Get started

Newsbackground

Bulls Broke, and 3 Days Left before the Default of EvergrandeThe US stock market ended with growth for the fifth day in a row. Judging by the SP500 index, its further fate should be decided if not today, then tomorrow. A move above 4500 will be an unconditional victory for the bulls and will pave the way for further growth. As for the reasons for growth, analysts can think of nothing better than a successful reporting season as a justification. To be fair, we note that so far the reporting season is really good, as confirmed yesterday's reports from Procter & Gamble, Johnson & Johnson, Philip Morris International and Netflix. Although it is worth noting that while exceeding forecasts for profits and incomes, companies in the real sector (in particular Procter & Gamble) expressed concern about rising costs and inflation. But they solved the problem of rising costs for themselves simply - they raised prices for products. From the outside, it looks like an elegant way out of a difficult situation, but, in fact, the problem was simply passed on to consumers and it went nowhere. How the problems of Chinese developers have not disappeared. Another default this week: Sinic, registered in Hong Kong, defaulted on $ 246 million bonds. Plus S&P and Moody's downgraded credit ratings for a number of other developers. Well, and the cherry on top, of course, is Evergrande: already this Saturday, the 30-day period will expire, which has been given to the company to pay off the debt since the first default. That is, the official date of default, the point of no return, may be just October 23 of this year. But once again, we note that here and now the markets are not much interested in problems such as defaults by developers in China, inflation and changes in the vectors of monetary policies, the energy crisis, or, for example, weak data on the US real estate market, published yesterday. It is much more interesting, for example, to buy cryptocurrencies, since yesterday the first ETF on Bitcoin futures was launched. What can turn the tide? In addition to Evergrande on Saturday, already today we are waiting for inflation statistics from the UK, Eurozone and Canada, which may remind the markets of Central Banks and the end of the era of cheap money, without which this whole feast would have been impossible.
TVC:SPXShort
by Trade24Fx
3
Race of Central Banks Amid Economic ProblemsLast week, in the minutes of the last FOMC meeting, the Fed practically announced the start of a cycle of monetary tightening. But inflation is not just a US problem. Central banks' inflation targets have been exceeded several times in the Eurozone and the UK. This means that both the Bank of England and the ECB need to tighten monetary policy. Tellingly, verbal interventions from both sides have already started. The head of the Bank of Italy Ignazio Visco (member of the ECB) admitted that inflationary expectations were higher than the ECB would like. Governor of the Bank of England Andrew Bailey made perhaps the most aggressive statement for himself, noting that the central bank "will have to act." In this regard, the fate of the euro and the pound in pairs with the dollar does not seem so obvious and, by and large, will depend on the outcome of the race of the central banks. Although we would still sell the pound. The situation with the pandemic in Britain is getting worse again. The number of new cases of diseases has reached a three-month high. Well, and even more strange against the background of the planned tightening of monetary policy in the world, the dynamics of stock markets looks, especially the United States, especially against the background of yesterday's data on industrial production in the United States, which decreased by 1.3% in September. However, China was not happy yesterday with its weak data on GDP. In general, logistics problems are starting to worry economists more and more. Even outside the context of bottlenecks, there are plenty of problems. For example, the cost of booking a 40-foot container from Shanghai to Los Angeles was $ 10,229 in the first week of August, up 238% from the same time a year earlier. As a result, toy manufacturers, for example, are ditching a range of products and relying on small stuffed toys. So do not be surprised by the emergence of a new fashion, as well as the fact that prices will continue to rise against the background of empty shelves for some items of the product range.
TVC:SPXShort
by Trade24Fx
1
Week in a Glance: Earnings Season, US Inflation and EvergrandeThe past week can be safely attributed to risky assets. The US stock market showed steady growth, oil went above 84 (Brent mark), and Bitcoin so generally flew above 60K. And although this was all part of the general dynamics in risky assets against the background of a sharp decrease in the level of fear (the VIX index again storms pre-pandemic marks), each asset / market also had its own story. We will talk about them in today's review. The US stock market rallied at a great start to the earnings season. Banks are tearing analysts' forecasts to shreds. Reasons: the excess of money makes the investment component of banking a gold mine, while the release of reserves allows you to "draw" profits. In addition, the House of Representatives approved the extension of the US government debt limit, so the default is canceled for now. The rose-colored glasses of the markets were so much fogged up with optimism that they did not notice in the text of the minutes of the last FOMC meeting almost direct indication of the start of monetary tightening in the United States as early as next month. They also ignored the record-high growth rate of manufacturing inflation in the United States and the highest annual growth rate of consumer inflation in the United States over the past 30 years. Markets were not much upset because of the third default by the Chinese developer Evergrande. But the situation in the real estate market in China is deteriorating rapidly. S&P Global has once again downgraded the ratings of the two largest companies in the sector, Greenland Holdings and E-house, and Kaisa Group bonds are now trading at 35 cents per dollar. The markets were not worried about the energy crisis. Gas prices are still prohibitively high and are pulling the prices of other energy assets. Which forces companies to close production facilities that are highly dependent on the price of electricity or gas with oil. There is flooding here in China and mining in the largest coal-producing region has been hit hard. But the markets gratefully accepted rumors that the Securities and Exchange Commission (SEC) intends to authorize the first cryptocurrency ETF in the United States (we are talking about an application for opening ETFs from ProShares and Invesco based on futures contracts). As a result, Bitcoin soared above 60K. In our opinion, this once again confirms that cryptocurrencies are not about the economy, they are about hype. Prices are now based not on fundamentals, but on increased market scrutiny. In this regard, the news that Elon Musk's fortune is now estimated at $ 230 billion is indicative - the same as that of Bill Gates and Warren Buffett combined. The coming week may well continue the current trends. The reporting season continues and goes into an active phase. At the same time, in terms of macroeconomic statistics from the US, the week will be very calm.
