaviour (an agreement to reduce production by 1.2 million b / d). For oil, this decision, by and large, does not change anything in terms of fundamental alignment. But any agreements to increase the limits will play into the hands of buyers and vice versa. Refusal of the deal in any form will be a strong hit to oil and activates its sellers.
TVC:DXYShort
by Trade24Fx
Good news from US, dollar & new threatsA lot of macroeconomic statistics was published yesterday, however, it did not lead to significant movements. GDP was revised upwards 2.1% instead of preliminary 1.9%, and durable goods orders exceeded the most optimistic expectations (+ 0.6% m / m instead of -0.9% m / m). Well, the number of people receiving unemployment benefits in the United States so generally reached the lowest level since 1973. However, people were not in a hurry to buy a dollar in the foreign exchange market. Even against the backdrop of news that another progress has been made in the negotiation process between the US and China: Trump said that phase 1 of the trade transaction is close to its completion. The lack of reaction to such a clear fundamental positive, in our opinion, is very symptomatic. Accordingly, we are not going to revise our recommendation to “sell the dollar”. On the contrary, thanks to yesterday's data, sale for the dollar against the euro and the Japanese yen became simply excellent as well as Gold. So yesterday's dollar appreciation is an opportunity, not a threat. We continue to monitor analysts predicting an imminent crisis. We are not even interested in the time frame as much as the reasons. So far, our collection has the collapse of the CLO market, the growth of staff salaries and the fall in corporate profits because of this, huge debts both at the state and corporate levels, the collapse of price bubbles in the stock and bond markets, trade wars, and growing inequality in world, the end of the business cycle. So today in our piggy bank replenishment: a crisis in the banking system of China. According to the Bank of China, more than half of Chinese banks may collapse if the economic situation in the country worsens further. And this is tens of trillions of dollars. For reference: the size of China's banking system is about $ 40 trillion, which is two times bibber than the US banking system. That is the problem. So we find another confirmation of our basic investment strategy: to shorten the US stock market while buying safe-haven assets (gold and Japanese yen). Well, in conclusion, we note that the spring is now compressed to its limit (for example, the volatility of the euro has reached a historic low).
TVC:DXYShort
by Trade24Fx
About the recession, markets immunity to good news & US GDPThe US and China have traditionally been optimistic about the progress in the negotiations, but apparently, the markets no longer respond to this. If you yell “wolf”, in the end, people will no longer come. Something similar we can see in the negotiation process between China and the United States. They have been optimistic for more than a month, but there is no breakthrough. In this regard, we will continue to look for points for the purchase of safe-haven assets, which are providing excellent entry points. We will bring up a topic of the upcoming recession. In yesterday’s review, we wrote about the forecasts of Societe Generale analysts who expect a recession in the spring of next year. Recall, in March 2019 the so-called yield curve inversion took place (an anomalous situation when the yield on short-term US treasury bonds exceeds the yield on long-term bonds). As a rule, after this, a recession occurs within 12-18 months. Despite the fact that now the yield curve has returned to normal. In the spring comes the end of the countdown of 12 months. So analysts at Societe Generale are probably not mistaken. Fed Chairman Jerome Powell, meanwhile, once again confirmed that the US Central Bank is likely to continue to hold a pause in interest rate policy actions. Today, unlike Monday and Tuesday, will be quite busy in terms of macroeconomic statistics. First of all, we are talking about data on US GDP for the third quarter. Given that this is the second reading of the indicator, that is, the revised value, we do not expect any serious surprises. However, analysts do not expect as well, predicting the immutability of the preliminary assessment of 1.9%. In addition, you should pay attention to orders for durable goods in the United States, as well as the ADP report on the level of employment in the private sector. A busy day for the dollar will end with the publication of statistics on personal income and expenses, as well as incomplete transactions for the sale of housing. Recall our position on the dollar - to look for points for sale for almost the entire spectrum of the foreign exchange market. But today we are acting with an eye on the output data. This is not about changing the direction of the trades, but about the possible emergence of more interesting points for its sales.
