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Bond trader

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

Fed, Bonds and Bitcoin

The Week That Was - What Lies Ahead?

Editorial

Another chaotic week with the bond market the wild card.  Expect more of the same volatility again from yields as the Federal Reserve meets Tuesday and Wednesday. We saw new highs in the S&P and DJIA while the Nasdaq is still well off it's highs as tech and growth stocks have pulled back on yields rising. With the passing of the $1.9 trillion splurge a FOMO surge lifted stocks.

The small cap Russell 2000 ripped 7.3% to be now up 19.1% on the year. The Banks $KWB jumped 4.3%, up 26% ytd. The Broker Dealers was up 5.8% and the Midcaps up 5.3% whilst the Utilities popped 4.5%. The Goldman Sachs Most Short Index surged 10.6%, increasing ytd gains to 40.4%. GME itself was back over to $300 at one point and Bitcoin printed $61,708 by Saturday. In the face of this Treasury yields jumped to new one-year highs. Ten-year Treasury yields rose six bps to 1.63%. five-year Treasury inflation “breakeven rate” surged another 10 bps to 2.58%, the high since July 2008.

What concerns bond holders and impacts stocks over the past weeks is the Fed appears to be too Blaise about inflation. This view got added weight when crude oil hit the highest prices since 2019 after OPEC decided to stay pat on production for April. Powell said "We’re going to wait to see signs of actual inflation or the appearance of other risks that could threaten the achievement of our goals. And we’ve seen that the economy can sustain exceptionally low levels of unemployment without inflation.”

There is a view that Powell also refuses to be dictated to and set the bond bullies up for failure. The V reversal last week suggests that. Air needs to come out of the market, particularly Tech, this is best illustrated by the ARK Funds and Semi-Conductor SMH ET's (see below). From here we have another massive $1.9 Trillion stimulus. Is that enough to keep asset prices elevated, hard to fight the Fed and that kind of cash floating around. Watch the argument from analysts that higher yields mean the economy is growing, stocks are value versus hyperinflation is on its way.

After being up over 90% Bitcoin reversed sharply from $44,000 to over $60,000. One could argue bonds and crypto are at the opposite ends of the spectrum, but all they in 2021? Astonishing and symptomatic of so many confluences which we will discuss later. These added further price pressures on food and energy come after we discussed inflationary pressures are building in the US, and a truly tidal wave of Treasuries is in the pipeline. Not hard to grasp Bond market nervousness. 

Raise your eyes and look at the stopped car in front of you you may want to hit the brakes.The pandemic is not close to our greatest worry, nor is energy it seems. The  runaway credit bubble in the era of delusion and entitlement has multiple unintended consequences or are they intended? The stockmarket has lost rationality  the danger is should the bubble pop the consequences of a historic debt crisis in a deeply divided nation and unprepared social and geopolitical backdrops could be earth shattering as the Fed disregards asset inflation and bubble dynamics.

Of note during the Arctic Blast with the EV mania and the Biden Admin Green deal push we noted the spike in spot Texas electricity prices pushing the cost of electricity not on fixed plans to unheard of levels. Bloomberg reported on recharging a Tesla from about $18 to $900. Yes the price spike was fleeting but it should remind the sane amongst us the broader issue of the disconnect between the push toward electrification and our massively inadequate energy infrastructure. This is the area that needs investment, not just for our glorious EV but for all energy and possible disasters like we just saw.

Comments from Yellen and others on the same page suggest that low rates conveniently push potential debt instability far out into the future. The Fed is poised to expand its balance sheet, by adding liquidity to the tune of $1.5 TN this year with no regard for rampant asset price inflation and bubbles. Now the new administration has control of the blank checkbook and is determined to us it with no long-term thinking or planning; everything is short-term focused. Washington is gambling with our nation’s future, from kicking cans down the road to rolling drums down a hill. 