TVC:SPXShort
by Trade24Fx
1
On Yesterday's Optimism and the Prospects for Oil PricesYesterday, without a doubt, can be written into the asset of the supporters of risky assets. The stock market was growing, cryptocurrencies were growing, commodity markets were growing. The successful start of the reporting season was named as the reason. Indeed, banks are beating analysts' profit forecasts with one left hand. But few people think about the true nature of the sharp rise in profits. This is, in fact, about purely accounting nuances associated with shifting money from one pocket to another. Banks are releasing reserves en masse, which is reflected in the financial statements in the form of profit growth. And let's not forget that excess money has created a golden age for investment banking with its asset management and financial advisory services. In general, banks are not an indicator. As not an indicator, and companies that make money in the commodity markets. Well, how could the same Alcoa show weak financial results if prices for aluminum have grown by 50% since the beginning of the year? All of this is about looking at the companies that are manufacturing and what they have to say about rising costs due to inflation, bottlenecks in global supply chains, and shortages of human resources and semiconductors. By the way, about inflation. US manufacturing inflation data was released yesterday, and it reached its highest ever recorded mark. Yes, the history of this indicator has been going on since 2010, but still, it sounds impressive. That is, the ring around the Fed is shrinking. And although the markets do not want to think about tightening monetary policy, with each new piece of data it seems more and more inevitable. Another, in our opinion, inevitable process in the future is a drop in oil prices. Yes, here and now you should probably not count on this, but in a couple of blocks - quite. Although data on US oil inventories (growing for the third week in a row) already signal a market transformation and a transition from deficit to surplus, this process is likely to take several more months. According to IEA estimates, the transition will finally be completed at the start of 2022, at least if OPEC + continues to increase production by 400K b / d every month. So as strange as it sounds in the midst of the energy crisis (when everyone wants to buy), oil sales are a promising undertaking, but with development in 2022.
TVC:UKOILShort
by Trade24Fx
1
Fed Closer to Adoption, and Chinese Developers to DefaultsBased on yesterday's data on the US inflation and the texts of the minutes of the last FOMC meeting, the decline in the dollar and the growth of the US stock market seem illogical and rather strange. On the other hand, this is a great reason to buy the dollar cheaper and sell it on the stock market for a higher price. Consumer inflation in the United States (the main benchmark for the Fed, in contrast to the same manufacturing inflation) yesterday reached its maximum levels over the past 13 years. In annual terms, the growth was 5.4% (2.5 times higher than the Fed's target), and in relation to the previous month, the growth was 0.4% (even higher than the forecast of 0.3%). Each month of these figures is a new confirmation of the Fed's position that inflation is a temporary phenomenon, caused by private factors (such as rising prices for used cars). In addition, this is the Fed's approach to the stage of the final and irrevocable acceptance of the fact that there is a problem of high inflation, which requires a solution. The Central Bank has two options: to roll back quantitative easing or raise rates. Since the Fed is faced with a dilemma of how not to collapse the resulting bubbles in the financial markets (the US stock market, the US real estate market, bubbles in the commodity and cryptocurrency markets), the option to raise rates will be postponed until the last. But with tapering there is nowhere to hesitate. Yesterday's minutes of the last FOMC meeting showed that mid-November is the most likely start to curtailment of the quantitative easing program (recall, now it is 120 billion of asset repurchases, of which 80 billion are treasury bonds, and 40 are mortgage bonds). The parameters so far sound as follows: every month the volume of purchases will decrease by 15 billion, of which 10 billion are treasuries, and 5 - MBS. Against the background of such news, the dollar can and should be bought and the opposite with the stock market. Moreover, another problem of the world economy is getting worse every day. Developers in China continue to pour in. As we warned earlier, Evergrande is the first domino to trigger the fall of the next. S&P Global again downgraded the ratings of the two largest companies in the sector, Greenland Holdings and E-house. Kaisa Group's dollar bonds fell to 35 cents per dollar (that is, now their yield is 60%). And in general, the cost of resources for Chinese developers soared to an average of 24%, which by and large makes them inaccessible with all the ensuing opportunities for debt refinancing.
