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

46, ECB, Yellen

The Week That Was - What Lies Ahead?

Editorial

A big noise week with Friday's announcement of President-elect Biden's plan for $1.90 trln in spending. The plan includes direct payments of $1,400, increased unemployment benefits, and aid for state and local governments, but some elements of the legislation will require 60 votes in the Senate so it is unclear if the current version will be approved. Economic data that was mixed, on balance on Thursday we saw another higher jobless claims and on Friday industrial Production beat expectations in December and inflation at the producer level remained muted. Retail Sales fell 0.7% in December while the November decrease was revised down.

The jobless claims follows December showing the first a fall in jobs since April. Moving ahead this week we have the release of the first PMI data of 2021 for the U.S., Eurozone, UK and Japan released on Friday and could be weaker than anticipated. The ECB hold's its first meeting of 2021 on Thursday. Policymakers announced extra stimulus in December, but the economic outlook continues to be clouded with the discovery of new Covid-19 strains and the relatively slow pace of the vaccination rollout. The Bank of Japan and Bank of Canada also announce policy settings. None of the 3 are expected to move rates or adjust broader policy, with interest instead in what each has to say about the economic outlook and policy guidance for the new year. Following the first major S&P 500 companies to post earnings for Q4 2020 are money center banks JP Morgan, PNC, Citigroup and Wells Fargo last week we kick off week 2 with Goldman Sachs, Bank of America and Netflix earnings and finish Friday with Schlumberger earnings

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

  • S&P index -27.29 points or -0.72% at 3768.25 For the week -1.48%
  • NASDAQ index -114.13 points or -0.87% at 12998.56 For the week -1.54% 
  • Dow industrial average -177.26 points or -0.57% at 30814.26 For the week -0.91%  
  • Russell 2000 index +33.107 points or +1.53% at 2122.26 For the week +1.5%
  • S&P 400 Midcaps added 0.3% (up 5.1%)
  • The Utilities increased 0.9% (up 0.8%).
  • The Banks added 0.6% (up 9.2%),
  • Broker/Dealers little changed (up 5.5%).
  • Transports gained 0.5% (up 3.5%).
  • The Semiconductors rose 1.9% (up 7.1%).
  • The Biotechs gained 1.1% (up 4.9%).
  • With bullion falling $21, the HUI gold index sank 5.9% (down 5.0%).

 US Indices W 1 15 2021

Highlights - Europe

  • France's CAC40 -1.2% For the week: -1.8%.
  • Germany's DAX equities index -1.4% For the week: -1.8%
  • Italy's FTSE MIB index rose -1.1% For the week: -2.1%
  • Spain's IBEX 35 equities index -1.8% For the week: -1.8%
  • 'U.K.'s FTSE equities index -1.0% For the week: -2.1% up 4.3% y-t-d.

In Europe - how we closed 2020

CAC 2020

DAX 2020

FTSE MIB 2020

IBEX 2020

Highlights - Asia

  • Japan's Nikkei Equities Index gained 1.4% (up 3.9% y-t-d)
  • South Korea's Kospi index declined 2.1% (up 7.4%).
  • China's Shanghai Exchange was little changed (up 2.7%).

Japan's Nikkei Equities Index and China's Shanghai Exchange for 2020

Nikkei 2020

Shanghai Composite 2020

Highlights - Australia - ASX 200 for 2020

ASX 2020

Highlights - Emerging Markets

  • EM equities were mostly lower.
  • Brazil's Bovespa index sank 3.8% (up 1.1%),
  • Mexico's Bolsa fell 1.8% (up 4.1%).
  • South Korea's Kospi index declined 2.1% (up 7.4%).
  • India's Sensex equities index increased 0.5% (up 2.7%).
  • China's Shanghai Exchange was little changed (up 2.7%).
  • Turkey's Borsa Istanbul National 100 index fell 1.0% (up 3.2%).
  • Russia's MICEX equities index was little changed (up 4.9%).

