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FEAR NOT Brave Investors

Two Tribes
 

 Strange times But remember The Joker once served as the Iranian ambassador for the United Nations.

Amerika 2020 - When Two Tribes Go To War - Week 2

The Week That Was - What Lies Ahead?

Editorial

The split along party lines in the US has never been deeper, whether there was a steal or not is not the point partisans miss. After four years of blocking, mayhem and mistrust the ignorance, social media or MSN manipluation to reset everything is part of the problem. If you are one side or the other you now loathe the other side more than ever. For those keeping political biasis out of it how does this affect the markets? 

A key maybe lies in the extreme hedging coupled with emotive speculating. Strange bedfellows indeed in these deeply political and virus impacted market dynamics. The virus is now more than Covid you could safely argue. So in a nutsell, more volatility and expect the unexpected.

The market is in the belief of the Fed Put, at the same time the left agenda is pushing Janet Yellen as the next treasury secretary, hardly an inspired choice given her being often referred to most as he most inept Fed chair ever, but she doe sfit into the age bracket of the Democrat leadership. The choice of the next treasury secretary is important for the market. Who follows the Mnuchin, Powell act with a $3 trillion ballooning of the Fed's balance sheet?

Then lets shift back, what happens if this Covid resurance becomes something deeper, such as more lockdowns, more poverty, more unrest? Just in a week since the election we have new restrictions imposed in New Jersey, Oregon, New Mexico, Idaho, Virginia, and California. Is the market already hedged or in a speculative blinker period?  We get it ,the market is pricing securities for the eventuality of a favorable post-vaccine economic landscape. Bur, oh there are so many buts.

Contents

  • Stockmarkets
  • Energy - Oil and Gas
  • Foreign Exchange
  • Gold and Silver
  • Fixed Interest & Banks
  • Risk Radar
  • Geopolitcs and Economy 
  • Week ahead

 

Stock Markets

Highlights - USA

  • The week started with Pfizer's and BioNtech's announcement of 90% effectiveness for their COVID vaccine. However there are many logistical challenges await a vaccine requiring extreme cold storage of negative 100 Fahrenheit. In a market cearly overhedged this set the algos off to send the S&P to record highs.
  • TThe S&P 500 gained 2.2% (up 11.0% y-t-d), the Dow popped 4.1% (up 3.3%).
  • The Utilities rose 2.3% (up 4.3%). The Banks bounced back 11.5% (down 22.8%),  Broker/Dealers gained 6.6% (up 13.9%). The Transports rose 4.1% (up 10.9%).
  • The S&P 400 Midcaps rose 4.3% (up 2.4%), Russell 2000 jumped 6.1% (up 4.5%).
  • On the flip side the Nasdaq 100 declined 1.3% (up 36.7%). The Semiconductors fell 0.8% (up 35.6%). The Biotechs added 1.3% (up 9.6%).
  • With bullion down $62, the HUI gold index sank 8.9% (up 30.3%).'
  • Ignoring risk continues to be the theme Equities funds attracted a record $44.5 billion over the past week (ending Wednesday). State Street's SPDR S&P 500 ETF (NYSEARCA:SPY) received Monday inflows of $9.8 billion. Meanwhile, Wall Street strategists are climbing over each other to raise market targets.

 US Indices D 11 13 2020

Highlights - Europe

  • In Europe for the week U.K.'s FTSE equities index surged 6.9% (down 16.3%). France's CAC40 surged 8.5% (down 10.0%). The German DAX equities index gained 4.8% (down 1.3%). Spain's IBEX 35 equities index surged 13.3% (down 18.5%). Italy's FTSE MIB index jumped 6.2% (down 11.1%).

Highlights - Asia

    • In Asia stocks. Japan's Nikkei Equities Index rose 4.4% (up 7.3% y-t-d), South Korea's Kospi index gained 3.2% (up 13.5%). China's Shanghai Exchange was little changed (up 8.5%). T

Highlights - Australia

    • Stocks were 

Highlights - Canada

    • Stocks were 

Highlights - Emerging Markets

  • EM equities were higher. Brazil's Bovespa index rose 3.8% (down 9.4%), and Mexico's Bolsa jumped 5.9% (down 6.3%). India's Sensex equities index advanced 3.7% (up 5.3%). Turkey's Borsa Istanbul National 100 index surged 8.3% (up 12.9%). Russia's MICEX equities index rose 4.5% (down 0.7%).

IPO mania is back in full force with Snowflake an indication of, which more than doubled on debut.