TVC:DXYLong
by Trade24Fx
2
All Prices Rise, Republicans Threaten, and Dimon Is PerplexedAll Prices Rise, Republicans Threaten, and Dimon Is Perplexed The current energy crisis is a clear illustration of how everything bad that can happen happens almost simultaneously. Judge for yourself, this whole crisis began with the fact that the level of gas reserves in Europe was below the 5-year average. It would seem unpleasant, but tolerable. And then 33 misfortunes began, the end of which has not yet ended: the wind stopped blowing in the Server Sea and the power generation from wind turbines dropped sharply, then a fire and disabling of a key power cable in Britain, etc. etc. Of the latter, targeting in China led to a sharp decline in coal production in the country. Accordingly, hello the rise in coal prices, which by no means contributes to the resolution of the energy crisis. It seems that there is simply no end to this. But the energy crisis is not the only problem in the world economy. And we are not talking about yesterday's extremely weak data on consumer sentiment in Europe (ZEW indices), and not even about a sharp decline in vacancies in the US (lost 600K), but about more global things. Last week, everyone seemed to have calmed down about a possible US default. But the Republicans decided to remind everyone that the problem has not been solved by word at all, it has simply been pushed back in time by a month and a half. Republican leader McConnell wrote in an open letter to Biden that there would be no more votes in support of Democratic debt ceiling initiatives. So December 3 may well go down in history as another black day for the US stock market. Well, if everything does not cover much earlier. In this light, we are interested in whose bubble will collapse faster and stronger - the stock market or cryptocurrencies. We would bet on the latter. Well, simply because there is at least an economy behind the stock market, albeit not capable of justifying the current insanely high prices. There is nothing behind the cryptocurrency market but human greed. In this regard, the head of JPMorgan Chase Jamie Dimon said the following: "I personally believe that bitcoin is worthless." We subscribe to every word and recommend selling cryptocurrencies, as well as shares on the US stock market.
BITSTAMP:BTCUSDShort
by Trade24Fx
1
Evergrande and Energy Crisis Purge Remnants of OptimistsLast week's Senate vote on US government debt ceilings boosted the mood in financial markets. In principle, today one more injection of positive from the House of Representatives is not ruled out (we must also vote on this). But what's next? And then you have to look around. And around now everything is not very good. Evergrande skipped the third round of bond payments yesterday. This time for $ 150 million. That is, all the hopes of investors that it will dissipate by itself are not justified by the word at all. The situation is getting worse every day, and most importantly, the infection has begun. Last week, another Chinese developer, Fantasia, defaulted on its obligations. This week, a couple more developers from China's Modern Land and Sinic will join the growing roster of default lovers. As a result, the bonds of these companies are sold at 20-30 cents per dollar. It would seem like a wonderful opportunity for optimists to earn 100-200% profitability. But no one is in a hurry to buy this garbage. On the contrary, they sell out at almost any price that is offered. The energy crisis has not gone anywhere either. In oil equivalent, gas is now traded at $ 200 + per barrel, which is absolutely outrageous (with live oil trading at $ 83). In Lebanon at the weekend, the light was turned off throughout the country for 24 hours, recalling how all this could end. For example, blackouts in China and production cuts are a blow to all tech companies in the world. Automakers that are already suspending production due to a shortage of chips will get even bigger problems. And then the harvest season in China can be greatly complicated by power outages. In general, everything is pretty gloomy. And most importantly, there is room for deterioration. Yesterday, for example, the head of the Bank of England announced that the rate, apparently, would have to be raised earlier than we would like, because of inflation. This means that the next in line will be the Fed. In general, if we abstract from today's vote in the House of Representatives, on the horizon, the US stock market has the last hope for a bright future - the reporting season. Formally, it should be one of the best in the last 10+ years. Profit growth is projected at 27% year-on-year. But will this be enough for the markets? What if they decide to look at the same figure, but quarter to quarter? What if companies are actively talking about rising costs due to rising wages, raw materials and energy prices? Or problems in global supply chains and rising logistics costs? And one should not forget about the consequences of the latest wave of the pandemic. In general, the balance of benefits / threats, in our opinion, is very strongly biased towards threats. So selling in the US stock market remains our basic trading idea.
Editors' picks
TVC:SPXShort
by Trade24Fx
94
Week in a Glance: US Without Default, Weak NFP & Energy CrisisLast week, financial markets focused on the same events: a potential US default, the energy crisis and the future of US monetary policy. It is impossible to say that at the end of the week one of these stones was removed from the soul, but the markets still received some reasons to calm down. We are talking about voting in the Senate for an increase in the ceiling of public debt by 480 billion. The US default has been canceled for now. Well, or rather, it is postponed from October 18 to December 3, because this measure is temporary. But the markets took the information as if all the world's problems had been solved. The energy crisis reached its peak (current) last week, when gas prices in Europe soared to almost $ 2,000, but then fell to almost $ 1,000 per thousand cubic meters within a few hours after Putin said that Russia was ready to increase gas supplies to Europe. The sharp decline in prices was another reason for the growth of optimism in the stock markets. But again, the joy, in our opinion, is more than premature, simply because the crisis has not yet gone anywhere. Friday data on the US labor market came out rather strange. The figures for NFP turned out to be a frank failure - again many times worse than the forecasts and figures from the ADP. On the other hand, unemployment has been steadily declining, while hourly wages have grown no less steadily, confirming that inflation is not going anywhere in the foreseeable future. Based on these data, the Fed still has room for maneuver. In the sense that you can continue to cover your inaction with weak data on NPP. At the same time, more and more central banks (last week Poland, New Zealand, Iceland) raise rates, explaining this by a sharp increase in inflationary pressure. In this light, the figures on consumer and industrial inflation in the US, which will be published this week, may be decisive for the Fed. In general, the coming week will be extremely rich in various kinds of macroeconomic statistics from the United States (inflation, retail sales), China (trade balance, retail sales), Great Britain (labor market, GDP, industrial production). In addition, the US reporting season kicks off. Traditionally, banks are the first to report. After the super-successful two previous quarters, there are questions about the third - whether it will be able to continue the established trends, how the inflation and the energy crisis will affect the financial results, as well as problems in global supply chains.