IPO mania was 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 1 15 2021

S&P 500 Index Technical Analysis via @KnovaWave

After SPX rallied to new all time highs, closed the week testing tenkan san & +4/8 Murrey Math Daily & Chikou break retest. We have a number of alternatives of degree (iii) or (iv) of 5, Keep it simple support is Tenkan and Kijun as Chikou rebalances.

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 1 15 2021

Weekly SPX spat the break channel it had been tracing since the break of v of (III) or (V). Key is spit or retest of MM 8/8.. Major support is previous highs 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 1 15 2021

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

Watching Semiconductors cleanly with Murrey Math levels and Tenkan - keys are previous high at +1/8 and Chikou rebalance patterning. Weekly +2/8 around 250 key number recognition factor also.

SMH W 1 15 2021

Apple $AAPL

 AAPL W 1 15 2021

Amazon $AMZN

Amazon high was MM +3/8 and from there has built a large weekly flag which it closed under after breaking the Tenkan and Kijun, watch if Kijun closes through Tehkan for a bigger move.

 AMZN W 1 15 2021

Energy and Commodities

Highights

  • The Bloomberg Commodities Index rose 1.0% (up 3.1% y-t-d). WTI Crude oil settled Friday up 12 cents to $52.36 for the week (up 7.9% YTD). Gasoline declined 0.9% (up 8%),
  • February Natural Gas Nymex contract settled at $2.737/MMBtu on Friday, up 1.4% on the week and up 7.8% YTD. Forecasts for stronger expectations for severe winter conditions and robust heating demand by late January, boosting futures in the week’s final day of trading by 7.1 cents.
  • Copper dropped 1.9% (up 2%). Wheat surged 5.8% (up 6%). Corn jumped 7.1% (up 10%). Bitcoin dropped $3,779 this week to $36,262 (up 24.7%). 
  • 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 1 15 2021

Copper

Copper has been a leader in the risk on movement, The weekly channel since the low has maintained the speed of the move with support at the tenkan.

 Copper W 1 15 2021

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 1 15 2021

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 1 15 2021

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 1 15 2021 

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 1 15 2021

Key Energy Reports

 

Precious Metals

Highlights

  • Gold futures settled $21.50 lower (-1.2%) to $1,829.90/oz, a -0.3% loss on the week, as the U.S. Dollar Index advanced +0.6% on Friday to $90.74.
  • Spot Gold declined 1.1% to $1,828 (down 3.7%).
  • Silver gained 0.9% to $24.866 (down 5.9%). 

Gold

Gold 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 1 15 2021

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 1 15 2021

Forex Markets

Highlights

  • For the week,the U.S. dollar index advanced +0.6% on Friday to $90.74. For the week, the U.S. dollar index rallied 0.8% to 90.772 (up 0.9% y-t-d).
  • Majors for the week. For the week on the upside, the British pound 0.2% and the Japanese yen 0.1%. On the downside, the euro fell 1.1%, the Australian dollar -0.7%, the Swiss franc 0.6%, the and the Canadian dollar 0.2%.
  • Minors for the week  For the week on the upside, the Brazilian real increased 2.3%, the Mexican peso 1.1%, the South African rand 0.4%, On the downside, the Swedish krona declined 1.9%, the Norwegian krone 1.7%, the New Zealand dollar 1.5%, the South Korean won 0.9%, the Singapore dollar 0.3%, and the Canadian dollar 0.2%. The Chinese renminbi declined 0.10% versus the dollar this week (up 0.71% y-t-d).

Australian Dollar - AUDUSD

Aussie dollar continues higher after it completed 5 waves in emotive fashion. with vigor spitting the 100% panic muster. It has closed over the 50 Wma in 5 waves The AUDUSD pulled up close to 0.7806 on Thursday just shy of the three year high of 0.7820 from January 6. Support Tenkan and Kijun.

