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Agonizing summit, stimulus and magic pillsThe EU summit, which instead of one day on Friday dragged on for the entire weekend and smoothly turned on Monday, become of the most difficult and longest in the history of the EU. It should be reminded that the fate of the 750-billion-euro aid fund was decided there. The price is more than serious, so it is not surprising that there was no unity in the ranks of Europe. The stumbling block was not so much the size of the fund as its distribution and control mechanisms. At the end of Monday, it seems that a compromise has been reached. At the same time, the size of the fund has not changed - 750 billion euros, but the structure of its distribution has undergone significant changes. The total amount of gratuitous aid (will be distributed in the form of grants) has been reduced from 500 to 390 billion euros, and the size of loans is 360 billion instead of 250. Although these news for the euro are generally positive, it seems to have exhausted its entire upward potential. In general, the issue of stimulus to the economy this week came to the fore not only in the EU, but also in the United States. By and large, the United States has only a week to agree on a new stimulus package. Otherwise, next week the US economy will face a situation of survival in a crisis without government assistance. All this is happening against the backdrop of a worsening pandemic situation in the United States. The mayor of Los Angeles said he is ready to return a full-fledged lockdown in the city. Meanwhile, the vaccine race continues. The UK has already agreed to purchase 90 million doses from Pfizer and Valneva, and seek effective treatments. Pfizer has released additional information on its tests (positive). In terms of treatment and medicine, AstraZeneca excelled by announcing the results of clinical trials of their experimental drug developed in collaboration with Oxford University. Preliminary results showed that the drug kills not only the virus, but also the cells affected by the virus. In general, a magic pill in its purest form. And small British company Synairgen more than tripled its capitalization after announcing the results of its Covid treatment option. Amid the news, the US tech sector saw another impressive rally led by Amazon and Tesla.
Short
by Trade24Fx
Week in a Glance: earnings season, Chinese GDP, EU, OPEC and panThe past week was exceptionally rich in all sorts of events: the start of the earnings season in the United States, meetings of the three leading world central banks (Banks of Japan and Canada, as well as the ECB), the OPEC + meeting, the EU summit, China's GDP, as well as news from Moderna, continued growth of bankruptcies in the United States; and much more. Central banks decided to leave the parameters of monetary policy in the Eurozone, Japan and Canada unchanged. At the same time, the Bank of Japan has significantly worsened its own forecasts for economic growth. The main positive news of the week can be considered information from Moderna about the next successful round of testing a vaccine against coronavirus, as well as statistics on China's GDP, which not only did not slip into a recession, but also showed results much higher than analysts' expectations (+ 3.2%). But this positive is so far covered by pandemic news: the total number of cases in the world has exceeded 14.5 million with 600K+ deaths, and last week was characterized by new highs in the number of new cases, both in the world and in the United States. As a result, California (the largest US economy and the 5th largest economy in the world among all countries in terms of GDP) went into lockdown # 2. The key event for the oil market was the OPEC + meeting. There will be no further record reduction of 9.7 million barrels per day. From August, the voluntary cuts will drop to 7.7 million barrels per day. And although OPEC tried to sweeten the pill (a number of countries will increase the size of reductions in order to fulfill the obligations violated in May-June, and Saudi Arabia promised not to increase exports in August), this news is generally negative for the oil market. So, this week we will be looking for points to sell oil. We will also continue to sell in the US stock market. The earnings season, which kicked off last week, doesn't look as disastrous as it could have been. But the banks' reservation of billions to cover future loan losses suggests that businesses are preparing for a further deterioration in the situation. And there are enough reasons for this: if Congress does not extend payments to the unemployed and small businesses (the current aid expires next week), then the United States risks facing a real picture of the crisis. However, the continuing increase in the number of bankruptcies of large companies (retailers, restaurants, oil workers, etc.) suggests that the situation is already very negative. Last week ended on a very minor note: the EU summit, at which the fate of the 750 billion aid fund was decided, failed again. This is a very serious blow to the euro. So today we will sell it against both the dollar and other currencies.
Short
by Trade24Fx
1
China's GDP, US unemployment and the European aid fundThe main event of yesterday in terms of macroeconomic statistics was the publication of data on China's GDP for the second quarter. The data came out significantly better than forecasted (+ 3.2% vs. analysts' expectations of 2.1%). Formally, the news is simply great and should have led to a surge of optimism in the stock market in China and the world in general. But by the end of yesterday, the key index of the Chinese stock market has lost almost 5%. Yes, this can be attributed to weak data on retail sales in China. But it seems to us that the markets are just ripe for a correction. This is also supported by information from UBS that the bank's richest clients, who took huge loans in March to buy shares, are now actively fixing profits and planning to move from equities in favor of other assets. The ECB, as expected, did not change the parameters of monetary policy yesterday. Nevertheless, the euro, which in the first half of the day faced serious difficulties after the announcement of the results of the ECB meeting, rose sharply, only to then decline again at the end of the day. However, the main news for the euro this week is the results of today's EU summit. If the aid fund of 750 billion euros will be approved, then the euro may well go above 1.15. Otherwise, the week will likely end below 1.13. But let’s get back to yesterday. Data on retail sales and figures on jobless claims in the United States. Retail sales were a pleasant surprise (+ 7.5% m / m against the forecast of + 5.0% m / m), but the figures on jobless claims were rather mixed. In general, the situation in the labor market continues to be disgusting and the reopening of the economy has not yet radically changed it. The steadily overwhelming number of people receiving unemployment benefits is now doubly dangerous, since there will be no additional checks of $ 600 per week since August. And if the government does not propose alternatives, the US economy may face very serious problems in this regard.
