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Intraday Market Thought: Darkening Macro Picture, Soaring Bank Loan Losses

by Adam Button | Apr 15, 2020 23:11
A shocking fall in the Empire Fed and some of the details of the US retail....nbsp; The US dollar was the top performer while the Australian dollar....US banks' loan loss provisions soared, with the BoA, Citigroup and....8bn of charges in Q1...These figures should imply sharp blow to the once-solid consumer sector...more below) Oil and indices futures took a fresh dip moments ago after the....Australian jobs and US initial jobless claims are due up next...There are 5 Premium trades currently open in FX, indices and crypto; 3 in the....موازنة الانتظار مع التنفيذ فيديو للمشتركين...The Empire Fed report was expected to sink...It's an indicator that's close to real-time and it surveys....Yet no one thought it would be this bad...The consensus estimate was for a fall to -35 from 21 in March...That would have been narrowly lower than the -34...3 bottom during the financial crisis...There were 43 estimates in the Bloomberg survey of economists and the worst was....Only two were below -45...The result was -78...2...It's a massive miss and it could harken a broader transition in the....With regards to those bank loan loss provisions, not only they slashed US....The blow to the US consumer is too grea, Not to mention additional loan losses....More evidence was in the March retail sales report...The headline at -8...7% compared to -8...0% expected was much closer to the consensus but it was still the worst....It's within the data where there are hints on the state of the consumer...Spending on clothing was down 50...7%, Vehicles 25...6% and electronics 15%....The economy wasn't closed until halfway through the month...As for market moves, the US dollar rebounded sharply, particularly against....AUD/USD fell more than 2% after seven days of gains...The Canadian dollar also gave back much of its recent strength...That was helped by a surprise announcement of more QE from the Bank of....In the day ahead, economic data will continue to be top-of-mind...The Australian March employment report is at 0130 GMT and forecast to show 30,....Then at 1230 GMT it's US weekly jobless claims with another 5...5m job losses expected...That report will be a good test of the market's sensitivity to data, good..
Intraday Market Thought: Oil Implodes, Currencies Next?

by Adam Button | Apr 21, 2020 23:19
The June oil futures contract for WTI closed above $11 today from a low of $7,....30...As for Brent oil, it hit an 18-year low of $17...51...Questions arise whether Brent will find the same fate as WTI, despite less....The difference from yesterday is that US indices began to feel the hit from oil,....A story that fell through the cracks was the RBNZ leader saying he was open to....The big question right now is whether central banks and governments can....US coronavirus deaths topped 45k on Tuesday, doubling in a little over a....A 6th trade for the Premium Insights subscribers was posted issued with 3....All 6 existing trades are currently in the green (please make sure to refresh....Ashraf's tweet above give an idea about not only Trump's attempts to....We have warned repeatedly for weeks here and here that supply of crude outstrips....That means excess oil is a nuisance and you can find yourself in a position....Even knowing all that, a plunge to -$40 is beyond shocking...A few cents negative would have been understandable, but this was a sign of....The drop extended further out into crude on Tuesday and June crude fell to $6...50 as the USO ETF tried to pare down holdings that exceeded 30% of open....Can central banks and governments can counteract the demand shock?....Stimulus sums right now are astronomical and on Tuesday the US Senate passed....It's the same story everywhere and no one is even offering a pretense at....On Tuesday the RBNZ said out loud two words we once thought we would never....He said he was open minded on directly monetizing debt...The reality is that there is no other way out of the fiscal holes that....But however it's done it's undoubtedly good for hard assets and....USD bulls may see less reasons for concern if oil's implosion means....And if deflation does become a problem, would it be a fear factor for gold? Is..
Intraday Market Thought: The Virus and the Economy