AUD W 1 15 2021

New Zealand Dollar - NZDUSD

The Kiwi mirrored the AUD and has closed over the panic breakdown (0%) correcting all of the panic muster wave and running to the 38% Fib & 6/8 confluence.  Support the Tenkan, which is pivotal. Resistance 6/8 spits.

NZD W 1 15 2021

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 1 15 2021
Euro - EURUSD

The Euro tested and broke both the channel after ABC (IV) then retested the tenkan to spit the +1/8 in 5 waves from there we closed the week back testing the tenkan (orange). A question of degree on recent high - 1 complete or 1 of 3?, Watch 3 waves 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 1 15 2021

British Pound - USDGBP

GBP W 1 15 2021 

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 1 15 2021 

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 1 15 2021

 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 1 15 2021


Turkish Lire USDTRY

Turkish markets reacted to another two percent hike in interest rates to 17% boosted sentiment towards the Lira. The USD/TRY has fallen to 3.3800 and is set to test its 200-day moving average at 7.3100 assuming the US Dollar remains weak. Keep an eye on geopolitical risk factors. 

 TRY W 1 15 2021

Bitcoin

Bitcoin has exploded after it spent a year consolidating under the 61.8% spit. Each tenkan and kijun tap has seen an explosive kiss of life. Use Murrey Math levels for higher corrections and target as algos control the herd here, support is the cloud and sharp ABC, 1-2 moves.

 BTC W 1 15 2021

Bond Markets (and Fed Watch)

Investment-grade bond funds saw inflows of $6.946 billion, while junk bond funds posted outflows of $1.260 billion (from Lipper).

Highlights - Treasuries

 TNX W 1 15 2021

Investment-grade bond funds saw inflows of $5.356 billion, while junk bond funds posted outflows of $196 million (from Lipper).

"Investors are flooding the state and local government debt market with cash, driving the biggest weekly influx ever into mutual funds focused on the riskiest municipal securities. Buyers added $2.6 billion to municipal-bond mutual funds in the week ended Wednesday, the 10th straight inflow and the third biggest on record… High-yield funds collected $1.1 billion, outpacing the previous record of $796 million in 2017…" Bloomberg (Danielle Moran and Romy Varghese)

  • Three-month Treasury bill rates ended the week at 0.075%.
  • Two-year government yields were little changed at 0.135% (up 1bp y-t-d).
  • Five-year T-note yields declined three bps to 0.45% (up 9bps).
  • Ten-year Treasury yields dipped three bps to 1.08% (up 17bps).
  • Long bond yields fell four bps to 1.83% (up 19bps).
  • Benchmark Fannie Mae MBS yields added a basis point to 1.48% (up 14bps).

Benchmark Fannie Mae MBS yields rose 13 bps to 1.47% (down 115bps). Total money market fund assets gained $12.1bn to $4.309 TN. Total money funds surged $660bn y-o-y, or 18.1%. Total Commercial Paper surged $84.6bn to $1.105 TN. CP was down $21bn, or 1.8%, year-over-year.

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 surged 14 bps to 2.79% (down 86bps y-o-y).
  • Fifteen-year rates rose seven bps to 2.23% (down 86bps).
  • Five-year hybrid ARM rates spiked 37 bps to 3.12% (down 27bps).
  • Bankrate's survey of jumbo mortgage borrowing costs had 30-year fixed rates adding a basis point to 2.95% (down 104bps).

