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US Inflation, Gas Pumping up, IEA Report & Apple ShameThe main event of yesterday was the publication of data on consumer inflation in the United States. Markets looked at this data with frank apprehension ahead of the FOMC meeting (the decision will be announced on September 22). Formally, buyers got an excuse to breathe out with some relief, as the numbers turned out to be lower than experts' expectations: 0.3% m / m against the forecast of 0.4% m / m. But there is really nothing to be happy about: on an annualized basis, consumer inflation in the United States increased by 5.3%, which, although lower than the previous value of 5.4%, is still 2.5 (!) times higher than the Fed's target. There is no reason to hope for an imminent sharp drop in inflation without active action by the Fed: prices on commodity markets are going off scale, especially for energy assets, to which consumer prices are especially sensitive. And in a recent study by the Federal Reserve Bank of New York, consumer expectations for medium-term inflation are at their highest on record. Speaking of energy assets. Natural gas prices continued to enjoy mass hysteria and rose. This time, the calm weather in the North Sea helped, due to which the production of electricity from wind farms was sharply reduced. However, the market flywheels continue to spin - slowly but surely. The point is that the sky-high gas prices in Europe have made it a more attractive target for the sale of reduced gas. The reorientation of LNG producers from Asia to Europe may well extinguish the panic and cries of "we are all going to freeze." Following OPEC, the International Energy Agency published its monthly report on the oil market. The agency was less categorical in terms of the prospects for the oil market and noted that the loss of production in the United States due to Ida was, in general, offset by the growth of OPEC + production. And on the demand side, things are far from being as unequivocally positive as OPEC saw in their report. The Agency notes that the new wave of the pandemic has reduced oil consumption. But overall, the world's oil reserves have continued to decline and are below the 5-year average. Apple held a presentation of new products. New iPad and iPad mini, Apple Watch Series 7, iPhone 13 and iPhone 13 mini, iPhone 13 and iPhone 13 Pro Max. It would seem like a great reason for stocks to rise. But if you look at the actual innovations, you can see that the company has run out of steam. There was nothing like this in terms of new technologies for a long time (never). The most important breakthrough argument is that the battery now lasts 1.5 hours longer. It is not surprising that this disgrace this year online broadcasts were watched by 5 times (!) fewer viewers.
NASDAQ:AAPL
by Trade24Fx
1
Natural Gas Hysteria and OPEC ForecastsThe start of the week has already passed as usual for the last weeks, accompanied by cries that everyone will freeze this winter and that we urgently need to snatch at least a little more gas at any price to fill the empty storage facilities. Given such sentiments, there is nothing strange in the fact that gas prices continued to renew their multi-year highs, in general, no. Note that the cost of gas production has not changed radically and this is not the first such case in the history of gas. So, it is worth taking a closer look at the gas for sales. Maybe not right now, but the prospect is already painfully interesting. And most importantly, it is approximately clear what will happen and how. This refers to the mechanisms of market self-regulation, which will inevitably correct the current situation - the question is only in time. So the news that Morgan Stanley is forecasting a rise in gas prices to $ 10 per million British thermal units in the next 6-9 months is rather a signal that it is already possible to sell, however paradoxical it may sound. Moreover, the flywheel of the market mechanism has already spun. An old mothballed coal-fired cogeneration plant, West Burton A, has been launched in the UK. And uranium prices have risen by more than 30% in less than a month. And these are just the first bells. But God bless him with gas, after all, this is a strategic deal and not for one month. OPEC published its monthly oil market report yesterday. The cartel was quite optimistic about the outlook for demand in the oil market, raising its forecast by almost a million barrels of oil per day. OPEC now expects oil demand in 2022 to be 100.83 million barrels per day, up 4.15 million barrels from 2021. The reason for this optimism is that an increase in vaccination rates will lead to control of the pandemic, which in turn will lead to a return of economic activity and mobility to pre-pandemic levels. The main event of today, and all of this week, is perhaps the publication of data on consumer inflation in the United States. If (when) the data show a further rise in inflation, the markets may get scared and even panic, because in this case they may not like the results of the FOMC meeting next week at all. Actually, the results of last week showed that many are already fixing profits (5 days of Dow decline in a row), and the growth of new capital on the stock market has decreased by 54%.
FX:NGASShort
by Trade24Fx
1
Week in a Glance: ECB, US inflation, El Salvador and BitcoinFormally, the main event of the past week for financial markets is the announcement of the results of the ECB meeting. The Central Bank of Europe left the basic parameters of monetary policy unchanged (the rate at minus 0.5%, and purchases under the Asset Purchase Program at the level of 20 billion euros per month). But at the same time, the Pandemic Shopping Program (PEPP) was decided to be phased out until its complete cessation in March 2022. And although the central bank did not provide numerical guidelines for the rate of closure, it is still a clear signal in favor of the end of the era of ultra-soft monetary policy. This is where we attribute the weakness of the US stock market last week. Since in a week and a half the Fed should make its decision and it is far from a fact that the stock markets will be delighted with it, therefore the most impatient ones are fixing profits right now. There is still something to fix, because according to Citi, half of the longs in the SP500 will turn into a pumpkin when the index goes below 4200. Inflationary data from the US finished off the rest of the optimists in the stock market. Manufacturing inflation does not even think to decline (why should it decline if commodity markets continue to go up, and prices for transportation of goods remain prohibitively high?): 8.3% year-on-year growth is the maximum value in the entire history of observations. In general, it will be very difficult for the FOMC to say that inflation is under control and does not pose a threat. Well, how not to recall the gamble of El Salvador to recognize Bitcoin as a legal tender in the country. The cryptocurrency market felt it needed to be reminded in this regard of its basic feature: extreme volatility. To do this, he exponentially collapsed by 20% during Tuesday, showing that your $ 100 in Bitcoin is just an illusion, since it could well be $ 80. Such money of Schrödinger - it seems to be there, but it does not seem to be. The UK is going to raise taxes, which is quite unfortunate for buyers in the country's stock market, and for the British pound too. However, the US is next in line, so do not think that the drop in the US stock market last week is all that sellers are capable of. Plus, Yellen reminded last week of an unclosed gesheft in the form of a public debt ceiling, which in a few weeks could lead to a US default. The coming week promises to be extremely saturated with all sorts of macroeconomic statistics from literally everywhere: consumer inflation and retail sales in the United States, as well as Great Britain. Retail sales and manufacturing from China, and consumer inflation in the Eurozone. In general, it will not be boring, but the markets will be thinking on September 22 and everyone will look at the data through the prism of a possible FOMC decision.
