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Stimulus

A capture of inflation, dilution and stimulus /2024As we see by the chart, we had a series of events mostly around mega-stimulus for Covid and a massive dilution of currency as triggering events. Inflation rose and is now back down close to the desirable 2% inflation. We don't want prices to go back to where they were, that is deflation and is not healthy for an economy. We want prices to stay near the same year after year with modest inflation. When inflation rises too fast, we increase interest rates to slow down spending, to reduce inflation. The best we can do is work on wage growth to accommodate the inflation from our past years while maintaining modest inflation. At 2.4% inflation currently, there really is pretty much nothing to fix anymore, we just need to keep it around where it is, a little lower really and work on modest wage growth. Looking at this data, it really looks like the vast majority of the culpability of that inflation we had came from 2020, one of the single worst years financially as a country with inflation starting to rise immediately in 2021, and exacerbated some in 2021. Looking at this chart, there is a tangible possibility that we see >10% inflation by 2027 Here is the M2 money supply chart:
ECONOMICS:USIRYYEducation
by EncryptShawn
Hedging Price Risk in Silver in a Pivotal Week This is a big week for financial markets, a long-anticipated election in the US is likely to have widely varying impacts across major asset classes. Safe haven assets such as silver stand to benefit from the uncertainty. There is also an FOMC meeting scheduled on 7/Nov (Thu) where the Fed is widely expected to cut rates by 25 basis points. A lower rate environment also serves as tailwind for silver. Finally, the Chinese parliament is expected to announce details of fiscal stimulus on 8/Nov (Fri). Fiscal stimulus in China also stands to benefit silver through higher investment demand as well as industrial demand. In what should fundamentally be a strong week for silver, prices have entered the week on a bearish note following a 3.4% decline last week. While fundamental outlook for Silver remains bullish, this eventful week may drive unwanted volatility. Indeed markets are expecting large moves in silver prices with silver options IV near a 1-year high. Source: CME Group CVOL Investors can strategically deploy CME silver weekly options along with a long position in silver to capitalize on the fundamental increase while remaining protected against volatility. BULLISH FUNDAMENTAL OUTLOOK FOR SILVER Mint Finance covered some of silver’s bullish fundamental drivers in a previous paper . In brief, robust growth from the photovoltaic (PV) sector is driving high demand. PV installations are surging, with global solar installations up 29% year-over-year, driven by aggressive climate policies and energy transition goals. This increase has directly boosted silver consumption, essential for PV production. At the same time, silver markets have stayed in a supply deficit for the past four years. Silver miners have struggled to keep pace with the rapidly increasing industrial demand. China’s massive stimulus package—its largest since the pandemic—also plays a crucial role, freeing up liquidity to revitalize its struggling economy. This stimulus supports sectors like PV and electronics, key industries for silver usage, while bolstering consumer confidence, which translates into heightened demand for silver in electronics and jewellery. Investment demand for silver has started to pick up pace. Since July, U.S.-listed silver ETFs have seen over $942 million in inflows, particularly after the Fed’s rate cuts, which makes non-yielding assets like silver more attractive. HIGHER SILVER JEWELLERY DEMAND IN INDIA The recent festival season in India saw high demand for silver as buyers opted for it over gold. Silver sales by volume are expected to have increased 30-35% YoY while gold sales fell by 15% according to data from the Indian Bullion & Jewellers Association. Rising investor interest in silver is partly due to its relative affordability compared to gold, which is trading at an all-time high. While high gold prices are dampening demand, especially for physical gold and jewellery, silver remains more accessible, supporting increased investment. Rising investment demand, particularly for jewellery, risks pushing silver further into deficit. While jewellery demand for silver had been modest in recent years, 2022 saw a significant increase. According to the Silver Institute, jewellery demand is projected to grow by 4% in 2024 (but below 2022 levels), with actual demand potentially exceeding this due to the strong seasonal trend. Increased demand would further tighten silver supplies, likely driving prices higher over the next year. UPCOMING FOMC MEETING AND CHINA STIMULUS TO DRIVE SENTIMENT China’s parliament has started it five-day meeting on 4/Nov (Mon) and is expected to announce the details of the fiscal support on 8/Nov (Fri). Analysts suggest the fiscal plan could reach 10 trillion yuan ($1.4 trillion), with most funds likely allocated to refinancing local government debt. A substantial fiscal stimulus plan is likely to support silver prices. Recent economic data from China has also shown a recovering industrial sector as China’s manufacturing PMI rose from 49.8 to 50.1 in Oct as the manufacturing sector shifted into expansion after 5 months of contraction. In case the trend continues, stronger industrial