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Preparing for the Fed; the US Retail Sales FailingThe financial markets' attention in the first half of this week is on Biden's incentives, his plans for tax reform and Treasury bond yields, and also on the forthcoming meeting results announcement of the Federal Open Market Committee of the Federal Reserve today. In our opinion, the markets are trying to create an intrigue while there's none, yet. All this inflation and rate hikes-related talk is more than premature, and Powell talks about it in every public appearance. Yes, the Fed may be slightly modifying its plans for 2023. But these plans' price in the current reality is close to zero. Yes, the new stimulus package in theory is fraught with a jump in inflation, but the Yellen plainly stated that there's nothing to be afraid of and she doesn't see a threat. What can we expect from today's Fed meeting, then? Perhaps, economic development forecasts' revisions. Still, the stimulus package is really large and cannot but accelerate the economic recovery. As for the rest, we don't expect any revelations or surprises to happen. By the way, as for the surprises: yesterday's data on the US retail sales came out very weak and pretty worse than expected. But again, sprinkling ashes on the head and giving up on economic recovery aren't worth it. The indicator is chain, so that the overestimated base of the previous period invariably affects the current period's results. In addition, abnormal frosts came as a shock to the consumer sector, which is reflected in the data. In general, nothing terrible happened.
Short
by Trade24Fx
Who'd Pay for the Stimulus? Biden Tax InitiativesThe excitement over a new $1.9 trillion stimulus package for the United States is not going to subside in financial markets. Keeping in mind 2020 and prices' reaction to economic stimulus, everything looks quite logical and reasonable. But for some reason no one thinks of whose expense the holiday is at and who will pay for it. After all, if everything is so simple: they adopted a stimulus package and outstripped China in terms of economic growth, then why has the United States not done anything like this for 40 years? The most obvious version is that everything is far from simple and you have to pay for everything. How? Well, for example, by increasing the revenue side of the budget. How? For example, by raising taxes. It will be very interesting to observe the behavior of the same US stock market when Biden fulfills his election promise and raises the corporate tax up to 28%. So, the hour of reckoning is just around the corner. President Joe Biden plans the first major federal tax hike since 1993. Proposed steps include raising the corporate tax rate up to 28%, raising the tax for people with high incomes, and a possible increase in the capital gains tax. In our opinion, it is a great reason to think about the consequences today, before tomorrow comes. One of the examples of the future events logic is as follows. Increase in corporate tax will result in profits of corporations sharply sinking with all the consequences for their reporting and investment metrics. And, of course, the share buyback programs pumped up by an influx of money out of nowhere is due to the corporate tax cut by Trump. Thus, one can remember that companies will sell previously bought shares to fill holes in corporate budgets.
DJ:DJIShort
by Trade24Fx
1
Week in a Glance: stimulus, ECB, UK Failures and OECD ForecastThe Biden stimulus package adoption by Congress and the bill signing by Biden were the main events of the past week. Some Americans received $1,400 in one-time cash assistance already this weekend, as a result. So, many analysts have revised their own forecasts for the US economy growth rate in favor of growth. The OECD, for example, more than doubled its US-related forecast up to 6.5%. We’ll remind you that China has planned a 6% economic growth mark for 2021. It means the US may overtake China in terms of GDP growth—for the first time in many decades. For the world as a whole, the organization raised its forecast for global growth for 2021 from 4.2% to 5.6%. Against this background, the US stock indices renewed their all-time highs. New local maximums were also renewed by the yield of US Treasury bonds. It cannot but worry buyers on the US stock market. Also, the dollar is becoming more attractive—so, the time has come to look closely at the mid-term purchases. Yes, we’d buy the dollar against the British pound. UK GDP data was released last week, showing that the country’s economy contracted 2.9% in January (the worst economic slowdown since the first lockdown almost a year ago). In addition, in January, the UK exports to the EU fell by 40.7% and imports—by 28.8%. Among other events of the week, there are the ECB meeting results. The monetary policy parameters were left unchanged, but since the volumes of the asset repurchase program haven’t been fully implemented in recent months, the European Central Bank states to plan an increase in its purchases in the future due to the saved volumes. This week will be interesting primarily because of the Fed meeting results and the ones of the Bank of England and the Bank of Japan. In addition, we’re waiting for the data on retail sales in the US and consumer inflation in the Eurozone.