NASDAQ:NDX
by Trade24Fx
Lagarde Imitates Thatcher, and Yellen Scares by DefaultThe main event of yesterday for financial markets is the announcement of the results of the ECB meeting. Let us recall that after a sharp rise in inflation in the Eurozone (to the highest values ​​in the last 10 years), many were puzzled by the question, is it time for the ECB to tighten monetary policy? The results of the ECB meeting turned out to be rather ambiguous. On the one hand, the ECB's key rate remained unchanged at minus 0.5%, and purchases under the Asset Purchase Program (APP) were unchanged at 20 billion euros per month. That is, sort of like the status quo. But there is one "but". The Pandemic Shopping Program (PEPP) has been phased out until it ends in March 2022. As part of this program, over the past two quarters, the ECB has been buying about 80 billion euros of debt every month. And although the central bank did not provide numerical guidelines for the rate of curtailment, it is still a clear signal in favor of the end of the era of monetary showers. But on the other hand, the head of the ECB Lagarde, imitating Margaret Thatcher (who at one time, in response to calls to change the course of economic policy, said: “the lady's not for turning”) said literally the following: “The lady isn't tapering”. That is, it made it clear that we are not talking about narrowing quantitative easing as such. Recall that it is the word "tapering" (literally "narrowing") that has recently been most often found in the context of central banks, especially the Fed. So everyone can interpret the results of the ECB meeting based on their own vision. On our own note, there is a natural competition on the part of the Central Banks "how to tighten monetary policy, but to do it so that no one understands that this is tightening." In this light, the ECB is definitely one of the nominees for the grand prize. And if Lagarde tried with all her might to make a good face in a bad game, then US Treasury Secretary Jannette Yellen did not even try to choose words when she turned to Congress about the need to raise the public debt ceiling. And she directly stated that the delay in making a decision at the legislative level would call into question the ability of the federal government to fulfill its obligations and, probably, cause irreparable damage to the US economy. So a default in the context of the United States may well enter the keywords of financial news in the foreseeable future. Recall that 10 years ago there was a similar situation, and then the bargaining between the legislators ended with a downgrade of the US credit rating.
Long
by Trade24Fx
1
US Job Records, Strategist Alert and Apple AnnouncementFormally, the main news event on the financial markets yesterday was the meeting of the Bank of Canada and its decision on the parameters of monetary policy. More precisely, it would be important if the Central Bank took any action to adjust monetary policy, or at least somehow aggressively commented on its future. Because in that case something similar could be expected from the FOMC meeting on September 22 (in theory). But the parameters of monetary policy in Canada were left unchanged, and no hawkish statements followed. So let's go. Not really, though. After all, today the results of the ECB meeting will be announced. After the latest inflation statistics from the Eurozone (maximum inflation values ​​over the past 10 years), many stopped assessing the probability of the ECB monetary policy vector being unchanged at 100%. Most likely, Lagarde will repeat his favorite song about the need to save the economy and not wanting to make the mistake of premature action. In this case, everyone will remain with their own people. But if the ECB seriously expresses concern about inflation and somehow aggressively speaks out about the need to fight it, then the euro can receive serious support. In the US, meanwhile, published data on the number of open vacancies. And again, it was not without a record. Almost 11 million jobs were generated by the fragile and vulnerable, according to Powell, the US labor market. What are we for? Moreover, the need to tighten monetary policy in the United States is already obvious to everyone (except, perhaps, the head of the Federal Reserve System). The other day strategists at Goldman Sachs Group Inc., Morgan Stanley and Citigroup Inc. issued a warning about the possibility of negative shocks in the US stock market. Motivation: The spread of the delta strain, a slowing global economic recovery, and the likelihood that central banks will begin phasing out stimulus programs. But this is all macroeconomics. At the micro level, Apple has announced its annual September grocery event. New iPhones are expected. Possibly new Apple Watch and AirPods models.