Highlights - Federal Reserve

  • Federal Reserve Credit last week fell $25.5bn to $7.281 TN. Over the past year, Fed Credit expanded $3.149 TN, or 76%. Fed Credit inflated $4.471 Trillion, or 159%, over the past 427 weeks.
  • Fed holdings for foreign owners of Treasury, Agency Debt last week jumped $27.8bn to a record $3.517 TN. "Custody holdings" were up $97.1bn, or 2.8%, y-o-y.
  • M2 (narrow) "money" supply surged $107.4bn last week to $19.179 TN, with an unprecedented 45-week gain of $3.745 TN. "Narrow money" surged $3.842 TN, or 25%, over the past year.
  • For the week, Currency increased $5.6bn. Total Checkable Deposits surged $212.7bn, while Savings Deposits dropped $103.1bn. Small Time deposits declined $4.9bn. Retail Money Funds slipped $2.9bn.
  • Total money market fund assets gained $6.0bn to $4.315 TN.
  • Total money funds surged $685bn y-o-y, or 18.9%.
  • Total Commercial Paper dropped $44.4bn to $1.061 TN. CP was down $60.5bn, or 5.4%, 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

  • Greek 10-year yields rose seven bps to 0.65% (up 3bps y-t-d). Ten-year Portuguese yields gained three bps to zero (down 3bps). Italian 10-year yields jumped eight bps to 0.61% (up 7bps). Spain's 10-year yields gained two bps to 0.06% (up 1bp).
  • German bund yields declined two bps to negative 0.54% (up 3bps). French yields were little changed at negative 0.32% (up 2bps). The French to German 10-year bond spread widened two to 22 bps.
  • U.K. 10-year gilt yields were unchanged at 0.29% (up 9bps).

Highlights - Asian Bonds

  • Japanese 10-year "JGB" yields added one basis point to 0.03% (up 4bps y-o-y).  

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

With the lack of stimulus and continued lockdowns initial jobless claims jumped to the highest level in three months last week, in what was a second straight weekly increase. November's job report again showed 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

US President-elect Joe Biden will be sworn in as America’s 46th President on Wednesday. Investors will be wary of any potential for armed protests in the lead-up to the event, especially as impeachment proceedings against US President Donald Trump continue. The primary concern in the markets will likely remain Biden’s expansive fiscal stimulus agenda. Biden announced a larger than expected $US1.9 Trillion worth of spending last week that will see higher direct payments to individuals, more money to combat the pandemic, and beefed-up support for state governments.

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.
  • US prepared to sanction Turkey over its purchase of Russian S-400 air defence systems last year.
  • China tightened its grip on Hong kong and threats with Taiwan continue. Secretary of State Mike Pompeo lifted communication restrictions between American and Taiwanese officials on Saturday. Pompeo said the restrictions had been imposed decades ago "in an attempt to appease the Communist regime in Beijing.”
  • Russia is showing the affects of low energy prices, filtering into the socio economic dynamic
  • A Brexit deal was concluded on Christmas Eve and moving rapidly through the approval process from both sides for the official start of the UK outside of Europe on Jan. 1st.
  • For emerging markets the lower US dollar is helping the Fragile 5. Argentina and Turkey are still red letter risks with Covid however.
  • 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  continues as the end of the Trump admin nears
  • 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

Following Pfizer's vaccine the week before Moderna’s Covid-19 vaccine  gained approvalto an emergency use authorization and rollout. Moderna’s drug, like Pfizer’s, is a two-dose vaccine and was found in clinical trials to be more than 94% effective. The U.S. is recording at least 216,600 new Covid-19 cases and at least 2,600 virus-related deaths each day, based on a seven-day average calculated by CNBC using Johns Hopkins University data.

COVID has methodically dispersed itself in areas like California and New York. Troubling development for 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

CNB on December 23: "The U.S. began vaccinating the population against the coronavirus last week, but mass adoption is not a guarantee. Nearly 4 in 10 Americans say they would 'definitely' or 'probably' not get a vaccine, according to a Pew Research Center survey of 12,648 U.S. adults from Nov. 18 to 29."

