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Investors Flee to Risk-free Assets, OECD and Labor MarketYesterday was not rich in important news. The data on jobless claims, which, although came out worse than forecasts, cannot be called failures in general. And since there is a short pause in the news background, we can talk about more global things. For example, the yield on US Treasury bonds fell sharply this week. Note that a decrease in the yield on this instrument means an increase in demand for it. And treasury is, perhaps, the quintessence of a safe-haven asset or a risk-free investment. In general, investors en masse enter risk-free assets. The recent rally in gold and the strengthening dollar, which can also act as safe haven assets, confirm this. What else does it say? Well, for example, that the time has come to sell on the US stock market. At least if the moods remain as they are. The OECD recently published a study showing that developed countries will not return to pre-pandemic employment levels until the end of next year. A couple of numbers for illustration. During the pandemic, around 114 million jobs were lost worldwide. At the moment, the number of unemployed is 8 million more than before the pandemic. In addition, at least 14 million more people are now inactive in the labor market in the OECD region. As for the US, the latest figures for the NFP, as well as JOLTS (the number of vacancies published on Tuesday), showed that the US job market is in good shape. US employers are posting a record number of job openings for the second straight month as the rapidly recovering economy generates strong demand for workers. For example, in May, there was one job open for every unemployed American, which is much more typical of an economy with much lower unemployment. In general, buying the dollar continues to appear to us as a basic trading idea for the foreign exchange market.
TVC:DXYLong
by Trade24Fx
1
FOMC Protocols, Oil Uncertainty, Chip ShortagesThe main event of yesterday was the publication of the minutes of the last Federal Reserve Open Market Committeemeeting. The markets have recently relaxed a lot and have forgotten that the US Central Bank is going to tighten monetary policy earlier than initially expected. In theory, the protocols were supposed to remind about this. But rather, they reminded the opposite. This refers to the basic mantra of the Fed: let's not rush. In general, the emphasis in the minutes was placed on the start of the discussion on the reduction of monthly bond purchases. In general, buyers in the US stock market can breathe - they are lucky once again. However, this does not negate the fact that the market is radically overbought and that there is a bubble on it. Germany, meanwhile, reported a decline in industrial production. The reason is the subsidence of the economic activity of automakers. But not because of the lack of demand for products, but because of the bottlenecks in the production process associated with a shortage of chips. But if for someone the lack of chips is a problem (automakers, manufacturers of equipment and smartphones), then for others it is even an opportunity. For example, Samsung Electronics reported a 53% year-on-year increase in operating profit in its preliminary second quarter earnings report for the quarter. So the investment strategy can be as follows: we sell everything that suffers from scarcity and buy everything that benefits from it. In the meantime, strange things continue to happen in the oil market. We have warned more than once: prices that strongly depend on investor sentiment are extremely volatile. As soon as optimism changes to pessimism and literally out of the blue there are strong drops in prices. So Brent crude oil went below 72.60 yesterday. The formal reason was the news about the UAE's plans to increase production. But it is clear that the point here is not in the UAE as such, but in the fact that OPEC + can simply fall apart and then an exciting game "every man for himself" will begin, which will inevitably provoke a sharp increase in supply on the market, since everyone will try to get the most out of situation, as well as to maintain or even increase their market share.
NASDAQ:NDXShort
by Trade24Fx
1
Johnson's Risky Rate, FOMC Protocols and OilFollowing Biden, recently officially announced the end of the pandemic in the US, Boris Johnson was quick to announce that the UK government plans to cancel almost all legislative measures introduced to combat the virus from July 19. In our opinion, he hastened: that's putting it mildly. By and large, Johnson's actions are a bet. Moreover, the rate is very risky. The fact is that in the United States, the situation with the pandemic looks, if not resolved, then controlled with an exceptionally positive trend in the development of the situation. In the UK, at the start of the week, the number of new cases exceeded 27K. And a little over a month ago, the number was about 2K. That is, an increase of more than 10 (!) times, and against this background, antiquarian measures are not intensified, but in general are completely canceled. In our opinion, this bet can play a cruel joke. So the sale of the pound continues to be relevant. In general, purchases of the dollar in general on the foreign exchange market after the recent local correction look very attractive. Yes, the markets have somehow forgotten about the Fed's updated estimates on the timing of the rate hike, but today's FOMC minutes may well remind us that monetary policy in the United States will tighten in the foreseeable future, and inflation is a real threat that cannot be ignored forever. One of the sources of inflation, oil prices, yesterday, however, somewhat eased the upward pressure on prices. In this light, we cannot but recall our yesterday's recommendation to sell oil, the relevance of which has not only not decreased, but even increased.