FOREXCOM:NAS100Short
by Trade24Fx
Why El Salvador Will Be Expensive to Build the Cryptocurrency MaThere was so much talk in the financial markets yesterday that El Salvador became the first country in the world to recognize cryptocurrency (bitcoin) as a legal tender. The hero of the occasion (bitcoin) soared above 50K on this occasion, and it would seem that he is the return of a bright future. But this is a typical attempt at wishful thinking. We will not even write that El Salvador is an imperceptible drop in the sea of ​​the world economy. Or about the enthusiasm with which the news that El Salvador bought 400 (four hundred, Karl, not 400 thousand, but just four hundred) bitcoins was accelerated. Once again: the whole country bought crypts for 20 million (not billion) dollars and this is presented as a breakthrough and a transition to a qualitatively new level of being. So, this is not the main mistake of the markets. And the fact that they project the actions of El Salvador (by the way, according to CNBC polls, 70% of the country's residents are shocked by such actions of the authorities and are frankly bewildered what kind of lawlessness is happening, and they say that they did not subscribe to this and are extremely negative about the idea of ​​recognition bitcoin legal tender) to other countries. Crypto-optimists decided that other countries of the world would follow El Salvador and now we will live, because the ice has broken, gentlemen. In this regard, we want to give just one example of how this kind of delusion ends. A few years ago, a similar thing happened in the cannabis market, after Canada legalized marijuana. Everyone decided that this was a bifurcation point and the cannabis market would literally explode. As a result, shares of companies such as Canopy Growth and Aurora Cannabis have risen in price on average 20 times in less than a year (2000% if anything). Doesn't it look like anything? So this is the end of this story (at least for today). When it became clear that this was not a bifurcation point, Aurora Cannabis shares fell from 150 to 7. That is, more than 20 times.
BITSTAMP:BTCUSDShort
by Trade24Fx
2
Stagflation Trade, Freebies Ended and Saudis DiscountsYesterday was a day off in the US and Canada, so the financial markets were pretty calm. Nevertheless, there was enough news, let's talk about the main ones. Let's start with the fact that Saudi Arabia has cut its oil prices for the first time in the last 4-5 months (for Asian suppliers). The oil market strained about this - does it smell like a new price war on the oil market? We already went through this a year and a half ago, and even people far from financial markets know about minus $ 50 per barrel. But oil is still holding on to the aftermath of Hurricane Ida. The point is that the hurricane caused quite a lot of damage to the coast of the Gulf of Mexico, as a result of which oil production in the United States decreased by 1.7 million b / d. But you need to understand that the destruction is not irreversible, which means it is nothing more than a pause before falling. What can be used to sell more expensive oil. Although it is worth noting that, in general, this recommendation contradicts the current stagflationary trade, when prices for risky assets are growing, in particular, the technological sector of the US stock market is growing (capital inflow there over the past week amounted to about 2.5 billion), but at the same time capital goes from safe-haven assets (the outflow from the US Treasury bond market over the past week, according to BofA, amounted to about 1.3 billion). Even riskier emerging markets received a $ 4.4 billion capital injection. At the same time, the bank notes that its private clients, who own assets in the amount of $ 3.2 trillion, increased their share in shares to a new record high of 65.2%, while reducing investments in bonds to a record low of 17.7%. The imbalance turns out to be just terrible and when the bubble in the US stock market bursts, there will be not just a lot of people affected, but a lot. The answer to the question "when will it burst" is still open. On the one hand, the Fed and the Government continue to inject multibillion-dollar cheap money. On the other hand, the "freebie" is clearly coming to an end (in the US this week additional payments to the unemployed are stopped, which means there may be fewer "professional" traders, because someone will have to go to work as a cleaner, someone as a waiter). Very soon, the United States may be reminded that everything has a price. The increase in budget expenditures by trillions of dollars should be accompanied at least by attempts to compensate for this by an increase in the revenue side. This means that tax increases are just around the corner: experts expect an increase in income tax, a tax on capital growth and other options for increasing the revenue side. In general, we remind you that September is the worst month for the US stock market over the past 70 years (purely statistically).
TVC:UKOILShort
by Trade24Fx
1
Week in a Glance: Failed NFP, Inflation in the Eurozone & ECBThe main event of the past week was the publication of statistics on the US labor market. In theory, it could change market expectations from the results of the FOMC meeting on September 22. In practice, he showed that in his last speech at a symposium in Jackson Hole, Powell was more right than wrong when he said that it is too early to tighten monetary policy in the United States because the economic recovery is extremely unstable. The NFP numbers turned out to be a real cold shower. 235K with a forecast of about 750K is, of course, a failure. That is, from the standpoint of pre-pandemic times, the figure is simply excellent, but now we are in reality, when millions of jobs were lost (at the moment we are talking about about 5.6 million), respectively, much larger numbers are needed to return to the old reality. The reason for this failure is the experts' underestimation of the new outbreak of the pandemic in the United States. Everything can be explained by one figure: in the hospitality and leisure sector in August, the number of jobs showed zero growth. And this is after + 415K a month earlier, created by this sector and after 2.1 million, created in the period from February to July. If you wish, of course, you can find a few spoons of honey in this ointment. For example, unemployment fell from 5.4% to 5.2%. Average hourly wages have risen sharply (up to 4.3% against the forecast of 4%), which means hello inflation. Yes, and the past NFP values ​​were revised upward (for both June and June), as a result of which the corrections added 134,000 to the original estimates. As for the reaction of financial markets to statistics on the US labor market, in the case of the dollar, it was natural - the dollar was sold. The stock market tried to grow (which is also logical in the context of US monetary policy), but it turned out so-so. In general, the continuation of these trends can be expected this week as well. Speaking about the coming week, it is worth noting that the ECB meeting may become its key event. The fact is that last week inflation data from the eurozone was frankly shocking: consumer and industrial inflation showed sharp growth rates, reaching the highest levels in the last 10+ years. Which naturally provoked questions, is it not time for the ECB to do something about all this. Thursday can provide an answer to this question.