From rebalance as a natural reversion after the bull mania we have surged with another speculative rush. This after Dow ended the second quarter with a 17.8% gain, the biggest quarterly rally since the first quarter of 1987, when it ripped up 21.6%. IS that enough to rebalnce and go higher? The S&P 500 had its biggest one-quarter surge since the fourth quarter of 1998,  soaring nearly 20%. The Nasdaq Composite jumped 30.6% for the quarter, its best quarterly performance since 1999.

Stock valuations, as measured by forward price-to-earnings ratios are near their highest level since the 2000 dot-com boom.

Biggest SPX Stock Winners and Losers Last Week

Top US Stocks W 11 13 2020 
 

S&P 500 Index Technical Analysis via @KnovaWave

The SPX spat to new all time highs after the PFE news to consolidate back to the previous high and 7/8 Murrey Math Daily with a kiss of life, We have a number of alternatives ABCDE, Continuation of Wave 1 of 5 or the higher degree C,  Keep it simple  support is Tenkan and Kijun as Chikou rebalances. Important to note the high was a retest of the initial breakdown .

The break up was from above the 200dma. The balance from sharp reversal after the initial 3 wave down from the SPX wave 5 extension as Covid19 fed impulse accelerated under the tenkan. From there we had seen the ABC or 1-2-3 spinning around the 61.8% of the move. Support began at the October 2019 lows. A manic wave 5 or 3 of some degree was a resolution for the ages. Note the 100% extension from the emotive element and MM levels when the spit kicks in. A manic wave 5 or 3 of some degree was a resolution for the ages.  Note the 100% extension from the emotive element and MM levels when the spit kicks in.



 SPX D 11 13 2020

Weekly SPX spat the 50 wma and Kijun powerfully in a 1-2 to test the break trend (white) - now resistance with MM 8/8 to +2/8. Major support is top of channel and Tenkan. We look for 3 waves down and reactions to keep it simple with the alternatives in the daily.  Keep an eye on the putcall ratio with recognition to the sheer size of contracts AND keep in mind the stimulus distortion. The spit per channel fractal and Adams rule launched back over the cloud where we were encased AND we are back testing it. Watch if a spit or clear break support as chickou rebalances

SPX W 11 13 2020 

A reminder that Apple Inc $AAPL, Microsoft Corp $MSFT, Amazon.com Inc $AMZN, Facebook Inc $FB, and Google-parent Alphabet Inc $GOOGL make up approximately 23% of the total weight of the S&P 500. With that comes gyrations that are an outsized impact on broader markets.

Semiconductors SMH

SMH W 11 13 2020

Apple $AAPL

 AAPL W 11 13 2020

Amazon $AMZN

 AMZN W 11 13 2020

Energy and Commodities

Highights

  • The Bloomberg Commodities Index gained 1.2% (down 8.9% y-t-d).
  •  WTI crude ripped higher$2.99 to $40.13 (down 34%).
  • Gasoline rose 3.8% (down 33%), 
  • Natural Gas jumped 3.7% (up 37%).
  • Copper increased 1.0% (up 14%).
  • Wheat declined 1.4% (up 6%).
  • Corn rose 3.1% (up 8%).
  • Risk markets continue to respond to a Conronvirus outbreak and failed negotiations between Congress and the White House over an additional economic stimulus package to boost economic demand.
  • U.S. producers production still under pre Laura levels.
  • Higher crude prices prompt some U.S. producers start drilling again with rigs up for the ninth week in a row.

 BDI Freight Index

 BDI W 11 13 2020

 

US Crude Oil (WTI)

In any break key is crowd behavior to help tell the story. We watch ABC corrections from here. he March breakdown, Support Tenkan and Kijun. In any break key is crowd behavior to help tell the story. We watch ABC corrections from here.

WTI D 11 13 2020

WTI after it's huge run continues to rebalance chikou indicative of extreme crowd behavior in a series of fractals. We have completed 5 waves as marked, from here we watch 3 develop to confirm.

These are special times, recall "After we regained the pattern 261.8% from the extreme (-$40) move. The climax of the larger acceleration lower after broke the weekly uptrend, a fractal of the sharp and all the way to all time lows to negative pricing we have seen mirror replications." Support is previous channels, tenkan and Kijun. Above we have 50wma and Murrey Math time and price Above we have 50wma and Murrey Math time and price.  

WTI W 11 13 2020

US Natural Gas (Henry Hub)

US Natural Gas continues to work the lows that were either (5) or (iii) of (5). After a b or ii down we have bounced over tenkan and Kijun into cloud. Key is that 3 wave low. Above top of cloud. So far consistent failed breaks despite the strength of spitting the previous low and -2/8 with an island reversal to test the Kijun and downtrend line but fell back to Tenkan The big question is was that a completed move down there or a 3? Support at cloud.  