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

  • JP Morgan, Citigroup and Wells Fargo released fourth-quarter earnings on Jan. 15, among the first S&P 500 companies to post their results. All banks sold off on the results, the worse hit was WFC,  no real suprise there.
  • Banks stocks have benefited from the Federal Reserve partially lifting its hold on share buybacks, saying that banks can resume repurchases in the first quarter of 2021 as long they don't exceed the average quarterly profits from their past four quarters. The change came after the Fed found that all major banks passed a second round of stress tests, indicating the firms can continue lending to businesses and households even if the economy dipped into a new recession.
  • Potentially the top six banks can buy back $11 billion in the first-quarter. Goldman Sachs shares after the announcement led the rally with a 7.7% increase. Morgan Stanley and JPMorgan jumped 6.4% and 4.9% at intraday highs. Within minutes of the announcement all three banks have announced plans to resume buybacks in the new year.
  • Last quarterbMorgan Stanley continues in its aim to become the leading wealth and investment services firm with another aggressive aquisition. $MS announced an intention to buy Eaton Vance $EV for $7 billion. This follows the bank completing its $13 bln acquisition of E*TRADE $ETFC.
  • In times of recession and credit tightening Banks risk becomes problematic, though since 2008 the World's Central Banks have been quick to loosen the strings. Add massive QE and purcahse failing assets.
  • Banks are benefiting from the Federal Deposit Insurance Commission intending to ease the Volcker Rule, which restricts banks from making large investments into venture capital. The Volcker Rule was enacted in the wake of the 2008 financial crisis, and the new changes could potentially free up billions in bank capital. Bank stocks rose. otal Non-Financial Debt (NFD) expanded $737 billion during Q3 to a record $60.113 trillion. Through the first three quarters of 2020, NFD surged an unprecedented $5.740 trillion, or 14.1% annualized. NFD was up $6.181 trillion over the past year (11.5%) and $8.817 trillion (16.7%) over two years. For perspective, NFD expanded on average $1.830 trillion annually over the past decade. NFD has ballooned 71% since the end of 2008.
  • Banks are responding to the Federal Reserve in their annual stress test capped bank dividend payments and suspended share-buybacks for the third quarter.

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: January 18, 2021

None Seen

Tuesday January 19, 2021

  • 13:00 GBP BoE MPC Member Haldane Speaks
  • 20:30 CNY PBoC Loan Prime Rate

Wednesday January 20, 2021

  • 10:00 CAD BoC Monetary Policy Report
  • 10:00 CAD BoC Rate Statement
  • 10:00 CAD BoC Interest Rate Decision
  • Tentative CAD BOC Press Conference
  • 16:00 BRL Interest Rate Decision
  • 21:00 NZD RBNZ Offshore Holdings (Dec)
  • Tentative JPY BoJ Monetary Policy Statement
  • Tentative JPY BoJ Outlook Report (YoY)
  • Tentative JPY BoJ Press Conference
  • Tentative JPY BoJ Interest Rate Decision

Thursday January 7, 2021

  • 04:30 GBP BOE Credit Conditions Survey
  • 07:45 EUR Deposit Facility Rate (Jan)
  • 07:45 EUR ECB Interest Rate Decision (Jan)
  • 08:00 ZAR Interest Rate Decision (Jan)
  • 08:30 EUR ECB Press Conference

Friday January 8, 2021

  • None Seen

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:

Sunday, January 17, 2021

  • 17:00 JPY Reuters Tankan Index (Jan)
  • 19:01 GBP Rightmove House Price Index (MoM)
  • 19:30 SGD Trade Balance
  • 21:00 CNY Fixed Asset Investment (YoY) (Dec)
  • 21:00 CNY GDP (QoQ) (YoY) (Q4)
  • 21:00 CNY Chinese GDP YTD (YoY) (Q4)
  • 21:00 CNY Industrial Production (YoY) (Dec)
  • 21:00 CNY Chinese Industrial Production YTD (YoY) (Dec)
  • 21:00 CNY Retail Sales (YoY) (Dec)
  • 21:00 CNY Chinese Retail Sales YTD (YoY) (Dec)
  • 21:00 CNY NBS Press Conference
  • 23:30 JPY Capacity Utilization (MoM) (Nov)
  • 23:30 JPY Industrial Production (MoM) (Nov)