Long
by Trade24Fx
Markets Prepare for NFP, Britain for Empty Shelves Markets have been waiting for today all week. The US labor market statistics, of course, will not provide any definitive answers. It is unlikely that it will provide answers to even intermediate ones, but it may well change the attitude of the markets regarding the foreseeable future. We are talking, of course, about the September meeting of the FOMC. It is through his prism that today's data will be viewed. Let us remind that weak data will be a signal that Powell was right and it is not the time to tighten monetary policy, because it is necessary to continue the noble mission of saving the economy. The US stock market, however paradoxical it may sound, will gladly accept weak NFP numbers. But buyers can get depressed over great data. Because in this case, the markets may revise the chances of starting the reduction of the quantitative easing program in the direction of an earlier development of events. This, in turn, may become a reason for the decline in prices on the US stock market and the strengthening of the dollar. So the trading plan for today for the dollar and the US stock market looms more or less clearly. Meanwhile, Britain continues to enjoy the fruits of Brexit. British food manufacturers and supermarkets warn that empty shelves could persist during the holiday season at the end of the year unless the government takes action to alleviate the shortage of workers and truck drivers. The Trucking Association said the Kingdom is short of roughly 100,000 truck drivers, 20,000 of whom are EU citizens who left the country after Brexit. So selling the pound continues to be one of our favorite trading ideas. In this regard, we recommend paying attention to buying the euro pound. After the inflationary data for the Eurozone, published this week, many began to look askance towards the ECB with its ultra-soft monetary policy. It's no joke, industrial inflation in the Eurozone exceeded 12% (!) YoY - even the United States does not allow itself that. As a result, the ECB meeting to be held next week on Thursday unexpectedly sparkled with new, positive colors for the euro.
Long
by Trade24Fx
3
ADP Data Alarming, September and US Stock MarketThe main statistics of yesterday were the US employment data from the ADP. Experts expected 600K +, but in fact 374K came out. On the one hand, a failure. On the other hand, it should be remembered that the main data block will still be published on Friday. And extrapolating yesterday's data to Friday is quite a thankless task, simply because the correlation between ADP and NFP is about 25%. So it is clearly too early to sprinkle ashes on your head. But you should be on your guard. However, judging by the dynamics of the US stock market, no one is going to be alarmed. But in this case, the principle "the worse the better" applies. Weak US labor market data will show that Powell was right when he said that monetary tightening in the US, because a fragile economic recovery is all about it. And if Powell was right, then on September 22, at the end of the next FOMC meeting, nothing in this world will change. So you can continue to feast. However, purely statistically, September is not the best time to buy on the US stock market, out of context, whether the Fed will tighten monetary policy or not. The point is that over the past 70 years, the worst month of the year for the US stock market is September. This is the worst month on average in the last 10 years, in the last 20 years from the last 70 years. On the face of it, there is clear stability. And the rule "sell in May and go away" also, in general, did not appear out of the blue. So, despite the continued growth in US stock indices, we continue to recommend selling US stocks. Another important event yesterday was the OPEC meeting, at which, as expected, the participating countries will confirm the current agreement, according to which production will be increased by another 400K b / d in September. In fact, it turned out that way, respectively, the oil was under the downward pressure. Which is logical and logical.
NASDAQ:NDXShort
by Trade24Fx
4
Inflation in Europe and USA, Voice of Reason from Jackson HoleYesterday's data on consumer inflation in the Eurozone showed very clearly that high inflation is not just a temporary phenomenon in a single US economy. And the problem is quite systemic. Annual inflation of 3% for Europe is the highest rate of price growth in the last 10 years. With each such publication, Powell, with his position of "temporary inflation", looks more and more ridiculous. Speaking of inflation in the United States. Yesterday was also published data on the growth rate of prices in the US real estate market and lo and behold - prices have reached their highest levels over the past 30 years (that is, in the entire history of the Case-Shiller index). So yes, inflation is clearly temporary. True, for some reason US consumers do not think so. A couple of weeks ago, researchers at the University of Michigan demonstrated that consumer sentiment in the United States is a little more than completely dull. And yesterday the data on the Conference Board Consumer Confidence Index were published. Consumer sentiment collapsed to the level of the month of February. The reasons are rising prices and a pandemic. Against the background of all this information, the speech of Don Cohn, the former Deputy Chairman of the Federal Reserve for Financial Supervision, sounded like a kind of echo of reason. So he said that the financial system has accumulated a critical mass of risks and something needs to be done about this, and urgently. He noted that the United States fully used the potential of the FRS and the Government to rescue the economy from the crisis. There is nowhere to soften monetary policy, the budget deficit is already 3.5 trillion, that is, expanding fiscal incentives is also not an option. And he asked a very logical question: if there is a crisis tomorrow, how and at what expense will you save the economy? The context of this issue lies in the plane of Powell's last speech, for whom the current version of monetary policy is the optimal strategy. In general, absolutely everything (economic data, experts, security considerations) indicates that Powell needs to change his worldview, and the time has come to adjust monetary policy in the United States.