 NG D 11 13 2020

Natty continues in large sideways pattern between weekly kijun and tenkan as they suppress. Above Cloud and 50wma. Support is downward channel and previous low. Talking fractals, remember the tenkan/kijun kiss of death brought it down from the $2 range. Much work here churning away. .

Key Energy Reports

 

Precious Metals

Highlights

  • Spot Gold dropped 3.2% to $1,889 (up 24.4%).
  • Silver fell 3.5% to $24.775 (up 38%). .

Gold

Gold (AUG) fell 0.11% to settle at $1,801.9 but gained 0.66% for the week kGold exudes strength after it back tested the previous wave 3 after finally cracked the Tenkan after correcting in 3 waves from 1556 to Murrey Math +3/8. In sight of the intraday high of $1765.43 reached on May 18. We have overcome the negative divergence between the weekly chikou, Silver spread and the recent highs. Support Tenkan & Kijun. From there does the 5 play out? Watch Fibs and chikou.

Gold W 11 13 2020

Silver

Silver  did a fractal of the sharp C up to breakdown level above the cloud fed by divergence from gold reverting. no  Silver reverseds with much more violent impulse than gold . Given that we have to repsect this is a iii  but  here is also a chance this is an A  

 Silver W 11 13 2020

Forex Markets

Highlights

  • For the week,  the U.S. dollar index recovered 0.5% to 92.722 (down 3.9% y-t-d). 
  • Majors for the week. On the upside, the British pound 0.3%, the Australian dollar 0.2%, On the downside, the Swiss franc  fell1.5%, the Japanese yen 1.2%, the Canadian dollar 0.7% and the euro 0.3%,;
  • Minors for the week,  On the upside, the New Zealand dollar increased 1.1%, the Mexican peso 1.0%, the South African rand 0.6% and the Singapore dollar 0.1%. For the week on the downside, the Brazilian real declined 1.6%, the Swedish krona 0.6%, the euro 0.3%, and the Norwegian krone 0.1%. The Chinese renminbi increased 0.09% versus the dollar this week (up 5.40% y-t-d).

 Australian Dollar - AUDUSD

Aussie dollar continues higher after it competed 5 waves in emotive  fashion. with vigor spitting the 100% panic muster. It has closed over the 50 Wma in 5 waves Resistance cloud is a long way off.  Support Tenkan and Kijun. From here we watch for 2 or X

AUD W 11 13 2020

New Zealand Dollar - NZDUSD

The Kiwi mirrored the AUD and has closed over the panic breakdown (0%) correcting all of the panic muster wave. We are now above the Tenkan, which is pivotal. Resistance 50wma

NZD W 11 13 2020

Canadian Dollar - USDCAD

The Loonie continues to correct in ABC after spitting the 261% Fib & Weekly 8/8 after 5 waves lower. We closed at the old 100% 61.8% confluence. Use Fib s for support and resisitance until Tenkan and Kijun catch up, 

CAD W 11 13 2020

 Euro - EURUSD

The Euro tested and held both the channel and cloud spits after so many false breaks to close at its best level since the BRexit spike. We are still in 3 waves so we need to see development for continuation. Resistance is Fibs as marked.  Watch for impulse off Chikou rebalance and Kijun above. Again governed by EURGBP and Bund volatility. 


EUR W 11 13 2020

 EuroPound - EURGBP

Back testing top of outer band and tenkan of Brexit. Johnson price reaction.after its classic ABC out of failure following the X wave. Tenkan will give us a clue if normalcy is returning to the channel trade.

EURGBP W 11 13 2020

 Japanese Yen - USDJPY

Japanese Yen still stuck in channel trade, a series of failures and sharp bounces after X led 3 wave panic. Any change will come from the weekly Kijun Tenkan kiss. Use your #USDJPY Murrey 6/8 0/8 grid for now. #EURJPY #AUDJPY will determine risk on/off

JPY W 11 13 2020

 Mexican Peso USDMXN

The Peso has been correcting in ABC since it collapsed and spat 261% right back to the 100% Fib  We have seen violent moves with outisde uncertainty from oil and COVID19. Use the Gann octave and the extension fibs to help measure the noise. 

MXN W 11 13 2020


  Turkish Lire USDTRY

USDTRY after completing the large 5 waves corrected back to the channel acceleration point and finished testing Tenkan. Alternative is we are still in Wave 5 and this is another 1- Kijun support well above cloud  Impulse is needed to pull away from here.  Keep an eye on geopolitical risk factors. 

 TRY W 11 13 2020

Bitcoin

Nothing new for Bitcoin, more of the same as it continues to falter after 61.8% spit. Well under the tenkan and kijun. Needs to test downtrend for higher correction. Use your MM rules as algos control the herd here, support is the cloud - we said be wary of sharp ABC, 1-2 moves.