by Adam Button | Jul 13, 2020 12:23
Florida grabbed headlines to start the week with a 15,300 new cases; that's....But below the surface there are signs of optimism...See our note our weekly reminder on virus reporting patterns below...Silver and gold are leading against USD, while GBP and JPY lag...We also cite a recent recurring pattern in USD/CNY below...nbsp; US index futures are up after Pfizer and BioNtech got fast track....CFTC data showed more speculators buying the euro...nbsp; Below is the performance for FX and metals against the USD since the....nbsp;....US handling of the virus has undoubtedly been a failure but the trend in the....Ultimately, the US will get there and took a big step on Saturday as the....In terms of data, the Florida number also wasn't as bad as the headline...The 35% jump in cases came on a 60% increase in the number of tests...As a result, the positivity percentage fell to 11...25% from 12...6%....In Arizona, Texas and California there are early signs of a leveling off in....While hospitalizations and deaths will likely rise through month-end, there is....Pfizer also stoked some weekend optimism with the pharm company's CEO saying....After a 1% gain on Friday, S&P 500 futures started the week higher...The challenge for traders (especially those trading off indices) is to....nbsp; The Premium Insight's WhatsApp Broadcast Group capitalised on Thursday&....nbsp; ....With regards to FX, Ashraf is cautioning on the Chinese yuan's rally past....0 level (USDCNY drops below 7...0), sugesting a key inflection point in the USD's next leg down...Recall how last year the 7...00 resistance in USD/CNY proved a stubborn barrier in the face of USD bids,....nbsp;....The focus will remain on the virus Monday with a very light economic....Be advised that most states tend to report the weekly low in virus numbers....That's a factor the market should be better at pricing in but it continue to....CFTC Commitments of Traders....Speculative net futures trader positions as of the close on Tuesday...Net short denoted by - long by....EUR +104K vs +98K prior...GBP -16K vs -21K prior...JPY +17K vs +24K prior...CHF +4K vs +4K prior...CAD -17K vs -21K prior...AUD -1K vs -3K prior...NZD 0K vs 0K prior...Euro longs dropped 20K two weeks ago but had a small bounce last week...Aside from that position, the speculative market is reluctant to pile....nbsp;..
Intraday Market Thought: After the Blue Wave

by Adam Button | Oct 23, 2020 18:50
Are we getting ahead of ourselves to talk about the Blue Wave (US Democratic....We recognize the ever-present chance of a 2016-style surprise but with everyone....The charts below may suggest that markets are indeed preferring a blue....nbsp;....1) Lame duck stimulus....The market continues to get bounced around by stimulus headlines but this is....Pelosi highlighted progress on Thursday but was asked at the end of her press....Those are the two areas that have held up negotiations for months and doom....So the question after the election is whether a deal is possible in the lame....Assuming a blue wave, it appears highly unlikely unless it's something small....For the broader economy, it's going to have to wait...That's likely to trigger severe market disruptions even with a huge....Can the market look through it? Probably but it will be a tough test...2) COVID resurgence....France and Holland reported record case numbers on Thursday and the US is....US cases regained the 70K mark, while Italy, France and Luxembourg will....Another wave is here and the speed of the rise in cases – particularly....Flu season doesn't peak until February and expectations for growth....Again the question will be whether the market can look through it and based on....3) Negative rates....Central banks in a number of countries are flirting with negative rates and....The hollowing out of eurozone banks might be a coincidence but the financial....If there's some success in Australia or the UK, could the Fed have another....Other themes to watch will be: digital currency adoption, rising home prices,....Join Ashraf for his webinar on the latest lntermarket fractals applications..
Intraday Market Thought: The Scramble for Vaccine Begins

by Adam Button | Dec 8, 2020 12:38
We all agree that the key to economic acceleration in 2021 is a vaccine but....On Tuesday we learned that the US will have an inadequate supply of one of the....It may be time to start paying attention to the timeline...The vaccine is the light at the end of the virus tunnel but with the UK having....The first batch of 6...4m Pfizer doses is expected to be shipped to the US this weekend and....However the US has only ordered enough of that vaccine to protect 50 million....A report on Tuesday said the US declined to order more cases in the summer and....Other candidates may fill that timing gap but it's not certain...There appears to be some level of concern in the White House because on....It's not clear that order will have any power...The threat of commandeering doses paid for by other countries threatens to....The EU has agreed to buy up to 300 million doses of the Pfizer vaccine but....The UK has ordered 40m doses of the virus and will receive 800K on Tuesday....Some time soon the Queen will be vaccinated in what will be a powerful....Canada has an interesting strategy in that it isn't at the front of the....That's far more than needed for the 35m population but Canada will donate or....With only cursory data, it appears that the US and UK will be the early winners....The US may have fumbled on Pfizer but there are six other leading candidates....The UK is likely to be close behind...Other regions may be waiting until Q3, year-end 2021 or beyond for widespread....All of this will affect the granularities of the reopening but there....Once the elderly and vulnerable are vaccinated, will places try to get back....Again, the US has shown more of a willingness than other developed....There's a consensus call for USD weakness in 2021 but there's also a..
Intraday Market Thought: Prices will be Paid, Ratios Remembered