demand also stands to push silver prices higher. SILVER IN THE MIDST OF CORRECTION DURING UPTREND Silver continued its bullish momentum from September into October but has corrected sharply over the past week. During the rally earlier this year, when silver prices corrected, they were able to find support at the 38.2% and 61.8% Fibonacci levels. With Silver presently just above the 38.2% level, it may find support here. Silver’s performance in the past two months has closely aligned with monthly pivot points. In both September and October, prices tested these pivot levels before moving higher. However, recent tests have shown smaller deviations from the pivot compared to prior months, suggesting that volatility could push prices slightly lower during this month’s test. There is strong reason to believe that the general bullish trend is likely to continue into next year. According to a poll at the LBMA precious metal conference, delegates expect silver prices to rise to USD 45/oz over 2025, reflecting a 37% increase from present levels. Precious metal analysts were highly optimistic about silver, stating that higher industrial demand combined with continued supply deficit was likely to drive strong gains. SEASONALITY SUGGESTS POTENTIAL FOR LARGE GAINS IN NOVEMBER Silver prices closed out October with a 4.6% increase but are currently nearly flat for November. Historically, November has been a mixed month for silver, with an average price increase of 1.88% since 2000, though with high standard deviation. Notably, only 42% of Novembers have shown positive gains. Despite this variability, past performance shows periods where silver either consistently declined or consistently rallied over multiple Novembers. Over the last two years, November has seen significant growth in silver prices; if this recent trend persists, silver could experience strong gains this month. SILVER’S PERFORMANCE AROUND ELECTIONS Certain safe haven and risk assets (gold, silver, BTC) stand to benefit from a Trump presidency. Historically, elections have impacted silver prices in varying ways. Following the Trump victory, silver stands to benefit. Looking at silver’s historical performance in the two weeks following elections since 1980, prices increased by an average of 0.7% when a Republican replaced a Democrat president. The Democrat-to-Republican shift has led to price rallies in two-thirds of cases. SILVER’S PERFORMANCE AROUND FOMC MEETINGS As mentioned, lower rates have a positive impact on non-yielding investment assets such as silver while also boosting industrial demand during periods with loose monetary policy. During the Fed easing cycles in 2001, 2007, and 2019, silver reacted positively to Fed rate cuts in 68% of cases (performance measured 1 week after FOMC meeting with monetary easing) with an average of 0.9% appreciation on the CME Silver front month contract. Source: CME FedWatch CME FedWatch tool is suggesting that a 25-basis point rate cut is most likely at the upcoming meeting on 7/Nov with a probability of 98%. As the outcome is largely anticipated, the impact of the meeting on silver prices may be minimal. HYPOTHETICAL TRADE SETUP Silver remains bullish with strong fundamental drivers including the rapid growth in the PV industry and strong investment demand. This week, several major events are expected to drive significant volatility in the silver market. While these events are generally anticipated to boost silver demand, prices may remain unstable and could see short-term declines. Silver is currently trading near its support levels, but increased event-driven volatility this week could lead to significant price swings. In late October, for example, silver briefly surged nearly 4% above usual resistance levels during short bursts of volatility. Although trading volume remained concentrated near the support level, the risk of sudden, sharp moves remains. This could result in a long silver position being prematurely closed out. With a long position in silver futures at risk from near-term event risks, investors can deploy CME weekly options to hedge a long position from near-term volatility which increases tail risk. In the following hypothetical trade setup, investors can combine a long position in CME micro silver futures expiring in December (SILZ4) at an entry of 32 with a protective put using CME silver weekly options expiring on 8/Nov (Fri) (SO2X4) at a strike level of 31 (delta 20, premium of 0.087/oz or USD 435) offers a compelling trade setup while remaining hedged against near-term volatility. Using a delta-20 put option keeps the position fully delta-hedged for the week, as the delta of the long micro silver position aligns with the option’s delta at 20. Since each micro silver contract is one-fifth the size of a full contract, this setup effectively maintains the hedge. In case prices dip below 30.64 by Friday due to volatility from the election, FOMC meeting, and China parliamentary meeting, the put option would offset any losses from the futures leg. In the later part of the month, the outlook for silver is likely to be bullish given the fundamental factors highlighted above, in case prices rise, the position would become profitable above 32.44, offsetting the premium paid for the short-term option. The scenarios in which the position loses: 1) In case prices remain between 30.64 and 32.44 2) In case prices fall below 30.64 following the put option expiry on 8/Nov The scenarios in which the position profits: 1) In case prices fall below 30.64 before the put option expiry on 8/Nov 2) In case prices rise above 32.44 at any point It should be noted that it would be prudent to set a stop loss on the long futures position following options expiry at 31 to minimize losses in case of a decline after options expiry. MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme . DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