Short
by Trade24Fx
1
Stimulus & Inflation, Oil Reserves & the Bank of CanadaYesterday was marked by the vote in the House of Representatives on the stimulus package in the United States (a version of the bill after amendments in the Senate), as well as by the US inflation statistics. And if everything's clear about the first event the beginning (the Democrats completely control the Chamber and naturally voted “for”), then the inflation data openly frightened the markets. But yesterday's statistics showed that they were worried in vain. The inflationary spiral does not unfold. The core consumer price index even came out less than the average forecasts. So, everyone breathed out in unison and returned to buying on the stock market, which was also facilitated by the decline in the yield of US Treasury bonds. For the second week in a row, US oil inventories have been showing the growth measured in double-digit million barrels. Last week, data from the EIA showed an increase of 21.5 million, and yesterday's data showed almost 14 million. That is, in two weeks, oil reserves in the US increased by 35 million barrels. The reason is that the US abnormal frosts States led to a temporary paralysis of the US oil refining industry. And so far, it's not been able to fully recover. The stock figures are exclusively bearish, so oil sales from the current ones still seem to us a promising trading idea despite the results of the OPEC Plus meeting last week. The decline in oil is likely to pull down the Canadian dollar, which traditionally strongly correlates with the dynamics of prices for black gold. Moreover, following the results of yesterday's meeting of the Bank of Canada, it didn't change the parameters of monetary policy, which means that there is no point in expecting any help for the Canadian dollar.
TVC:UKOILShort
by Trade24Fx
Japan’s GDP, OECD Forecasts and Stimulus Getting CloserOptimism reigns in the stock markets after several days of sales. It’s fueled by both economic data and US stimulus-related expectations. Japan yesterday reported a double-digit GDP growth rate for the country in the last quarter of 2020. But you shouldn’t flatter yourself too much. It’s because in the next quarter the country had been covered by a wave of a pandemic and a lockdown. So, experts expect negative rates of GDP change in the first quarter of 2021. Perhaps, the OECD gave a more weighty reason for optimism yesterday. The updated forecasts from the Organization showed a radical change in the OECD’s assessments for the future. And if the forecast for global growth for 2021 was raised from 4.2% to 5.6%, then for the United States it was doubled to 6.5%. The reason for such generosity was the expectation of the imminent adoption of the US $1.9 trillion stimulus package. Actually, today the House of Representatives should vote for the version of the bill after the vote in the Senate, and after that only Biden will remain. The US President has already announced that he will sign the law as soon as it appears on his desk. Despite these obvious reasons for joy, we recall that everything has a price. And the Republicans opposed this package not only out of harm, but also because the other side of the coin is very unattractive. In the first 5 months of the new tax year, the US budget deficit has already exceeded the $1 trillion rate. And this is without taking into account the stimulus package from Biden. After the provisions are implemented, the United States will have every chance to break last year's record for the size of the federal budget deficit. Recall that at the end of 2020, the budget deficit amounted to about 3 trillion. Today is interesting primarily with data on consumer inflation in the United States. It is possible that markets will panic again if they see signs of an inflationary spiral. In addition, the Bank of Canada will announce its decision on the parameters of monetary policy.
DJ:DJIShort
by Trade24Fx
1
Stimulus, Germany’s Failure, the McAfee and Musk CaseAs expected, optimism reigned in the financial markets after the Senate voted on Biden’s stimulus package over the weekend. Even the reluctance of US Treasury yields to decline yesterday did not scare the markets. Hopes for a quick recovery in the US economy again flooded the thoughts of investors. Expectations are that the size of the stimulus package is large enough for US GDP to return to its pre-pandemic trend by mid-year, closing the pandemic gap entirely. Data from Germany tried to bring the markets to their senses at least a little: according to the Federal Statistical Agency Destatis, industrial production amounted to -2.5% m / m against the expected growth of 0.2%. But as a result, only the euro suffered. And although the decline in the single European currency seems logical against this background, it was clearly delayed in tandem with the pound. Moreover, although Britain is gradually lifting restrictions, it will still be unraveling the economic consequences of the pandemic and Brexit for quite a long time. For example, UK merchandise exports fell by £ 54bn in 2020, according to the latest data. In this light, the medium-term purchases of the EURGBP pair seem to us an increasingly interesting trading idea. Tesla’s crown, meanwhile, is dimming more and more. The latest data from Europe showed that Musk's company is failing in this market a little more than completely: in January, 1,619 Tesla electric vehicles were delivered to 18 key European markets, which is only 3.5% of the total number of electric vehicles. Given that the share of Volkswagen there reaches 30%. On this, Musk’s troubles can potentially only begin. The US Department of Justice has indicted the creator of the first commercial antivirus McAfee, 75-year-old John McAfee, on charges of conspiracy to commit fraud and money laundering. McAfee and its accomplices pre-bought various cryptocurrencies, then on Twitter McAfee (more than a million subscribers) published messages urging users to buy these altcoins ‘to artificially inflate their market prices’, and after the increase in value they sold. Doesn’t it look like something we’ve already heard of? If not, check out Musk’s Twitter account.