Contents

  • Part A: Stockmarkets
  • Part B: Bonds
  • Fed and Banks
  • Part C: Commodities
  • Energy - Oil and Gas
  • Gold and Silver
  • Part D: Foreign Exchange
  • Geopolitics and Economics
  • Economy Week ahead

 

PART A - Stock Markets

Highlights - USA

  • The S&P500 jumped 2.6% (up 5.0% y-t-d)
  • Dow surged 4.1% (up 7.1%). 
  • Utilities rose 4.5% (down 1.5%).
  • The Banks advanced 4.3% (up 26.0%), and the Broker/Dealers surged 5.8% (up 20.8%). 
  • The Transports gained 3.9% (up 13.2%).
  • The S&P 400 Midcaps jumped 5.3% (up 14.7%), and small cap Russell 2000 surged 7.3% (up 19.1%).
  • The Nasdaq100 rallied 2.1% (up 0.4%). 
  • Semiconductors recovered 1.5% (up 6.1%). Biotechs increased 0.2% (down 3.5%).
  • With bullion rising $26, the HUI gold index rallied 3.5% (down 9.5%)

 US Indices W 3 12 2021

Highlights - Europe Stocks

  • France's CAC40 surged 4.6% (up 8.9%).
  • The German DAX equities index rose 4.2% (up 5.7%).
  • Spain's IBEX 35 equities index gained 4.3% (up 7.1%).
  • Italy's FTSE MIB index surged 5.0% (up 8.5%).
  • U.K.'s FTSE equities index advanced 2.0% (up 4.7% y-t-d).

 Highlights - Asia Stocks

  • Japan's Nikkei Equities Index jumped 3.0% (up 8.3% y-t-d).
  • South Korea's Kospi index increased 0.9% (up 6.3%).
  • India's Sensex equities index added 0.8% (up 6.4%).
  • China's Shanghai Exchange fell 1.4% (down 0.6%).

 Highlights - Emerging Stocks 

  • EM equities were mixed.
  • Brazil's Bovespa index declined 1.0% (down 4.1%), 
  • Mexico's Bolsa jumped 3.1% (up 8.4%).
  • South Korea's Kospi index increased 0.9% (up 6.3%).
  • India's Sensex equities index added 0.8% (up 6.4%).
  • China's Shanghai Exchange fell 1.4% (down 0.6%).
  • Turkey's Borsa Istanbul National 100 index rose 1.0% (up 5.5%).
  • Russia's MICEX equities index surged 3.7% (up 7.6%).

IPO and SPAC mania is back in full force with last years  Snowflake an indication of and video game maker Roblox going public the most recent big hit.

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 5 SPX W 3 12 2021 

S&P 500 Index Technical Analysis via @KnovaWave

SPX rallied again to new all time highs, after testing and spitting tenkan san & 8/8 Murrey Math at the Daily Cloud & with a positive Chikou 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 3 12 2021 

Weekly SPX spat the break channel it had been tracing since the break of v of (III) or (V). Key was the spit or retest of MM 8/8 and Tenkan San, which held with the previous highs and Tenkan.  To repeat "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 3 12 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 3 12 2021

Apple $AAPL

 AAPL W 3 12 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 3 12 2021

ARK ETF

ARKK W 2021 03 12 2021

US Stocks Watch

 

Earnings Week Ahead

We have seen off the bulk of the official earnings season, which has been better than most predicted after 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 expected the worse, we saw 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 $XPEV, $SITC Site Centers, $WISH Contextlogic $CASY Casey's General Stores $SFIX Stitch Fix $GOCO Gohealth $ATCO Atlas $TACO #DelTaco $MWK Mohawk $GRBK $SIBN $PRTS Carparts, $HRB H&R Block, $NAV Navistar, $THO Thor Industries, $DKS Dick's Sporting Goods, Campbell Soup, Oracle, Vera Bradley, Tupperware, United Natural Foods, Adidas, Cloudera, Bumble, Fossil, Lending Club, Express, AMC Entertainment, Ulta Beauty, Vail Resorts, DocuSign, Poshmark, Gogo, Zumiez, JD.com, WPP, Party City

This week we hear from:

  • Monday starts us off with
  • Westport Fuel Systems, Carlotz
  • Tuesday with earnings from
  • Volkswagen, Fuel Cell, Designer Brands, Jabil, Lennar, Coupa Software, CrowdStrike, REI
  • Wednesday Earnings Include
  • Cintas, Lands' End, Five Below, Herman Miller, American Outdoor Brands
  • Thursday Earnings Include
  • FedEx, Dollar General, Nike, Petco, Accenture, Commercial Metals, Signet Jewelers
  • Friday Earnings include
  • Buckle

IPO Week Ahead

The IPO market starts to pick back up with eight IPOs scheduled to raise $2.2 billion in the week ahead.