COMEX_MINI:SIL1!Long
by mintdotfinance
AUDUSD - Inflation in Australia, under control?!The AUDUSD currency pair is below the EMA200 and EMA50 in the 4H timeframe and is moving in its medium-term bearish channel. In case of an upward correction due to the release of today's economic data, we can see a supply zone and sell within that zone with a suitable risk reward. Yesterday, China urged the United States to change its stance on Taiwan’s independence, asking it to clearly state “we oppose Taiwan independence” instead of “we do not support Taiwan independence.” The United States, however, refused to make this change and continues to maintain informal relations with Taiwan, providing support and military supplies to the island. Additionally, reports indicate that China’s top legislative body is reviewing a new financial package valued at over 10 trillion yuan, likely to be announced on November 8. China plans to raise 10 trillion yuan in new debt over the coming years through special treasury and local government bonds. This financial package includes 6 trillion yuan to mitigate local government debt risks and up to 4 trillion yuan for purchasing idle lands and properties. Should Donald Trump win the U.S. presidential election, China may unveil an even stronger financial package. Moreover, China is planning to issue over $1.4 trillion in additional debt in the coming years. A poll by Ipsos shows that the popularity gap between Kamala Harris and Donald Trump among registered voters has narrowed to one percentage point, with Harris at 44% support, just one percent ahead of Trump at 43%. BlackRock CEO Larry Fink has predicted that the Federal Reserve will cut interest rates by 25 basis points at least once more in 2024. He also remarked that the decline in U.S. interest rates will be less than people expect. Australia’s inflation data largely met expectations and was insufficient to prompt any change in the Reserve Bank of Australia’s (RBA) rate decision. Annual inflation for the third quarter stood at 2.8%, slightly below the expected 2.9%. The monthly rate was 2.1%, with the total inflation at 2.8%. This annual inflation rate is the lowest since early 2021; however, core inflation remains above the RBA’s 2-3% target. The reduction in annual inflation is mainly due to government subsidies and lower gasoline prices, although service inflation remains high. The RBA will hold a meeting on November 4-5, and given these figures, no rate cut is expected during this session. The final meeting will be on December 9-10, and no rate cut is anticipated for that session either. February remains the anticipated timeframe for analysts, though if the labor market remains strong and core inflation is high, a rate cut may be delayed until April or May.
Short
by Ali_PSND
China Property Stimulus to Boost Aus200 IndexThe recent announcement of a stimulus package by the Chinese government to boost the property sector is expected to have a positive impact on the Australian stock market, particularly the Aus200 index. The stimulus package includes measures such as lower down payments for home purchases and tax breaks for developers. These measures are expected to increase demand for property in China, which will in turn benefit Australian companies that export goods and services to the Chinese market. In addition, the stimulus package is also expected to boost the Chinese economy, which is Australia's largest trading partner. A stronger Chinese economy will mean more demand for Australian goods and services, which will support corporate profits and earnings growth. As a result, the Aus200 index is expected to rise in the coming months. Of course, there are also some risks associated with the China property stimulus. If the stimulus is too successful, it could lead to an overheating of the Chinese economy and a resurgence of inflation. This would be negative for Australian companies that export to China, as it would make their goods and services less competitive. However, at this stage, it appears that the risks are outweighed by the potential rewards. Overall, the China property stimulus is a positive development for the Australian stock market. The stimulus is expected to boost demand for Australian goods and services, support corporate profits and earnings growth, and lift the Aus200 index.
OANDA:AU200AUDLong
by SabahEquityResearch
1
Irrational market is about to endXETR:DAX The macro condition is continuously deteriorating. Record braking inflation across the Euro Area, worsening supply chain issues, declining PMIs and lower consumer confidence. It's a non-stop barrage of negative news. Surprisingly enough, though, the indices have been having a great time. But the last ray of light is about to be clouded with the ECB meeting looming this week. DAX is about to experience its first significant decline after a couple of weeks of resilient pumping. As for technical analysis, we can observe a pretty clear double top forming at the ~14600 level, lowering volume and an exhaustion candle today - all pointing towards a reversal. Be wary of another low volume pump tomorrow but overall, expect a red weekly candle.