Long
by Trade24Fx
1
OPEC Plus results, Retail Sales in Europe, and NFP AheadYesterday was marked by the main event for the financial markets: the OPEC Plus meeting. It’s not a secret for anyone that it’s the alliance of 23 countries. Today it determines the oil market situation, at least in terms of its supply. The markets were expecting a decision to increase production by 0.5 mln bpd, as well as Saudi Arabia’s refusal to voluntarily cut production by 1 mln bpd from April. At the same time, Saudi Arabia was in favor of not changing anything in overall quotas so far, that is, it was against an increase in production by 0.5 million b/d. And Russia, on the contrary, was in favor of increasing production. As a result, Saudi Arabia won again. The status quo has been preserved and oil has received a strong reason for growth in the form of the lack of additional supply in the market in the amount of 1.5 million b/d in April. Treasury yields jumped up again yesterday. And Powell in his speech didn’t even think to calm the markets, saying that the Fed sees everything, but is not going to do anything. So, the sell-off in the stock markets intensified. Gold and cryptocurrencies have also been pressured. Quite a lot of important macroeconomic statistics were also released yesterday. Retail sales in the Eurozone came out frankly weak (almost – 6%, which is 5x worse than expected). So it’s no surprise that the euro was under pressure. Especially when you consider that European countries—one by one—due to the worsening pandemic situation, they’re tightening restrictions and extending lockdowns. The data on applications for unemployment benefits from the United States also cannot be called over-optimistic. Although they came out slightly better than forecasts, they were not enough to instill confidence in the markets on the eve of today’s NFP data. Markets are waiting for about 200K, which is quite optimistic in our opinion. So we won’t be surprised if the data comes out worse than the expert forecasts. In addition to the US labor market statistics, today is still interesting due to the results of the vote in the Senate on the Biden stimulus package. In general, the day promises to be extremely eventful and difficult.
DJ:DJIShort
by Trade24Fx
Data from ADP, Light Panic, and US Oil StocksUS Treasury yields began to rise again—and the markets panicked again. It wasn’t the kind of panic when the cries of “we are all going to die” are heard on every streetcorner, but the US stock market’s technology sector has confidently gone into the red. However, the cryptocurrency market completely ignored this wave, continuing to focus on the positive, like the idea that there are fewer bitcoins in free circulation. It means that their shortage is inevitable, especially with the current increased demand from institutional investors. Once a shortage is inevitable, prices will rise. We’ll not look for flaws in this logic just because they are resolutely at every link in the chain. But it doesn’t matter, common sense has left the cryptocurrency market a long time ago, and any attempt to analyze it from this position will inevitably lead to false predictions. Once again, we’d note that common sense is absent not only in the cryptocurrency market. The oil market has also completely lost touch with reality. It was especially interesting to watch the oil prices’ reaction to yesterday’s data on the US oil reserves. Still, not so often their growth is 21.5 million barrels per week. It is clear that abnormal frosts are to blame. Still, the figure itself deserves some price compensation. In fact, it doesn’t. However, the most interesting thing will still happen today, the OPEC Plus meeting can potentially add to the supply on the oil market from 1.5 million b/d (0.5 total + 1 million from Saudi Arabia). And this is much more serious than a local weekly anomaly in the US. Today oil has a good chance to start a correction, so we’ll sell it as actively as possible. Yesterday’s data from ADP on the US employment still left more questions than answers, although they came out in positive territory (117 against the forecast of 177). But tomorrow we will have official statistics and figures on NFP.
TVC:UKOILShort
by Trade24Fx
1
Bubbles, Energy-consuming Bitcoin and the Latest Data AgainWe’ve been informing you on inflated price bubbles in various financial markets—from cryptocurrency market to the stock one. But for now, no one cares, because there’s too much money and it needs to be put somewhere. The S&P 500 closed up at the 2.4% rate on Monday, the best day since June last year. And according to Bloomberg, investors poured a record $86 billion in stock ETFs in February. But again, ignoring bubbles doesn’t negate the fact of their presence. So, yesterday there was a replenishment in the ranks of those concerned about the current situation. China’s top banking regulator said he’s “very concerned” about the US and European bubbles. Perhaps the reason for this statement is a certain unfairness of what is happening: the Chinese stock market has lost more than 10% over the past couple of weeks, but the SP500 index is in 1–2% of historical highs. In addition, the regulator expressed concern about the rise in prices in the real estate market in China. The biggest bubble right now is probably in the cryptocurrency market. On the one hand, Citigroup released a report that said bitcoin could become the currency of global trading, and Goldman Sachs is reopening the trading floor for cryptocurrency trading. On the other hand, energy consumption for mining is growing and its scale is already comparable to the scale of countries such as Argentina. As a result, China begins to think about banning mining, at least in certain regions of the country (Inner Mongolia). Fun fact: One Bitcoin transaction has the same carbon footprint as Visa’s 680,000 transactions or 51,210 YouTube hours. So it’s only a matter of time before any environmentalists will take the issue seriously. In terms of news, yesterday reminded the markets of the pandemic and lockdowns price to be paid. This refers to the disastrous data on retail sales and unemployment in Germany. The same is about data on Canada’s GDP, which showed that the country’s economy in 2020 lost 5.4%, which was the worst result in the last 60 years. Today is interesting primarily because of the data on the US labor market from ADP, as well as the business activity indexes in the service sector from ISM.