Monday, January 18, 2021

  • All Day Holiday United States - Martin Luther King, Jr. Day
  • 04:00 EUR Italian CPI (MoM) (YoY) (Dec)
  • 05:00 EUR Eurogroup Meetings
  • Tentative EUR German Buba Monthly Report
  • Tentative CNY FDI
  • 08:15 CAD Housing Starts (Dec)
  • 08:30 GBP BoE Gov Bailey Speaks
  • 08:30 CAD Foreign Securities Purchases (Nov)
  • 16:00 NZD NZIER Business Confidence (Q4)
  • 16:00 NZD NZIER QSBO Capacity Utilization (Q4)
  • 16:45 NZD Electronic Card Retail Sales (MoM) (Dec)
  • 19:00 AUD HIA New Home Sales (MoM)

Tuesday January 19, 2021

  • 02:00 GBP Car Registration (MoM)(YoY) (Dec)
  • 02:00 EUR Italian Car Registration (MoM) (YoY) (Dec)
  • 02:00 EUR German Car Registration (MoM) (YoY) (Dec)
  • 02:00 EUR German CPI (MoM) (Dec)
  • 02:00 EUR French Car Registration (MoM) (YoY)
  • 02:30 CHF PPI (MoM) (Dec)
  • 04:00 EUR Italian Trade Balance (Nov)
  • 04:00 EUR Current Account (Nov)
  • 04:30 GBP Labour Productivity (Q3)
  • 04:30 ZAR Gold Production (YoY) (Nov)
  • 04:30 ZAR Mining Production (Nov)
  • 05:00 EUR German ZEW Current Conditions (Jan)
  • 05:00 EUR German ZEW Economic Sentiment (Jan)
  • 05:00 EUR Construction Output (MoM) (Nov)
  • 05:00 EUR ZEW Economic Sentiment (Jan)
  • 08:30 CAD Manufacturing Sales (MoM) (Nov)
  • 08:30 CAD Wholesale Sales (MoM) (Nov)
  • 08:55 USD Redbook (YoY) (MoM)
  • 09:30 NZD GlobalDairyTrade Price Index
  • 11:30 USD 3-Month Bill Auction
  • 11:30 USD 6-Month Bill Auction
  • 13:00 GBP BoE MPC Member Haldane Speaks
  • 16:00 USD US Foreign Buying, T-bonds (Nov)
  • 16:00 USD Overall Net Capital Flow (Nov)
  • 16:00 USD TIC Net Long-Term Transactions (Nov)
  • 16:00 USD TIC Net Long-Term Transactions including Swaps (Nov)
  • 18:30 AUD Westpac Consumer Sentiment (Jan)
  • 20:30 CNY PBoC Loan Prime Rate

Wednesday January 20, 2021

  • 02:00 GBP CPI (MoM) (Dec)
  • 02:00 EUR German PPI (MoM) (Dec)
  • 04:30 GBP PPI Input (MoM) (Dec)
  • 04:30 GBP PPI Output (MoM) (Dec)
  • 05:00 EUR CPI (MoM) (Dec)
  • 06:00 GBP CBI Industrial Trends Orders (Jan)
  • 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
  • 08:30 CAD CPI (MoM) (Dec)
  • 08:55 USD Redbook (YoY) (MoM)
  • 10:00 USD NAHB Housing Market Index (Jan)
  • 10:00 CAD BoC Monetary Policy Report
  • 10:00 CAD BoC Rate Statement
  • 10:00 CAD BoC Interest Rate Decision
  • Tentative USD U.S. President Biden Speaks
  • Tentative CAD BOC Press Conference
  • Tentative USD U.S. President Biden Speaks
  • 13:00 USD 20-Year Bond Auction
  • 16:00 KRW PPI (MoM)
  • 16:00 BRL Interest Rate Decision
  • 16:30 USD API Weekly Crude Oil Stock
  • 18:30 AUD Westpac Consumer Sentiment (Jan)
  • 18:50 JPY Trade Balance (Dec)
  • 19:00 AUD MI Inflation Expectations
  • 19:30 AUD Employment Change (Dec)
  • 19:30 AUD Full Employment Change (Dec)
  • 19:30 AUD Participation Rate (Dec)
  • 19:30 AUD Unemployment Rate (Dec)
  • 21:00 NZD RBNZ Offshore Holdings (Dec)
  • Tentative JPY BoJ Monetary Policy Statement
  • Tentative JPY BoJ Outlook Report (YoY)
  • Tentative JPY BoJ Press Conference
  • Tentative JPY BoJ Interest Rate Decision)