Short
by Trade24Fx
2
OPEC + Failure: What Can Stop Oil Price Rising Now?OPEC + yesterday failed to reach a compromise. And the situation finally hung in the air. On the one hand, the absence of an increase in production in August and beyond is a powerful bullish signal against the backdrop of a recovery in demand. So the growth of the asset looks more than logical. On the other hand, current events are the failure of OPEC +, the next step after which may be the collapse of the alliance as such. Given the strategic importance of the oil market, today we will talk about what can stop the growth of oil. In general, it should be noted that the recent consensus in the oil market is such that the positive is being worked out with a vengeance, while the negative is usually not noticed. That is, the price of oil is, in fact, held hostage by market sentiments. And this is always a factor of increased danger, because sentiments are volatile, and prices become extremely vulnerable because of this. Therefore, today we will talk about what can change the mood. We have already written about Iran, but we will remind you. The lifting of the sanctions could provoke an increase in production in the future up to 2 million bpd. And Iran has accumulated about 60 million barrels in storage facilities, which it can start actively selling. But that's not all of the supply-side threats. The sleeping giant (American slate) may finally wake up and then it will not seem enough to everyone. Current prices are more than favorable for field re-entry and production growth. As for the component of demand, there are plenty of threats here as well. China, for example, a year ago filled its storage facilities with cheap oil. And it looks more than logical on his part, instead of buying oil at the current $ 75, to pump oil from the storage facilities, bought at $ 20 - $ 30. And there is also the potential threat of renewed trade wars between the US and China, and the delta strain continues to harvest, threatening the recovery of the global economy and oil demand. It seems to us that the markets greatly underestimate all these factors; therefore, the current prices seem unfair to us, and we will continue to sell oil.
TVC:UKOILShort
by Trade24Fx
Week in a Glance: OPEC+, NFP, Pandemic & Stock Market RecordsThe Delta strain is an increasing threat to the world. At least if you look at the dynamics of daily cases of diseases in the UK, Indonesia, Russia and a number of other countries. For example, in the UK, a couple of months ago the show was less than 2K. Last week it exceeded 27K (!), that is, it grew almost 15 (!) times. And this is in a country with one of the highest vaccination rates in the world. But the markets tried not to consider it. The US stock market, for example, updated historic highs almost every day. Against the background of Friday's data on the labor market, growth quite naturally continued. The figures for NFP came out better than forecasted (+ 850K against the forecast of + 700K) and showed that the labor market is in excellent shape. At the same time, it should be noted that, purely statistically, the growth of the US stock market in recent years bears signs of an anomaly: more than 280 days without a 5% decline from the S&P 500 index highs (while the average time interval between falls of 5% or more is 178 calendar days) days). The most obvious reason for the start of a correction in the stock market is inflation in the United States. Given that the driving season in the US is approaching its peak and oil prices are still at their highs, it is hardly worth counting on a sharp improvement in the inflationary situation. And if so, then the Fed will have to at least step up verbal interventions. By the way, the minutes of the last FOMC meeting will be published on Wednesday, and it is likely that they will contribute. The main event of the past week was the OPEC + meeting. Everything went to increase oil production by 400,000 barrels per day every month from August to December. But literally a minute before the announcement of the final decision, the United Arab Emirates blocked the deal because they were not satisfied with their own production quotas, which they wanted to expand. On Friday, negotiations continued, but to no avail. Accordingly, the announcement of the decision was postponed for a week. So the oil market will be volatile this week too. Our position is still unchanged: we are selling oil in anticipation of an increase in production from OPEC + or the collapse of the association altogether.
TVC:UKOILShort
by Trade24Fx
1
OPEC Intrigue, Awaiting Data from NFP and Buying DollarThe main event of yesterday was the OPEC + meeting. Quite a lot has been written about it this week. Therefore, we will not repeat ourselves and move on to its results. More precisely, to their absence. Everything seemed to be heading towards an increase in oil production of 400,000 barrels per day every month from August to December. At least, such a consensus was reported by sources from the camp of the negotiators. But literally a minute before the announcement of the final decision, the United Arab Emirates blocked the deal because they were not satisfied with their own production quotas, which they wanted to expand. On the one hand, this news seems to be exclusively bullish for oil. Since the absence of a deal means maintaining the status quo, which today means a significant deficit in the oil market. On the other hand, recalling the spring of last year, buyers have more than serious reasons for concern. Because last year the lack of agreement between Saudi Arabia and Russia led to a price war in the oil market and prices went into negative territory. In total, OPEC + should get together today to find a compromise. So the intrigue drags on. The main event of the week for the financial markets in general, the dollar and the US stock market in particular, is the publication of monthly statistics on the US labor market. Traditionally, on the first Friday of every month, we receive a whole block of data, which includes such indicators as NPP, unemployment rate and average hourly wages. There are enough reasons to expect good data. Starting from the overall current form of US savings, ending with the confirming figures from the ADP (they came out almost 100K better than forecasted), as well as the dynamics of the number of vacancies in the United States, which, according to the latest data, reached an all-time high of 9.3 million. At the same time, the monthly growth rate was +998,000 (!). And jobless claims have been coming out quite decent lately. Yesterday, for example, the indicator for initial applications was 364K, which is the lowest level since the beginning of the pandemic.