TVC:DXYLong
by Trade24Fx
Default's Canceled for Now. We're Analyzing Fresh CorrelationYesterday the markets continued to be optimistic about the future, because one of the key fears - the US default is still delayed in time. We are talking about what, in general, the Republicans announced on Wednesday - the powers of the US Treasury Department on borrowing have been extended until early December (the Senate has already voted to increase the public debt ceiling by 480 billion, now it's up to the House of Representatives). That is, the financial Armageddon, scheduled for October 18, is canceled. While canceled, not canceled in principle. So the joy of buyers in the US stock market, in our opinion, is more than premature. The growth of stock indices yesterday can also be explained by the fact that the tension on the energy assets market has somewhat eased. More precisely, it was such a feeling in the morning. But at the end of the day, the pressure resumed, so it’s early to rejoice. Oil again approached $ 82 per barrel of the Brent mark, and neither the next discounts from Saudi Arabia, nor the US threat to print out the strategic stock and sell part of it on the market helped. We cannot fail to note once again that it is now generally useless to analyze the fundamentals of the oil market. Oil is clearly in the waterway of natural gas. The level of correlation between assets for graying for a couple of months increased from -0.5 (quite a strong feedback, that is, an increase in natural gas prices was accompanied by a decrease in oil prices in 50% of cases) to 0.9 (now, in 9 cases out of 10, an increase in prices for gas is accompanied by an increase in oil prices). Speaking of correlations and interconnections, an interesting hedge link has emerged. We are talking about a sharp change in the relationship in the dynamics of prices in the US stock market and the natural gas market. A month ago, the connection was direct and quite strong - the correlation coefficient remained 0.71 (in 7 cases out of 10, the rise in gas prices was accompanied by a rise in prices on the US stock market). But now the opposite picture is observed: in 7 cases out of 10, the increase in gas prices is accompanied by a decrease in prices on the US stock market. That is, sales on the US stock market can be hedged by purchases on the natural gas market. Or, if you prefer, purchases of natural gas can be insured by sales on the US stock market.
FOREXCOM:NAS100Short
by Trade24Fx
1
The Better the Economy, the Worse the US Stock MarketAt first, yesterday was in line with basic trends. In a panic, we bought up any assets with the prefix energy. The peak of hysteria was observed in Britain, where natural gas prices grew by almost 40% during the day. But as usual with moments of hysterical growth, they stop almost instantly and for no apparent reason. As a result, oil and gas prices formed confident black candles by the end of the day. However, to take this as a signal that the worst is behind it is even more than premature. Moreover, according to Saudi Aramco estimates, the current energy crisis has already added about 500K b / d to world oil demand. Considering the problems with electricity in China and the love of the Chinese in such cases to use diesel power generators, it is far from the fact that everything will be limited to an increase in demand of 500K b / d. Meanwhile, the nerves of the Central Banks are beginning to fail. Almost simultaneously, the central banks of New Zealand, Iceland and Poland raised rates. The reason is obvious - inflation, which does not even think to stop its growth. For example, in Poland, for example, inflation reached its maximum values ​​over the past 20 years. Next in line are the ECB and the Fed. Moreover, the latter received another reason yesterday for tightening monetary policy. This refers to the publication of employment data from the ADP. They came out better than expected and in general showed a very impressive 568K. Let us remind you that the Fed constantly justified its reluctance to tighten monetary policy by the insufficiently good form of the US labor market. Well, if the NFP is not let down on Friday, then there will be nothing to hide behind. As a result, on excellent data on the labor market yesterday, the US stock market experienced another round of sales. The logic is as follows: good data is bad for the stock market, because the Fed will start tightening monetary policy earlier. In general, the better the worse. Although it is worth noting some progress in the issue of the US government debt ceiling, which at least makes it possible to postpone the US default. So the jump in optimism and the growth of stock indices at the end of yesterday's trading session can be called justified. But there are still no prospects for this growth in the current realities. So we continue to sell.
FOREXCOM:NAS100Short
by Trade24Fx
1
The Clouds Are Gathering: October and the US Stock MarketDespite a slight increase in optimism on the US stock market yesterday, there is little reason for joy. From China, the news is not that worse, but not encouraging. Evergande seems to be sold in pieces and clearly not at book value. So not all creditors and shareholders will get theirs. Meanwhile, another Chinese developer, Fantasia Holdings, failed to pay $ 206 million in bonds on Monday. So the problem of debts and non-payments is not only about Evergande. In general, the clouds over the US stock market continue to thicken. The energy crisis does not even think to be resolved. Gas prices in Europe have surpassed 1,300, oil settled above $ 82 a barrel (Brent mark), and commodity markets as a whole have reached heights not seen since 2011. Yesterday's data on manufacturing inflation in the Eurozone (13.4% y / y) reminded that the natural result of all this will be a further unwinding of the inflationary spiral. And then the reporting season begins. And it will obviously be worse than the previous one. In general, I wonder how long the markets will be able to ignore the negative current and future. We already wrote earlier that September is, purely statistically, the worst month for the US stock market in terms of price dynamics. So October is the most dangerous month - it is characterized by the maximum volatility of the year. Just in case, we note that the 2 largest crises in the US stock market began in October. We are talking about Black Monday, when in one day on October 19, 1987, the Dow lost 22.6%, as well as on October 24, 1929, which is considered the beginning of the Great Depression. Not surprisingly, in the latest poll from Allianz Life Insurance, 54% of investors surveyed said they fear a market crash in the foreseeable future and prefer to stay away from the US equity market. But you can take a more attacking position and sell on the US stock market.