Thursday, January 21, 2021

  • 02:00 CHF Trade Balance (Dec)
  • 02:45 EUR French Business Survey (Jan)
  • 04:00 USD Philadelphia Fed Manufacturing Index (Jan)
  • 04:00 EUR Italian Industrial New Orders (MoM)
  • 04:00 EUR Italian Industrial Sales (MoM) (Nov)
  • 04:00 EUR Spanish Trade Balance
  • 04:30 GBP BOE Credit Conditions Survey
  • 07:45 EUR Deposit Facility Rate (Jan)
  • 07:45 EUR ECB Interest Rate Decision (Jan)
  • 08:00 ZAR Interest Rate Decision (Jan)
  • 08:30 USD Building Permits (Dec)
  • 08:30 USD Housing Starts (MoM) (Dec)
  • 08:30 USD Jobless Claims
  • 08:30 USD Philly Fed CAPEX Index (Jan)
  • 08:30 CAD ADP Nonfarm Employment Change
  • 08:30 CAD New Housing Price Index (MoM) (Dec)
  • 08:30 EUR ECB Press Conference
  • 10:00 EUR Consumer Confidence (Jan)
  • 11:30 USD 4-Week Bill Auction
  • 11:30 USD 8-Week Bill Auction
  • 13:00 USD 10-Year TIPS Auction
  • 16:30 NZD Business NZ PMI (Dec)
  • 16:45 NZD CPI (QoQ) (YoY) (Q4)
  • 17:00 AUD Manufacturing PMI
  • 17:00 AUD Services PMI
  • 18:30 JPY CPI, n.s.a (MoM) (Dec)
  • 19:01 GBP GfK Consumer Confidence (Jan)
  • 19:30 AUD Retail Sales (MoM)
  • 19:30 JPY Manufacturing PMI (Jan)
  • 19:30 JPY Services PMI (Jan)
  • 19:30 SGD URA Property Index (QoQ) (Q4)