  • Chinese IoT platform developer Tuya (TUYA) plans to raise $806 million at a $10.4 billion market cap. Tuya’s platform offers PaaS and SaaS to over 5,000 customers for the development, management, and monetization of software-enabled devices and services. Fast growing and unprofitable, the company’s customer base includes large brands like Philips and Schneider Electric.
  • In its second IPO attempt, Vine Energy (VEI) plans to raise $328 million at a $1.3 billion market cap. This Blackstone-backed natural gas E&P operates in the Haynesville Basin of Northwest Louisiana with approximately 900 drilling locations and 370 net producing wells. Hard hit by the pandemic, the company saw a steep decline in revenue and net income swing negative in 2020.
  • Restaurant SaaS platform Olo (OLO) plans to raise $306 million at a $3.1 billion market cap. Olo provides order management software to over 400 enterprise restaurant brands to process and manage orders, payments, and deliveries. Fast growing and profitable, Olo’s platform has benefitted from stay at home orders, and it may see a slowdown post-pandemic.
  • The Duckhorn Portfolio (NAPA) plans to raise $300 million at a $1.8 billion market cap. This California-based company produces and sells luxury and ultra-luxury wine under a portfolio of ten brands, sourcing most of its grapes from a network of 225 growers. Despite cost fluctuations from harvest yields, Duckhorn has a track record of strong EBITDA margins and is the only pure play wine producer in the luxury segment.
  • Low-cost airline Sun Country Airlines (SNCY) plans to raise $200 million at a $1.4 billion market cap. Sun Country targets the leisure market and family travelers, but also offers charter flights to customers such as casino operators, the US DoD, and college sports teams. Despite cash flow remaining negative, Sun Country has maintained positive EBITDA.
  • Chinese biotech Connect Biopharma Holdings (CNTB) plans to raise $150 million at an $863 million market cap. Connect's lead candidate is currently in a Phase 2b trial for moderate-to-severe atopic dermatitis (AD) in the US, Australia, and New Zealand, with top-line results expected in the 2H21. It plans to initiate additional trials in asthma and chronic rhinosinusitis in the 1H21 and in AD patients in China in the 2H21.
  • Lysosomal storage disorder biotech Gain Therapeutics (GANX) plans to raise $40 million at a $129 million market cap. This preclinical biotech is developing small molecule therapies through its proprietary platform, SEE-Tx, to treat diseases caused by protein misfolding, initially focusing on lysosomal storage disorders. Gain Therapeutics expects to obtain preclinical data and start IND-enabling studies in 2021.
  • Chinese medicine manufacturer Universe Pharmaceuticals (UPC) plans to raise $30 million at a $126 million market cap. Universe sells Traditional Chinese Medicine that targets elderly consumers to address aging and promote well-being. Due to pandemic-driven facility shutdowns, the company saw revenue decline 10% in the 1H20.

IPO data via Renaissance Capital

Part B : Bond Markets

Highlights - Treasuries

  • Investment-grade bond funds saw inflows of $3.308 billion, while junk bond funds posted outflows of $5.331 billion (from Lipper).

Prior to the recent bond route 2 weeks ago "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 0.02%.
  • Two-year government yields added a basis point to 0.15% (up 3bps y-t-d).
  • Five-year T-note yields rose four bps to 0.84% (up 48bps).
  • Ten-year Treasury yields jumped six bps to 1.63% (up 71bps).
  • Long bond yields rose eight bps to 2.38% (up 73bps).
  • Benchmark Fannie Mae MBS yields surged nine bps to 1.97% (up 62bps).

TNX W 3 12 2021 

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.

Highlights - Mortgage Market

U.S. home prices have been fueled by the lowest mortgage rates in history and relocation demand have risen rose at the fastest pace on record, surpassing the peak from the last property boom in 2005. The median price of a single-family home climbed 14.9% to $315,000 in the fourth quarter, the biggest surge in data going back to 1990. The Northeast led the way with a 21% gain.”