TVC:DXYLong
by Trade24Fx
3
Ida and the US Hurricane Season, Cryptocurrencies & Natural GasHurricane Ida hit the US coast. As a result, New Orleans experienced an almost complete loss of electricity, Mississippi waters reversed, gasoline prices in the United States jumped due to the suspension of the main refineries, in general, an apocalypse as it is. The funny thing is that this +/- happens every year, because it's hurricane season (from June to November in the Atlantic it happens on an annual basis), but every time everyone did not expect this and is shocked by what is happening. However, the end of the world is once again canceled. The hurricane died down. Oil production has been restored. It was restored, by the way, in Mexico after the fire on the Pemex oil platform last week. OPEC + should also remind markets this week that from September it is worth expecting an increase in production by another 400K b / d. And the number of active oil installations in the United States has been growing for the 13th month in a row, doubling over the past year. We are all for this: selling oil at current prices is not such a gamble from the point of view of fundamental analysis. A potentially even more interesting short position is emerging in the gas market. It repeats the story of three years ago, when gas prices almost reached $ 5, and then collapsed to $ 1.5. Yes, the set of factors in favor of gas growth here and now is impressive: on the demand side - the recovery of the world economy, multiplied by the panic shortage of gas in Europe (storage facilities are half-empty and cannot be filled in any way, and winter is close), and on the supply side - hurricanes, fires at the facilities of Pemex, Gazprom. But there is no feeling that these factors are permanent - rather, on the contrary, very temporary, and whether without them gas prices will be able to stay at the top is another question. In general, in the medium term, we see a very promising deal - the sale of natural gas. Meanwhile, China continues to deflate the bubble in its stock market with regulatory methods. This time, the computer games industry was the target of the attack. China has released draft rules with new hard time limits for minors. In addition, China, through the mouth of the Central Bank of China, once again reminded the world that cryptocurrencies "are not legal tender and have no real value." Billionaire John Paulson said this in a recent interview, who said that cryptocurrencies are a bubble and used a very capacious phrase to describe it: "limited supply of nothing". For those who share this point of view, but are afraid to sell crypto directly due to increased volatility, we give a list of companies that have invested billions of dollars in crypto: Microstrategy, Tesla, Galaxy Digitalm Voyager Digital, Square, Mrathon Digital, Coinbase, Mercado Libre. The collapse of a bubble in the cryptocurrency market is guaranteed to hurt these companies, and if the stock market bubble bursts, then nothing of them may remain at all.
FX:NGASShort
by Trade24Fx
1
Week in a Glance: Jackson Hole, Powell & Monetary Policy FutureThe main event of the past week was the speech of the head of the Fed, Jerome Powell, at the symposium in Jackson Hole. Common sense, comments by FRB presidents, economic data - all strongly indicated that Powell was using the site of the symposium to announce the beginning of a change in the vector of FRS monetary policy. The funny thing is that he +/- did it. But he did it in such a way that it was rather perceived not as a change in the vector, as the very continuation of the existing order of things. And if so, then cheap money will still be and you can continue to feast. Accordingly, the stock markets continued to churn out all-time highs. But back to Powell. By and large, he repeated everything that he has been talking about for several months in a row: inflation is a temporary phenomenon, and if so, then the Fed does not need to make sudden movements - it will resolve itself. But ensuring economic recovery in the current realities is a more important priority for the Central Bank. Although at the same time Powell said that the US economy continues to move towards the goals of the Fed, which makes it possible to reduce the size of emergency programs adopted during the pandemic. But he did not name any parameters or dates. Let us remind once again that the Fed is now playing a very delicate game, within which it is extremely important not to allow the collapse of price bubbles, but to ensure their more or less smooth deflation. In this context, Powell's performance can be considered ideal. He seemed to give a signal that monetary policy would tighten, but at the same time he did not give rise to even a hint of a panic wave. Although, again, based on the reaction of the markets, the situation in fact only worsened. This week will be published data on the US labor market, which may well tip the scales in one direction or another. This refers to both the general decision to reduce the quantitative easing program and timing issues. Excellent data could provoke a decision on the reduction already at the upcoming FOMC meeting on September 22. But the weak, on the contrary, will show that Powell was right and should not count on an imminent tightening of monetary policy.
NASDAQ:NDX
by Trade24Fx
1
Will Powell Pop Bubbles Tonight, Explosions in KabulYesterday, the optimism on the financial markets somewhat diminished. There were at least two serious reasons for this. The main one is the approach of Powell's speech at the Jackson Hole symposium, which could potentially radically change the balance of power in the financial markets. Another reason for the growth of fear is the bombings in Kabul. Several Americans were killed and several were wounded. In general, Afghanistan promised to become a new point of tension, and it has become one. In the meantime, everyone is waiting for the US reaction, let's talk about Jackson Hole. The main event of today, as, indeed, of the week in general, is Powell's speech at a symposium in Jackson Hole. Based on yesterday's data on US GDP (revised upward), figures for jobless claims (repeated claims continued to decline, and primary ones are in the area of ​​lows since the start of the pandemic), there is reason to expect the announcement of the start of curtailing the quantitative easing program. This is also supported by the latest comments from FRS officials. For example, Esther George, President of the Federal Reserve Bank of Kansas City, said that it is necessary to start "narrowing" the program of buying the assets of the Fed at the next FOMC meeting on September 22. Dallas Federal Reserve President Robert Kaplan, who told CNBC that he would like to see a cut in bond purchases announced in September, expressed a similar thought. As you can see, the question is not whether it is necessary to cut the quantitative easing program. He is in the plane when it is worth doing. And many believe that this should be done in the near future. So Powell can draw the line today and say that the Fed is starting to tighten monetary policy. The most interesting, as usual, will be in the details. Reduce everything at once or in parts and gradually? When to start cutting? What about the rates? Raising them will be the next inevitable step, or will one not be connected with the other? The responses of the markets will depend on the questions to these and other questions. Most likely, Powell's aggression will be enough to announce the start of the reduction of the quantitative easing program, and gradual rather than one-time. At the same time, he will declare that we are not talking about rates at all, because they are now at an adequate level and no one is going to touch them yet. So it is likely that the bubbles will not collapse for now. But in any case, this will be the reason for the start of the correction, which is long overdue. This means that selling risky assets today is an extremely promising trading idea. Therefore, today we sell in the US stock market, as well as in the commodity and crypto currency markets.