Short
by Trade24Fx
2
Central banks, OPEC +, earnings season, dollar and ECBYesterday started with the Bank of Japan. As we have already noted, the parameters of monetary policy (rates and quantitative easing program) were left unchanged. But at the same time, the Central Bank lowered its own forecast for the country's economic growth in the current fiscal year (ends in March 2021): GDP will decrease by 4.5% -5.7% (previously the range was 3% -5%), that is, outlook is worsened very significant. The Bank of Canada also did not change the status quo: the parameters of monetary policy were left unchanged. Among other news, it is worth noting the results of the OPEC + meeting. As we predicted, the voluntary 9.7 million b / d cut for August was not extended. This means that in a couple of weeks, the supply in the oil market may immediately grow by 2 million b / d, which is a very strong bearish signal. On the other hand, OPEC + assures that the overall reduction in August and September will be not 7.7 million bpd, but about 8.54 million bpd over the next two months, since Iraq, Nigeria, Angola, Russia and Kazakhstan will compensate for previous non-compliance. Otherwise, markets continued to be in risky mode following the announcement of Moderna vaccine trials. We have note once again that this news does not solve the current problems in any way, even if we forget that this is a very early stage of testing and more than one month will pass before the vaccine appears on the shelves. However, this temporary optimism boosted equity markets and also weighed on the dollar. As a result, the Dollar Index tried to break the key support 96. So far, we cannot state unambiguously that the level has been taken, which means that all our recommendations for buying the dollar remain relevant. But if a breakdown does occur, then it makes sense to turn into dollar sales across the entire spectrum of the foreign exchange market. The earnings season, meanwhile, continues and yesterday's reports can be treated as good ones for the current conditions. However, the growth of equity markets was very limited. This is largely due to the fact that those companies whose results turned out to be better than forecasted had their own unique reasons for improving performance, which, moreover, were of a rather one-step nature. In general, stock markets are clearly losing momentum. For example, today the data on Chinese GDP came out better than forecasted, but the Chinese stock market is in deep red. Today we are preparing for new reports from US corporations (Netflix, Johnson and Johnson, Morgan Stanly, Bank of America and others), as well as the ECB's decision on the parameters of monetary policy in the Eurozone.
SSE:000300Short
by Trade24Fx
1
Lockdown 2.0 in California, weak data and central banksThe main news of yesterday can be considered the introduction of lockdown №2 in California. Yes, this is a milder version of restrictions (food in take-away restaurants, banning bars and public events), but California is still the main generator of US GDP, and indeed the world as a whole (6th place among all countries in the world level of GDP). So, everything is serious, very serious, especially considering that the situation with the pandemic in the US is getting worse. And not only in the USA: Hong Kong tightens restrictions, Tokyo is a step away from introducing a new state of emergency, Iran is closing schools, etc. In general, yesterday can be safely written in the liabilities of the global economy. In addition to the lockdown in California, there were many depressing macroeconomic data. For example, industrial production in Japan (-26.3% in May compared with the same period last year) and the UK (6%, which is actually equivalent to a strong drop, since these data are relative to the previous month, manufacturing production in the metric year / year decreased by 22.8%), Singapore's GDP in the second quarter fell into the abyss (-41.2%), and in the UK the situation is slightly better (1.8% compared to the previous month is all almost a 20% drop compared to the same period last year). The data from the Eurozone was not very pleased either (economic sentiments, according to ZEW data, was much lower than forecasts), which, however, did not prevent the euro from growing (expectations of EU summit on Friday). Yesterday, the earnings season began in the United States. Banks started with their financial reports. The overall results can be summarized as follows: those who had large trading departments were able to relatively withstand the lockdown (JPMorgan), but those who were totally dependent on the traditional banking business suffered more than noticeably (Wells Fargo). In general, the losses of banks from traditional business are enormous - almost each of the banks wrote off about $ 8 billion for possible loan losses. These are the highest marks since the global financial crisis. Today promises to be no less eventful. The Bank of Japan has already announced the results of its meeting: the rate was left unchanged. The Bank of Canada will announce its decision later. In addition, we are waiting for data on inflation in the UK, as well as industrial production in the United States. From the conditional positive of yesterday, at least for the oil market, we can consider the OPEC report, in which the cartel was relatively optimistic about the market prospects in the foreseeable future. But this positive can be dispelled today by the decision of OPEC + to increase production by 2 million bpd. Yes, and the markets traditionally took the opportunity to increase optimism - the news about the next round of vaccine trials from Moderna.