  • Freddie Mac 30-year fixed mortgage rates rose three bps to a seven-month high 3.05% (down 31bps y-o-y).
  • Fifteen-year rates gained four bps to 2.38% (down 39bps).
  • Five-year hybrid ARM rates increased four bps to 2.77% (down 24bps).
  • Bankrate's survey of jumbo mortgage borrowing costs had 30-year fixed rates up three bps to 3.23% (down 74bps).

Highlights - Federal Reserve

  • Federal Reserve Credit last week expanded $24.2bn to $7.531 TN. Over the past year, Fed Credit expanded $3.309 TN, or 78.4%. Fed Credit inflated $4.720 Trillion, or 168%, over the past 435 weeks. 
  • Fed holdings for foreign owners of Treasury, Agency Debt last week surged $25.2bn to $3.570 TN.
  • "Custody holdings" were up $130bn, or 3.8%, y-o-y.
  • Total money market fund assets gained $29.7bn to $4.392 TN.
  • Total money funds surged $615bn y-o-y, or 16.3%.
  • Total Commercial Paper gained $11.9bn to $1.111 TN. CP was down $18bn, or 1.6%, year-over-year.

We do know we have massive speculation pockets, viz a viz the Meme or GameStop, Weed stocks and cryptocurrency spectacles in just the matter of weeks. The Fed is today throwing additional fuel on historic speculative manias.

  • 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 sank 14 bps to 0.82% (up 20bps y-t-d).
  • Ten-year Portuguese yields dropped nine bps to 0.20% (up 17bps).
  • Italian 10-year yields sank 13 bps to 0.62% (up 8bps).
  • Spain's 10-year yields fell six bps to 0.33% (up 28bps).
  • German bund yields were unchanged at negative 0.31% (up 26bps).
  • French yields declined two bps to negative 0.07% (up 27bps).
  • The French to German 10-year bond spread narrowed about two to 24 bps.
  • U.K. 10-year gilt yields rose seven bps to 0.82% (up 63bps).

Highlights - Asian Bonds

  • Japanese 10-year "JGB" yields surged five bps to 0.16% (up 14bps y-t-d).

 

Part C: Commodities

Highights

  • The Bloomberg Commodities Index was little changed (up 10.1% y-t-d).
  • WTI crude slipped 48 cents to $65.61 (up 35%).
  • Gasoline rose another 4.1% (up 53%), 
  • Natural Gas dropped 3.7% (up 2%).
  • Copper gained 1.6% (up 18%).
  • Wheat dropped 2.2% (unchanged).
  • Corn fell 1.2% (up 11%).
  • Bitcoin gained $7,913, or 16%, this week to $56,966 (up 96%).
  • 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 Freight W 3 12 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 and tested the median line this week

 Copper W 3 12 2021

US Crude Oil (WTI)

WTI  spiked higher over $68 Last week to complete a 5 wave structure and test min targets after broke the topside of the channel it had been in since September, In any break, the key is crowd behavior to help tell the story which in energy is often around often geopolitics. We watch ABC corrections and from here we get the energy from the break being balanced. This week that was powered by the Tenkan Spit of a spit. Support  is the Tenkan, old channel & prev high confluence. Watch Kijun & 50 dma.. Resistance MM and previous lows.

WTI D 3 12 2021


WTI continued higher after it rebalanced chikou indicative of extreme crowd behavior reverseing at 7/8 after the series of fractals at last Dec wave 1 turn after we had completed 5 waves as marked, from here we watched 3 & 5 waves develop. Price popped after the spit of the 50wma (green) which is now key for support as Tenkan touched Kijun in a kiss of life. Given that we had tremendous energy which bore out in the hghs last seen 2019.

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 Murrey Math time and price 

WTI W 3 12 2021

Oil 2014 2021

Oil 2020 2021

US Natural Gas (Henry Hub)

US Natural Gas has played out both the corrective and consolidation phases since it completed its B or IV ( Bull Case) last year since then a series of 3 waves. Bear is this 3 wave is a C of B, bull a developing 5 and we closed under the daily cloud which needs to be recaptured for the natags bulls. Tenkan failed after the arctic blast with more failure after Kijun crossed Tenkan. Support is previous breaks. Resistance is 8/8 and recent highs. 