TVC:SPXShort
by Trade24Fx
17
Sale in Stock Markets amid OPEC + DecisionWorld stock markets started the week on a minor note. The sell-off took place across the entire spectrum of the US stock market and spread to the rest of the world: Japan's Nikkei 225 fell more than 3%, while South Korean Kospi lost 2.16%. We have already written about the reasons for what is happening more than once last week (the energy crisis, the change in the vector of the FRS monetary policy in the foreseeable future, the potential default of the United States and Evergande). OPEC + was an additional reason for sales yesterday. The fact is that the markets were counting on the cartel and allies to heed the requests of the White House, India and other countries and increase production by an amount exceeding the planned 400K b / d. Considering the scale of the energy crisis, both actual and potential, as well as the fact that OPEC + had long ago achieved its goal of rebalancing the market, and let's not forget about prices of 80 per barrel, the hopes were justified. But they did not come true OPEC + decided to stick to the base plan (in July, the group agreed to increase production by 400,000 barrels per day per month until April 2022). After this decision by OPEC +, everyone was very depressed, because it is obvious that inflation will break records again. This means that the central banks will begin to roll back ultra-soft monetary policies. In such conditions, it will not be easy for the stock market to grow, especially given the current totally inflated prices. Since all the current factors of downward pressure on the US stock market remain in play, we see no reason to change our “sell” recommendation. Moreover, new problems may appear on the horizon: an increase in the yield of Treasury bonds, which will provoke an increase in capital outflow from the stock market, a reduction in fiscal stimulus, an increase in taxes, global debt, which has already exceeded 350% of world GDP, etc.
TVC:SPXShort
by Trade24Fx
1
Week in a Glance: Energy Crisis and Disastrous SeptemberLast week, as well as September as a whole, turned out to be very disastrous for the US stock market. As a result, September justified the title of the worst month for the US stock market over the past 70 years, losing about 5%. A great many problems have accumulated and the end is not yet in sight. No sooner had the Chinese developer Evergrande missed one bond payment than the turn of the next payment came last week. He also had to be skipped. But this is not even what the markets are concerned about right now. The energy crisis has spread from Europe to Asia and China in particular. Gas prices in Europe have already exceeded $ 1,100 per thousand cubic meters. A gasoline crisis erupted in Britain, and even had to use the army to resolve it. Well, China simply introduces rolling blackouts and stops production in a number of provinces. And although the consequences are not yet fully clear, analysts have already lowered their forecasts for China's GDP growth just in case. And the problems don't end there. The US miraculously managed to avoid the shutdown, but the specter of default looms ahead, because the US government debt ceiling was raised, and Yellen, meanwhile, called the “end of the world” date - October 18 (that's when the money will run out and the US can default). In general, in this form, we enter October and the new week. What to expect from this week? The key event is the publication of data on the US labor market. Although they are unlikely to change something radically. Today OPEC is meeting and maybe even a surprise awaits us in the form of an increase in production by an amount more than the planned 400K b / d. Plus, we continue to follow what is happening in the US Congress. For the rest, the basic strategy is selling in the US stock market and buying dollars in the foreign exchange market.
TVC:DXYShort
by Trade24Fx
Disappointing September Results for the Stock MarketStatistically, September is the worst month for the US stock market. This is the only month that the SP500 has shown negative returns on average over the past 10, 20 and 70 years. What is typical September 2021, this statistics was fully and completely confirmed. The S&P 500 ended September with a 4.8% drop (the worst month since March 2020, when the pandemic caused panic and massive sell-offs in financial markets). The Nasdaq fell 5.3% (worst month since March 2020). The Dow fell 4.3% (worst month in 2021). Tellingly, the decline was more than logical: the fundamental background is extremely unfavorable for the growth of prices in the stock market. We will list only the key factors of reduction (we have already written about them, but we will remind you). China's second largest developer, Evergrande, has failed twice in the past 2 weeks to pay off its bonds, which is a default (but the company still has a 30-day period to rectify the situation before the actual default becomes legal). The energy crisis from Europe spread to the whole world, especially the indicative situation in China, where factories are shutting down due to a lack of electricity; the debt crisis in the United States - Congress was unable to raise the ceiling of public debt, or at least extend the moratorium on it - which means that on October 18 we may face a default, but not a private company from China, albeit equal in volume to 2% of GDP, but the first economy in the world. Well, do not forget about the Fed and the change in the vector of monetary policy, which is even more deadly for the US stock market. With such a background, we enter October and the answer to what to do next is, in general, obvious. Are there any gaps in this dark realm? You can find them if you wish. For example, Congress yesterday at the last moment saved the United States from the shutdown. It didn't save but postponed the funding limitation until December 3, 2021. Plus, Biden's infrastructure plan continues to loom on the horizon, which has traditionally inspired buyers to new exploits. True, yesterday the Democrats failed to pass it, so here and now the infrastructure plan is more a minus than a plus. But sooner or later it will be adopted, so we will refer it to a promising positive. Today is unlikely to be a breakthrough day, which means that the development of current trends is most likely. And they are such that the dollar is growing, the US stock market is falling, and gas prices in Europe are renewing their historic highs every day.