Long
by Trade24Fx
Risk Appetite Returning and Economy RecoveringAlthough the yield on the US Treasury bonds grew on Monday, it wasn’t the same pace compared to the last week. This calmed the markets somewhat, and they returned to their favorite fun: buying everything in risky asset markets. As a result, the stock markets grew in price, as well as the cryptocurrency market, and the commodity markets were strengthening. An additional reason for the growth was an attempt to incorporate the success of the vote in the House of Representatives on the 1.9 trillion Biden stimulus package and the expectation of its successful passage in the Senate. But there is some more positive news from yesterday. Data on business activity in the US manufacturing sector came out better than expected. Even the labor market component of the ISM manufacturing index was above 50, that is, it signaled an increase in economic activity. Considering the US labor market stats, coming this week, this is cause for joy. But despite all this optimism, buying risky assets at current prices is sheer madness. And the fees for it can be quite high. Consider, for instance, the Cathie Wood funds from the ARK family. They noted that they actively bought all kinds of Tesla and other bitcoins. So, just on one Thursday last week, investors took about $500 million from funds. And it’s not known for how long it’d last—especially considering the Bitcoin sell-off on Friday. Well, God bless them with risky assets. Let’s talk about the latest news. Early this morning, the Reserve Bank of Australia decided to leave the rate unchanged. The decision is expected. But in general, the growth of the Australian dollar is questionable. Especially if commodity markets are under downward pressure again.
Short
by Trade24Fx
2
Week in a Glance: Bond Yields’ Growth, Powell, and StimulusPrice dynamics was of primary interest during the past week considering the entire spectrum of financial markets. The US Treasury yields’ sharp rise triggered the worst Nasdaq day in the last 4 months, resulting in the worst month for gold in the last 4 years. There were no reasons for the increase in the yield of US Treasury bonds yield. Yes, the head of the Fed, Jerome Powell, testified in Congress for 2 days. But if you put his thoughts as briefly as possible, then it’s as follows: do not expect any changes until the situation improves. That is, no increase in the FRS rate is planned, as well as other measures to tighten monetary policy. Among the victims of the last week were both the stock market and gold and the cryptocurrency market. In addition to the general wave, a certain expert negativity was formed around cryptocurrencies. This refers to the statement by Jannette Yellen (US Treasury Secretary) that bitcoin is nothing more than a speculative asset and doesn’t represent any other value. And then Bill Gates added that if you aren’t Musk, then it’s better to pass by the purchases of cryptocurrencies. True, it didn't help Musk that he was Musk. Buying 1.5 billion bitcoins is a very risky affair, especially when the cryptocurrency falls by 10% per day. So, the strongest drop in Tesla shares since November 2020 was generally expected and natural last week. That time, Reddit’s interest in speculation flared up again. As a result, Gamestop shares doubled in price. Well, the week ended with a vote in the House of Representatives for the Biden stimulus package. The first step towards 1.9 trn has been made. The Senate has a say this week.
FOREXCOM:XAUUSDShort
by Trade24Fx
2
Treasuries Hit the Roof, Oil Reserves Grow, and Reddit AttacksYesterday the Treasury bonds yield growth had an extremely negative effect on the US stock market buyers. Along with the explanations for this listed in yesterday’s review, an increase in profitability simply means the appearance of an investment alternative, being formally risk-free. And this is an alternative to buying insanely expensive and overvalued risky assets. In general, nothing is surprising that there was no time for fun on the stock market yesterday. The growth in Treasury yields is a very positive signal for the US dollar. It’s becoming more attractive in the foreign exchange market relative to other currencies. And this is also worth paying attention to, especially considering that the dollar is extremely cheap here and now. In this light, let us recall our mid-term recommendation to sell the pound against the US dollar. Moreover, the UK never ceases to generate fundamental negatives for the pound. From the latest news, there’s some more information about the dangers Brexit can cause for foreign trade. The cost of transporting goods from France to the UK increased by almost 45%. Naturally, many carriers have reduced their activity in this direction. With all the ensuing consequences for British international trade. The potential dollar growth can play a cruel joke on commodity assets. So far, gold is being blown for everyone. But it also shows what can happen to other assets. For example, oil. Besides, US production is recovering. Next week the OPEC Plus meeting will be held. It may bring many negative surprises for oil, and, according to API, the US oil reserves increased for the first time in the last 5 weeks.