TVC:DXYLong
by Trade24Fx
In Anticipation of OPEC, Analyzing Figures from ADPOne of the key events for the financial markets in general and without a doubt the key event for the oil market in particular is the OPEC + meeting. As usual, everything is extremely vague and the intrigue drags on to the last: first of all, there is a postponement of the meeting of the Monitoring Committee. Let us recall the background. Last spring, OPEC + artificially reduced the supply on the oil market by 9.7 million bbl / d. The goal is market balancing. And it should be noted that they achieved their goal and even overdid it: now the oil market has a deficit of about 3 million bbl / d. The fact of the deficit is also confirmed by the constantly decreasing oil reserves in the United States. In this light, and taking into account the recovery of the economies of the leading countries of the world, it is logical to expect an increase in supply from OPEC +. In fact, the markets are forecasting an increase in production in August by another 0.5 million b / d. It would seem that one can put at least three dots in this question. But in fact there is a question mark, because there is an Indian strain that introduces an element of uncertainty. Options for the development of the event: the supply increases by at least 0.5 million b / d - the signal is bearish by definition and oil is worth selling. The offer is left unchanged - the signal is exclusively bullish and a reason for further growth in oil. Among other news yesterday, it is worth noting the data on the US labor market from ADP. This statistics is traditionally published on the eve of the main data set on the US labor market on Friday, which includes the NFP. But we will talk about NFP tomorrow, and today we note that the numbers from ADP came out better than forecasted (+ 692K against the forecast of + 600K) and set us up for a positive. But buyers in the stock market are better off not being too happy, since such figures tell the Fed that everything is in order with economic development and the Central Bank can focus on the problem of inflation. And this almost automatically means a tightening of monetary policy. So we buy the dollar and sell it in the US stock market.
TVC:UKOILShort
by Trade24Fx
Confident US Consumers Amid Pandemic, SP500 RecordsYesterday's statistics on the US consumer confidence in the form of consumer confidence index showed the best sentiment over the past year. On the one hand, everything is logical: the US economy is recovering at an unprecedented rate. On the other hand, the Indian delta strain carries an increasingly tangible threat. In some places, a full-fledged panic has already begun. Almost half of Australia's population is isolated, Indonesia is introducing stricter controls as the more infectious strain spreads, Europe is trying to insulate itself from the "delta" as best it can by excluding Britain from unrestricted travel lists. Although judging by the dynamics of the US stock market (all three major Wall Street indices are showing growth for the fifth (!) quarter in a row), the states have already achieved collective immunity. But this is not so. Let's forget the markets and about the Fed. Note that today's data from ADP may give the go-ahead to the Central Bank not to pay attention to the country's economy, because everything is in order with it, but to focus on inflation, which is practically equivalent to tightening monetary policy in the foreseeable future. In general, the current growth of the US stock market looks somehow too careless. Even purely statistically, this is an anomaly: historically, the average time interval between SP500 falls by 5% or more is 178 calendar days. And now we have a 280 (!) Day of uncorrected growth. So, in our opinion, selling on the US stock market may well turn out to be a very profitable transaction. Purchases of the US dollar seem to us no less promising. Good data on the labor market will be a double plus for him: the economy is growing and monetary policy will be tightened. So for those who do not risk getting involved in short positions in the US stock market, long positions in the dollar in the foreign exchange market can be recommended.
TVC:SPXShort
by Trade24Fx
Binance Ban, Tesla Trouble, Virgin Galactic And Facebook SuccessWhile there are no changes on global fundamental fronts (markets are waiting for the Biden Infrastructure Plan and data on the US labor market, as well as the OPEC + decision), we can focus on more local news. As usual, let's start with what is unpleasant for the cryptocurrency market. The largest cryptocurrency exchange in the world received a ban from the UK Financial Conduct Authority (the country's key regulator). Binance Markets Limited "is not authorized to engage in any regulated activity in the UK." This is very unpleasant news not only for the cryptocurrency market, but also for Tesla, which invested $1.5 billion in Bitcoins and runs the risk of going into deep minuses with this investment. Moreover, Tesla's problems are not limited to this. Chinese regulators said Tesla will "recall" nearly 300,000 Chinese and imported Model 3 and Model Y vehicles for online software updates related to assisted driving. The only positive thing in this situation: the owners are not obliged to return their cars, the update will take place online. But Richard Branson had a holiday. Its Virgin Galactic shares soared 14% after the company received the green light from the FAA to carry passengers into space. Recall that Virgin Galactic's Unity spacecraft is designed to accommodate up to six passengers along with two pilots. The company has about 600 booked tickets for future flights, which are selling for between $ 200,000 and $ 250,000 apiece. Mark Zuckerberg was also happy yesterday - his Facebook entered the trillionaire club - the company's capitalization exceeded $ 1 trillion.