NG D 3 12 2021 

Natty has moved in a series of 3's since spat the 50 wma to get over weekly Kijun and Tenkan BUT this week all gave way other than the weekly Kijun in it's larger developing pennant. Support is the cloud and 50wma.  A series of fractals, as you would expect in a seasonal commodity with weather a prime mover. Resistance is recent highs and Fib/Murrey confluence.

 NG W 3 12 2021

 Key Energy Reports

 

Precious Metals

Highlights

  • Spot Gold rallied 1.6% to $1,727 (down 9.0% YTD).
  • Silver recovered 2.7% to $25.919 (down 1.8%).

Gold

Gold exudes weakness or  bulls dissappointment after its manic rise to +5/8 weekly and rebalance of the Kikou in 5 waves then tested and failed the Tenkan, kijun and 50 wma. We have found support at the wave 1 conflunce of the higher degeree 5, To be bullish we would need to recapture the cloud (or the flag :) ). In sight of the intraday high of $1765.43 is a key harmonic pivot. We appear to have overcome the negative divergence between the weekly chikou, Silver spread and the recent highs BUT NOT yet Tenkan & Kijun fails. From there does the 5 play out? Watch Fibs and chikou.

 Gold W 3 12 2021

 Gold 2 26 21 Fail

Silver

Silver squeeze is front and center with WSB after GME forced the Gold/Silver spread to correct which has buoyed silver in the PM space.. Knowing that recall Silver did a fractal of the sharp C up to breakdown level above the cloud fed by divergence from gold reverting. Silver sits just between the weekly Tenlan and Kijun and as we know reacts with much more violent impulse than gold . Given that we have to respect this is a 3 key is the recent V of what degree this is. Note the MM levels.

 Silver W 2021 03 12 2021

 

Part D: Forex Markets

John Maynard Keynes, 1920: “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

Highlights

  • For the week,the the U.S. dollar index declined 0.3% to 91.679 (up 2.0% y-t-d).
  • Majors for the week For the week on the upside, the Canadian dollar 1.5%, the Australian dollar 1.0%, the British pound 0.6%, the euro 0.3%, For the week on the downside, the Japanese yen 0.7%, and the Swiss franc 0.1%.
  • Minors for the week  For the week on the upside, the Mexican peso increased 3.0%, the South African rand 2.7%, the Brazilian real 2.3%, the Norwegian krone 1.4%, the Swedish krona 0.7% and the New Zealand dollar 0.1%. For the week on the downside, the South Korean won declined 0.7%, the Singapore dollar 0.2%. The Chinese renminbi declined 0.18% versus the dollar this week (up 0.29% y-t-d).

Australian Dollar - AUDUSD

Aussie dollar completed a 5 at the pysch 80 level and it back doing a break retest of 8/8 and the weekly tenkan. as one would expect after it completed 5 waves in emotive fashion.  It has closed over the 50 Wma in 5 waves but between the Tenkan and Kijun like many commodities.The AUDUSD old three year high of 0.7820 from January 6. is a key option energy point playing out.

AUD W 3 12 2021

New Zealand Dollar - NZDUSD

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

NZD W 3 12 2021

Canadian Dollar - USDCAD

The Loonie hit in 3 year high this week as it continues to benefit from dollar weakness and commodity currency strength led by the AUSD and NZD after spitting the 261% Fib & Weekly 8/8 after 5 waves lower (USD higher)  We closed ender the old 38.8% confluence. Use Fibs for support and resisitance until Tenkan and Kijun catch up

CAD W 3 12 2021

Euro - EURUSD

The Euro continues to correct in flags after broke the channel last May. 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) and now Kijun (pink). 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. Again governed by EURGBP and Bund volatility. 

EUR W 3 12 2021


British Pound - USDGBP

GBP D 3 12 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 3 12 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 2021 03 12 2021

 Mexican Peso USDMXN

The Peso corrected the collapse to +1/8 against the USD 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 3 12 2021

Turkish Lire USDTRY

The Turkish Lire corrected back to the weekly cloud to bounce to the Kijun The USD/TRY had fallen to around 7 to bounce to 8/8.  The move is aquestion of degree. Keep an eye on geopolitical risk factors. 

