Intraday Market Thoughts

The Technology Currency

Oct 26, 2021 18:54 | by Adam Button

We often talk about commodity currencies and low-yielding currencies but the technology currency is rarely touted. In mid US session, AUD and CHF are the only gaining currencies vs USD, while JPY and EUR are the weakest. US new home sales shot up 14% in Sep, while DAX and Nasdaq lead indices. The 2nd Premium DAX long hit its final target for a total of +500 pts from the earlier trade

The Technology Currency - Tweet Real Yields (Chart 1)

The handful of megacap technology equities are in a class of their own. The 12% rise in Tesla on Monday was one of the single largest market cap gains in any stock, ever. It's now larger than all other car companies combined. Apple, Facebook, Microsoft, Google and Amazon are in a similar class.

What they all have in common is that they're American and act like magnets for capital, particularly when they began to run. We've talked about it before but an underrated factor driving US dollar gains is financial flows into equities and derivatives. The stock market casino operates primarily in US dollars.

The Nasdaq is now less than 2% away from breaking the August record highs and we're nearing the positive Nov-Dec seasonal period. It's tough for the dollar to make gains against commodity currencies and EM in a growth-positive environment but it can continues to make gains against the euro and yen.

The rally in tech also points to the steadily improving mood. That's something that both reflects and will feedback into the real economy. Look for improving US consumer confidence on Tuesday.

ندوة أوربكس مساء اليوم مع أشرف العايدي

Oct 26, 2021 15:55 | by Ashraf Laidi

أهم الحقائق المتعلقة بتقليص مشتريات السندات -- ندوة الكترونيّة مجانيّة سيقدمها لنا أشرف العايدي 
غدآ الثلاثاء يوم 26 أكتوبر، الساعة 9 مساءً بتوقيت مكة المكرمة. سجلوا حضوركم الآن ولا تفوّتوا فرصة التعلّم من الخبراء  

ندوة أوربكس مساء الثلاثاء مع أشرف العايدي

Oct 25, 2021 16:15 | by Ashraf Laidi

أهم الحقائق المتعلقة بتقليص مشتريات السندات -- ندوة الكترونيّة مجانيّة سيقدمها لنا أشرف العايدي 
غدآ الثلاثاء يوم 26 أكتوبر، الساعة 9 مساءً بتوقيت مكة المكرمة. سجلوا حضوركم الآن ولا تفوّتوا فرصة التعلّم من الخبراء

China Covid Outbreak, & Bitcoin Correlated Stock

Oct 25, 2021 12:51 | by Adam Button

Chinese health officials delivered some bad news on the weekend, nothing that more than 100 covid cases have been confirmed in the past week across 11 provinces. The market took the news in stride early, but it's worth watching if cases begin to spread. On Friday, Powell reaffirmed the need to taper this year, prompting gold to lose half of the $30 rally generated earlier that daym before stabilizing above $1800. USD is up against most currencies as of Sunday's open, with the exception of against AUD and CAD. Minutes ago, US crude oil just hit $85 for the 1st time in 7 years, which is another reason why Ashraf reaffirms the point made in 7:20 mins of this video.  Ashraf added a stock in the chart below, with a high positive correlation with Bitcoin. Care to guess/add it to your holdings?
Click To Enlarge
China Covid Outbreak, & Bitcoin Correlated Stock - Mystery Stocks W Bitcoin Oct 25 2021 (Chart 1)

As bad as supply chain bottlenecks are, they could be much worse if covid had hit China as hard as the rest of the world. Or maybe it's only a matter of time because while China is making vaccine progress, it's jab is less effective than MRNA technology so they may eventually need to let it run.

While we're optimistic on covid receding further, the recent lockdown in Russia and rising cases in the UK, along with this news bear watching.

Otherwise, markets are consumed with rates and inflation talk. Powell on Friday struck a different tone in nothing the high prices will likely last well into next year. He also emphasized that they need to consider a full range of plausible outcomes.

While he still argued for patience, the confident 'transitory' talk from Jackson Hole is long gone. The Fed doves are seeing the pressure on jobs and supply chains and increasingly worrisome that higher prices will become embedded. Interestingly though, as the dollar rallied on this and short-dated rates pushed up, long dated rates pulled in, suggesting the risk of tightening prematurely and tee-ing up another decade of sub-2% inflation.

Economic data will be more lively in the week ahead with the US week starting with the Chicago Fed index, Richmond Fed and new home sales.

Yields Pause, Metals Jump, Dax Breaks out

Oct 22, 2021 15:36 | by Adam Button

President Biden said there will be no tax hikes on high earners or US corporations in a blow to his agenda but a boost to US equities. The dollar fell across the board, with both CNHUSD and XAGUSD posting their 3rd biggest weekly gain of the year.  The week ended with stronger Canada retail sales, mixed PMIs in Europe, with US services surprising on the upside but not the case for manufacturing. Gold jumped more than $30 to 1812, reaching the target of the inverted head-&-shoulders first signalled on Oct 8th to the WhatsApp Broadcast Group below. More specifically, the GoldBugs ratio fell below its 100 DMA and 21 WMA as alerted in last week's Youtubevideo. The subsequent posts show the progress of the trade as well as in XAGUSD. A new Premium trade was posted earlier today. Heads up for Powell's speech at 11:00 am Eastern (15:00 GMT).

Yields Pause, Metals Jump, Dax Breaks out - Whatsapp Gold Post Oct 22 2021 (Chart 1)

Biden relayed on US TV late Thursday that Democratic Sen Sinema said she will block any tax raises at all on corporations or high earners. Perhaps that's a tactic to put pressure on her but it likely means that avenue for raising funds for a reconciliation package is done.

It will likely mean a considerably smaller package but ongoing low taxes will maintain the US corporate advantage and keep money flowing into dollars. We will continue to keep a close eye on what comes next and the potential fallout.

In the bigger picture on Thursday, there was a retracement in yen weakness that ran counter to continued stock market gains and the rise in bond yields. It's likely to be a standard dip after an extended one-way move but it bears watching closely on Friday in case it's foreshadowing a broader market move.

Economic data continues to send positive signals with a strong US existing home sales report on Thursday and a new cycle low in initial jobless claims.

For Canada, the final piece of economic data ahead of next week's BOC will be the August retail sales report. That sector has been a drag in Q3 while the rest of the economy hums. It would take an especially weak print to spoil a hawkish turn from the BOC.