NASDAQ:TSLAShort
by Trade24Fx
1
Week in a Glance: Fed, Bank of England, Crypto, InfrastructureThe past week was quite busy for the financial markets. Traditionally, the highest activity in terms of volatility was observed in the cryptocurrency market. The news around the crypto was mostly negative, starting with the disappearance of two South African brothers, and with them bitcoins worth $ 3.6 billion, to the continued pressure from China on miners (authorities ordered the closure of cryptocurrency mining projects in Sichuan province). They added fuel to the fire as criticism from Nassim Taleb (he stated that the real value of any cryptocurrency is zero, and the blockchain turned out to be a useless technology), and the results of the JPMorgan survey (only 10% of institutional investment firms use cryptocurrencies, while most characterize cryptocurrencies as an asset class by the term "rat poison"). Against this background, there was nothing surprising in the fact that Bitcoin peeped below 30K and did not like what he saw. The Bank of England left the parameters of monetary policy unchanged. But the main focus of the markets was not on the Central Bank of Britain, but on the Fed. After the FOMC updated its vision for the future of monetary policy in the US a couple of weeks ago, the markets wanted to see how real the threat of monetary tightening is in the foreseeable future. The week showed that the opinion of officials was divided: a part led by Powell considers inflation to be a temporary phenomenon, but another part thinks that it is time to do something. Moreover, last week the May index of prices for basic personal consumption expenditures rose 3.4% compared to last year, which is the largest increase since 1992. Despite the fact that the problem of inflation is becoming more obvious, the US stock market last week showed calm and new all-time highs (as if there was no last FOMC meeting). Part of this was aided by President Joe Biden's announcement on Thursday that "we have a deal" on the infrastructure plan. The coming week, despite the height of summer, promises to be no less eventful. On Friday, statistics on the US labor market including NFP will be published. And on Thursday, OPEC + will decide what to do with oil production: starting in August, production growth is very likely, with all the ensuing consequences for the current extremely high oil prices.
BITSTAMP:BTCUSDShort
by Trade24Fx
Bank of England, 5 Years of Brexit, Taleb vs. CryptoThis week it's been 5 years since the historic referendum as for the UK leaving the EU. It is difficult to say whether they have achieved what the supporters of Brexit wanted, but the losses in this case are quite tangible. Politically, the UK may lose a couple of its members. We mean Scotland, whose referendum on independence is rather a matter of time but not a hypothetical possibility. Yes, and Northern Ireland under this noise can secede from the metropolis and join Ireland. In economic terms, a complete failure in exports from Brittany to the EU at the start of 2021 (a drop of about 50%) for various reasons is a reason for pessimism. But there is also the financial sector, the service sector, etc. In general, it turned out to be a sad anniversary. The Bank of England did not extend a helping hand to the British pound yesterday. There was a formal reason for at least verbal intervention in the Central Bank (inflation exceeded the target). But in fact, the parameters of monetary policy were left unchanged. As a result, the pound immediately lost about a hundred points. Rumors have spread in the oil market that the United States and Iran have agreed and that the lifting of sanctions on Iran is only a matter of time. If this is the case, then we can expect a sharp increase in supply on the market (up to 2 million bpd). In addition, during the sanctions, Iran has accumulated quite large oil reserves (up to 79 million barrels), which the country can also throw on the market. In general, it will definitely not seem a little. In this regard, we remind you of our recommendation to sell oil. Fundamental negativity continues to accumulate in the cryptocurrency market. Another scandal with cryptocurrency companies showed how vulnerable and unprotected the owners of cryptocurrencies are. The South African crypto company Africrypt, judging by the information received, has robbed its clients for $ 3.6 billion. We remember a recent similar case in Turkey. And then the publicized Nassim Taleb published a rough version of an article on bitcoin, where he went through the cryptocurrencies extremely hard. Key points: the real value of the cryptocurrency is zero, and the blockchain is, in fact, a useless technology. The author of "Black Swan" can be treated in different ways (in academic circles, not everyone will greet him), but only twitter he has about 750K subscribers, and the books are sold in millions of copies. So even if he does not compare with Musk, he has some potential as an influencer.
