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FEAR NOT Brave Investors

Deal With The Devil
 

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

Deals - Market Mania - Political Chaos

The Week That Was - What Lies Ahead?

Editorial

To rehash last week, "markets go a lot further than most expect in either direction. Machines have taken out human emotion, QE has taken out natural bull/bear cycles, it is the market we live in. With this new marketplace comes extreme moves BOTH ways be aware nothing is as it seems." We ended the week with a US jobs report showing lower than expected job growth which is a concern with people sinply giving up looking for work, a worrying trend with the virus, so many unemployed and with a gutted middle class. We did however tick to record highs as we now have Nancy Pelosi promising Stimulus and Biden promising ever more, same game new players.

Another week where the political divide grows deeper in the US with nothing but chirping at the other team the Dow continued up after being up nearly 13% for November, its best month since January, 1987. The promise of vaccines has calmed and emboldened the market with the S&P 500 closing at a record 3,638 and up 11.3% for the month. The gain is its best performance since April’s 12.7%, which was the third best month for the S&P 500 since its connoction in 1957. December has kicked off in the same vane.

The market has the belief the Fed Put saves all and has satisfied it's self that Janet Yellen as the next treasury secretary as a great move. Hardly an inspired choice given her being often referred to by many as he most inept Fed chair ever. 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? The reasoning is that Yellen being ex Fed will work smoothly with current Fed Chairman Powell.

Then lets shift back, what happens if this Covid resurgance becomes something deeper, such as more lockdowns, more poverty, more unrest? Just in a week since the election we saw 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. Another but, Brexit talks are still ongoing (yeah really), the EU budget and rescue fund are at risk, and OPEC+ comes in with higher prices BUT more division in the Middle East, especially with Iran. 

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

  • Rotation the feature again highlighted by the O&G sectors ripping higher as WTI broke over $46, with new all time highs on the S&P 500, Nasdaq 100 and the Dow Industrials. Risk on was highlighted by Bitcoin, Tesla and tech names such as ZScaler and Snowfake.
  • The S&P 500 rose 1.7% (up 14.5% y-t-d), the Dow gained 1.0% (up 5.9%). The Utilities fell 2.4% (down 2.0%). The Banks rose 2.7% (down 15.6%), and the Broker/Dealers popped 3.6% (up 25.8%). The Transports gained 1.4% (up 16.9%).
  • The S&P 400 Midcaps rose 1.8% (up 8.8%), and the small cap Russell 2000 jumped 2.0% (up 13.4%).
  • The Nasdaq100 advanced 2.2% (up 43.5%). The Semiconductors surged 6.1% (up 51.0%). The Biotechs rose 2.0% (up 10.9%).
  • With gold bullion rallying $51, the HUI gold index rallied 4.0% (up 20.9%).

 US indices W 12 4 2020

Highlights - Europe

  • In Europe for the week U.K.'s FTSE equities index jumped 2.9% (down 13.2%). France's CAC40 increased 0.2% (down 6.2%). The German DAX equities index slipped 0.3% (up 0.4%). Spain's IBEX 35 equities index gained 1.6% (down 12.8%). Italy's FTSE MIB index declined 0.8% (down 5.6%). EM equities were higher

Highlights - Asia

  • In Asia stocks. Japan's Nikkei Equities Index added 0.4% (up 13.1% y-t-d). South Korea's Kospi index advanced 3.7% (up 24.3%). China's Shanghai Exchange gained 1.1% (up 12.9%).

Highlights - Australia

  • Stocks were 

Highlights - Canada

  • Stocks were 

Highlights - Emerging Markets

  • EM equities were higher mostly. Brazil's Bovespa index jumped 2.9% (down 1.6%), and Mexico's Bolsa surged 4.9% (up 0.2%). India's Sensex equities index rose 2.1% (up 9.3%). Turkey's Borsa Istanbul National 100 index added 0.2% (up 16.3%). Russia's MICEX equities index rose 1.3% (up 4.6%).

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

 SPX Top Stocks W 12 4 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 12 4 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 12 4 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 12 4 2020

Apple $AAPL

 AAPL W 12 4 2020

Amazon $AMZN

 AMZN W 12 4 2020

Energy and Commodities

Highights

  • The Bloomberg Commodities Index declined 0.7% (down 8.1% y-t-d).
  • WTI crude gained 57 cents to $46.09 (down 25%).
  • Gasoline fell 1.4% (down 25%),
  • Natural Gas sank 10.5% (up 17%).
  • Copper jumped 3.1% (up 26%).
  • Wheat dropped 5.0% (up 3%).
  • Corn fell 3.4% (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 12 4 2020

Copper 

 Copper W 12 4 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 12 4 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 12 4 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 12 4 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. .