DJ:DJIShort
by Trade24Fx
1
UK GDP and other data, bank earnings, OPEC outlookAs we noted in yesterday’s report, this week is going to be exceptionally eventful. Yesterday's events in the US stock market - a clear confirmation of this. And this is just the beginning. Tuesday should be another proof, because today fully starts the earnings season and many important macroeconomic statistics will be published. As for the data, China has already reported international trade data (imports grew by 2.7% and exports by 0.5%), which once again indicates that the Chinese economy is feeling yourself relatively good. This cannot be said about Japan: industrial production in May collapsed by 26.3% compared with the same period last year. Next, we are waiting for data on UK GDP and industrial production for May (do not flatter yourself with forecasts that expect growth rates: this growth relative to the previous month, and relative to May last year, it will most likely be a decrease of 15-20%). Recall that our position on the pound is to look for points for its sales in the foreign exchange market. This can be done both against the dollar and against the euro. The day will continue with data on consumer inflation in Germany and USA, as well as industrial production in the Eurozone. In addition, OPEC is due to release its monthly oil market review on Tuesday. Considering that the OPEC + meeting will take place in the middle of the week, at which they will decide to extend the reduction by 9.7 million b / d further or not, this week will be difficult for the oil market. Our expectations are that they will not extend (this means that since August the supply in the oil market will grow by 2 million bpd), and the report will have concerns about the growth of oil demand, which together gives reason to recommend oil sells from current prices. And finally, the earnings season. According to analysts, it will become the worst since the global financial crisis (and maybe even worse). Today, before the markets open, banks will report and it is very likely they will set the pace for this week and even the entire earnings season.
DJ:DJIShort
by Trade24Fx
3
Week in a Glance: optimism, pandemic and earnings season aheadThe main result of the week was new historical highs in the Nasdaq Index. The reason for the sharp rise in optimism on Friday was information from Gilead Sciences about the latest test results for remdesivir, which, according to their data, reduces the risk of death from coronavirus by 62%. Oil was added to the fire by Biontech, saying that they are ready to provide the vaccine by December (meaning to submit it to regulatory authorities). All this, of course, is great. But buyers clearly do not ask themselves one simple question: what to do here and now, when last week a new absolute maximum was recorded in the number of new cases in the world and the USA in particular. Today this is more urgent issue, since a week or two of such a tendency and lockdown No. 2 will become real. Also, none of the buyers seem to be interested in the dynamics of bankruptcies: their number continues to grow and we are not talking about small companies, but about entire networks of retail trader, restaurants, gyms, etc. Last week, the legendary Brooks Brothers filed for the Bankruptce, and Ascena Retail Group Inc (Ann Taylor, LOFT, Lou & Gray, Justice, Lane Bryant, Catherines and Cacique brands) plans to file for bankruptcy. Other names include Rosehill Resources Inc., Sur La Table, Lucky Brand Dungarees, Muji, G-Star RAW USA and many others. This week will be fulfilled with important events: ECB, Bank of Japan and Bank of Canada will provide us with their decisions. In addition to important macroeconomic statistics such as China’s GDP for the second quarter, UK GDP for May, US retail sales for June, we are waiting for the start of the earnings season in the US for the second quarter. The earnings season promises to be the most disastrous in history. That is why we have until recently recommended and still recommend sales in the US stock market despite its growth. Total overvaluation, multiplies by disastrous data of corporations will become the last straw that will fill the cup of patience and the bubble will go to the stage of collapse. Traditionally, banks will be the first to report. Recall that last quarter, the drawdown in their profits ranged from 50% (CitiGroup) to 90% (Wells Fargo). And this is according to the results of the quarter, when the US did not yet have an epidemic and lockdown. So there is every reason to expect losses in the second quarter, when the economy showed the largest drop in history.
DJ:DJIShort
by Trade24Fx
10
Jobless claims, Lockdown #2 and earnings season aheadFrom the point of macroeconomic statistics, the main event of yesterday was the publication of weekly data on jobless claims in the United States. New applications were submitted by 1.3 million, while the total number of unemployment beneficiaries is still above 18 million. What these numbers are talking about is basically: there is no quick economic recovery. Recall that the labor market is one of the most sensitive segments, and weekly jobless claims are in fact the most closest to real-time data, and they say that a month after the start of the reopening of the US economy, the situation in labor market continues to be unprecedentedly bad. So we continue to swim against the tide and recommend sales in the US stock market. Well, recall that the earnings season in the United States starts next week, which will almost certainly be the worst for all time observations. It will be extremely interesting to observe the actions of bulls in the US stock market. How easy will it be for them to buy at historic highs when companies report a fall in profits of 50% or even 100%, as well as a two-digit decrease in revenue. And let’s not forget about the pandemic. The number of new cases in the world yesterday showed a new absolute maximum. The situation in the USA continues to raise concerns of “lockdown No. 2”: for two consecutive days, the number of new cases there has exceeded 60K. According to the chief infectious disease specialist Faucci, the situation is developing exponentially again, which means that his forecast of 100K, announced last week, remains relevant. Our trading positions for today are unchanged: we are looking for points to buy the dollar, especially against the British pound, we will sell in the stock markets, as well as in the oil market.