NASDAQ:NDXShort
by Trade24Fx
1
Jackson Hole Seems to Start and the US Selling off Its OilYesterday was frankly boring in the financial markets. There was no important news, and it was scary to grow further because of the start of the symposium in Jackson Hole. As a result, everyone stayed with their own people. But this is clearly not for long. Today begins the first of three days of the Jackson Hole Symposium. There is something to talk about: from the pandemic to inflation and the future of monetary policy. What are we waiting for? At the very least, the recognition by the world's leading financiers that inflation in its current form is a problem that needs to be addressed. As a maximum, the announcement of a change in the global vector of monetary policy. But at the same time, one should not exclude the good old mantra that this is a pandemic, everything is somehow incomprehensible, and the economic recovery is unstable and fragile, and this inflation of yours is a temporary phenomenon that can and should be ignored. And if so, the current monetary policy is what the world needs in such conditions. Amen. The reaction of the markets will depend on which of the scenarios is realized. Judging by the start of this week, everyone is counting on the latter scenario. Well, the more painful it will fall if any other option is implemented. Our position is still unchanged - risky assets are surprisingly expensive and this should be used. Speaking of risky assets. The rise in oil this week is another great opportunity to make money, especially in light of the news that the US is about to have one of the largest oil sell-offs from its strategic reserves since 2014. We are talking about the sale of about 20 million barrels. Let us recall the logic of what is happening is more than obvious: a little over a year ago, the United States, like China, was actively buying cheap oil. And now they have the opportunity to sell at $ 70 what they bought at $ 30. Great deal. But for the oil market, this means a one-time surge in supply, and for the price this is not a reason for growth. So we sell oil.
TVC:UKOILShort
by Trade24Fx
China Stock Market is Back in Favor, Fed Plans, OilRisk appetite in financial markets has been consistently high this week. And although the fundamental reasons for this seem more than dubious to us, the fact remains that stock markets are growing all over the world. Even the stock market in China, which has been an outcast in the past few months, is growing. The reason for the flight of investors from the Chinese stock market was the pressure of the authorities on technology companies, ranging from threats to ban listing abroad, ending with antitrust investigations and other pressures. Our theory is that the Chinese authorities are trying to deflate the bubble in this way to avoid the collapse of the financial system if it bursts in sync with other bubbles around the world. And now it has already reduced its scale by 25 percent and the consequences will not be so catastrophic. Other countries cannot afford this - democracy, that's all. The US appears to be planning to deflate the bubble with verbal interventions to tighten monetary policy. This is, so to speak, the Fed's plan "A". But this plan, judging by the new highs of American stock indices, is failing. Last Hope for the Jackson Hole Symposium. If it does not help, then plan "B" is an actual tightening of monetary policy. This option provides for a tougher stock market landing, but what to do. There is also plan "C", when the Fed will simply raise the rate on a beautiful day without warning, for example, by 0.5%, and then everything will collapse. But the Central Bank is unlikely to take such drastic measures without making sure that plans "A" and "B" have failed. And finally, a little about oil. Its explosive growth this week is a direct continuation of the growth in demand for risky assets against the background of general groundless optimism. A fire on an oil platform in Mexico also contributed to this outrage. The scale of production losses is impressive - we are talking about 400K + b / d. But production can be restored today. And then the markets will have a reason to stop and think - are they too carried away with growth. The answer is, in general, obvious. Therefore, today we will sell oil.
TVC:UKOILShort
by Trade24Fx
1
Yellen for Powell, Business Activity Declines, 200 Days GrowthLast week we wrote that, as a rule, after a 100% rise in the US stock market, a fairly deep correction follows. Another purely statistical signal in favor of a correction was the overcoming of the 200-day growth mark without a correction of at least 5%. In the entire history of the SP500, this has happened only 8 times. Recall that the results of the virtual symposium in Jackson Hole, which will be held at the end of the week, may well become a trigger for the start of a correction, because all the necessary fundamental and technical base is already present - only a push is needed. By the way, about the fundamental base. Yesterday was published data on business activity in Europe and the United States. The data for July came out worse than the estimates of the previous month and below the forecasts. Another reminder to the markets that the peak of the economic recovery has passed and there is a rather unpleasant (in the light of pandemic figures) uncertainty ahead. But who is looking for a positive, he will find it. Markets opted to ignore the economic data and focused on news that the FDA has granted Pfizer and BioNTech full approval for their Covid-19 vaccine. In theory, the move could motivate some unvaccinated Americans to get vaccinated, as well as instill more confidence in private businesses across the country to meet vaccination requirements. China, on the other hand, reported zero transmission of COVID-19 among the country's population. And finally, the head of the US Treasury, Jannet Yellen, supported Powell's candidacy for a second term as head of the Fed. Powell at the head of the Fed is perceived by the markets as a signal that a sharp tightening of monetary policy in the foreseeable future should not be expected. And, indeed, in recent months he has been the ultimate "dove" in his assessments and comments. In general, summing up yesterday's positive, it is obvious that this was only a reason, and a formal one, for growth. Accordingly, we see no reason to change our “sell” position on risky assets, especially in the run-up to Jackson Hole.