TVC:SPXShort
by Trade24Fx
1
Dollar's Back: "Double Bottom" and "Smile Theory" in ActionThe dollar yesterday updated its maximum levels for the last year. In general, the breakdown of the 93.50 Dollar Index seems to be a very serious application for the start of an uptrend. The formation of the “double bottom” reversal chart pattern is officially completed and the road to growth to the area of ​​100 is open before the “evergreen”. Naturally, a foundation is needed for a sustainable trend. It is the transition of financial markets from the stage of denial of the fact that the Fed is going to tighten monetary policy to the stage of adopting it. An emerging consensus: the asset buyback program will be phased out in November, and the first rate hikes will begin by the end of 2022. And despite the fact that Powell continues to try to sit on two chairs, maneuvering between the job market and inflation, even he officially admitted this week that inflation was not as temporary as he previously argued. Another reason for the growth of the dollar is described by the "smile theory", according to which the dollar grows in good and bad times, but in the times between these states with growth it has problems. Although this theory is better described by real economic ties. In this case, it all comes down to those moments when the growth rate of the US economy is higher / lower than the global one. In general, the current conditions favor the smile of the dollar, especially considering that yesterday the Chinese developer Evergrande missed the next payment. If last week the company had to pay off its obligations for $ 80 + million and could not do it, then this week the story repeated itself with another payment in the amount of about $ 50 million. That is, the situation is not only not resolved, but continues to deteriorate with everyone from here resulting.
TVC:DXYLong
by Trade24Fx
Chaos and Anarchy in Financial MarketsYesterday, the financial markets were hot and not boring. And if in recent days this has more to do with commodity markets, or rather energy products, then yesterday it was decidedly volatile everywhere. Moreover, there was still a swing on the commodity markets: at first, the tendencies of hysterical growth in prices for natural gas, which pulled oil along with it, continued. As a result, gas prices have updated everything that could be updated and have reached quite exorbitant heights. But as often happens, the higher you go, the more painful it is to fall. As a result, growth was unexpectedly replaced by a fall, which can be attributed to both the general unsteady base for growth (panic) and profit-taking on long positions (there was something to fix). In general, there is a feeling that investors were not very comfortable yesterday in risky assets. And, indeed, the general fundamental does not in any way have an increase in demand for risky assets: China did not have time to recover from Evergrande, as it had to close production due to a lack of electricity, Yellen in Congress again frightens the US by default and even calls the day "X" - On October 18, the FRS is clearly preparing to tighten monetary policy, there is also this energy crisis. It is difficult to imagine who will buy with such a background, and even at such exorbitant prices. In general, the stock market fell yesterday after the commodity ones. And this is logical. That's where he is dear. The sell-off in the US stock market was partially facilitated by the growth in the yield of US Treasury bonds, which are either discounted under the tightening of the FRS monetary policy, or are preparing for a US default. Even the very optimistic OPEC report, in which the cartel predicted a sharp increase in demand and a bright future for the oil market in the next few years, did not help oil yesterday. However, an unexpected rise in US oil inventories (according to API data) is definitely a bearish signal for the asset.
TVC:SPXShort
by Trade24Fx
5
A New Global Crisis Is Imminent - The Energy OneIf Evergrande or a potential US default were not enough for you (by the way, yesterday the US Senate blocked a bill voted by the House of Representatives to extend the moratorium on the public debt ceiling until the end of 2022), then this week there is another reason to worry - the global energy crisis. Initially a local topic - the shortage of gas in Europe and the panic associated with this seems to be starting to become a global problem. Recall that natural gas prices in Europe have already increased by almost 500% over the past few months. And most importantly, the deficit - no matter real or contrived - cannot be filled in any way. And then there are weak winds in the North Sea, the destruction of the power cable that supplied electricity to the UK, Hurricane Ida in the United States and production problems in the Gulf of Mexico. All this creates an atmosphere of genuine hysteria and the cries of “we will all die” are heard louder and louder, and not only from “freezing” Europe, but also from other parts of the planet. In the UK, there is a natural panic at gas stations - there is no gasoline. The authorities are seriously considering the possibility of involving the army to solve the problem. High prices for gas and electricity are forcing the closure of production. At the start of this week, an unexpectedly loud cry of "Houston, we have problems" came from China. The desire of the Chinese authorities to clear the sky of smog before the Winter Olympics led to the fact that power outages began. It is already getting to a candlelight dinner, and some production has also been suspended, including factories that produce components for Apple and Tesla. Analysts immediately rushed to lower their forecasts for China's GDP growth. In particular, Nomura cut its forecasts for China's GDP growth in the third and fourth quarters to 4.7% and 3.0%, respectively, from 5.1% and 4.4% earlier, and its annual forecast to 7.7% from 8. 2%. At the same time, forecasts for energy prices, on the contrary, are increasing. Goldman Sachs raised its forecast for Brent oil by $ 10 at once and by the end of this year sees oil at $ 90 per barrel. The situation is extremely hysterical. This means that prices deviate greatly from equilibrium. This is great in terms of making money. All these coals, gases and oils, of course, will pour in sooner or later, and then everyone will tell how stupid it was to buy the same gas at 76 euros per thousand MWh. But you need to understand that 76 euros in such an atmosphere as it is now, can easily turn into 100 or 150.