 BTC W 11 13 2020

Bond Markets (and Fed Watch)

Highlights - Treasuries

  • Investment-grade bond funds saw inflows of $3.471 billion, and junk bond funds posted positive flows of $4.565 billion (from Lipper).
  • Three-month Treasury bill rates ended the week at 0.0825%.
  • Two-year government yields increased three bps to 0.18% (down 139bps y-t-d).
  • Five-year T-note yields rose five bps to 0.41% (down 128bps).
  • Ten-year Treasury yields jumped eight bps to 0.90% (down 102bps).
  • Long bond yields gained five bps to 1.65% (down 74bps).

TNX W 11 13 2020 

All good while markets hold up but take note that the loosest financial conditions in history have supported a record $1.4 trillion of corporate debt issuance. While easy credit availability has supported economic activity,  funding new investment whilst keeping vulnerable companies afloat. THe combination of urban shifts through virus and riots fears has fueled a booming MBS market and record low mortgage rates pushing strong housing markets into Bubble risk territory.

Highights - Mortgages

  • Benchmark Fannie Mae MBS yields rose four bps to 1.37% (down 134bps).
  • Freddie Mac 30-year fixed mortgage rates rose six bps to 2.84% (down 91bps y-o-y). Fifteen-year rates added two bps to 2.34% (down 86bps). Five-year hybrid ARM rates surged 22 bps to 3.11% (down 34bps). Bankrate's survey of jumbo mortgage borrowing costs had 30-year fixed rates up nine bps to 3.07% (down 105bps).

Highlights - Federal Reserve

  • Federal Reserve Leaves Rates and Bond Buying Unchanged After Election
  • Federal Reserve Credit last week expanded $16.1 billion to a record $7.126 trillion. Over the past year, Fed Credit expanded $3.120 trillion, or 77.9%. Fed Credit inflated $4.316 trillion, or 154%, over the past 418 weeks.
  • Fed holdings for foreign owners of Treasury, Agency Debt last week jumped $11.1 billion to $3.427 trillion. "Custody holdings" were up $6.2 billion, or 0.2%, y-o-y.
  • For the week, "M2 (narrow) "money" supply jumped $56.0 billion last week to a record $18.895 trillion, with an unprecedented 36-week gain of $3.387 trillion. "Narrow money" surged $3.623 trillion, or 23.7%, over the past year. For the week, Total money market fund assets declined $8.1 billion to $4.327 trillion. Total money funds surged $755 billion y-o-y, or 21.1%. Total Commercial Paper gained $10.5 billion to $961.5 billion. CP was down $170 billion, or 15.0% year-over-year.
  • Currency increased $2.3 billion. Total Checkable Deposits jumped $52.2 billion, and Savings Deposits gained $5.3 billion. Small Time deposits fell $9.5 billion. Retail Money Funds rose $5.7 billion.
  • The Fed QE infinity programme is a yield curve control policy with long government bond yields coming down. Bond supply and continued central bank resistance to more negative policy rates limits the move. Central banks have been cutting rates and adding liquidity to avoid systematic failure.

Highlights - European Bonds

  • In Europe Greek 10-year yields dropped six bps to 0.75% (down 68bps y-t-d). Ten-year Portuguese yields added a basis point to 0.09% (down 36bps). Italian 10-year yields increased three bps to 0.67% (down 75bps). Spain's 10-year yields increased one basis point to 0.11% (down 36bps). German bund yields jumped seven bps to negative 0.55% (down 36bps). French yields rose five bps to negative 0.31% (down 43bps). The French to German 10-year bond spread narrowed two to 24 bps. U.K. 10-year gilt yields gained six bps to 0.34% (down 48bps).

Highlights - Asian Bonds

  • Japanese 10-year "JGB" yields were little changed at 0.03% (up 4bps y-t-d).

 

On the Risk Radar

Fed Warnings on Possible Medium To Long Term Risks

Fed Financial Stability Report Risks May 2020

Geopolitical Tinderbox Radar

Trade Imbalances IMF

Italy CDS
Turkey Geopolitical

Economic and Geopolitical Watch

Job Losses

October's job report  showed  again the effect of return to school as highlighted by well over 1 million women leaving the workforce and many men also to take care of their children not returning to work. What is clear is the disconnect from the realities by pundits, particarlarly partisn biased rhetoric of the true damage to the economy, the social fabric and the selling of that as a new normal. Covid19 brought with it a new reality of brutal times for workers.