 TRY W 3 12 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 to over 423% of that consolidation. 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 3 13 2021

The rise of Bitcoin 2 26 2021

 

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

 President Biden gave his strongest indication yet that he’ll push for swift action on coronavirus relief for the U.S. economy without Republican support, as House lawmakers cleared the way for passing his $1.9 trillion stimulus plan with only Democratic votes. Biden signaled he was resigned to his minimum-wage hike not being a part of the bill. 

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.
  • Mario Draghi’s appointment as PM in a coalition government. China liquidity conditions eased significantly, with China’s overnight funding rate collapsing to 1.88% from the previous Friday’s 3.33%. Global anxiety that Beijing might finally be determined to rein in Bubble excess was quickly supplanted by exultation that Chinese officials wouldn’t dare risk it. Curiously, the Shanghai Composite gained only 0.4%, recovering but a fraction of the previous week’s drop. Perhaps Chinese equities discern this week’s loosened liquidity conditions were only a temporary phenomenon - with further tightening measures to follow over the coming weeks and months..
  • 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

  • Trade wars persist between Australia and China. The largest exporter of commodities and the worlds largest importer of commodities. China is experiencing record cold weather and it's beligerance is hurting shooting itself in the foot. Regional partners such as Japan and India have supported Australia's standing up to Chinese bullying.
  • 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..We are awaiting Biden's offical resposne.
  • Chairamn Chi and President Biden had a phone hook up this week with the US saying they will review all policies but tariffs to stand in the meantime. China continued it's theats on the matter. 

 

Fat Tail Virus Risk

“A highly infectious Covid-19 variant is circulating widely in Florida, prompting concern that a resurgence of the virus is possible in the state and beyond, even as cases and hospitalizations drop dramatically. In Florida, as elsewhere in the U.S., Covid cases, hospitalizations and deaths have dropped significantly… But conditions aren’t improving quite as quickly in the Sunshine State, at least in certain key categories. The per-capita rate of Covid-19 patients currently in Florida hospitals is now about 25% above the national average.” Bloomberg

“A second wave of Covid-19 is ripping through Brazil, pushing hospitals and ICUs toward collapse and claiming record numbers of daily deaths. While a new variant of the coronavirus spreads throughout the country, many Brazilians continue to defy mask mandates mobility restrictions following the example of President Jair Bolsonaro, who recently said people need to ‘stop being sissies’ and ‘whining’ about the virus.” CNN

 

Banks

https://traderscommunity.com/administrator/index.php?option=com_content&view=article&layout=edit&id=2367#wf-editor-wysiwyg

The major money cents banks have released earnings with mixed results for Q4:

  • 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 year Morgan 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 purchase of 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. 

 

"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

The key focus in the week ahead is testimony from Federal Reserve Chairman Jerome Powell, who delivers his semi-annual testimony on the economy before the Senate Banking Committee on Tuesday and the House Financial Services Committee Wednesday. Analysts will looking for comments on the increase in interest rates, as well as concerns that inflation could begin to take off.

Powell is expected to continue to emphasize that the Fed will keep rates low for a long time and maintain its easy policies to help the economy. 

Central Bank Watch speeches, reports and rate moves

Monday: March 15 2021

  • 20:30 AUD RBA Meeting Minutes

Tuesday March 16, 2021

  • 19:30 AUD RBA Assist Gov Kent Speaks

Wednesday March 17, 2021

  • 10:30 EUR German Buba Mauderer Speaks
  • 14:00 USD Interest Rate Projection - 1st Yr (Q1)
  • 14:00 USD Interest Rate Projection - 2nd Yr (Q1)
  • 14:00 USD Interest Rate Projection - Current (Q1)
  • 14:00 USD Interest Rate Projection - Longer (Q1)
  • 14:00 USD FOMC Economic Projections
  • 14:00 USD FOMC Statement
  • 14:00 USD Fed Interest Rate Decision
  • 14:30 USD FOMC Press Conference
  • 20:30 AUD RBA Bulletin

Thursday March 18, 2021

  • 04:00 EUR ECB President Lagarde Speaks
  • 04:30 EUR ECB McCaul Speaks
  • 06:30 EUR ECB LTRO
  • 07:00 EUR ECB President Lagarde Speaks
  • 08:00 GBP BoE Interest Rate Decision (Mar)
  • 08:00 GBP BoE MPC Meeting Minutes
  • 09:10 EUR ECB's De Guindos Speaks
  • 10:30 EUR German Buba Mauderer Speaks
  • 14:00 EUR ECB's Schnabel Speaks
  • 22:30 JPY BoJ Press Conference
  • 22:30 JPY BoJ Press Conference
  • 22:30 JPY Monetary Policy Meeting Minutes

Friday March 18, 2021

  • 06:30 RUB CBR Interest Rate Decision '
  • 08:00 RUB CBR Press Conference
  • 09:00 GBP BoE MPC Member Cunliffe 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:

Key economic reports this week will key off The Federal Reserve meeting Tuesday and Wednesday which could be a catalyst for a move in yields.