TVC:DXYShort
by Trade24Fx
FOMC protocols & stormBlack swans did not fly by, and there were no important macroeconomic statistics or news injections either on the financial markets. In general, the lull that has lately reigned in the financial markets is lingering and the silence begins to become painful. Usually, it all ends with a storm. But a storm needs a trigger. For example, Trump’s next demarche and the failure of negotiations between the US and China with a sharp intensification of trade wars. But so far, markets do not believe in such a scenario. Goldman Sachs Group analysts predict the extinction of friction between the United States and China in 2020, and the WTO predicts the intensification of global trade next year: if by the end of 2019, world trade is expected to grow at 1.2%, then in 2020 WTO experts are counting on an increase of 2.7%. The dynamics of the VIX Index (Fear Index) is located in the area of historic lows. According to Deutsche Bank estimates, the currency market volatility for the major G10 currency pairs is at its lowest level over the past 45 years. The last time this happened only twice in the past - during 2007 and 2014. Nevertheless, the calmer the financial markets look and the more optimistic the forecasts of financial analysts sound, the more worrying it becomes for us since all these are signs of an impending storm. In this regard, our confidence in the advisability of medium-term purchases of safe-haven assets is growing stronger every day. But once again, we note that within the day, gold or the Japanese yen may well decline, especially if positive news from the trade negotiations appear. Today promises to be more interesting than Tuesday. Because inflation statistics for Canada will be published, as well as FOMC protocols. Given that the next Fed’s actions are not what we can predict now, the markets will study with interest in the text of the last FOMC meeting. Our position on the dollar, meanwhile, is unchanged: we believe that the threat/opportunity balance for the dollar has now shifted towards threats and will continue to look for points for its sales in the foreign exchange market.
FX:NGASShort
by Trade24Fx
Short on the DXY, weaking strength ahead post Trump tweetsHeading into next week very bearish against the dollar. While the rally of last week was enjoyable if you were long on the dollar it seems the macroeconomic environment has changed and the tides may turn. On the fundamental side of things you have Trump threatening more tariffs against China, kicking off the trade war again and shocking the markets into correction. NFP wasn't anything particularly new, simply showing what the FOMC already had decided on: growth is slowing and needs a push, hence the cuts. Seeing as cuts will take time to ripple through the economy (especially with slowed manufacturing indicated by the PMI), the dollar will have to correct in the meantime until the global economy tells us otherwise. On the technical side of things there isn't much to look at except an EMA and MA cross (9 & 18 respectively), and the fact that the DXY rejected off of the top area of the range its been in since the beginning of the trade war. The rally of last week combined with FOMC and the trade war ceasefire showed possibilities of a breakout, alas trump had other ideas and his tweets sent the market tumbling down seeking shelter from the scary bird who brought news of more tariffs.
TVC:DXYShort
by david_eke
DANGER: Global financial chaos looms, next week (educational). This is a brief educational post, that is meant as a heads up for sensible traders. They would wish to be aware of systemic risks approaching if Deutsche Bank collapses finally. This is likened to the Lehman Brothers fiasco of a few years ago, but it could be much bigger. I'm sharing this information based on reliable hard data available freely on the internet. DYOR. It's better to be prepared - and nothing happens, than not prepared and your world turns into chaos. The financial world is far more hooked up globally than around 2008 with the advent since, of superfast internet connections. The speed at which shockwaves may travel, would likely be hundreds of times faster than in 2008. So a 'flap of a butterfly's wings' in one financial corner of the planet could cause 'hurricanes' thousands of miles away in other corners of the world - like you never imagined before (concepts applied from Chaos Theory). Nothing here is predictive. I never do predictions. I deal only in probabilities. Appropriate seeding non-promotional references: 1. Lehman Brothers story 2. Deutsche Bank - recent events Disclaimer : This is not financial advice, even if so construed. Should you come to be influenced by this brief screencast, know that your losses are your own. In simple terms no liabilities accepted by me. You'd just have to sue yourself.
NYSE:DBEducation
by Captain_Walker
3