Short
by Trade24Fx
2
Gold records, US unemployment, oil status quo Looking at the dynamics of stock markets, it seems that the global economy is experiencing its best times. At the same time, an analysis of macroeconomic statistics indicates that times are just the worst in history. Who is right? We propose to use gold and the dynamics of its prices as an arbiter. So yesterday, the asset rose above the $ 1800 mark (the highest prices since 2011). In our opinion, this is vivid evidence in favor of the fact that everything is far from being as good in the “Danish kingdom” as it seems, if you look at the dynamics of stock markets. Recall that gold is traditionally considered a safe haven asset and a sharp increase in demand for it (the inflow of funds into gold ETFs this year has already exceeded the maximum levels recorded in 2009) is one of the signs that investors are scared. And given that gold has approached historical highs, investors are apparently very scared. Another reason for concern, the markets may receive today after the publication of data on jobless claims. The increase in the number of unemployed will be a serious reason for the growth of fears. In our opinion, this is quite a likely scenario, given that many states are curtailing programs to open economies. According to official data, US oil reserves grew by 5.6 million barrels for the week, but given that they fell by 7.2 million barrels last week, markets did not use this data as a reason to sell the asset. In general, the status quo in the oil market is maintained, and we continue to recommend sell oil at current prices with small stops. As for the other positions, we note that the dollar came close to its lower limits against most currencies, so the sale of EURUSD, GBPUSD or AUDUSD seems to us to be great deals today. But with small stops, since a breakdown of the lower border of the dollar could provoke massive selloffs.
Short
by Trade24Fx
Forecasts revisions, US closing again, NovavaxYesterday, the financial markets were relatively calm. In the morning, the euro was under pressure. The reason was the revision of forecasts for the Eurozone economy by the European Commission. Traditionally, for the last time, the revise goes for the worse: a reduction of 8.7% is expected. It is difficult to disagree with these forecasts, especially if you look at the statistics on industrial production in Germany, also published yesterday. With forecasts of industrial production growth in May by 11.1% m / m, the fact of growth was only 7.8% m / m. Why is it bad? Well, because this is a figure relative to last month, when the fall was 17.5%. If you look at what is happening relative to the same period last year, we have a decline of almost 20% (!). This is about the quick recovery of the economy (Germany in May actively reopened). Meanwhile, more cities and the United States are turning off plans for re-opening and closing again. Yes, so far we are not talking about a complete lockdown, but the restrictions are increasing every day. There are enough reasons for this: the number of cases is close to 3 million people, and the new daily cases are above 55K. At the same time, an increase in the number of cases is observed in 41 US states. Against this background, the statements by the head of the Atlanta Federal Reserve Bank that the US economic recovery is in trouble look more than logical and appropriate. Novavax pulled out a lucky ticket in the form of a reward from the US Government in the amount of $ 1.6 billion for the development and manufacture of the vaccine. The government wants to see the result in the form of an established production process by January. This is a question about the timing when the vaccine may appear on the shelves. The rally in the Chinese stock market continues, as, indeed, the rampant growth of Tesla shares. Well, the harder they would fall.
DJ:DJIShort
by Trade24Fx
Long road ahead, goodbye V and hello WAs daily cases around the world increase, the fact that in 2020 we will not see any return to the pre-pandemic level becomes more and more obvious. Lucky if this happens in 2021. In light of the US labor market data released last week, there were some interesting forecasts from the Congressional Budget Office (CBO). The US unemployment rate could reach 4.4 percent only in the fourth quarter of 2030. By the way 4.4% is much higher than the historically low level of 3.5 percent that was observed in the USA before the outbreak of COVID-19. This is about the long road ahead. So goodbye V-shape and hello W (with any luck). CBO gave their updated and very gloomy vision on US GDP growth in 2020: -5.9%. This is even worse than the updated forecast from Goldman Sachs, which is expecting a 4.6% slowdown in the US economy in 2020. JPMorgan Chase & Co. forecast global debt growth of $ 16 trillion by the end of 2020, and the total amount will exceed $ 200 trillion. This is to the question of why stock markets do not fall against the background of such forecasts of economic growth rates and its current state. In fact, there is an unprecedented injection of money into the stock market. How this will end is understandable, the whole question is when the bubble will burst (sooner or later, debts will need to be repaid, which means selloffs in the stock market). The Chinese stock market index CSI 300, for example, has grown by 14% over the past 5 days, and added another 5.7% yesterday after state-owned media in China set up an advertising campaign for investing in the Chinese stock market. This growth is even greater than in December 2014. By the way, the Chinese stock market collapsed in 2015 (just a fact).