Short
by Trade24Fx
Powell Calms Markets As Pound Losing Touch With RealityThe main news event yesterday was the Fed Chairman Jerome Powell’s speech in the Senate made for the banking committee. The sharp rise in Treasury yields in recent years has provoked fears in the markets of an inflation spiral. The rise in inflation would have its consequences to tighten the monetary policy of the Fed (in the end, the Central Bank’s main goal is to maintain the national monetary unit’s stability). Tightening monetary policy would mean the end of this eternal holiday in the stock market, cryptocurrency market and others, where huge bubbles were inflated. That is, the growth of the FRS rate is such a needle that will burst bubbles. So there was a lot at stake. But Powell’s confirmed that the current Fed is a very predictable structure that isn’t going to dazzle the markets with surprises and other surprises. Powell did his best to calm the markets yesterday. And he said that Inflation wasn’t a threat The Fed will continue ultra-soft monetary policy, and The labor market in the current economic recovery is more important than some kind of inflation. In general, the sharp rise in risky assets (stock and cryptocurrency markets) after his speech looked more than natural and in some ways even natural. The growth of the pound seems to be less logical and reasonable. Over the past six months, it has strengthened by more than 1500 points together with the dollar. Yes, Brexit went through a soft deal, but the infection cases number’s falling and the vaccination campaign is going well. But on the other side of the scale there are no less factors. These factors would be supposed to range from the most severe economic crisis for Britain in the last 300 years, ending with chaos on the border with the EU and the potential exit of Scotland from the UK. Yesterday’s data on the labor market very clearly demonstrated the illogicality of what is happening in pound pairs. Unemployment was at its highest levels in the last 5 years and about 4 million people were temporarily unemployed in December. But against this background, the pound soared above 1.41.The fundamental divergence seems to be already large enough to start short-term positioning in pound pairs.
Short
by Trade24Fx
Metals Price Rise, Markets Waiting for Incentives & BTC CheaperThe world keeps on getting ready for economic recovery and for how it can be discounted for future processes. The commodity markets, literally bursting in recent months, have become an object of discounting. The week kicked off with copper futures topping $9,000 per ton for the first time since 2011. Zinc futures hit a two-year high, while aluminum futures hit their highest level since 2018. The weak dollar and expectations of the imminent US stimulus package adoption can traditionally be named as this growth’s additional drivers. This week, the relevant bill will be submitted to a vote in the House of Representatives. Next week, a vote will be held in the Senate. In general, by March 14, the issue will have been fully and completely resolved—mainly by some democrats. What does this mean for financial markets? We’ve already been through the better half of 2020. It’s even strange that against this background, Bitcoin yesterday managed to lose 10%. What’s so strange, though? It can fall by 50% and nothing in the world will change. Simply because the real value of cryptocurrencies still has nothing to do with prices in the market. One cannot help but recall the DogeCoin founder’s comment, who stated that he’d spent about 3 hours creating a token. Once again, the cost of a cryptocurrency, now ranking 14th in the world with a capitalization of 7 billion each, is three hours work by one person. That’s all you need to know about the value of a given cryptocurrency. But back to the commodity markets. The rally continued in the oil market. After the collapse of the US oil market last week amid a sharp cooling, the markets are getting used to the idea that there will be no immediate return to pre-crisis production, and no less than 40% of US oil production has been lost. But next week another OPEC Plus meeting is planned. Saudi Arabia and Russia’s positions diverge again. Let’s remind you that last year this led to negative oil prices (meaning futures contracts, of course). And the markets have clearly not forgotten this. Accordingly, there’s an element of fear. Therefore, we keep believing that oil growth will be limited this week, especially given the fact that most likely almost every day there’ll be news of heroic efforts to restore the US oil production.
TVC:UKOILShort
by Trade24Fx
Week in a Glance: Texas Freezing, Retail Sales and a Trillion BTThe main movements in the past week show a rather sharp decline on most risk-free assets fronts, traditionally accompanied by an increase in risky assets. In terms of news, freezing temperatures in Texas have distracted attention from the usual top-level topics like the US stimulus package fate and pandemic news. So, gold underwent quite evident losses last week, but the yield on US Treasuries rose to the highest values ​​since February 2020. Such dynamics is a clear signal in favor of risky assets (capital flow). But also it gives a serious reason to think about whether it is worth buying shares at such exorbitant prices, if the risk-free profitability has almost tripled over the past six months. Judging by the dynamics of the US stock market last week, the markets were really focused on that. This thoughtfulness, however, did not appear in the cryptocurrency market. Bitcoin capitalization has approached a trillion. Perhaps air never costs so much. Even Musk’s rather vague explanation about Tesla’s investment in bitcoin didn’t help stop the insane rally: his thought boiled down to the fact that he had nothing to do with it, this was not his idea, and in general he believed that this had been a rather adventurous idea. The oil prices grew last week. Unlike the same cryptocurrency market, there were quite tangible reasons for this. The main one, of course, is that the record frost in the US provoked a collapse of the energy system in some states (mainly Texas). It resulted in up to 40% loss in the US oil production. Note that since this shock is short-term (the temperature has already climbed up), this week oil pricing may well be significantly corrected. Moreover, Saudi Arabia has announced that it will soon stop cutting production by an additional 1 million B/D. The top macroeconomic statistics of last week shows The data on retail sales in the US (they came out much better than forecasts thanks to incentives) and The UK (much worse than forecasts, thanks to the pandemic, lockdowns and Brexit) In addition, data on PMIs in Europe and the US were released on Friday stating that the Europeans are supposed to do very well, especially in the service sector. Then the United States continued to literally radiate positive, continuing the positive series of macroeconomic statistics.