BITSTAMP:BTCUSDShort
by Trade24Fx
Business Growth, Bitcoin and Rat Poison, MicrosoftYesterday's data on business activity in Europe and the United States showed that the economies of these regions are doing very well. For example, the Eurozone Purchasing Managers' Indices showed that the private sector in the euro area is growing at the fastest pace in 15 years. The figure for the UK was even higher. At the same time, survey data indicate a sharp increase in production costs in the country. Which again leads us to talk about inflation. Today this topic is # 1 for Britain because the Bank of England is to announce the results of its meeting. Moreover, there is a formal reason for worries: inflation in the country has already exceeded the target of the Central Bank. But the excess is minimal, but the number of new cases of covid diseases is growing (increased 8 (!) Times over the past couple of months), so the Bank of England is unlikely to take anything or announce measures to tighten monetary policy in the foreseeable future. One of the consequences of ultra-soft monetary policy on the part of the world's leading central banks was the capitalization of Microsoft, which this week exceeded $ 2 trillion. Only Apple has more. There are now only two members of the two-trillion-dollar club: Apple and Microsoft. JPMorgan, meanwhile, has continued the tradition of beating cryptocurrencies in recent weeks. According to surveys conducted by the company, only 10% of institutional investment companies trade in cryptocurrencies, with almost half of them calling this asset class "rat poison" or considering cryptocurrencies to be a temporary phenomenon.
Short
by Trade24Fx
1
Bitcoin's Cross of Death, Powell's Testimony and Some OilTough times for the cryptocurrency market carry on. Losses are measured in tens and hundreds of billions of dollars and there is no end in sight. On the contrary, there is a feeling that this is just the beginning. This is a rather strong technical signal that emerged on the daily Bitcoin chart: the 50-day moving average crossed the 200-day moving average, forming the so-called "death cross". This is a classic sell signal from the point of view of averages analysis. Moreover, the signal has just appeared, which suggests that the downtrend is just emerging. And if someone thinks that the current minus 50% for Bitcoin is too much and the deepest bottom, look at the chart of the dogi of the coin. Cryptocurrency meme has lost about 75% over the past month and a half. Actually, after Musk's performance on SNL, it became clear that the king was naked. Without active PR on the part of Elon, it turned out that there are simply no other reasons and reasons for the growth of this cryptocurrency. Another asset that has climbed a bit high and can fall at any moment is oil. The artificially created deficit on the part of OPEC + (currently estimated at about 3 million b / d) has done its job, driving Brent into the $ 75 region. But the markets are clearly underestimating the fragility of the situation. Now about 5.7 million bpd have been artificially withdrawn from the market. Their return will radically change the market conditions (and this without the potential 2 million bbl / d from Iran in the event of the lifting of US sanctions). So, this week Russia announced that it is considering the possibility of increasing production by OPEC and its allies at the next meeting on July 1. Other OPEC + countries have confirmed the information, although no specific numbers have been announced, one delegate said. In general, you can work ahead of the curve and sell oil right now. The main event of yesterday was the speech of the head of the Fed, Jerome Paeull, in Congress. On the whole, it was very optimistic. When worried congressmen asked whether the States would get inflation like in the 1970s, the head of the Fed assured that these are completely different situations. In general, the current surge in inflation is nothing more than a temporary superposition of factors (rising prices for timber, air tickets, used cars, etc.). So it probably comes as no surprise that the US stock market rallied yesterday.
TVC:UKOILShort
by Trade24Fx
1
China and Cryptocurrencies, Election in Iran and OilMonday turned out to be a correction day for financial markets. After the intense movements of the last week, the correction is more than logical and necessary for the markets to recover. However, the correction was not everywhere. Another sale took place on the cryptocurrency market yesterday. Recently, either China or Musk has been the reason for strong movements in this market. Yesterday was China's turn. The process of banning mining in the country continues and is gaining momentum. This time, mining in Sichuan province suffered, where the authorities ordered the closure of cryptocurrency mining projects. Why is this particular region important? In addition to being one of the largest in terms of mining in China, energy is produced there using hydroelectric power plants, that is, as it were, "green" energy. And it seems that mining in this region should not be "toxic", but the Chinese authorities think differently, making it clear that mining in China is not happy in principle, and not because of its carbon footprint. But even this was not enough for China, and it decided to add negativity to the market. The central bank of China said on Monday that recently some banks and payment institutions got called into, urging them to tackle cryptocurrency trading more vigorously. In general, it will not be easy for cryptocurrencies to grow against such a background. But it was just yesterday that oil was growing on the news that the elections in Iran were won by Ebrahim Raisi, who is under US sanctions. It is difficult to expect a breakthrough in the negotiations between the US and Iran after this. Recall that it was the return to the nuclear deal and the lifting of sanctions by the United States that was the most obvious factor in the downward pressure on the oil market (this could potentially lead to the appearance of an additional 2 million b / d oil supply on the market).