FOREXCOM:NAS100Short
by Trade24Fx
1
Week in a Glance: NFP, pandemic, best quarter, etc.The main event of the past week was the publication of data on the US labor market. The NFP data came out very impressive: + 4.8 million with a forecast of +3 million. But the overall minus in NFP since the start of pandemic is still about 15 million and it is already obvious that it is unlikely to be able to level it before the end of the year. And this means that there will be no quick economic recovery. One of the factors contributing to this is the second wave of epidemic un the US. More than 50K new cases per day is a serious reason for concern. As a result, a number of states are tightening measures with all the ensuing consequences for the labor market and the economy as a whole. U.S. chief infectious disease specialist Anthony Faucci announced the figure of 100K new cases per day in the nearest future. Last week was marked as the best quarter for the US stock market over the past few decades. We have already noted that this happened just before the dot-com bubble collapsed, as well as before the stock market crash in 1987. So, this is not a cause for joy, but rather an extremely alarming signal. Tesla bypassed Toyota in terms of capitalization. Which, in our opinion, is a clear sign that the markets have totally lost their minds: Tesla produces 25 (!) times less cars than Toyota, and its revenue is 10 (!) times less. In general, it's time to sell Tesla , while there are still crazy people buying it at $ 1,200 per share. The Brexit talks again ended with nothing. So, pound sales this week remain our basic trading idea for the FOREX. As for the general trend in the positions, we will give preference to purchases of the dollar, first of all against the Australian and Canadian dollars. In the stock market, we will continue to look exclusively for sales opportunities as well as in the oil market. As for the upcoming week, it will be exclusively desaturated on fundamental events. By and large, this will be one of the last weeks of rest, the calm before the storm, which will almost certainly begin with the start of the earnings season in the USA and the publication of US GDP data for the second quarter.
Short
by Trade24Fx
2
US labor market, sanctions and the end of free cheeseThe main event of yesterday was the publication of data on the US labor market for June. In fact, it was a month of active reopening of the US economy, respectively, signals were expected from the labor market about quick restoration of the economy. On the one hand, the data on NFPs pleasantly surprised: with a forecast of +3 million in fact, the increase in NFPs amounted to +4.8 million. But on the other hand, if you look at the data in the context of the accumulated effect, it is still extremely negative. The labor market is still minus about 14 million in terms of the NFP and this is very serious. The fact is that we will hardly see the figure of 5 million next month, which means that restoration will take not 2-3 months, but the whole of 2020 and possibly part of 2021. And all other things being equal, that is, the pandemic will recede and the states will continue to reopen. In the meantime, the US is updating records for the number of new infections, and some states continue to curtail programs to open economies. That is, in fact, next month we will not see figures similar to yesterday, but in general we can see even a negative number in the graph of new jobs created. In general, such a large-scale crisis in the US labor market, has not yet spoken yet its word for only one reason: government support. Checks from the Government have not yet allowed the following logical chain to be realized: no work, no salary, no money, nothing to pay bills, nothing to buy goods with all the ensuing economic consequences in the form of a banking crisis, falling demand and, consequently, falling producer revenues, etc. So, we recall that currently July is the last month when the Government provides “free cheese”. If Congress does not vote to extend the current one or adopt a new aid act, then very soon we will see what is the real price of 20 million unemployed for the economy is. Meanwhile, the U.S. House of Representatives passed a bill imposing sanctions on banks that deal with Chinese officials involved in cracking down on demonstrators for democracy in Hong Kong. Let us look at the reaction of China, since all this is fraught with a new round of rising tension between US and China.
FOREXCOM:NAS100Short
by Trade24Fx
4
Best quarter, vaccine and US labor marketThe second quarter for the US stock market was the best over the past few decades. It seems like a more than obvious buy signal. However, we have the opposite opinion. For us this fact is a direct indication to sales. The problem with modern financial markets is that they have the memory of a goldfish. Let’s dive into the past a little bit. The high-tech Nasdaq Composite has showed the best results since the fourth quarter of 1999, soaring by 30.6%. Recall that the fourth quarter of 1999 was the last period of growth before the collapse of the dot-com bubble. Right after the fourth quarter of 1999 Nasdaq index fell by 4 (!) times. And if it seems to you that this is nothing more than a coincidence, then consider the Dow Jones Index, for which the second quarter of 2020 turned out to be the best quarter since the first quarter of 1987. What is 1987 for the US stock market? This is the year of the largest one-day fall in its history. 1987 was the year of the Black Monday, when the Dow Jones Index lost 22.6% in a day, which provoked a severe crisis in the US stock market and around the world too (Australian stock market has lost 41.8% by the end of October, Canada - 22.5% , Hong Kong - 45.8%, Great Britain - 26.4%). That is why when we see news headlines with phrases such as “the best quarter in decades,” it becomes completely clear that the current bubble has reached the terminal stage. Another signal in favor of this is Tesla's first place among automobile companies in the world by capitalization. A company that produces dozens of times less cars than Toyota costs more than the latter. The degree of absurdity has clearly reached a critical point. So, stock market sales continue to be the main trading idea of 2020 for us. By and large, now the whole question is in the trigger. That is, an event that will provoke a change of market sentiments. In general, there are enough reasons, starting from the pandemic and its second wave, ending with the economic crisis. So, today's data on the US labor market, in view of their traditional significance as a whole, are also suitable for the role of a trigger. Although the data most likely will not be disastrous, so we don’t really hope that everything will start today. We have much more hopes for the earnings season for the second quarter, as well as the US GDP data for the second quarter. So, the ebd of July, in our opinion, can become a turning point for the US stock market. But back to the statistics on the labor market. In March-April, about 21.5 million in NFP were erased. Yes, May restored 2.5 million, but this is still MINUS 19 million. That is, almost any figure below 5-7 million is, by and large, a negative signal. For example, if the forecasted 3 million will come out. What does it mean? That the labor market will need another 5-6 months (!) to just restore the losses incurred, in fact, during 1 month. This is all you need to know about the quick recovery of the US economy, and in the world as a whole. As for the rising optimism in the financial markets yesterday, it was triggered by news of a successful vaccine test. This time, the Pfizer and BioNtech vaccine proved to be safe during early trials and ensured the formation of antibodies to the virus. This is not the first surge of optimism against the background of such kind of news. Previously, this was information about the tests of Remdesevir, as well as the results of vaccine tests from Moderna . But the problem is that the pandemic is here and now, and the vaccine is something in the unknown future. That is, here and now this news does not solve anything.