NG W 11 27 2020

Key Energy Reports

 

Precious Metals

Highlights

  • Spot Gold rallied 2.9% to $1,839 (up 21.1%).
  • Silver recovered 6.8% to $24.32 (up 35.7%).

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 12 4 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 12 4 2020

Forex Markets

Highlights

  • For the week,  the U.S. dollar index the U.S. dollar index declined 1.1% to 90.805 (down 5.9% y-t-d).
  • Majors for the week. For the week on the upside, the Canadian dollar 1.6%, the Swiss franc 1.6%, the British pound 1.0%, the Australian dollar 0.5%
  • Minors for the week For the week on the upside, the Brazilian real increased 4.1%, the South Korean won 2.0%, the Mexican peso 1.4%, the euro 1.3%, the Swedish krona 0.5%, the Norwegian krone 0.4%, the New Zealand dollar 0.3%, the South African rand 0.3% and the Singapore dollar 0.2%. The Chinese renminbi increased 0.71% versus the dollar this week (up 6.61% 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 12 4 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 12 4 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 12 4 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 12 4 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 12 4 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 12 4 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 12 4 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 12 4 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.

 Bitcoin W 12 4 2020

Bond Markets (and Fed Watch)

Investment-grade bond funds saw inflows of $4.809 billion, while junk bond funds posted outflows of $1.393 billion (from Lipper).

Highlights - Treasuries

  • Three-month Treasury bill rates ended the week at 0.07%.
  • Two-year government yields were little changed at 0.15% (down 142bps y-t-d).
  • Five-year T-note yields rose five bps to 0.42% (down 127bps).
  • Ten-year Treasury yields jumped 13 bps to 0.97% (down 95bps).
  • Long bond yields surged 16 bps to 1.74% (down 65bps).
  • Benchmark Fannie Mae MBS yields rose five bps to 1.41% (down 130bps).

 TNX W 12 4 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

  • Freddie Mac 30-year fixed mortgage rates declined a basis point to a record low 2.71% (down 97bps y-o-y).
  • Fifteen-year rates fell two bps to an all-time low 2.26% (down 88bps).
  • Five-year hybrid ARM rates dropped back 30 bps to 2.86% (down 53bps).
  • Bankrate's survey of jumbo mortgage borrowing costs had 30-year fixed rates down three bps to 2.94% (down 98bps).

Highlights - Federal Reserve

  • Federal Reserve Leaves Rates and Bond Buying Unchanged After Election
  • Federal Reserve Credit last week declined $37.2 billion to $7.177 trillion. Over the past year, Fed Credit expanded $3.158 trillion, or 78.6%. Fed Credit inflated $4.366 trillion, or 155%, over the past 421 weeks. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt last week rose $8.9 billion to $3.468 trillion.
  • "Custody holdings" were up $50.7 billion, or 1.5%, y-o-y. M2 (narrow) "money" supply gained $12.4 billion last week to a record $19.121 trillion, with an unprecedented 39-week gain of $3.613 trillion.
  • "Narrow money" surged $3.754 trillion, or 24.4%, over the past year.
  • For the week, Currency increased $4.1 billion. Total Checkable Deposits surged $493.8 billion, while Savings Deposits contracted $474.9 billion. Small Time deposits fell $7.9 billion.
  • Retail Money Funds dipped $2.8 billion. Total money market fund assets slipped $3.8 billion to $4.320 trillion. Total money funds surged $741 billion y-o-y, or 20.7%.
  • Total Commercial Paper increased dropped $14.7 billion to $969 billion. CP was down $167 billion, or 14.7% year-over-year.
  • 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 declined two bps to 0.63% (down 80bps y-t-d). Ten-year Portuguese yields gained three bps to 0.04% (down 40bps). Italian 10-year yields rose three bps to 0.63% (down 79bps). Spain's 10-year yields increased two bps to 0.08% (down 39bps).
  • German bund yields rose four bps to negative 0.55% (down 36bps). French yields gained four bps to negative 0.31% (down 43bps). The French to German 10-year bond spread was unchanged at 24 bps.
  • U.K. 10-year gilt yields rose seven bps to 0.35% (down 47bps).