FX:NGASShort
by Trade24Fx
Week in a Glance: Defaults, Central Banks and Fall of CryptoThe past week has been extremely challenging for the financial markets. From the very beginning, there were many questions, each of which could provoke a full-fledged panic wave. Will Evegrande default? Will the US raise the government debt ceiling or will we face a US default? What will the Fed say following the FOMC meeting? Evegrande, with its 2 trillion units of assets (2% of China's GDP), is the kind of company that can upset the balance and wreak havoc not only in China (the real estate and construction sector is about 20% of China's economic activity), but in the world as a whole. (financial contamination - Evegrande's investors are the world's largest investment companies such as BlackRock, UBS, HSBC). Not surprisingly, everyone watched with bated breath Thursday - the date of payment of $ 83.5 million in interest on offshore bonds. The result of Thursday was nothing - no money came to investors, and the company itself remained deadly silent and pretended to be "in the house." The end of the world on this matter has not yet come, because there is still a 30-day period to pay off the debt until what happens is considered a default. At the start of last week, the Wall Street Journal published an article by US Treasury Secretary Jannette Yellen, in which she predicted an apocalypse for the country if the public debt ceiling was not raised. At the end of the week, no one raised anything, but government agencies received a command to prepare for the shutdown, that is, the cessation of activity due to lack of funding. The leading central banks of the world (the Fed, the Bank of Japan and the Bank of England), although they left the parameters of monetary policy unchanged, made it clear (with the exception of the Bank of Japan) that tightening is not far off and the account is already underway for months. But most of all, the Bank of Turkey was surprised, which against such a background and against the background of inflation of 19.25%, the rate was taken and lowered by as much as 100 basis points. The Turkish lira did not appreciate this cunning and unorthodox economic move and went on to dig further in search of a new fragile bottom. And at the end of the fun week, China finally banned all crypto-shabash on its territory, that is, no mining, no payments, no exchange operations, no cryptocurrencies - that's enough. The cryptocurrency market fell into a depression on this issue. However, as experience shows, fans of cryptocurrency are unlikely to be ripped out of their clearing with green grass, rainbows and unicorns.
NASDAQ:NDXShort
by Trade24Fx
Erdogan Pushed Through Bank of Turkey, Bank of England with No CYesterday everyone was absorbed in waiting for the outcome of the drama with Evegrande, as well as waiting for the decision of the Bank of England. But rather unexpectedly, the main surprise came from the Bank of Turkey. Everything in order. The Bank of England, as expected, kept its key interest rate at 0.1% and its asset purchase target of £ 895 billion ($ 1.22 trillion). But the regiment of those wishing to end quantitative easing has arrived. We can say that the number of those in favor of curtailing QE has doubled. Well, that is, now two members of the MPC of the Bank of England voted for the earliest possible termination of the asset repurchase program. Considering that only 9 people vote - there is only nothing left - to persuade 3 more members to their side. At least, judging by the reaction of the pound, this is how the results of the meeting of the Bank of England were perceived in the foreign exchange market. Which is rather strange, because on the US stock market, similar results of the FOMC were interpreted by the FRS solely as the parameters did not change, which means there is nothing to fear a tightening of monetary policy. We mean that the growth of the pound is somewhat undeserved, which means that today it can be sold on the rise. What else can be sold is the Turkish lira. Erdogan got his way. Recall that the President of Turkey has a rather original view of economic laws: in his opinion, the rate cut by the Central Bank will help reduce inflation. In this regard, the heads of the heads of the Central Banks flew until the depth of this thought reached them. Yesterday the Bank of Turkey decided that it was time to cut the rate, as consumer inflation was only 19.25%. And the rate was lowered from 19% to 18%. Lyra, however, did not appreciate this maneuver and collapsed. So now all imported goods will rise in price and inflation will rise. Yesterday was X-day for the Chinese developer Evegrande. Will it pay off debts or not? China's central authorities decided no and warned local authorities about the potential fall of Evegrande. In general, they warned for a reason: given the scale of the giant, its fall, even in disciplined China, could lead to mass unrest, because there will be a lot of victims. In any case, Evegrande still has about a month to settle the situation, so the torment is not over yet.
Short
by Trade24Fx
3
Preparing for the FOMC and Keeping on to Fear EvergrandeYesterday the markets were trying to pass off wishful thinking and desperately believed in miracles. For example, that the Chinese authorities will take and rescue the hapless developer Evegrande on a beautiful white horse. These expectations can be understood because the price of the issue is extremely high: the total assets of the company are under 2 trillion yuan, which is about 2% of China's GDP. But the main thing is the potential collapse of the entire real estate market in China. Actually, according to Nomura, in the first ten days of September, home sales in the primary and secondary markets in China, as well as land sales, have already decreased by 26.6% y / y, 46.6% y / y and 38.3% y / y, respectively. And the volume of transactions with land in value terms decreased in the first ten days of September by 90.4% y / y. Given that the overwhelming majority of China's developers are terribly indebted, the refusal to refinance debt (and this is a natural reaction of creditors to the default of Evegrande) will provoke a wave of bankruptcies and a potential collapse of the Chinese real estate market, and there, through financial contamination, everything will be passed down the chain and will cover the entire financial system. ... The Fed may somewhat calm the markets today. Not in the sense that the US Central Bank will lend a helping hand to the Chinese developer, but in the sense of keeping the parameters of monetary policy unchanged. And while the need to start reducing the quantitative easing program is more than obvious, the Fed has something to justify its inaction, ranging from classic curtsies towards a pandemic, to a potential US default if the government debt ceiling is not raised, as well as weak NFP data for August. And the current situation with Evegrande is not conducive to sudden movements. The boat is on the verge of a coup. So buyers in the US stock market today can get a reason to buy from deep, but the dollar can be sold locally. But it is unlikely that all this will be too widespread, since every buyer will have the specter of default Evegrande behind them. However, on Thursday, the ghost can either dissipate like smoke, or materialize into a natural monster. Last but not least, China Evergrande will pay a coupon payment of $ 35.9 million on September 23rd.