TVC:UKOILShort
by Trade24Fx
1
Oil at Crossroads, Problems of Apple, Christie’s and CryptocurreThis week the rise in oil prices looked the most uncontested in fundamental terms. The news abundance in favor of the oil price rise is meant. Record frosts in the USA hit several states so hard that the oil production level in the country fell by almost 40% (!). Yes, it’s temporary, but still, it matters. Accordingly, the US oil reserves have declined quite rapidly. The lowest number of cases since October continued to fuel hopes for a global economic recovery, as did excellent US retail sales data. It’s even surprising that oil didn’t add as much as it did (less than 5% within almost a week). But the situation may change against oil quite soon. The US is expecting a warmer weekend. Also, the frosts have a downside: both oil production and oil refining have stopped. Accordingly, demand collapsed no less sharply. And then Saudi Arabia recalled that March will be the last month when the country will additionally reduce its production by 1 million BPD. In general, the next week may not be so successful for oil. But if the problems of oil are still potential, then at Apple they are quite tangible. This refers to the departure of prices for Apple shares below the 50-day moving average against the information that the largest shareholders of the company, Vanguard, and Warren Buffett’s Berkshire Hathaway cut rates. Everything is still rosy in the cryptocurrency market. Bitcoin gets used to the rate above 50K. And Christie’s, the British auction house, has recently confirmed that it accepts the cryptocurrency ether as a payment option at the upcoming digital art auction.
TVC:USOILShort
by Trade24Fx
500 mln Mistake, Worst January and Surprise from the USSince February 2020, the yield on the 10-year US Treasury bond has hit new highs. On the one hand, the safe haven assets exit continues. On the other hand, an alternative to buying stocks at insane prices by purchasing risk-free assets with a profitability many times higher than it was a few months ago is becoming more obvious. It may well be the reason for a correction in very overbought and overvalued stock markets. But the US stock market isn’t the main loser of yesterday—its participants are. Citibank made one of the most expensive mistakes in history. It sent a hundred times that amount instead of $8 mln (total, the bank accidentally sent $900 mln). A part of this erroneous transfer was returned to the bank, but about 500 million haven’t been returned, yet. In August, Citibank filed a lawsuit to recover its funds, but yesterday the court was known not to support the side of the company, so the bank is in trouble now. But the holiday was on the streets of the United States yesterday. This refers to the data on retail sales for January, which turned out to be much better than forecasted. Considering that January was the peak month in terms of the pandemic, the followers of the fast recovery sect after such data have increased significantly. However, there are still plenty of reasons for concern. According to the latest information, European automakers sold 26% fewer cars in January: Registrations of the Volkswagen Group, the region’s top-selling automaker, fell by 28% The VW brand dropped by 32% Audi by 31% Seat by 27%, and Skoda by 21%. As a result, January 2021 became the worst month in the European automotive market history. So, everything isn’t so simple in terms of the economic recovery speed.
DJ:DJIShort
by Trade24Fx
1
Resource Supercycle, Scottish Independence and Rich EnvironmentRecently, talks about the emergence of a new raw materials super cycle have intensified. It’s actually against the background of rising prices for main commodity items. The reasons seem clear—the rise in prices amid an abundance of cheap money. But it is somewhat strange that at the same time the analysts voicing the idea of ​​this very supercycle don’t touch its fundamental foundations. In the late 90s and early 2000s, the Chinese economy growth rate and its unrestrained demand for everything in the commodity markets provided the previous super cycle. But who will provide it now? Japan and the Eurozone having minus 5% of GDP at the end of 2020, or the United States staying in the minus? Or China with a 2% rate after 10% in the late 90s and early 2000s? In general, it is worth taking a closer look at the commodity markets for the presence of a price bubble there. The minibubble has inflated in pound pairs. Yes, the deal is a reason to exhale in relief. And in general, initially we talked about 1,40 as a growth target for working out this news. But what is happening now in Britain and its economy by no means corresponds to the behavior of the British currency. We’ve already written about chaos at the border, the loss of exporters and a sharp decline in exports to the EU. But an even bigger problem looms on the horizon. The threat from a hypothetical day is getting closer to the title of fact. It's about Scotland and its independence. The case is moving towards a referendum. According to the Scottish Government, the second referendum questions’ specific timing and wording on the country’s independence from Great Britain will become known in the next few weeks. It’ll be a severe blow to the UK in general and its economy in particular. So, the current price of the pound is a great opportunity to sell it both against the dollar and against the euro. Today is interesting primarily due to the data on January retail sales in the US. Analysts are quite optimistic and expect growth. But it should be recalled that January was still a record month in terms of a pandemic. So, surprises are quite possible. They are less likely on the part of the Fed. The Central Bank will publish the minutes of the last FOMC meeting. But given the importance of the document, it is worth paying attention to this news anyway.