Highlights - Asian Bonds

  • Japanese 10-year "JGB" yields slipped a basis point to 0.02% (up 3bps 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: December 7, 2020

  • None Seen

Tuesday December 8, 2020

  • None Seen

Wednesday December 9, 2020:

  • 10:00 BoC Rate Statement
  • 10:00 BoC Interest Rate Decision
  • Tentative BoE Financial Stability Report
  • Tentative BoE FPC Meeting Minutes
  • 19:30 AUD RBA Bulletin

Thursday December 10, 2020

  • None seen

Friday December 11, 2020

  • 02:00 BoE Financial Stability Report
  • 02:00 BoE FPC Meeting Minutes
  • 03:30 BoE Gov Bailey Speaks
  • 12:40 FOMC Member Quarles 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: December 7, 2020

  • 00:00 JPY Coincident Indicator (MoM) (Oct)
  • 00:00 JPY Leading Index (MoM) (Oct)
  • 02:00 EUR German Industrial Production (MoM) (Oct)
  • 04:00 CNY FX Reserves (USD)
  • 04:30 EUR Sentix Investor Confidence (Dec)
  • 10:00 USD CB Employment Trends Index (Nov)
  • 10:00 CAD Ivey PMI (Nov)
  • 11:30 USD 3-Month Bill Auction
  • 11:30 USD 6-Month Bill Auction
  • 15:00 USD Consumer Credit (Oct)
  • 18:00 JPY Reuters Tankan Index (Dec)
  • 18:30 JPY Household Spending (MoM) (Oct)
  • 18:50 JPY Current Account n.s.a. (Oct) 
  • 18:50 JPY GDP (QoQ) (Q3)
  • 19:00 NZD ANZ Business Confidence
  • 19:01 GBP BRC Retail Sales Monitor (YoY) (Nov)
  • 19:30 AUD Building Approvals (MoM)
  • 19:30 AUD House Price Index (QoQ) (Q3)
  • 19:30 AUD NAB Business Confidence (Nov) 
  • 19:30 AUD NAB Business Survey (Nov)

Tuesday December 8, 2020

  • 00:00 JPY Economy Watchers Current Index (Nov)
  • 01:30 EUR French Non-Farm Payrolls (QoQ) (Q3)
  • 01:45 CHF Unemployment Rate s.a. (Nov)
  • 02:45 EUR French Current Account (Oct)
  • 02:45 EUR French Trade Balance (Oct)
  • 05:00 EUR German ZEW Current Conditions (Dec)
  • 05:00 EUR German ZEW Economic Sentiment (Dec)
  • 05:00 EUR Employment 05:00 EUR GDP (QoQ) (Q3)
  • 05:00 EUR ZEW Economic Sentiment (Dec)
  • 06:00 USD NFIB Small Business Optimism (Nov)
  • 07:00 USD EIA Short-Term Energy Outlook
  • 08:30 USD Nonfarm Productivity (QoQ) (Q3)
  • 08:30 USD Unit Labor Costs (QoQ) (Q3)
  • 08:55 USD Redbook (MoM)
  • 13:00 USD 3-Year Note Auction
  • 16:30 USD API Weekly Crude Oil Stock
  • 18:30 AUD Westpac Consumer Sentiment (Dec)
  • 18:50 JPY Core Machinery Orders (MoM) (Oct)
  • 20:30 CNY CPI (MoM) (Nov) CPI (YoY) (Nov)
  • 20:30 CNY PPI (YoY) (Nov)

Wednesday December 9, 2020:

  • 01:00 JPY Machine Tool Orders (YoY)
  • 02:00 EUR German Trade Balance (Oct)
  • 03:00 EUR Spanish Industrial Production (YoY) (Oct)
  • 03:13 CNY M2 Money Stock (YoY) (Nov)
  • 03:13 CNY New Loans (Nov) 1,430.0B
  • 03:13 CNY Outstanding Loan Growth (YoY) (Nov)
  • 06:30 EUR Spanish Consumer Confidence
  • 07:00 USD MBA 30-Year Mortgage Rate
  • 07:00 USD MBA Mortgage Applications (WoW)
  • 07:00 USD MBA Purchase Index
  • 07:00 USD Mortgage Market Index
  • 07:00 USD Mortgage Refinance Index
  • 10:00 USD JOLTs Job Openings (Oct)
  • 10:00 USD Wholesale Inventories (MoM)
  • 10:00 CAD BoC Rate Statement
  • 10:00 CAD BoC Interest Rate Decision
  • 10:30 USD Crude Oil Inventories
  • Tentative GBP BoE Financial Stability Report
  • Tentative GBP BoE FPC Meeting Minutes '
  • 13:00 USD 10-Year Note Auction
  • 16:45 NZD Electronic Card Retail Sales (MoM) (Nov)
  • 18:50 JPY BSI Large Manufacturing Conditions (Q4)
  • 18:50 JPY PPI (MoM) (Nov) '
  • 19:00 AUD MI Inflation Expectations
  • 19:01 GBP RICS House Price Balance (Nov)
  • 19:30 AUD RBA Bulletin