FOREXCOM:NAS100Short
by Trade24Fx
1
Best quarter, vaccine and US labor market dataThe second quarter for the US stock market was the best over the past few decades. It seems like a more than obvious buy signal. However, we have the opposite opinion. For us this fact is a direct indication to sales. The problem with modern financial markets is that they have the memory of a goldfish. Let’s dive into the past a little bit. The high-tech Nasdaq Composite has showed the best results since the fourth quarter of 1999, soaring by 30.6%. Recall that the fourth quarter of 1999 was the last period of growth before the collapse of the dot-com bubble. Right after the fourth quarter of 1999 Nasdaq index fell by 4 (!) times. And if it seems to you that this is nothing more than a coincidence, then consider the Dow Jones Index, for which the second quarter of 2020 turned out to be the best quarter since the first quarter of 1987. What is 1987 for the US stock market? This is the year of the largest one-day fall in its history. 1987 was the year of the Black Monday, when the Dow Jones Index lost 22.6% in a day, which provoked a severe crisis in the US stock market and around the world too (Australian stock market has lost 41.8% by the end of October, Canada - 22.5% , Hong Kong - 45.8%, Great Britain - 26.4%). That is why when we see news headlines with phrases such as “the best quarter in decades,” it becomes completely clear that the current bubble has reached the terminal stage. Another signal in favor of this is Tesla's first place among automobile companies in the world by capitalization. A company that produces dozens of times less cars than Toyota costs more than the latter. The degree of absurdity has clearly reached a critical point. So, stock market sales continue to be the main trading idea of 2020 for us. By and large, now the whole question is in the trigger. That is, an event that will provoke a change of market sentiments. In general, there are enough reasons, starting from the pandemic and its second wave, ending with the economic crisis. So, today's data on the US labor market, in view of their traditional significance as a whole, are also suitable for the role of a trigger. Although the data most likely will not be disastrous, so we don’t really hope that everything will start today. We have much more hopes for the earnings season for the second quarter, as well as the US GDP data for the second quarter. So, the ebd of July, in our opinion, can become a turning point for the US stock market. But back to the statistics on the labor market. In March-April, about 21.5 million in NFP were erased. Yes, May restored 2.5 million, but this is still MINUS 19 million. That is, almost any figure below 5-7 million is, by and large, a negative signal. For example, if the forecasted 3 million will come out. What does it mean? That the labor market will need another 5-6 months (!) to just restore the losses incurred, in fact, during 1 month. This is all you need to know about the quick recovery of the US economy, and in the world as a whole. As for the rising optimism in the financial markets yesterday, it was triggered by news of a successful vaccine test. This time, the Pfizer and BioNtech vaccine proved to be safe during early trials and ensured the formation of antibodies to the virus. This is not the first surge of optimism against the background of such kind of news. Previously, this was information about the tests of Remdesevir, as well as the results of vaccine tests from Moderna. But the problem is that the pandemic is here and now, and the vaccine is something in the unknown future. That is, here and now this news does not solve anything.
FOREXCOM:NAS100Short
by Trade24Fx
2
Extraordinary uncertainty, Australia closes, WHO warnsThe behavior of stock markets is similar to the last attack of a mortally wounded animal. Otherwise it is hard to explain his unwillingness to fall, when the second wave of the epidemic from a potential threat turns into a harsh reality and smoothly proceeds to the next stage: the re-closure of economies with all the ensuing consequences. At the start of the week, WHO openly stated that the worst is yet to come. And it’s hard to argue with them if you look at the news headlines: more and more states in the USA are stopping the process of easing restrictions and vice versa they are starting to tighten quarantine measures against the background of a sharp increase in the number of cases (daily increase is already above 45,000), and the country's main infectious disease specialist warns of an increase of this number up to 100K per day; Australia introduced a four-week lockdown in the second most populous state in the country, etc. Fed head Jerome Powell, meanwhile, notes an extraordinary uncertainty about the economic outlook for the pandemic. At the same time, more and more U.S. companies are filing for bankruptcy: retail giants (GNC, Neiman Marcus, JCPenny and many others) and restaurant chains, pioneers of the shale revolution (Chesapeake Energy) and even arms manufacturers (Remington Arms). This week, for example, NPC International Inc (owner of 1,200 Pizza Hut restaurants and 385 Wendy's Co. stores) is planning to file for bankruptcy, while Cirque du Soleil has already filed for the bankruptcy. To conclude, our pool of positions for today is as follows: sells in the stock markets, dollar buy primarily against the pound and the Australian dollar, oil sales, as well as the Russian ruble.