BITSTAMP:BTCUSDShort
by Trade24Fx
7
Week in a Glance: Fed Hit, China, Witching DayThe past week was quite busy for the financial markets, both in terms of news and in terms of price movements. The main event that may well determine the architecture of price movements for months ahead is the announcement of the results of the meeting of the Federal Reserve Committee on Open Market Operations. Markets were expecting assurances from the Central Bank that monetary policy will remain unchanged despite the sharp rise in US inflation. The Fed not only raised its inflation forecast, but also indicated that the rate hike could occur as early as 2023 (before that, it was announced in March that the rate increase would not be observed until at least 2024). Note that in this new reality, the dollar has a good chance of medium-term gains, especially against the British pound, which has climbed exceptionally high against the dollar. In addition, the US stock market bubble could begin to collapse. This is supported by their dynamics on "witching day", which ended the past week. On the third Friday of March, June, September and December, futures and options on stock indices, options and stock futures expire simultaneously, which usually increases volatility (traders randomly close positions, as a result of which 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. Well, the past week and "witching day" were no exception: the US stock market closed the week extremely depressively. Another candidate for selling due to a price bubble, albeit not of the same magnitude as in the US stock market, is raw materials. Wood has already lost over 40%, the next in line are other raw materials. Chances of falling prices are high because China is very unhappy with current commodity prices. China has ordered state-owned enterprises to limit their presence in overseas product markets. But most importantly, the authorities also announced that they would soon dump zinc, copper and aluminum from secret national reserves on the market. After this announcement, copper prices fell by 10%.
TVC:SPXShort
by Trade24Fx
Pound Problems, Witching Day and the US Stock MarketMarkets were mainly dominated by the Fed's decision yesterday. However, this is part of an already new reality and you need to start getting used to it. Recall in this new reality, the dollar has a good chance of medium-term growth, especially against the British pound, which climbed exceptionally high against the dollar. This was largely due to both the general weakness of the dollar and the successful vaccination campaign in the UK and hopes for a quick economic recovery in this regard. But the spread of the Indian strain of the Delta virus, if it does not put an end to these hopes, then greatly reduces their scale. Johnson this week has already postponed a full withdrawal of the lockdown for a month. And the number of daily cases of covid disease in Britain continues to grow and is already approaching 10K per day. But a month ago it was less than 2K. Another problem that in the near future may baffle the British economy may be the lack of labor. Figures from Indeed job site show that searches for EU jobseekers to work in the UK in May were down 36% from the 2019 average. Low-paying jobs in hospitality, nursing, and warehouses saw the largest decline at 41%. However, the pound is not the only candidate for sale. US stock market. Today we will not write about the bubbles and the Fed needle. And not because they wrote about it many times, but because today is the so-called "witching day". On the third Friday of March, June, September and December, stock index futures and options, options and stock futures expire simultaneously, which usually increases volatility. Traders randomly close positions, as a result of which trading volumes and market volatility can increase by one and a half to two times. Tellingly, according to BMO Capital, since 1990, in such weeks, the S&P 500 has lost an average of 3.1%.
Short
by Trade24Fx
1
Fed Decision, Inflation in Britain, China and Commodity PricesThe main event of yesterday, and of the week as a whole, is the announcement of the Federal Reserve Open Market Committee two-day meeting results. Markets were expecting assurances from the Central Bank that monetary policy will remain unchanged despite a sharp rise in US inflation. The Federal Reserve raised its forecast for headline inflation to 3.4%, which is a whole percentage point higher than the March forecast and brought closer the timing of the next increase in interest rates. The Federal Open Market Committee, which sets policy, indicated that the rate hike could occur as early as 2023 (before that, it was announced in March that the rate increase would not be observed until at least 2024). The central bank has given no guidance as to when it will begin cutting back on its aggressive bond buying program. As we predicted, the US stock market collapsed and the dollar shot up. The next meeting of the key Central Bank will be held last week - the Bank of England will announce its decision on the parameters of monetary policy. Taking into account yesterday's inflation data from the UK (consumer inflation rose by 2.1%, which exceeds the target of the Bank of England), the Central Bank has a formal reason to start tightening monetary policy. But he is unlikely to use it. We have already written that China is very unhappy with the current prices for raw materials. The lion's share of the rise in prices for commodity items is accounted for by speculative activity. Not surprisingly, China continues to tighten speculative screws. This time, China has ordered state-owned enterprises to limit their presence in overseas product markets. But most importantly, the authorities also announced that they would soon dump zinc, copper and aluminum from secret national reserves on the market. After this announcement, copper prices fell by 10%. In this light, let us recall once again our recommendation to sell commodity assets.