Thursday December 10, 2020:

  • 02:00 GBP U.K. Construction Output
  • 02:00 GBP GDP (MoM)
  • 02:00 GBP Industrial Production (MoM) (Oct)
  • 02:00 GBP Index of Services
  • 02:00 GBP Industrial Production
  • 02:00 GBP Trade Balance (Oct)
  • 02:45 EUR French Industrial Production (MoM) (Oct)
  • 07:45 EUR Deposit Facility Rate (Dec)
  • 07:45 EUR ECB Marginal Lending Facility
  • 07:45 EUR ECB Monetary Policy Statement
  • 07:45 EUR ECB Interest Rate Decision (Dec)
  • Tentative GBP NIESR GDP Estimate
  • 08:30 USD Jobless Claims
  • 08:30 USD CPI (MoM) (Nov)
  • 08:30 USD Real Earnings (MoM) (Nov)
  • 08:30 EUR ECB Press Conference
  • 09:00 GBP NIESR Monthly GDP Tracker
  • 10:00 USD CB Employment Trends Index
  • 10:30 USD Natural Gas Storage
  • 11:00 USD Cleveland CPI (MoM) (Nov)
  • 11:30 USD 4-Week Bill Auction
  • 11:30 USD 8-Week Bill Auction
  • 12:00 USD WASDE Report
  • 13:01 USD 30-Year Bond Auction
  • 13:30 CAD BoC Deputy Governor Beaudry Speaks
  • 14:00 USD Federal Budget Balance (Nov)
  • 16:30 NZD Business NZ PMI (Nov)
  • 16:45 NZD FPI (MoM) (Nov)
  • 18:50 JPY BSI Large Manufacturing Conditions
  • 20:00 NZD Net Debt Forecast
  • 20:00 NZD Economic Forecast

Friday December 11, 2020

  • 02:00 EUR German CPI (MoM) (Nov)
  • 02:45 EUR French CPI (YoY)
  • 03:00 EUR Spanish CPI (MoM)
  • 04:00 EUR Italian Industrial Production (MoM)
  • 04:00 EUR Italian Quarterly Unemployment Rate
  • 04:30 GBP Inflation Expectations
  • 05:00 EUR EU Leaders Summit
  • 05:00 EUR Euro Summit
  • 08:30 USD PPI (MoM) (Nov)
  • 08:30 CAD Capacity Utilization Rate (Q3)
  • 10:00 USD Michigan Consumer Sentiment (Dec)
  • 13:00 USD U.S. Baker Hughes Total Rig Count
  • 15:30 USD CFTC speculative positions

 

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 Emcore Corp (EMKR), Golar LNG (GLNG), Guess ? (GES), Jiayin Group Inc (JFIN), At Home Group Inc (HOME)Bank Of Montreal (BMO) Bank Of Nova Scotia (BNS) Box Inc (BOX) Hewlett Packard Enterprise Co (HPE) Kalvista Pharmaceuticals Inc (KALV) Momo Inc (MOMO) Navios Maritime Acquisition Corp (NNA) Netapp Inc (NTAP) Salesforce.Com Inc (CRM) Trip.Com Group LTD (TCOM) Avid Bioservices Inc (CDMO) Crowdstrike Holdings Inc (CRWD) Daktronics, Inc. (DAKT) Descartes Systems Group Inc (DSG) Five Below Inc (FIVE) National Bank Of Canada (NA) Okta Inc (OKTA)Patterson Companies Inc (PDCO) PVH Corp (PVH) RH (RH) Royal Bank Of Canada (RY) Semtech Corporation (SMTC) Splunk Inc (SPLK) Synopsys Inc (SNPS) Verint Systems (VRNT) Zscaler Inc (ZS) Afya LTD (AFYA) Canadian Imperial Bank Of Commer (CM) Cloudera Inc (CLDR) Cracker Barrel Old Cntry STR Inc (CBRL) Docusign Inc (DOCU) Dollar General Corp (DG) Domo Inc (DOMO) Q3 10/1/20 Kroger Co (KR) Lands End Inc (LE) Marvell Technology Group (MRVL) Michaels Companies Inc (MIK) Ollie's Bargain Outlet Holdings (OLLI) Science Applications Intl Corp (SAIC) Secureworks Corp (SCWX) Smith & Wesson Brands Inc (SWBI) Toronto-Dominion Bank (TD) Ulta Beauty Inc (ULTA) Zuora Inc (ZUO) Big Lots Inc (BIG) Canadian Western Bank (CWB) Johnson Outdoors Inc (JOUT) Laurentian Bank Of Canada