TVC:SPXShort
by Trade24Fx
Week in a Glance: Afghanistan, FOMC Protocols, Economic SlowdownThe past week turned out to be very eventful for all sorts of events, as well as price movements in the financial markets. What is typical (or rather not typical), logic was seen from time to time in price movements and they generally corresponded to the fundamental background that was forming during the week. The week began with a double negative. On the one hand, Afghanistan and the Taliban, on the other, weak data from China (industrial production and retail sales came out much worse than the previous values ​​and turned out to be below market expectations). All of this combined made investors tense, but optimism was still the dominant emotion. The data on retail sales in the USA, as well as the minutes of the last meeting of the FOMC, were supposed to act as a calming factor. But it was here that the scythe found itself on the stone, which resulted in massive sales in the commodity markets and downward pressure on the stock markets. US shoppers cut their purchases in July even more than expected (-1.1% versus forecasts of -0.3%), as concerns over the delta Covid-19 option reduced shopper activity and government incentives have dried up. Well, the FOMC minutes showed that the Fed is finally moving from the stage of denying reality to the stage of bargaining and its gradual acceptance. Representatives of the Federal Reserve System at the July meeting discussed plans to reduce the rate of monthly bond purchases by the end of the year. That is, the start of tightening US monetary policy is just around the corner. In total, the fundamental background is more than favorable for the start of the correction in the US stock market. It has matured and purely statistically. Over the past 20 years, there has not been a single case when the index grew plus or minus by 100% without a subsequent deep correction. And the SP500 has just surpassed 100% growth since the pandemic lows. In addition, according to research by Bank of America, only 27% of fund managers expect further growth in the US stock market over the next 12 months.
FOREXCOM:NAS100Short
by Trade24Fx
Panic Attack, Correction Talks and Goldman PredictionsThere were no global events in terms of news yesterday. Jobless claims, as usual for recent weeks, continued to show a downward trend and renewed pandemic lows. The numbers that were before the pandemic have not yet been achieved, but they are not so far away. Nevertheless, financial markets were hit by a slight panic attack yesterday. The minutes of the last FOMC meeting made it very clear that the tightening of US monetary policy is only a matter of time. This means that risky assets are at risk. The VIX jumped higher, with stock and commodity markets crashing down. At some point, it began to seem like it had begun. But it was possible to stop the panic attack, including with the help of the army of optimists that formed in the financial markets in the last little over a year. So far, the idea of ​​“buying deep” remains working. But this is for the time being. Let's assume that yesterday there was a warm-up or a rehearsal, or a reconnaissance. Corrections are already in full swing in the markets. Over the past 20 years, there has not been a single case when the index grew plus or minus by 100% without a subsequent deep correction. Moreover, there are plenty of reasons to start it. It is likely that yesterday the markets decided to wait for news from Jackson Hole, and then panic fully. Speaking of fundamental reasons for selling. It is clear that the main fear of the markets, or even not fear, but a nightmare, is a change in the vector of monetary policy in the United States and in the world as a whole. Next, we have a pandemic with its consequences. After that, the slowdown in the pace of economic recovery and the rest of Afghanistan. This week, in connection with all this, Goldman analysts could not stand the nerves, who radically revised their forecast for the growth rate of US GDP in the third quarter from 9% to 5.5%. And most importantly, they are not alone in their pessimism. Bank of America also lowered its forecasts for US GDP growth in the third quarter to 4.5%. In terms of news, today is interesting primarily with data on retail sales in the UK and Canada. Weak data will be another reminder that not only the economies of China or the United States are slowing down, but this is a global problem.
SP:SPXShort
by Trade24Fx
Lumber, Price Anti-Bubbles and Inflation, and Fed ProtocolsThis year's timber chart is a graphic illustration of what happens when an asset is in a bubble. It took wood about three months to lose 75% (!) Of the price. This is a very good example of the fact that at some point, faith in the growth of an asset begins to be lacking. And if someone thinks that the stock market or the cryptocurrency market is different, they may be unpleasantly surprised. Very often, price bubbles are replaced by anti-price bubbles. That is, the price deviates from the equilibrium, but not up, but down. There is no need to look far for an example - the oil market is a little over a year ago. Prices are less than the cost price - this is abnormal and oil has clearly demonstrated how it ends. In this light, the current prices for timber seem already attractive enough at least to hedge market risks for those who have sales of risky assets, for example, in the same commodity market. And also, according to Vanguard analysts, timber as a representative of the commodity markets does a good job of hedging inflation. Over the past decade, the beta inflation rate in commodities has fluctuated between 7 and 9 (meaning that a 1% rise in inflation leads to a 7-9% rise in commodities). This is especially true in light of yesterday's inflation data from Canada and the UK. However, as an independent position, the purchase of timber has a right to exist, at least as the first round of purchases, the current prices look quite suitable. But God bless her with wood - whoever buys is well done, and who does not - he can work with hundreds of other assets. Formally, the main event of yesterday was the publication of the FOMC minutes. Considering that for the second week in a row the FRB Presidents have been literally competing with each other in the field of rhetoric regarding the reduction of the quantitative easing program, the markets were very interested in whether there was anything about this in the last minutes of the Committee. It turned out there is. The Fed is clearly moving from the "denial" stage to the "bargaining" and "acceptance" stages. For buyers in the US stock market, this is extremely negative news. But the prices are still very high, so it's not too late to join the sellers.