Over 14.5 million are collecting traditional jobless benefits, up from 1.7 million a year ago, with no end in sight. on Thursday, the Labor Department reported under 800,000 Americans applied for unemployment benefits for the second time since the crisis.  With the Covid shutdown we lost over 22 million jobs in March and April. The September employment report, the last before the election, showed a slower pace of job growth than in August. There were 616,000 nonfarm payrolls, from 1.37 million in August. The unemployment rate expected dropped to 7.9% from 8.4%.As economies slowly reopened, the economy generated than 12 million jobs in May through September. Still a huge shortfall in jobs, and the big question is will they come back?

US Politics

Here we are a few days before the Nov. 3 election, the market is likely to thin out and with that is likely more volatility, especially if the outcome looks increasingly uncertain. Stimulus stories will be plied around the polls with the probability of having an unclear outcome, contested outcome or both. So far, more than 56 million Americans have voted early, which makes up 37% of total votes from the 2016 election. More than 38 million of these votes have been mail-in ballots. Election experts are predicting a record of 150 million ballots will be cast, meaning the U.S. could have the highest rate of voter turnout since 1908.

The upcoming presidential election is a huge risk with the intense split along Partisan lines of much of America. RealClearPolitics has President Donald Trump trailing former Vice President Joseph Biden in the polls but with a falling margin. A potential for a resurgence in Covid cases will see Trump not benefiting from an economic recovery, and as a result a better chance of Biden being elected. Biden is representative of uncertainty for small business, energy and the working middle class in the main. Potentially higher taxes under a Biden administration are another worry. Biden has proposed increasing the corporate tax rate to 28% from 21%, potentially weighing on companies’ earnings. A separate proposal to tax capital gains and dividends as ordinary income could prompt some investors to sell winners in order to lock in lower tax rates.

Stay alert to the political and geopolitical shifts with the world in flux. Government policies related to the environment, trade and tech sit high on the watch list.  Political and economic agendas that Influence policy-making is top of the list. For the US it is not just external threats, including increased political tensions between countries but also internal threats highlighted by the partisan impeachment devide. Politics influence all, directly or indirectly. 

The virus and psychological affect on domestic and trade relationships have impacted growth strategies with unexpected consequences   In a  fully fledged stock mania, nothing matters until it does. That is the feral nature of greed.

Global Watch

Hot Spots

  • Geopolitical tensions with China and India are on the rise as China increases military hardware near the China and India's Himalaya border, a potential negative shock not priced by markets.
  • War between Armenia and Azberjazan has reopened tensions in the region.
  • China tightened its grip on Hong kong and threats with Taiwan continued.
  • Russia is showing the affects of low energy prices, filtering into the socio economic dynamic
  • Brexit and the EU is bubbling along with increasing antagonism with UK PM Johnson wanting  new deal based on Northen Island security anf freedom.
  • For emerging markets the lower US dollar is helping the Fragile 5. Argentina and Turkey are still red letter risks with Covid however. Voters will also be going to the polls in Indonesia, the Philippines and Thailand this year.
  • Over $4 trillion of EM debt matures by the end of 2020, of which around a third is denominated in foreign currency, according to the Institute of International Finance. Nevertheless Banks are telling investors to buy, buy, buy, who is selling you should ask?

    If you wanted to play in the big room at Vegas, you are living it. Understand risk and the madness of crowds for your own sanity and wealth.

  • Continued volatility with the engulfing uncertainty of the Coronavirus and in commodity markets, particularly in oil and other commodities, not to mention unrest in Iran, Libya and Iraq. 

 

Trade Wars

  • Despite all the US and Chinese rhetoric we are led to believe trade talks between U.S. and China are still expected to recommit to the Phase one deal. China has increased purchases of U.S. oil ahead of their trade deal review, according to Reuters.On a more upbeat note, the UK struck its first post-Brexit trade deal with Japan as it seeks to make a success of leaving the EU.
  • Trump did say Phase 2 will be difficult and he sees the virus more important then trade with China..
  • In addition to rising tensions with China, the United States Trade Representative said last month said that the USTR is considering a new round of tariffs on $3.1 billion in European exports from France, Germany, Spain and the U.K..

Fat Tail Virus Risk

U.S. daily COVID cases have spiked to near 200,000, with Friday setting a new single-day record of over 195,000 new cases according to data compiled by Johns Hopkins University. Unlike the first two "waves," the surge in new infections is not dominated by particular metropolitan areas or a few large states. COVID has methodically dispersed throughout the heartland, with rural America in the crosshairs. This is a particularly troubling development for small town hospitals and healthcare systems facing limited capacity and scarce resources. Ominously, outbreaks have slammed many northern states early in the winter season. Over the coming weeks, the virus can be expected to shadow cooler weather advancing south. 