Sunday, March 14, 2021

  • 19:15 AUD RBA Governor Lowe Speaks
  • 19:50 JPY Core Machinery Orders (MoM) (Jan)
  • 19:55 KRW Trade Balance (Feb)
  • 20:01 GBP Rightmove House Price Index (MoM)
  • 21:30 CNY House Prices (YoY) (Feb)
  • 22:00 CNY Fixed Asset Investment (YoY) (Feb)
  • 22:00 CNY Industrial Production (YoY) YTD (YoY) (Feb)
  • 22:00 CNY Retail Sales (YoY) (YoY) (Feb)
  • 22:00 CNY Chinese Unemployment Rate
  • 22:00 CNY NBS Press Conference
  • 22:30 SGD Unemployment Rate

Monday, March 15, 2021

  • 00:00 AUD HIA New Home Sales (MoM)
  • 00:30 JPY Tertiary Industry Activity Index (MoM)
  • 03:00 EUR German WPI (MoM) (YoY) (Feb)
  • Tentative EUR Eurogroup Meetings
  • 07:00 EUR Reserve Assets Total (Feb)
  • 08:15 CAD Housing Starts (Feb)
  • 08:30 USD NY Empire State Manufacturing Index (Mar)
  • 08:30 CAD Manufacturing Sales (MoM) (Jan)
  • 11:30 USD 3-Month Bill Auction
  • 11:30 USD 6-Month Bill Auction
  • 16:00 USD US Foreign Buying, T-bonds (Jan)
  • 16:00 USD Overall Net Capital Flow (Jan)
  • 16:00 USD TIC Net Long-Term Transactions (Jan)
  • 16:00 USD TIC Net Long-Term Transactions including Swaps (Jan)
  • 16:00 NZD Westpac Consumer Sentiment
  • 17:00 KRW Export & Import Price Index (YoY) (Feb)
  • 20:30 AUD House Price Index (QoQ) (Q4)
  • 20:30 AUD RBA Meeting Minutes
  • 22:00 NZD Credit Card Spending (YoY)

Tuesday, March 16, 2021

  • 00:30 JPY Capacity Utilization (MoM) (Jan)
  • 00:30 JPY Industrial Production (MoM) (Jan)
  • 03:00 EUR German WPI (YoY)(MoM) (Feb)
  • 03:45 EUR French CPI (YoY)(MoM) (Feb)
  • 04:30 HKD Unemployment Rate (Feb)
  • 05:00 EUR Italian CPI (YoY)(MoM (Feb)
  • 06:00 EUR German ZEW Current Conditions (Mar)
  • 06:00 EUR German ZEW Economic Sentiment (Mar)
  • 06:00 EUR ZEW Economic Sentiment (Mar)
  • 08:30 USD Export & Import Price Index (MoM) (Feb)
  • 08:30 USD Retail Sales (MoM) (YoY) (Feb)
  • 08:30 CAD Foreign Securities Purchases (Jan)
  • 09:15 USD Capacity Utilization Rate (Feb)
  • 09:15 USD Industrial Production (YoY) (MoM) (Feb)
  • 09:15 USD Manufacturing Production (MoM) (Feb)
  • 09:55 USD Redbook (YoY)(MoM)
  • 10:00 USD Business Inventories (MoM) (Jan)
  • 10:00 USD NAHB Housing Market Index (Mar)
  • 10:00 USD Retail Inventories Ex Auto (Jan)
  • 10:30 NZD GlobalDairyTrade Price Index
  • 13:00 USD 20-Year TIPS Auction
  • 17:30 USD API Weekly Crude Oil Stock
  • 17:45 NZD Current Account (YoY)(QoQ) % of GDP (Q4)
  • 19:00 KRW Unemployment Rate (Feb)
  • 19:00 JPY Reuters Tankan Index (Mar)
  • 19:30 AUD MI Leading Index (MoM)
  • 19:30 AUD RBA Assist Gov Kent Speaks
  • 19:50 JPY Trade Balance (Feb)
  • 20:30 SGD Trade Balance