This week we hear from:

  • Monday starts us off with JKS Jinkosolar IESC Ies Holdings SVA Sinovac COUP Coupa Software EFX Equifax SMAR Smartsheet CASY Casey's General Stores TOL Toll Brothers HQY Healthequity SFIX Stitch Fix SGU Star Group
  • Tuesday with earnings from NEM Newmont BF.B Brown-Forman AZO Autozone THO Thor Industries HRB H&R Block CMD Cantel Medical $CHWY Chewy MDB Mongodb GWRE Guidewire Software AVAV Aerovironment PHR Phreesia GME Gamestop GATO Gatos Silver
  • Wednesday Earnings Include:
  • CPB Campbell Soup UNFI United Natural Foods PLAB Photronics LOVE Lovesac DBI Designer Brands VERU Veru Vera Bradley ADBE Adobe RH RH NCNO Ncino ASAN Asana VRNT Verint Systems GEF Greif SNEX Stonex OXM Oxford
  • Thursday Earnings Include:
  • Friday Earnings include  (LB)

IPO Week Ahead

Big Week for IPOs with "The unicorn IPO parade is set to begin in the week ahead, with DoorDash (DASH) and Airbnb (ABNB) leading the way. A total of nine IPOs and two SPACs are scheduled to raise $7.8 billion"

Delivery service giant DoorDash (DASH) plans to raise $3.1 billion at a $34.7 billion market cap. With a 50% share of the US market, DoorDash is North America’s largest delivery service, facilitating over 900 million orders to date. The company turned profitable on an EBITDA basis and posted positive free cash flow in the 9mo20. However, it has invested heavily in S&M, causing losses to spike in 2019, and it faces significant competition. DoorDash had planned to raise $2.6 billion before increasing the range on Friday.

Home-sharing startup Airbnb (ABNB) plans to raise $2.4 billion at a $31.8 billion market cap. A clear leader in the short-term rental space, Airbnb supported over 327 million nights booked in 2019. Thanks to its asset-light model and global network, Airbnb has been the fastest hospitality company to rebound from COVID-19, despite monthly bookings still not reaching pre-shutdown levels. While unprofitable, the company has posted positive free cash flow since 2016. C3.ai (AI) plans to raise $504 million at a $4.3 billion market cap. Led by an experienced management team, C3 has developed a suite of low- and no-code software tools to design, develop, and operate a variety of enterprise-scale applications. Unprofitable, the company’s revenue growth slowed sharply in the MRQ and sales have been lumpy.

Certara (CERT) plans to raise $500 million at a $3.1 billion market cap. Profitable with decent growth, the company offers an integrated, end-to-end platform to conduct virtual trials using virtual patients to predict how drugs behave in different individuals. Its software is used by more than 1,600 biopharmas and academic institutions across 60 countries, including the top 35 biopharmas by R&D spend in 2019.

AI drug discovery platform AbCellera (ABCL) plans to raise $357 million at a $4.9 billion market cap. The company offers a full-stack, artificial intelligence-powered drug discovery platform that searches and analyzes a database of natural immune systems to find antibodies that can be developed as drugs. As of September 30, 2020, the company had 94 discovery programs that are either completed, in progress, or under contract with 26 partners.

Hydroponics supplier Hydrofarm Holdings Group (HYFM) plans to raise $130 million at a $520 million market cap. A pick-and-shovel cannabis play, Hydrofarm distributes and manufactures controlled environment agriculture equipment and supplies, primarily serving the US and Canadian markets. The company turned profitable in the 9mo20, and growth accelerated.

AdTech platform PubMatic (PUBM) plans to raise $100 million at a $953 million market cap. Profitable with decent growth, the company provides a specialized cloud infrastructure platform that enables real-time programmatic advertising transactions. Several insiders are selling on the IPO.

In its second attempt to go public, gene therapy developer 4D Molecular Therapeutics (FDMT) plans to raise $100 million at a $491 million market cap. 4D is developing product candidates using its targeted and evolved AAV vectors, initially focusing on ophthalmology, cardiology, and pulmonology. It has three candidates in Phase 1 or 1/2 trials, and two additional candidates for which it expects to file INDs in the 2H21.

Late-stage French biotech Nanobiotix (NBTX) plans to raise $95 million at a $537 million market cap. The company completed the regulatory process for the CE mark of lead candidate NBTXR3 in April 2019, allowing the product to be commercialized in the EU for the treatment of locally advanced soft tissue sarcoma under the brand name Hensify.

IPO data via Renaissance Capital

 

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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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