Friday, January 22, 2021

  • 02:00 GBP Public Sector Net Borrowing (Dec)
  • 02:00 GBP Public Sector Net Cash Requirement (Dec)
  • 02:00 GBP Retail Sales (MoM) (Dec)
  • 03:15 EUR French Manufacturing PMI (Jan)
  • 03:15 EUR French Markit Composite PMI (Jan)
  • 03:15 EUR French Services PMI (Jan)
  • 03:30 EUR German Composite PMI (Jan)
  • 03:30 EUR German Manufacturing PMI (Jan)
  • 03:30 EUR German Services PMI (Jan)
  • 04:00 EUR Manufacturing PMI (Jan)
  • 04:00 EUR Markit Composite PMI (Jan)
  • 04:00 EUR Services PMI (Jan)
  • 04:30 GBP Composite PMI (Jan)
  • 04:30 GBP Manufacturing PMI (Jan)
  • 04:30 GBP Services PMI (Jan)
  • 08:30 CAD Retail Sales (MoM) (Nov)
  • 09:45 USD Manufacturing PMI (Jan)
  • 09:45 USD Markit Composite PMI (Jan)
  • 09:45 USD Services PMI (Jan)
  • 10:00 USD Existing Home Sales (Dec)
  • 10:30 USD Natural Gas Storage
  • 11:00 USD Crude Oil Inventories
  • 13:00 USD U.S. Baker Hughes Oil Rig Count
  • 15:30 USD CFTC speculative net 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 4th-quarter earnings reports on Jan 15, helping to set the tone for the broader U.S. stock market, as businesses cope with the eleventh 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 LULU Lululemon Athletica CCL Carnival AVTR Avantor HZNP Horizon Therapeutics NVCR Novocure CUK Carnival WTRG Essential Utilities NVTA Invitae PEN Penumbra PACB Pacific Biosciences NVRO Nevro CNXC Concentrix SNX Synnex GWPH GW Pharmaceuticals WYND Wyndham Destinations CDNA Caredx INOV Inovalon Dave & Buster's CNXC Concentrix SNX Synnex SLP Simulations Plus VOXX Voxx LMNR Limoneira KRUS Kura Sushi SHAK Shake Shack KBH KB Home BBCP Concrete Pumping EXFO Exfo among others

This week we hear from:

  • Monday starts us off with
  • None seen
  • Tuesday with earnings from Goldman Sachs, Bank of America, Netflix, Halliburton, Logitech International, and PetMed Express
  • Wednesday Earnings Include Procter & Gamble, US Bancorp, Alcoa Corporation, Bank of New York Mellon Corp, Morgan Stanley and UnitedHealth Group
  • Thursday Earnings Include Union Pacific, IBM, Intel, CSX, Discover Financial Services, Baker Hughes, United Airlines Holdings, Intuitive Surgical, Cyient and Seagate Technology
  • Friday Earnings include PPG Industries, Schlumberger, Kansas City Southern, AllyFinancial, and HuntingtonBancshares

IPO Week Ahead

Four IPOs are scheduled to raise $1.8 billion in the shortened holiday week, featuring a diverse group of foreign issuers.

China’s leading e-cigarette brand RLX Technology (RLX) plans to raise $1.0 billion at a $14.0 billion market cap. RLX Technology sells e-cigarettes and related accessories through over 100,000 retail outlets throughout China. Fast growing and profitable, the company boasted a 63% share of the e-vapor market in China in 2019. 

Brazilian private equity firm Patria Investments (PAX) plans to raise $400 million at a $2.0 billion market cap. One of the leading PE firms in Brazil, the company has an investment portfolio of over 55 companies and assets and has raised over $8.7 billion since 2015. As of September 30, 2020, the firm had $12.7 billion in AUM with 16 active funds. Patria plans to pay a dividend to shareholders representing approximately 85% of its distributable earnings. 

Germany-based luxury fashion site MYT Netherlands (MYTE) plans to raise $266 million at a $1.5 billion market cap. Operating under the name Mytheresa, the company offers clothing, shoes and accessories from multiple luxury brands through its e-commerce platform. The company is fast growing and profitable with approximately 522,000 active users, representing a 30% customer CAGR since the FY16. 

Dream Finders Homes (DFH) plans to raise $130 million at a $1.2 billion market cap. This Florida-based homebuilder is expanding nationally and has successfully completed several acquisitions. In the 9mo20, Dream Finders Homes expanded its EBITDA margins to 9%, and pro forma revenue increased 29%. Existing shareholder Boston Omaha has indicated on $25 million worth of shares in the IPO.

IPO data via Renaissance Capital

 

-comment section below data-

Last Week's Big Stories

The Week That Was - Last Weeks Recap

  • Into The Vortex - EIA Reports Draw of -134 Bcf in Natural Gas Inventories
  • Around The Barrel - Crude Oil Draws As Product Stocks Rise Strongly
  • OPEC Monthly Oil Market Report January 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.

Trade Smart!

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