Covid US cases 11 15 2020

Several countries are tightening restrictions and contemplating lockdowns as infections accelerate, prompting concerns about the impact on world economies attempting to recover. Earlier this month when adjusting for population, the number of new coronavirus infections in Europe has now overtaken the United States in new cases per million people, based on a seven-day average.

Covid Global cases 11 15 2020

  • AstraZeneca and Johnson and Johnson (J&J) announced they had received permission to resume trials on a COVID-19 vaccine. AstraZeneca was on track to have a vaccine ready before the end of the year, while J&J had said its candidate would be ready by early next year.
  • The US deals with a number of pharmaceutical giants have topped roughly $10.79 billion as part of Operation Warp Speed, a program led by several departments within the federal government to accelerate the development, manufacturing, and distribution of vaccines and treatments to fight the coronavirus.
  • The operation aims to provide at least 300 million doses of a coronavirus vaccine by January 2021. The companies are Moderna Johnson & Johnson Sanofi and GlaxoSmithKline Pfizer and BioNTech Novavax and AstraZeneca
  • Hopes and fears of reopening can outweigh mixed earnings results. No surprise after increased testing, weeks of protesting, people in large airconditioning indoors we have record daily U.S. cases. The U.S. reported 1000 deaths 4 days in a row with coronavirus cases,
  • There does appear to a concerted effort to put the blame on an economy reopening and miraclously the mass ongoing priotests have nothing to do with that. Take that for what it is worth. There is little mention of the younger age group in the new cases and much lower mortality rate. Fear is the feature. Use commonsense in your own protection, spreading and decision making.

 

Banks

BE AWARE: Stay rational and be prepared for many alternatives, either way. With crisis comes opportunity. From a market point of view this is not unprecedented, many other bubbles have popped with similar results. What is unprecedented is the pandemic, the mass media and social media fear mongering, the massive QE and printing and the strange era of entitlement and no responsibilty fed down from politicians to the youth of today for electoral purproses.

Put all that together and we see the result.  Again this isn't unprecedented just a different catalyst and fuel. Stay tuned. take a breath and think clearly. Oh and now we have the riots to throw on the kindling ....

  • Expect the Fed Stability Report warning on what happens if the pandemic worsens to be the go tto by Fed speakers (We are all watching to see if I spike aftet the Floyd protests and riots with no social distancing).
  • The backdrop is the Covid-19 crisis. Despite that the stockmarket is up over 40% from lows and stubborn bears and bulls alike are frustrated based on cognitive biases.
  • We continually focus on overcoming our biases and as the accompanying chart highlights stocks and the economy are NOT the same thing despite what we are told by our influencers and biased or selective recalls.

 

"Negative yields on long-dated government securities are more reflective of distorted market conditions than of stronger sovereign credit profiles, Fitch Ratings says. Lower interest service costs support sovereign creditworthiness, but this must be weighed against the impact of the economic conditions leading to lower yields and historically high government debt levels in a number of countries.- Fitch"

Akio Morita mistakes

The Week Ahead - Have a Trading Plan

Central Bank Watch speeches, reports and rate moves

Monday:

  • 03:30 CNY FDI
  • 04:00 EUR ECB Financial Stability Review
  • 19:30 AUD RBA Meeting Minutes

Tuesday

  • 01:00 RBA Assist Gov Debelle Speaks
  • 08:00 ECB's De Guindos Speaks
  • 09:00 BoE Gov Bailey Speaks
  • 11:00 ECB President Lagarde Speaks
  • 12:00 MPC Member Ramsden Speaks
  • 12:00 FOMC Member Bostic Speaks
  • 12:00 FOMC Member Daly Speaks
  • 14:00 BoC Gov Council Member Macklem Speaks
  • 17:00 RBA Governor Lowe Speaks

Wednesday

  • 05:30 BoE MPC Member Haldane Speaks
  • 08:15 BoC Gov Council Member Wilkins Speaks
  • 10:00 Chicago Fed President Evans Speaks
  • 10:00 ECB President Lagarde Speaks
  • 12:15 FOMC Member Williams Speaks
  • 13:20 FOMC Member Bullard Speaks
  • 19:00 FOMC Member Bostic Speaks

Thursday

  • 03:00 ECB President Lagarde Speaks
  • 08:30 FOMC Member Mester Speaks
  • 08:30 FOMC Member Mester Speaks
  • 09:30 German Buba Mauderer Speaks
  • 12:00 German Buba Wuermeling Speaks
  • 12:35 FOMC Member Mester Speaks
  • 20:30 PBoC Loan Prime Rate

Friday

  • 03:15 ECB President Lagarde Speaks
  • 08:00 German Buba President Weidmann Speaks
  • 08:30 FOMC Member Kaplan Speaks

Improvements in some economic indicators, such as home sales, manufacturing activity and  in employment data have bolstered investor confidence and helped extend the rally in stocks. Support in markets comes from the Fed’s balance sheet which has ballooned to $7.2 trillion, and the central bank committed to monthly purchases of $80 billion in Treasury securities and $40 billion in mortgage securities.