XETR:DAXShort
by hidelord
S&P500 26.5% drop incoming? I am seeing the start of a possible textbook head and shoulders pattern on the futures chart. If we have a blood bath next week it could just be the start of the pain. Especially if we end the quarter badly (March 31st). There are a lot of fundamental reasons we should be cautious in this market. Europe is seeing war on their doorstep. China is seeing massive instability in their housing market. US bonds (the blood of the financial world) are not catching bids. US banks may soon stop lending based on the yield curve, which will significantly effect the average American housing market. My long term buying target will be staged at the late 2019 early 2020 high if we break down hard from here. I will begin laddering in when we get within 5% of 2019 high. The next large drop in the market will see more stimulus. I am expecting 50-100T in stimulus is needed to keep this market even remotely stable in the next drop. This may be the final hurrah of the US stock market before a long bear market. Commodities are all breaking out which shows money is beginning to rotate. We are playing in a high volatility market. Any leverage is a huge risk and should be done with the utmost care.
CME_MINI:ES1!Short
by Nexusfurian
1
S&P vs OilToday we have a very simple idea. When to invest in S&P 500 vs Oil. The white centerline is the center of the logarithmic price distribution. The red line at the top is +2 standard deviations: unlikely events in favor of Oil will put the price here. The green line is the opposite, -2 standard deviations: unlikely events in favor of the S&P will put the price here. In general, oil has gotten cheaper over the last 125 years compared to the S&P, hence the overall downtrend. I've put some historical events in the chart to portray what might have "caused" the shift, however it's important to note that correlation is not causation, and there are MANY other factors at play here in addition to the events I've listed. There are many events that we must assume we don't know about that have took place. We simply want to observe the results. Besides, the chart doesn't have nearly enough room to post about all events which could have been related :p. Let's look at the percentage increases in the chart that took place when the price breached the green line, in order to set some future expectations: Oil vs S&P price increase based on HLC3 candles (average of high, low, close): 1917 to 1921: 760% 1929 to 1949: 480% 1969 to 1980: 1380% 1999 to 2008: 1070% 2020 to now : 420% If you look at these percentages increases, one might conclude that we might be near the top. However, we breached far below the -2 stdev line, and momentum has reversed sharply. Not only that, upward momentum in this area tends to carry us PAST the centerline (white line) historically speaking. So, expecting this to be the top is quite generous, especially if you consider that the price of oil was below 0 for the first time ever in 2020! In my opinion, it's not crazy to think we could go 3-4x from here, to 0.75 or greater, especially if you consider that OPEC has no plans to increase production, which produces some of the cheapest oil on Earth. This chart only covers events like today, where we are recovering from a -3 stdev event, and does not cover the inverse scenario of where the S&P recovers. I feel like that deserves a whole other chart as I didn't want to make it look too crowded. Thanks for taking a look and don't forget to hedge your bets!
TVC:USOILLong
by fringe_chartist
8
Bitcoin Death Cross Scenarios$BTC closed Jan 6th Daily with a bearish engulfing candle, providing indication that selling momentum remains strong. Unable to sustain long-term mid-channel as support, increasing likelihood of 100 EMA falling below the 200 EMA for an impending "death cross" in near future. Bearish structures continue, double tops, head & shoulders losing neckline support, Lindsay's 3 Peaks & Domed House. Overall, macroeconomic picture shows markets are overheated with Fed communicating multiple rate hikes are imminent. Market indicators (M2, PPI, CPI, Rev Repo, etc.) clearly reflect bumpy road ahead. Bitcoin support levels to watch - Going to $38k Potential to continue downwards for support at: 1. Best Case: $35k 2. Likely Case: $30k 3. Worst Case: $19k 4. Candle wick low for worst case is potential of $12k to $16k Invalidation scenarios: 1. Unlikely: Continued QE and "stimulus" delaying an overall major market correction 2. Possible: Market sentiment changes and BTC is considered a hedge to protect principal 3. Reversal: Bitcoin Spot ETF or other catalyst causing inflow of new money or broader institutional buy-in.