NASDAQ:NDXShort
by Trade24Fx
Burry's Back, Inflation and the Fed, Lumber Points the WayConsidering that the overwhelming majority of leading analysts are on the payroll of certain investment companies, their position reflects not so much their own opinion as their corporate one. It means that you cannot count on objectivity. As a result, we read about oil at 200, then about bitcoin at 500K, then about the death of the dollar, etc. In such conditions, an unbiased opinion is worth a lot. That is why we are frankly pleased with Michael Burry's return to Twitter. He returned with a reminder that we are now seeing the king of all bubbles and the bubble of everything. It seems that Burry knows something about the results of today's FOMC meeting. Because the timing can be perfect. The Fed is talking about the beginning of monetary tightening and bubbles are starting to burst. And Burry, like more than 10 years ago, can get the role of the protagonist of the next book by Michael Lewis. Moreover, yesterday's data on manufacturing inflation in the United States (the maximum growth in the entire history of observations) is no longer a red rag, into a powerful red spotlight in the eyes of the Central Bank. So selling in the US stock market and buying the dollar seem like promising trading ideas to us. Moreover, Buffett's favorite indicator on a global scale (capitalization of the world stock market to global GDP) has reached 133%. Naturally, this is a record value. And if it seems to someone that there is nothing to be afraid of and that growth will continue forever, we suggest looking at the timber price chart. For another month, the raw materials seemed invulnerable and renewed new highs every day. But today it is quoted 40% (!) lower, and for some reason no one is in a hurry to buy it.
FOREXCOM:NAS100Short
by Trade24Fx
2
Musk Boosting Crypto & Markets Preparing for the FedYesterday can be called the day of cryptocurrencies. If last week cryptocurrencies ignored the fundamental positive, then at the start of the week they could not stand it and began to grow in response to the news that Musk is ready to resume transactions with cryptocurrency if miners optimize energy use (reduce it by 50%). The billionaire Tudor Jones added fuel to the fire, saying that if the Fed continues to ignore the rise in inflation, then it is necessary to buy gold, commodities, as well as cryptocurrency. Tellingly, on the eve of the FOMC meeting, the markets are betting that the Fed will ignore the unwinding of the inflationary spiral and leave the parameters of monetary policy unchanged, as well as its vector for the foreseeable future. Recall that consumer inflation in the United States in May was not only at its maximum over the past 13 years, but also 2.5 times (!) exceeded the Fed's target. Markets believe that the central bank will continue to ignore that it is failing in its core function. We are betting that the Fed will approach the matter responsibly and if it does not reduce the volume of asset purchases, then at least it will announce its intentions to do so in the near future. From a trading point of view, this means the advisability of medium-term dollar purchases, as well as sales in the US stock market. As for the increased objects of demand from investors, today it is no longer the US stock market (too overheated), but the European stock market. Europe's largest stock ETF, the Vanguard FTSE Europe ETF, has recorded record capital inflows since 2017. The motivation is generally clear: European stocks are less overvalued, and the European economy is recovering with a lag relative to the United States.
TVC:DXYLong
by Trade24Fx
5
Everything's Growing, but Professionals Prepare for the WorstWorld stock markets showed new all-time highs yesterday: the pound renewed the highest levels in the last three years, oil went above 70 - that is, everything was growing (except perhaps for cryptocurrencies - there the bubble continues to deflate). It seems to be growing, and it's great. But the problem is that there is little factual basis for this. The growth is mainly driven by expectations that the success of the vaccination campaign will provoke an unprecedented economic boom and that one should not be late for this celebration of life. And for this you should buy here and now, and practically everything indiscriminately. At the same time, the CBOE Skew Index (often referred to as the Black Swan Index because it measures tail risks - the risk that the price of an asset or portfolio of assets will change by more than three standard deviations from the current price), soared to a record high since August 2018. What does this growth say? The fact that professional investors are waiting for a collapse (not just a correction, but a collapse) and are trying to insure themselves against this case. Recall that the most likely needle that will break the bubble in the stock markets is the tightening of monetary policies by the world's leading central banks. Yesterday's data on inflation in the Eurozone (reached the highest levels in the last couple of years) added another argument in favor of the fact that the time to act has already come. In general, stratification in the modern world is increasing. Some buy in anticipation of growth, others sell in order to hedge against a fall. In some countries, it is already practically possible to walk without masks, while in others, such as Malaysia, a nationwide lockdown is being introduced at the same time. To speak about something in such conditions with unambiguity is at least too self-confident. Following the meeting, OPEC + announced its decision on future coordinated actions yesterday. The basic plan to increase oil production by 2+ mmb / d by the end of July remains in play. So, it seems a little strange to buy oil at 70+ on the background of such information. However, this is what traders in the oil market were doing yesterday. Our position remains unchanged - current prices are an opportunity for selling, not buying.