Economic Events in the Week Ahead:

Monday:

  • All Day Holiday India - Diwali
  • 03:30 CNY FDI
  • 04:00 EUR Italian CPI (MoM) (Oct)
  • 04:00 EUR ECB Financial Stability Review
  • 07:30 USD Export Price Index (MoM)
  • 07:30 USD Import Price Index (MoM)
  • 08:30 USD NY Empire State Manufacturing Index (Nov)
  • 11:30 USD 3-Month Bill Auction
  • 11:30 USD 6-Month Bill Auction
  • 17:30 NZD Business NZ PMI
  • 19:30 AUD RBA Meeting Minutes

Tuesday:

  • 08:15 Canada Housing Starts (Oct)
  • 08:30 Export Import Price Index (MoM) (Oct)
  • 08:30 Retail Sales (MoM) (Oct)
  • 08:55 Redbook (MoM)
  • 09:15 Capacity Utilization Rate (Oct)
  • 09:15 Industrial Production (MoM) (Oct)
  • 10:00 NAHB Housing Market Index (Nov)
  • 16:00 TIC (Sep)
  • 16:30 API Weekly Crude Oil Stock
  • 18:50 Japan Trade Balance (Oct)
  • 19:00 Australian HIA New Home Sales (MoM).
  • 08:55 Redbook (MoM)

Wednesday:

  • 02:00 UK CPI, PPI (MoM)
  • 05:00 EU CPI (MoM) (Oct)
  • 07:00 MBA Mortgage Applications (WoW)
  • 08:30 Building Permits (Oct)
  • 08:30 Housing Starts (MoM)
  • 10:30 EIA Crude Oil Inventories
  • 13:00 20-Year Bond Auction
  • 19:30 Australia Employment (Oct)

Thursday:

  • 08:30 Continuing Jobless Claims
  • 08:30 Initial Jobless Claims
  • 08:30 Philadelphia Fed Manufacturing Index (Nov)
  • 10:00 Existing Home Sales (MoM) (Oct)
  • 10:00 US Leading Index (MoM) (Oct)
  • 10:30 EIA Natural Gas Storage 1
  • 1:00 KC Fed Composite and Manufacturing Index (Nov)
  • 11:30 4-Week Bill Auction
  • 11:30 8-Week Bill Auction
  • 12:00 10-Year TIPS Auction
  • 13:00 10-Year TIPS Auction
  • 15:00 TIC Transactions
  • 18:30 Japan CPI (YoY) (Oct)
  • 19:30 Australia Retail Sales (MoM) (Oct)
  • 19:30 Japan Manufacturing Services PMI

Friday

  • 02:00 UK Retail Sales (YoY) (Oct)
  • 02:00 German PPI (MoM) (Oct)
  • 08:30 Canada New Housing Price Index (MoM) (Oct)
  • 08:30 Canada Retail Sales (MoM) (Sep)
  • 10:00 EU Consumer Confidence (Nov)
  • 13:00 U.S. Baker Hughes Oil Rig Count
  • 15:30 CFTC Speculative net positions (Moved next week)

Focus on yourself and what YOU CAN INFLUENCE, set your trading plan and goals in be set for 2020. One suspects it will be a year long Groundhog day for Trump, the GOP and the Democrats. 

Earnings Week Ahead

Big banks kicked off third-quarter earnings reports on Oct. 13, helping to set the tone for the broader U.S. stock market, as businesses cope with the eighth month of the pandemic. Banks reaped the rewards of the initial public offerings and record corporate borrowings during the pandemic. Investors (and algos) will focus pn the conference calls and outlooks. Everyone is expecting the worse. We will see critical updates on production in coronavirus impacted regions and if there is extended halting of operations weighing on multi-nationals.