Short
by Trade24Fx
Weekend in the USA, Dogecoin Exodus and Oil RiseMonday was a day off in the United States, so it wasn’t overly busy. Nevertheless, there were some interesting movements in Dogecoin cryptocurrency, for instance. Musk struggled to catch up with the hype around it. As a result, even this cryptocurrency’s creator began to twist his finger at his temple with no understanding what was happening. He just can’t get how a token he made in just a couple of hours just for fun can cost more than a company with billions of dollars in turnover like Boeing. Dogecoin is another testament to how much everyone has lost touch with reality now. However, this did not stop the largest Dogecoin holders from capitalizing on this madness and fixing in the highs area. The funny thing is that after losing several dozen (!) percent on Monday, Dogecoin even went into plus by the start of the American session. So, the crazy feast continues. This is supported by the dynamics of the Fear Index updated its annual lows on Friday. Against this backdrop, commodity markets continued to grow. Oil prices were especially good, which continued to enjoy increased demand amid expectations of a speedy global economic recovery. Also, there was some news that another potential escalation of the Middle East conflict is associated with the interception of a drone armed with explosives by coalition forces led by Saudi Arabia released by forces. Iran-related. The oil growth was also facilitated by the 30-year record cold in the Permian Basin (Texas, New Mexico, and Oklahoma). Because of this, oil production in the Permian Basin decreased by 1 million bbl/d. Market optimism was also enhanced by data on Japanese GDP for the fourth quarter. The numbers came out much higher than forecasts. GDP grew at a double-digit pace (compared to the same quarter last year). As a result, Japan’s economy ended 2020, shrinking by 4.8%. But who cares now that this is the maximum drop since the global financial crisis, when about 2 trillion US stimulus looms on the horizon.
TVC:USOILLong
by Trade24Fx
Week in a Glance: Cannabis, Cryptocurrencies, Pound and OilThe cannabis market was the hottest topic of the past week. According to some information, it became the target of a new attack from the Reddit users. Perhaps, it’s just an attempt to buy shares of companies in a potentially very promising market. Judging by the dynamics of Tilray shares this is still the first option. Its value doubled in less than a week, and then lost 50% in a day. The situation is too similar to the situation with GameStop. By the way, does anyone else remember GameStop? The company lost 90% of its value (relative to the highs) and returned to its usual oblivion. The same fate will be repeated by Tilray shares, hypothetically. Some interesting events took place in the cryptocurrency market. The prophet of innovative things, Elon Musk, issued another revelation: Bitcoin is the future of money, which means that you urgently need to invest in it. But he did not invest his money, deciding to invest the money of Tesla shareholders. We’re talking about the amount of 1.5 billion. Well, you can understand it, you can buy it with your hard-earned asset, which can lose ten percent in a day, and in a month and half of its value, somehow it is not out of hand. Tesla shareholders are clearly risk-takers if they’re willing to pay $1,500 per dollar of the company’s virtual profit. So, everything seems to be logical. Last week, Musk was also supported by such respected companies as Mastercard and BNY Mellon, planning to come to grips with cryptocurrencies. True, they’re not going to invest their money, it is only about satisfying the clients’ needs. Among other weekly news, it’s worth noting some relatively good data on UK GDP. The pound’s been growing all week, but this cannot last forever. It’s no joke. According to unofficial information, Britain’s exports to the EU fell by almost 70% in January. The oil market was dominated by optimism related to the expectations of an imminent end of the pandemic, lockdowns and a quick economic recovery. Accordingly, the news that Germany is extending the lockdown until March, and OPEC and IEA are again lowering their own forecasts for the growth rate of oil demand, are of little interest.