LLong
by Trade24Fx
1
Retail Failures as a Final WarningYesterday was rich in all sorts of macroeconomic statistics. But the main thing was still the data on retail sales in the United States. After the rather weak statistics from China, published on Monday, the markets began to worry about whether the rapid economic recovery has come to an end. In this regard, hopes were pinned on US retail sales to calm the markets. But instead of calming down, the markets received another confirmation that it is time to forget about the increased rates of economic growth. With experts forecasting a 0.3% decline in retail sales, the actual drop was 1.1%. Given the fact that the largest retailers Walmart and Hope Depot did not inspire the markets with their quarterly reports in terms of forecasts for the future, the situation in the US consumer sector does not look very good at all. But this is a generator of 2/3 of the country's GDP. The pandemic news also added some negativity. New Zealand, for example, decided to show the whole world what a real "zero tolerance" approach to a pandemic is: after a single case was identified in the country, a lockdown was introduced. Well, Japan is going to extend its lockdown until September 12th. And the number of deaths from covid in some states in the United States has already exceeded the peak in November. In addition to these data, statistics on the UK labor market was released yesterday. The data came out, if not great, then excellent: salaries are growing, the number of vacancies is growing and is at record levels, unemployment is declining. But this did not help the pound much. Which indicates the feasibility of its sales. Well, finally, funny. Billionaire Mark Cuban, who, together with Musk, is desperately promoting the DOGE meme cryptocurrency, and who said that he himself invests in this crypto currency, recently discovered that his investment in DOGE is $ 500. And this is with a fortune of $ 5.8 billion.
Short
by Trade24Fx
4
China Disappoints, Taliban Adding Fuel to FireThe start of the week was not the most optimistic for the financial markets. China has released data on industrial production and retail sales. The data came out not so completely disastrous, rather disappointing. And most importantly, they give a clear understanding that the peak of economic recovery has clearly passed and the whole question now is how much everything will slow down and how quickly. Considering that China is ahead of the rest of the world, it is possible to roughly project the development of the situation in the United States, then in Britain and the EU, where there are lags regarding the Chinese economy. In general, thoughts about the prospects in this light are very gloomy. The shots from the Kabul Airport did not add to the joy either. The Taliban have taken full control of Afghanistan. This means that another point of increased uncertainty and potential risks has appeared on the globe. All this was superimposed on the sediment after Friday data on consumer sentiment in the United States, which, according to the University of Michigan, came out as a failure and ended up at a ten-year low. In general, all hope for today. US retail sales data will be released. If they turn out to be weak (which is very likely simply due to the nature of the calculation of the indicator: the growth rates are calculated by the chain method relative to the previous month, when the indicator grew), then the markets may fall into natural despondency and then the US stock market cannot avoid sales. In addition, data on industrial production in the US, the UK labor market and GDP in the Eurozone will be published. So it won't be boring. In addition, comments are expected from Powell and some other Fed officials.
TVC:DXYLong
by Trade24Fx
2
Week in a Glance: Infrastructure Plan, US Inflation & BritainMarkets have seen a clear boost in sentiment last week. This was supported by almost daily updates of historical highs for major US stock indices. Such a positive attitude can only be explained by the news that the Senate voted in favor of the Biden infrastructure plan bill. Considering the scale of the planned costs, the growth of the stock market seems quite natural. If not for a number of "but". Let's start with the fact that it has not yet been finally adopted: we are waiting for the House of Representatives. In addition, buyers have enough reasons to worry. Inflation data from the US, released last week, showed that inflationary processes are not even going to fade. Consumer inflation in annual terms is all at its maximum levels for more than 10 years. Well, industrial inflation is breaking all records. At the same time, we recall that the labor market is in good shape judging by the NFP numbers, the number of open vacancies (more than 10 million) and statistics on jobless claims. Considering that the rate of inflation growth is several times higher than the Fed's target, it is not surprising that after such data everyone looked towards the Central Bank. A number of heads of the Federal Reserve Bank unanimously announced that it was time to move on to curtailing the quantitative easing program and even announced the date - October. And this we have not yet remembered about the pandemic, which does not even think to subside. After the Olympics, Japan received not only the maximum number of infections in the entire pandemic, but also admitted that the situation had become out of control. Meanwhile, the reporting season is coming to an end and it is not at all clear where the markets will draw positive from this week. In general, taking into account the current circumstances and current prices, selling on the US stock market seems to us the only logical trading option. At the same time, purchases of the dollar do not lose their relevance, as well as sales of oil. Last week, the IEA published a rather gloomy vision of the future oil market, according to which, at the start of 2022, the oil market risks slipping from a deficit into a surplus. With all the implications for oil prices. The coming week will not be rich in significant events, but it will be full of all sorts of macroeconomic statistics. Starting with retail sales in the US and Great Britain, ending with inflation data from the Channels and the same Britain.
FOREXCOM:NAS100Short
by Trade24Fx