Last week we heard from MCD McDonald's BIP Brookfield BKI Black Knight HWM CGC Canopy Gwth PLUG Plug Power SPG Simon Property RNG Ringcentral XP KKR WPM Wheaton Precious Metals ZI Zoominfo OSH Oak Street Health IFF Intl Flavors & Fragrances OXY Occidental Petroleum BYND Beyond Meat NBIX Neurocrine NCLH Norwegian Cruise Line NKLA Nikola NVAX Novavax,DR Horton, Ecolab, TC Energy, Rockwell Automation, , Biontech Advance Auto Parts Bentley Systems TC Pipelines Jumia Rocket Companies,  Rocket Companies, Paccar, Datadog, Tencent Music, 10X Genomics, Fair Isaac, LYFT, Adaptive Biotechnologies, Ashland, Brooks Automation Air Products, Green Thumb, Lemonade GoodRx, Disney, Cisco, Applied Materials, Draftkings

This week we hear from:

  • Monday starts us off with Sogou, Cerence, Ucloudlink, Azul, Sohu.com Baidu Iqiyi Smiledirectclub Co-Diagnostics
  • Tuesday with earnings from Tuesday: Walmart, Home Depot, Kohl's, Nio earnings 
  • Wednesday Earnings Include: Target, Lowe's, TJX Companies, Nvidia earnings 
  • Thursday Earnings Include:  Macy's, Workday earnings
  • Friday  Foot Locker earnings 

IPO Week Ahead

US IPO market activity is up ahead of the Thanksgiving holiday, with seven IPOs scheduled to raise $3.6 billion in the week ahead.

  • Biotech research product provider Maravai LifeSciences (MRVI) plans to raise $1.3 billion at a $6.6 billion market cap. Maravai provides critical products to enable development of drugs, diagnostics, novel vaccines, and support research on human diseases. The company’s more than 5,000 customers include the top 20 global biopharmas by R&D spend. Maravai has seen increased demand in recent months due to COVID-19.
  • Lab service provider Sotera Health (SHC) plans to raise $1.0 billion at a $6.0 billion market cap. Sotera Health provides sterilization, testing, and advisory services to research labs in the medical device and pharmaceutical industries. Slow growing and profitable, the company serves more than 40 of the top 50 medical device companies and 8 of the top 10 global pharmaceuticals by revenue.
  • Chinese cosmetics producer Yatsen (YSG) plans to raise $558 million at a $6.4 billion market cap. Yatsen makes cosmetics and skincare products under the brands, the Perfect Diary, Little Ondine and Abby’s Choice in China. The company is fast growing, though it was unprofitable in the 9mo20, and gross margin contracted due to COVID-19.
  • Multifamily REIT Aspire Real Estate Investors (ASPI) plans to raise $300 million at a $327 million market cap. Formed from predecessors Avanath Affordable Housing I and II, this REIT is focused on acquiring existing income producing affordable and workforce multifamily properties. Its initial portfolio will be comprised of nine multifamily projects, six of which are located in Opportunity Zones.
  • Cybersecurity solutions provider Telos (TLS) plans to raise $210 million at a $1.0 billion market cap. Telos provides a portfolio of security products and services. Profitable on an EBITDA basis, the company’s customers include the US federal government, large commercial businesses like Amazon and Citi, and international clients.
  • Clinical stage biotech Olema Pharmaceuticals (OLMA) plans to raise $170 million at a $670 million market cap. Olema is focused on the discovery, development and commercialization of next generation targeted therapies for women’s cancers. Its lead candidate, OP-1250, is currently in an ongoing Phase 1/2 trial in a subset of ER+/HER2- breast cancer patients, with initial data expected in the 2H21.
  • Online lottery and gaming provider NeoGames (NGMS) plans to raise $72 million at a $392 million market cap. The company provides B2G and B2B technology and services to state lotteries and other lottery operators in Europe and North America. NeoGames is fast growing, and its consumer base is expanding rapidly, with monthly active players up 70% y/y in 9mo20.

 

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Last Week's Big Stories

The Week That Was - Last Weeks Recap

  • Into The Vortex - EIA Reports Build of +8 Bcf in Natural Gas Inventories
  • Around The Barrel - EIA Reports Crude Oil +4277k bbls Build v API -5147k bbls Draw
  • OPEC Monthly Oil Market Report November 2020
  • EIA Expects Natural Gas Prices To Rise On Rising Domestic Demand, LNG Exports and Reduced Production
  • EIA Says New Oil Drilling Activity Production Will Not Offset Existing Wells Declines
  • US Employment Continues To Recover From Coronavirus Lockdown
  • Federal Reserve Leaves Rates and Bond Buying Unchanged After Election
  • U.S. New Auto Sales Fell For First Time Since April in Uncertain Times
  • Mexico Business Confidence Improves With Peso and Easing Covid Restrictions
  • RBA Cuts Australian Rates To Record Low 0.25%, Targets Yield Curve
  • US Manufacturing Continues Recovery, New Orders Highest Since January 2004 

Stocks

  • Chevron Reports Profit Boosted by Capital Spending down 48% Operating Expenses down 12%
  • ExxonMobil Posts Third Straight Quarterly Loss But Seeing Early Demand Recovery

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Note these charts, opinons news and estimates and times are subject to change and for indication only. Trade and invest at your own risk.

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