Short
by Trade24Fx
2
Reddit’s New Fun, UK GDP and CryptocurrencyReddit’s retail investors seem to have found some new fun. Besides, unlike the previous venture with half-dead companies like GameStop, everything looks more interesting now. These are cannabis producing companies such as Tilray, Canopy Growth, and Aphria. As a result, Tilray shares doubled in just a few days, but fell by 50% yesterday. That’s the GameStop genre classics once again showing that such scams can only be involved at the start of the movement. So, delay in entering can ruin literally within a few hours. But let’s get back to the target of the attack looking this time strategically not hopeless in the growth plan. The fact is that the Democrats promised to legalize marijuana and have already begun to implement this promise. And the US cannabis market is no longer measured in billions of dollars, like the Canadian one. But in hundreds of billions. So, such falls in stocks can be used for shopping, especially if keeping in mind that Reddit’s love objects tend to end badly with their success stories. A real feast these days is on the cryptocurrency market. The theory that the current rally isn’t a bubble, a fundamental shift, a breakout, a move to a new level, etc. received a number of confirmations (well, or rather evidence in favor). We are talking about information that Mastercard and BNY Mellon are planning to come to grips with cryptocurrencies. Crypto enthusiasts aren’t inclined to delve into the reasons for this. Neither large company said that the market is promising and they are striving to occupy a niche in it. (With the exception of Tesla, but we’ve already written about its decision and its reasons and this is a separate very sad story in the future). All say: our clients really want this, and if so, then okay, we’ll get into it. In terms of news, today is interesting primarily with stats from the UK. The data on the country’s GDP as of the fourth quarter and December 2020 will be published. Also, the UK industrial production growth rate will be announced. December, from a pandemic viewpoint, was far from the best for Britain. So, there is every reason to count on weak data. Quarterly GDP in the negative zone may be the strongest blow to the pound positions. In any case, we expect some weak numbers and, therefore, recommend selling the pound.
Short
by Trade24Fx
1
US Inflation, lockdown in Germany and Britain’s problemsInflation hasn’t become the main newsmaker, yet. It’ll inevitably become, as economic theory, says. But its time hasn’t come, yet. And yesterday's US CPI data is clear evidence. Consumer inflation came out exactly in line with analysts’ forecasts. At the same time, the rate of its growth is 1.4% on an annualized basis. Of course, it’s not enough to wake up the sleeping beast (the Fed). Meanwhile, the US stock market was under pressure yesterday—especially in the technology sector. Another important news considered Germany going to extend the lockdown in the camp until mid-March. So, although the statistics on the pandemic are rapidly improving, and the vaccination process is gaining momentum (already under 140 million injections worldwide), the most countries’ economies continue to absorb damage as a result of lockdowns. For Germany, for example, they cost 5% of GDP at the end of 2020. Meanwhile, Britain continues to reap the benefits of Brexit. More and more companies faced with a new reality. They understand that if they aim to survive, they’ll have to transfer their business to the continent. At least partially. For the UK, this means, at best, the loss of thousands of jobs. From the latest news in this field: British meat processors are experiencing serious delays in exporting products to the EU. (Their current sales are only 50% of the pre-reckoning times). As a result, they massively register businesses in the EU.
Short
by Trade24Fx
2
A Little Conspiracy, Oil, Inflation and EverythingTesla bought Bitcoins for $1.5 billion to maximize profit from cash, as we wrote yesterday. Considering that buying Bitcoin at current prices is by no means a conservative risk-free investment. So, we have the following somewhat conspiracy theory. Musk desperately needs a Tesla’s profitability demonstration, which so far is present only formally on paper. If it weren’t for the regulatory loans sale, 2020 would’ve ended at a loss for Tesla—like ALL previous years. That is car production and sales cannot generate almost any profit. Perhaps one day the economies of scale would work, but so far the business has been unprofitable. Considering how high Tesla shares have climbed, they will be able to stay at the top and continue to grow only on condition of stable positive financial results. So, the bitcoins purchase for $1.5 billion is very similar to the ‘all-in’ strategy by Musk. If Bitcoin goes off, you’ll get a speculative excess profit. Also, you can then brag it about as a profit for Tesla’s business. But if Bitcoin suddenly loses half of its value again, then Tesla is doomed to losses. But Musk will say that these aren’t business problems, but his failed investment idea. The business itself has nothing to do with it. Such a ‘win-win’ situation. The whole question is whether this multi-move will work. In our opinion, Musk started the most dangerous game, and since he started it, apparently there’d been reasons for that. After all, everyone isn’t at stake because of a good life. Well, God bless Musk. At the end, maybe Tesla will really become an example for the whole world and Bitcoin will cease to be just a speculative toy and finally turn into something what it was originally conceived for. According to the past month results, the oil market recorded the best January for itself over the past 30 years. We’ve already listed the reasons for this in our review yesterday. Today we note that so far for oil, everything continues to develop to the maximum. There are problems in Libya again, and judging by the API data, US oil reserves continue to decline. But some analysts suggest thinking if it’s time to start worrying about this. Since November last year, oil prices have increased by 80%. And if you look from the minimum marks in the spring of 2020, then the growth is already measured in hundreds of percent. So much of a significant rise in oil prices is among the strongest inflationary drivers. The rise in inflation is a reason for the central banks to start tightening monetary policy. But this can already become a verdict for risky assets, in which bubbles have inflated everywhere and are just waiting for a reason to collapse. It’s possible that today’s CPI from the US will give a signal to the markets in this regard.
NASDAQ:TSLAShort
by Trade24Fx