TVC:UKOILShort
by Trade24Fx
OECD Forecasts, Iran Plans & Lockdown in MalaysiaYesterday was relatively calm, due to the weekend in the United States (as usual, it was volatile except for the cryptocurrency markets). Which, however, did not mean that the news had ceased to be generated. The OECD updated its forecasts for the pace of development of the world economy. According to the Organization for Economic Co-operation and Development, the global economy will grow 5.8% this year and 4.4% next, raising its estimates from 5.6% and 4.0%, respectively, in its latest forecasts released in March. In this case, the US economy will grow by 6.9% compared to the previous forecast of 6.5%. The reason for this optimism is the deployment of a vaccination campaign around the world, as well as trillions of injections into the world's largest economy. In addition, the number of cases in India continued to decline at a very impressive rate (as of this morning, we are talking about 126K + cases after 400K + less than a month ago). Despite this, the pandemic situation in a number of countries continues to be difficult. For example, Malaysia from today for: goes into a nationwide lockdown to curb rapidly growing Covid-19 cases in the country. Today is interesting, first of all, with the announcement of the results of the OPEC + meeting. It is expected that the cartel and co will leave plans to increase production unchanged and by the end of July the market will have an additional couple of million barrels of oil per day relative to March. Judging by the dynamics of oil today, this does not bother buyers much. As well as the fact that the Iranian oil minister announced the country's plans to increase oil production to 6.5 million b / d from the current 2.5 million b / d. Our position is unchanged - oil has climbed too high and at current prices it can and should be sold.
TVC:UKOILShort
by Trade24Fx
1
Week in a Glance: Inflation, Taxes, Commodity Markets, & CryptoThe past week was not rich in high-profile events, but you cannot call it completely calm, especially for the cryptocurrency market. The week for crypto traders began with rather pessimistic news about the mining ban in China, as well as details of the sanctions for breaking the ban (I mean information from Inner Mongolia, which is going to deprive companies found to be mining licenses, as well as state preferences). As a result, several large mining pools rushed to suspend activity in China. But China is no less than 65-70% of all world mining. To this percentage can be added another 4.5% of Iran, which banned mining in the country for 4 months. Despite such an obvious negative, it was possible to find a conditional positive. For example, the creation of the Bitcoin Mining Council, which should solve the problem of increased energy consumption when mining bitcoin (although what is there to decide - they would switch to the proof of stake protocol instead of proof of work, and the problem would be solved by itself). But the problems of the cryptocurrency market are actually more about conversations than about business on a global scale. Much more important from the point of view of financial markets, things are happening around inflation in the world and the United States, as well as the possible actions of the central banks in this regard. So last week gave another cause for concern among buyers in the US stock market: the key inflation indicator (PCE) rose by 3.1 percent in April compared to last year (the largest increase in the personal consumption expenditure index in 12 months since July 1992). And this despite the fact that a number of FRS officials last week directly stated that it is time to begin to reduce the volume of the quantitative easing program in the United States. However, the markets so far ignore all this, justifying the high inflation figures by a temporary statistical anomaly, as well as by a sharp jump in prices in commodity markets, but the latter have already begun a correction, which means that prices will inevitably fall. By the way, let's consider the commodity markets. According to Bloomberg, 60-70% of recent price increases in commodity markets are associated not so much with changes in physical supply and demand as with speculative activity. China on this issue last week asked the country's banks to stop selling investment products tied to commodity futures to retail investors, as well as to close all client positions in such instruments. In this regard, recall our recommendation to either sell on overbought commodity markets directly or sell commodity currencies such as the Australian and Canadian dollars. The coming week is interesting, first of all, with the data on the US labor market, the quintessence of which will be the figures for the NPP. In addition, it will be very interesting to observe the outcome of the OPEC meeting.
Short
by Trade24Fx
2
US Data and Republican Infrastructure PlanQuite a lot of data on the US economy was published yesterday. It cannot be said that they were breakthrough. According to the results of the first quarter, the GDP was not revised (the same 6.4% annual growth). The data on orders for durable goods somewhat spoiled the mood (-1.3% against the forecast of 0.7%), but the impression was smoothed by the figures on jobless claims. Initial applications for unemployment benefits came out at the lowest values ​​since the start of the pandemic, practically leaving 400K. Republicans, meanwhile, presented their version of the infrastructure plan. We will remind, earlier Biden proposed a plan in the amount of 2.4 trillion. But the amount was too obviously overpriced and impassable among Republicans. So last week, Biden cut it by a good $ 700 million to $ 1.7 trillion. And while this is a clear step in the direction of the Republicans, the parties are still far from each other. The fact is that the proposal of the Republicans is less than 1 trillion. That is, the gap is another 700 million. Apparently, the parties will converge in the region of 1.3-1.4 trillion. Unless, of course, they quarrel in the process, because the Republicans are categorically against the increase in corporate income tax. Finally, a few words about the cryptocurrency market. We continue our week of skepticism. Note that our dislike for cryptocurrencies is explained not only by the meaninglessness of prices, but also by the dubious meaning of the basic concept of cryptocurrencies and blockchain in the real world. On this point, here's a quote from Brian Moynihan of Bank of America: "We still haven't found applications at scale." Let us explain. Bank of America holds over 60 patents related to blockchain, the distributed ledger technology that underlies cryptocurrencies, but it just doesn't know what to do with it or why. That is, patents were made just in case, but there is no practical sense in them.
BITSTAMP:BTCUSDShort
by Trade24Fx
2