by Adam Button | Mar 16, 2021 0:19
The prices paid components of every manufacturing survey continue to soar as....The kiwi led the way on Monday while the euro lagged on vaccine worries...US retail sales are due up next...Here is the latest Nasdaq/10yr yield ratio compared to 2000/02...The Empire Fed survey of New York-area manufacturing was slightly better than....The sequence in the past five months is: 64...4, 57...8, 45...5, 37...1, 29...1...That's a dramatic escalation and while the Fed can promise to see through....For now, consumers are seeing the upside of higher home prices but the costs of....At times, companies can't pass those through the supply chain but with a....Monday's overall trade was relatively subdued...There was a brief flight into the US dollar after nearly all of Europe pulled....That's unfortunate but the market quickly rebounding, perhaps concluding....EU officials will have an update on Tuesday...That news will compete with the US February retail sales report...The consensus is for a 0...5% decline after the +5...3% surge in January...The 'control group' is forecast down 0...9%....Those expected falls are in large part due to terrible weather in much of the....On the other hand, if the consumer powered through the cold and snow, then....China Data Highlights Re-Opening Tailwind....The February 2020 lockdown in China has since been overshadowed by the pandemic....The Canadian dollar was the top performer last week while the yen lagged;....CFTC data showed a drop in the crowded euro long position...The year-over-year increases in Chinese February data were remarkable...Industrial output was up 35...1% y/y compared to 30...0% expected...Retail sales rose 33...8% y/y versus 32...0% expected and new construction starts were up 64...3% y/y...Of course, that all reflects the depths of the shutdown as much as the....At the same time, it underscores the pipeline of positive headlines that will....CFTC Commitments of Traders....Speculative net futures trader positions as of the close on Tuesday...Net short denoted by - long by....EUR +102K vs +126K prior...GBP +34K vs +36K prior...JPY +7K vs +19K prior...CHF +14K vs +12K prior...CAD +11K vs +15K prior...AUD +8K vs +6K prior...NZD +17K vs +16K prior...Divergent policy paths from the ECB and Fed continue to show up in the CFTC....Rate differentials have moved sharply in the US dollar's favour and all....The latter half of the year will narrow that divergence but that's a trade..
Intraday Market Thought: Unprecedented Global Macro Sequence

by Ashraf Laidi | Dec 28, 2023 14:12
Here's some big picture analysis along with unprecedented global macro....2023 is winding down to see a rise in both gold and SPX with a decline in the....Such a combination is relatively frequent as it happened 17 times since....This year would be the 18th occasion for such a set-up...2022 saw the inverse of 2023, namely a decline in both gold and SPX, with a DXY....The 2022 set up is relatively less frequent as it occurred in only 4....But over the past 55 years, markets have never witnessed the 2022-2023 sequence....e...markets never had a year of falling XAUUSD & SPX with rising USD,....It is quite strange for such a sequence to have never happened...I will tackle this in the final paragraph, but let's go through the....Let's add 10-year bond yields to the mix...So far yields are down 0...7% YTD, which means they need to close the week/year above 3...88% to end the year positive and make it 3 consecutive annual gains, something....nbsp;....What about quadrifectas? Have we ever seen a year with an increase (or a....A negative quadrifecta has never happened according to available records....A positive quadrifecta, however (rising XAUUSD, SPX, DXY and 10-yr yields)....I vividly remember the reasons behind the quadrifectas of 2005 and 2016, with....But why did USD rise in 2005 despite the ascent of gold and equities? The reason....The result was an exceptional $312 billion wall of money repatriated into....For more detail on this policy and how USD performed in 2005, see the snapshot....What about the 2016 quadrifecta of rising XAUUSD, SPX, DXY and 10-yr yields?....nbsp;....Looking ahead....One thing that's comforting for the bulls is that the SPX never (since 1962)....If this pattern persists, then 2024 will be in the green...nbsp; The last time SPX fell in one year, rose the next, followed by another....Other such combinations were in the depression-era of the 1930s...nbsp; ....Fractious & Messy Year Ahead....The greatest risk to the stock market in 2024 (bonds & metals) is the....Any credible and consistent signs of renewed inflation (not one-off bounces....But even if you think the probability of such inflation rebound is minimal,....According to seasonality studies strecthing to 1900, April and May tends....A third risk is that of persistently swelling budget deficits and the ever....This could easily ignite another "bond market event" similar to....Tackling the Unprecedented Sequence....So back to that unprecedented sequence mentioned in the 1st paragraph...It's not rare to see a rise in USD and yields with a decline in gold and....But why we never saw the total inverse of that pattern in the following year....A 3rd straight annual increase in the USD would have dealt a lethal blow to....The populartity of risk-parity portfolios hedging equities with bonds....nbsp;....Despite the fundamental promise of technology stocks (chip designers,....The case for Bitcoin remains solid (argued in detail in this post), and we....We started with HUT, MARA, RIOT, then build our way into IRENT and BITF after....This is explains the 6-1 relationship between Bitcoin Miners and Bitcoin,..
Intraday Market Thought: Euro Bounces on Rate Cut Rebuff & Berlusconi’s Pullback