Short
by Trade24Fx
3
Australian terms, economic confidence and FacebookYesterday, the financial markets were relatively calm. For the panic moods, corresponding dynamics in the number of cases in the world and the USA is needed. And since the beginning of the week in this regard traditionally inspires elements of false hope, the markets were in no hurry to be afraid. But they did not have special reasons for relief as well. Economic confidence in the Eurozone in June did not justify expert forecasts: The economic confidence index in June is 75.7 with a forecast of 80.0 and a May value of 67.5. This is not much incorporating the fact how much talks were about a quick recovery and fast return to normal. The pound was under pressure yesterday. The reason is the same - Brexit. Johnson said over the weekend that Britain is ready for trade relations with the EU “on Australian terms” (trading based on standard WTO rules with a number of special agreements for certain goods) if no agreement will be reached. In general, both sides continue to raise rates. But the time is ticking out. So, the concerns of investors are clear. Even Johnson’s statements about his readiness to actively help the British economy through a sharp increase in government spending on investments for infrastructure projects did not help the pound. Among the other news, it is worth noting the natural hunting on Facebook, organized by companies around the world. Inadequate Facebook policy in terms of hateful speeches was chosen as a formal reason. Well, in fact, everything is trite: many companies do not have money, and they are forced to save costs. But you can’t admit it out loud, because it is fraught with consequences. Using this scandal, they saved money, and pretended to be socially responsible and generally on the side of the people.
Short
by Trade24Fx
Week in a Glance: second wave in the USA, IMF and new trade warsLast week began with an outbreak of short-term panic after a White House adviser said in an interview that the US-China trade deal is over. Trump made a rebuttal rather quickly and the markets quickly compensated for the losses. Nevertheless, the problem of trade wars did not end there: Trump administration said that the United States was going to set new tariffs of $ 3.1 billion on export from France, Germany, Spain and the UK. In response to this, the EU will have no choice but to impose its own sanctions in response. That is, trade wars will expand geography and scope. The main event of the week and the main newsmaker again became a pandemic. The situation in the world continued to deteriorate rapidly: the number of new cases in the USA at the end of the week reached 50K, in Brazil about the same number, and India approached the mark of 20K. And if for Brazil and India this is the first wave, then the United States is faced with a full second wave. Unreasonable removal of quarantine restrictions and exit from the lockdown say their words. Judging by the current dynamics, the second wave promises to be even worse than the first one. At least the current highs are already higher than the highs of late April. A week of such growth and the US should prepare for a new lockdown. Actually, some states have already suspended the lifting of restrictions. In general, our recommendation to sell in the US stock market is finding more and more reasons. Speaking of reasons. The IMF last week released updated forecasts on the global economy in 2020. Global growth is projected at –4.9 percent in 2020, 1.9 percentage points below the April forecast. The COVID-19 pandemic had a more negative impact on activity in the first half of 2020 than anticipated, and recovery is projected to be more gradual than previously projected. At the same time, the IMF notes the fact that there is a large gap in prices on financial markets from reality and warns about a correction in financial markets. This week, markets will continue to monitor the situation with the pandemic and their sentiment will be directly determined by the numbers for new cases of disease. In addition, we are waiting for the publication of official statistics on the US labor market: NFP and unemployment on Thursday will be the focus of markets.
DJ:DJIShort
by Trade24Fx
4
Fear of lockdowns, US GDP and its future, oil perspectivesThe pandemic situation in the world and individual countries continues to deteriorate. The result of this was the emergence of a new phobia in the financial markets - fear of lockdowns. The likelihood that countries will begin to close again is high enough. At least if you look at the dynamics of new cases in the United States, where they exceeded the mark of 40K per day, which is a new historical maximum. Amid such dynamics, the University of Washington in Seattle recounted the possible number of deaths in the United States by October. Now it is 180,000, which is almost 50% worse than the previous estimate of 122,000. If the US economy will be closed again, neither the Fed nor the new stimulus from the government will help the US stock market - sell off will be inevitable. But even in the current reality (without a second lockdown) everything does not look very good. Recent US unemployment figures show that around 20 million people continue to receive unemployment benefits. At the same time, over the week the number of new applications again turned out to be near 1.5 million. Yesterday, the final estimates were published on US GDP growth in the first quarter: a decrease of 5%. Recall that this is only the beginning of the problems for US GDP, and not their peak. Most experts believe that the fall in US GDP will be measured in double digits. Leading analysts estimate the rate of decline at 30-40%. Which, of course, is absolutely unthinkable, but in a month, it can become a reality. The growth of the stock market amid such data is beyond the scope of our imagination. So, we continue to remind about our recommendation to sell on the US stock market, and other countries too. In general, the threat of repeated lockdowns carries risks for a number of assets, including oil. The validity period of OPEC + in the current volume is gradually coming to an end (recall, it is valid until the end of July, May and June have already passed), that is, a couple of million barrels per day of additional oil will appear in the market in a month. But the lockdowns will provoke another sharp drop in oil demand. This will inevitably lead to a sharp drop in oil prices, as the oil storage facilities are still full (for three consecutive weeks, US oil stocks are growing). So in the current environment, we are probably inclined to sell oil.