INDEX:BTCUSDShort
by R0MM3LL
Stimmy for Jimmy - NyetManchin plays Foosball again. $2 Trillion in Stimmy is a solid "Sorry, but no." _____________________________________________________________ WASHINGTON (AP) — Democratic Sen. Joe Manchin said Sunday he cannot back his party’s signature $2 trillion social and environment bill, seemingly dealing a fatal blow to President Joe Biden’s leading domestic initiative heading into an election year when Democrats’ narrow hold on Congress was already in peril. Manchin told “Fox News Sunday” that he always has made clear he had reservations about the bill and that now, after five-and-half months of discussions and negotiations, “I cannot vote to continue with this piece of legislation.” The White House had no immediate comment. Biden was spending the weekend in Wilmington, Delaware. The legislation’s apparent collapse is sure to deepen the bitter ideological divisions within the Democratic Party between progressives and moderates. That would call into question whether Democrats will be able to join together behind any substantial legislation before the November congressional elections. And it adds a note of chaos just as Democrats need to demonstrate accomplishments and show a united front before the fall campaign. ________________________________________________________________ Lumps of Coal - Yellen the Fellon won't be squeaking about Defcits unless she prefers pitchforks and Biden is now the Zombie President - 110%. The Raven and his Ilk are, as most are all Central Banks around the Globe being instructed to withdraw Liquidity at an increasing rate. __________________________________________________________________ Political unrest, Social unrest - assured by Mid - 2022
FRED:GFDEBTN
by HK_L61
1
Japanese yen higher despite weak CPIThe Japanese yen has edged higher on Friday. USD/JPY is trading at 113.93, down 0.28% on the day. Japan's CPI edged up by 0.1% y/y in October, identical to the September gain. Higher energy costs were behind the increase, which would have been higher if not for a sharp drop in mobile phone fees. These inflation figures are certainly much more subdued than what we're seeing in the US and the UK, where inflation has become a hot issue and is affecting monetary policy. Still, rising fuel prices is a major concern for consumers and businesses, and the government's new economic package is expected to provide some relief. Many businesses have been hit hard by cost pressures, due to the weak yen, supply chain disruptions and high commodity prices. This hasn't translated into high inflation, as most firms are reluctant to pass on these costs to consumers. The Japanese yen remains under pressure and is on target for the dubious honour of being the worst-performing G-10 currency in 2021. The increased likelihood of higher US rates and the surge in oil prices have contributed to the weak yen, which climbed close to the 115 level this week. The yen is extremely sensitive to the USD/JPY rate differential, and a rise in US rates could push the yen above the 120 level. With inflation soaring in the US and the UK, the Fed and BoE are under pressure to tighten policy. There are growing calls for the Fed to accelerate its tapering and the BoE may raise rates next month. It's a completely different story in Japan, where inflation remains subdued. On Friday, the government unveiled a USD 490 billion stimulus plan, the largest ever in the country's history. The government is hoping that the plan will kick-start the lethargic Japanese economy. There is resistance at 115.02 and 116.15 USD/JPY is testing support at 114.58. This is followed by support at 113.01
by OANDA
$CARV: The S in ESG & “Transitory Inflation”Environmental, social and governance (ESG) integration is Blackrock’s practice of incorporating ESG information into decisions to help enhance risk-adjusted returns and I believe this 20 level here represents something significant. Following this ESG thesis one could expect a stock to rank highly in the social category, however, it doesn’t come without some significant risks and those risks may be why we find ourselves underneath this highly liquid area. Those risks come from inflation and crypto. If these macro inflation or crypto trends continue to play out this could mean the Fed has lost control of inflation which then will lead to the $DXY index rejecting 95 in a meaningful way. These forces could be devastating for Carver’s value as their customers lose purchasing power. However, if the Fed moves on with raising rates and the dollar rises back through the aforementioned 95 level, this could lead to tremendous benefits out of Washington in the future. In short, watch the 20 level in CARV and $DXY 95 over the following weeks / months to see which way the market will decide to push this stock
NASDAQ:CARV
by Fox_Technicals
SPY overlay China's 2015 retail boom-bust - In 2015 China had a retail boom-bust 🔥 - It did not take long for retail to find out who was going to hold that bag 💰 - Covid, tech, and monetary policy in the US have conspired to create another retail frenzy ⛈ - I attempt to overlay 2015's fundamentals, technicals, and psychology to the current scenario 🏹 - Just a little observation and thought-experiment 💚 - Have fun out there! someone is going to find that top 😬
AMEX:SPY
by brutusjudas
4
Stimulus - A ray of hope for tourism industry.MHRIL is a popular hotel company operating in India. The stock reached its all time high in 2017 and is consistently in a downtrend since then. After consolidating below the significant zone the stock witnessed the great covid 19 fall. After the recently announced stimulus package the stock has shown a fresh breakout of significant zone. Buying opportunity is seen if the retest is successful and covid 19 restrictions are further eased. **DYOR**
NSE:MHRILLong
by sumeetsuryawanshi2496