FOREXCOM:NAS100Short
by Trade24Fx
Another Fall of Crypto, Evergrande and MetalsYesterday in the financial markets there was only talk about the upcoming default of one of the largest developers in China, Evegrande. We already wrote about this last week, but the situation has become actual, since the moment of truth will come on Thursday. Many still hope that the Chinese authorities will step in and save the company. "Too big to fail" - that's all. Indeed, the company owes not only investment funds, but also banks, suppliers and even households. So far, it is difficult to assess the scale of the potential damage from the default of the company, but it will hardly seem certain just based on the volume of the company (over 300 billion in liabilities and 1,300+ real estate objects throughout China). Over the weekend, US Treasury Secretary Jannette Yellen recalled another potential default. This time we are talking about the US state, which runs the risk of being in a situation of inability to pay its bills in October, if the government debt ceiling is not raised by legislators. So most of the risky assets were uncomfortable yesterday, while safe-haven assets such as the Japanese yen and gold were in high demand. Yesterday was very revealing in terms of debunking the myth that cryptocurrencies are the newest member of the safe-haven asset class. So, against the background of growing demand for safe-haven assets, crypt was sold on all fronts. The scale of the decline reached 10% +. Just in case, we recall that the risky assets today are just cryptocurrencies and overbought stock markets, as well as overheated commodity markets. By the way, about the commodity markets. Iron ore prices collapsed last week, losing over 20%. The overall scale of the fall over the past few months has already exceeded 50%. In general, one more bubble in the commodity markets has decreased. Bubbles deflate in platinum and palladium markets. But there, the story is tied to the problems of the automotive sector amid a shortage of semiconductors. However, there are still plenty of bubbles among commodity assets. This is primarily about natural gas, but oil is still quite expensive. But the United States is more and more actively recovering after Hurricane Ida. 75% of production on the Gulf Coast has already been restored.
BITSTAMP:BTCUSDShort
by Trade24Fx
Week in a Glance: Gas, Taxes, Inflation & Quod Witch DayThe most interesting thing happened last week in the natural gas market. Hysteria has reached its current peak, and perhaps this is all that the bubble that has inflated in prices in this market wanted to tell us. The catalysts for the jump in natural gas prices were a fire and a disconnection of a connecting cable carrying 2 gigawatts of electricity from France to the UK, which was superimposed on calm weather in the North Sea and problems with generating electricity from wind farms. As a result, in terms of oil prices, European gas prices exceeded $ 150 per barrel. The Kremlin obligingly offered a simple solution to the problem - to launch Nord Stream 2 thereby, in fact, establishing causal relationships in what is happening in the natural gas market. We are more interested not in politics, but in how the market manages this situation. And he does the job. Britain began to de-mothball coal-fired power plants (not up to environmentalists today), uranium prices soared by 60% +, LNG sellers seriously thought of reorienting flows from Asia to Europe. In general, we continue to believe that natural gas sales are bound to generate significant profits in the medium term. In the US, meanwhile, they talked about the need to raise taxes, which did not please buyers in the US stock market. And if you add here 5.3% of consumer inflation in the United States, it becomes quite uncomfortable on the eve of the FOMC meeting, the results of which will be announced this week on Wednesday. Well, witch day (Friday was the day of expiration for major derivatives in the US stock market) lived up to its name, provoking confident black weekly candles for major US stock market indices. In addition to the above-mentioned FRS decision on the parameters of monetary policy in the United States, this week we will also see a decision by the Bank of England, which faces the same dilemma: continue to ignore inflation or finally tackle it. In general, the week of the Central Banks is announced.
FX:NGASShort
by Trade24Fx
US Retail Sales and a Quad Witch DayAheadFrom the point of view of macroeconomic statistics, the main event of yesterday can be considered the publication of data on retail sales in the United States. Experts, frightened by the pandemic and its consequences, expected weak data. But instead, it turned out to be a positive surprise: with the forecast of -0.8% m / m, it actually turned out to be + 0.7%. And this is despite the fact that the automotive industry is now going through hard times due to the lack of chips and the component of retail sales associated with the auto industry (decreased by 3.6%) dramatically pulled the indicator down. In general, the auto industry around the world is frankly causing concern. In Europe, for example, the number of new vehicle registrations fell 18% in August and 24% in July. In this light, the palladium problem looks quite logical. After all, 80% + of metal demand comes from carmakers. At the same time, experts are quite pessimistic about the shortage of conductors and predict it for 2022 as well. But back to US retail. Despite the excellent data, the US stock market was under pressure. The reason is the growing concern about the results of the FOMC meeting, which will be announced next Wednesday. This concern may well intensify today. After all, today is the third Friday of the third month. The so-called "quad witch day". It is on this day that all major derivatives on the American stock market expire. At the same time, stock index futures and options, stock options and futures expire. Specifically, today will be the so-called quadruple witch day, when absolutely everything that can expire expires. Such days are characterized by sharp movements in quotations, since players randomly close positions, as a result of which the trading volumes and market volatility can increase by one and a half to two times. Since 1990, the S&P 500 has lost an average of 3.1% during such weeks, according to BMO Capital. In general, we warned you. Happy witchcraft!
FOREXCOM:NAS100Short
by Trade24Fx