DJ:DJIShort
by Trade24Fx
2
Trade Wars, US problems, and IMF ForecastsThe main event of yesterday can be considered the publication of the IMF updated forecasts on the economic growth in the world in 2020. As expected, forecasts were revised downward. A decline in global GDP is now projected at 4.9 percent in 2020 (1.9 percentage points worse than the April forecast). In general, according to the IMF, the COVID-19 pandemic has done bigger negative impact on activity in the first half of 2020 than anticipated, and recovery is projected more gradual than previously expected. Among other news, it is worth noting information that the United States can set new tariffs for European exports in the amount of $ 3.1 billion. That is, the markets did not have time to breathe out after statements by the White House adviser that the trade agreement between the USA and China is over, and they have another blow. But this time it is a new front in trade wars. Obviously, such a move by the United States will provoke a symmetrical response from the EU with all the ensuing. In general, one more reason to worry about the future of the global economy. The news about the pandemic this week are extremely negative: the outbreak of diseases in Germany, the growth of new cases in the US and the country's inability to leave the plateau of diseases. As for the positive, we can note the latest information from the Ifo Institute, which demonstrated that business expectations in Germany have been rising for the second month in a row. On the other hand, this news was offset by a survey of employers in the UK, which showed that a quarter of workers are likely to lose their jobs after returning from forced leave when state support ends in September.
Short
by Trade24Fx
1
EURUSD: New safe haven against major pairs?This morning, I saw an educational video from transparent-fx and showed that the EURUSD is shaping an inverse H&S in D chart and indeed it is. Besides, in the H4 chart it comes from shaping a non-inverse H&S what makes you realise that the pair is experiencing a sideways movement since June 8. If the figure is finished, by June 30 EURUSD could reach 1.14. In addition, fundamental readings have been quite strong, coronavirus is contained in most of the european countries and even though Germany has seen a surge in covid19 cases, Merkel is still the Chancellor so she knows how to deal with this. On the other side of the Atlantic, US and Latin America are not improving which is why investors are running away from america (which has recently seen a spike in bankruptcies filing in the past week, 13-20 June) and embracing euro as the only safe currency since Japanese yen lost that condition when covid19 outbreak sparked the markets around Feb 24. So EURUSD might be the safest currency (inveur, investing.com's euro index is staying around 101, highs not seen since 2014) for this summer-autumn only, until everything drops down again.
Long
by alexinve
Slow recovery, IMF forecasts and common movementsYesterday, quite a few business activity indexes were published in Germany, the Eurozone, the UK and the USA. Indices were for June; therefore, their information was crucial to understand the pace of recovery. Apparently, the recovery process is not explosive, but gradual. At least the indices were below 50, that is, economic activity continues to decline. It is worth noting that indicators came out better than forecasts, which means events are developing not in the worst way. Given these data, as well as Trump's comments that the US-China trade deal remains valid, the markets were again optimistic and common movements typical to these market sentiments were detected: stock markets were growing, the dollar was declining, commodity markets were strengthening and the currencies of developing countries grew. At the same time some deviations were detected: safe haven assets were mostly increased. We thing this might a signal of reverse in the market sentiments soon. The positive mood of the markets yesterday was strengthened by the WTO report, which says that thanks to the actions of the governments, the worst-case scenario for the global economy can be avoided. Speaking about the actions of governments, we note that more than $ 2.3 trillion of the total amount allocated by the EU to help companies remained untouched. We traditionally remain pessimists. The lack of a quick recovery suggests that 2020 as a whole will be exceptionally disastrous for the global economy. So, there is nothing to be happy about right here and right now. In this regard, it will be interesting to read updated forecasts from the IMF on the pace of development of the global economy. The Fund warned a couple of weeks ago that we should expect a worsening of previous forecasts. The whole intrigue is how much worse the forecasts will be (in April, the IMF announced -3% shrink in the global economy by the end of the year).
FOREXCOM:NAS100Short
by Trade24Fx
2
New outbreaks, Germany pumps, the deal is overPerhaps the main news provider yesterday was Germany. On the one hand, an outbreak of pandemic, on the other - a signal in favor of a “hard” Brexit. To begin with, the reproduction rate jumped sharply over the weekend. From a rate of less than 1, the reproduction rate rose to area 3. This is due to an outbreak at the slaughterhouse where tests of 1300 workers gave a positive result. If we add to this the continued deterioration of the situation in Brazil and India and an increasing number of signs of a “second wave” in the USA, we get an extremely threatening picture for the world as a whole. Another reason to concern was provided byy White House adviser Peter Navarro, who said that the US-China trade deal is “over”. And although after this there were statements that the “over” was not quite the “over”, and Trump said that it was not the end at all, the sediment remained. And the markets began to think about a new round of trade wars between the two world largest economies. So, we see no other options than to recommend sells in the stock markets. But back to Germany. The German Deputy Finance Minister said that it is necessary to prepare for the worst and urged banks to be prepared for the “hard” Brexit, adding that there was a very strong risk of a difficult situation in the future. We think this message is not for German banks, but as the last warning to the UK, which continues to show miracles of inflexibility in the EU negotiation process. And apparently, the EU is already fed up with it. This is negative news for the pound, so we will sell it today.
Short
by Trade24Fx
6