by Adam Button | Jan 8, 2013 0:07
The euro continues to rebound from the failed test of 1...30...The yen was the leader Monday in a day of consolidation while the US dollar....Australian trade balance is the lone indicator in the Asia-Pacific region...Ashraf’s Premium Insights are due later this evening...Two factors sparked the euro rebound in US trading...The first was chatter that the ECB will not cut rates on Thursday and could....This was largely priced into markets already...The second was a report that Berlusconi has agreed not to run in the election...Euro gains mounted after breaking through 1...3050 and the momentum led to a nearly full cent rally to 1...3122...The late December lows in the 1...3060/70 range are now the dominant feature on the short-term chart...EURUSD held up successfully above tje 1...3030 trendline support, which was signalled by Ashraf in Thursday's....The pair is up 80 pips since...The lone data point was the Canadian Ivey PMI with a reading of 52...8 compared to 49...5 expected...The Canadian dollar ticked higher after the release and continued to gain as....The lone item on the upcoming calendar is Australian trade balance at 0030 GMT...The consensus estimate is for a 2...3B deficit for the November period...A miss is unlikely to affect the market.
Intraday Market Thought: Euro's Falling Share of Reserve Allocation

by Ashraf Laidi | Jun 30, 2015 19:34
The IMF's latest quarterly FX reserves figures show central banks'....1% of total official reserve allocation in Q1, the lowest level since 2002...The US dollar's share of disclosed currency holdings rose to 64...1%, the highest since March 2009, which is the peak of the USD's rise during....The IMF notes these figures are a reflection of “allocated”....There is no disclosure from the People's Bank of China –-the world'....The Role of Valuation....Notably, central bank allocation of foreign exchange reserves is largely....Similarly, the euro's fall accelerated in mid Q1, which occurred....nbsp;....This also explains the rise in allocation to the Aussie and Canadian&....Allocation to both GBP and JPY remain similar at about 4% of reported....Interestingly, the rise in JPY allocation occurred despite the Bank of....This phenomenon goes in line with the yen's appreciation of recent days....nbsp;..
Intraday Market Thought: Sunny Days in Australia?

by Adam Button | Jan 17, 2017 0:05
Sometimes the people who are most successful are the quiet ones who do the....The market can be the same way...The Premium Insights are considering opening a GBP trade ahead of Tuesday'....The stories in 2017 so far have been Trump, bonds, oil, jobs and US dollar....One spot where there has been almost no news or attention is the Australian....Why?....Australia has certainly been quiet...It's Summer holiday season there and that's made for a quiet calendar,....Another reason is the level of risk aversion in the market...AUD tends to do best when risk appetite is high but there is also a sweetspot of....If it were to rise any further the risk aversion would kick in and AUD would....The final reason is that the Australian dollar selling in the latter-half of....It was caught up in year-end flows and that's slowly been unwinding...The result is gains in 8 of the 10 trading days so far this year...The domestic calendar will remain quiet in the week ahead so for a sense of....With the pair closing at 0...7500 on Friday it's right up against an inflection point...Last week's high was 0...7519 and the December high was 0...7525...If those levels can break then the pair could add another 250 pips...If it holds, the it's likely a sign of higher risk aversion or a renewed....But do watch out from the deteriorating technicals in the Shanghai Composite and....Commitments of Traders....Speculative net futures trader positions as of the close on Tuesday...Net short denoted by - long by....EUR -66K vs -70K prior...JPY -80K vs -87K prior...GBP -66K vs -65K prior...CHF -14K vs -13K prior...AUD -4K vs -2K prior...CAD -8K vs -4K prior...NZD -14K vs -11K prior....The moves this week in the CFTC report were modest in what might be a sign of....Notably, the euro net short is now at the lowest since June...That signals a bit of extra ammunition for a retest of the 2016 lows.