Wednesday March 17, 2021

  • 03:00 GBP Car Registration (MoM) (Feb)
  • 03:00 EUR Italian Car Registration (MoM) (Feb)
  • 03:00 EUR German Car Registration (MoM) (Feb)
  • 03:00 EUR French Car Registration (MoM) (Feb)
  • 05:00 USD IEA Monthly Report
  • 05:00 EUR Spanish Trade Balance
  • 06:00 EUR CPI (MoM) (Feb)
  • 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 USD Building Permits (Feb)
  • 08:30 USD Housing Starts (Feb)
  • 08:30 CAD CPI (MoM) (Feb)
  • 10:30 USD Crude Oil Inventories
  • 10:30 EUR German Buba Mauderer Speaks
  • 14:00 USD Interest Rate Projection - 1st Yr (Q1)
  • 14:00 USD Interest Rate Projection - 2nd Yr (Q1)
  • 14:00 USD Interest Rate Projection - Current (Q1)
  • 14:00 USD Interest Rate Projection - Longer (Q1)
  • 14:00 USD FOMC Economic Projections
  • 14:00 USD FOMC Statement
  • 14:00 USD Fed Interest Rate Decision
  • 14:30 USD FOMC Press Conference
  • 17:45 NZD GDP (QoQ) (Q4)
  • 20:30 AUD Employment Change (Feb)
  • 20:30 AUD Full Employment Change (Feb)
  • 20:30 AUD Participation Rate (Feb)
  • 20:30 AUD RBA Bulletin
  • 20:30 AUD Unemployment Rate (Feb)

Thursday, March 18, 2021

  • 03:00 CHF Trade Balance (Feb)
  • 03:30 CHF PPI (MoM) (Feb)
  • 04:00 EUR ECB President Lagarde Speaks
  • 04:30 EUR ECB McCaul Speaks
  • 05:00 EUR Italian Trade Balance (Jan)
  • 06:00 EUR Wages in euro zone (YoY) (Q4)
  • 06:00 EUR Labor Cost Index (YoY) (Q4)
  • 06:00 EUR Trade Balance (Jan)
  • 06:30 EUR ECB LTRO
  • 07:00 EUR ECB President Lagarde Speaks
  • 08:00 GBP BoE Interest Rate Decision (Mar)
  • 08:00 GBP BoE MPC Meeting Minutes
  • 08:30 USD Jobless Claims
  • 08:30 USD Philadelphia Fed Manufacturing Index (Mar)
  • 08:30 CAD ADP Nonfarm Employment Change
  • 08:30 CAD New Housing Price Index (MoM) (Feb)
  • 09:10 EUR ECB's De Guindos Speaks
  • 10:00 USD US Leading Index (MoM) (Feb)
  • 10:30 USD EIA Natural Gas Storage
  • 10:30 EUR German Buba Mauderer Speaks
  • 11:30 USD 4-Week Bill Auction
  • 11:30 USD 8-Week Bill Auction
  • 13:00 USD 10-Year TIPS Auction
  • 14:00 EUR ECB's Schnabel Speaks
  • 19:30 JPY CPI, n.s.a (MoM) (Feb)
  • 20:01 GBP GfK Consumer Confidence (Mar)
  • 20:30 AUD Retail Sales (MoM)
  • 22:30 JPY BoJ Press Conference
  • 22:30 JPY BoJ Press Conference
  • 22:30 JPY Monetary Policy Meeting Minutes

Friday, March 19, 2021

  • 03:00 GBP Public Sector Net Borrowing (Feb)
  • 03:00 EUR German PPI (MoM) (Feb)
  • 06:30 RUB Interest Rate Decision
  • 06:45 EUR ECB's Panetta Speaks
  • 08:00 RUB CBR Press Conference
  • 08:30 CAD Core Retail Sales (MoM) (Jan)
  • 08:30 CAD Retail Sales (MoM) (Jan)
  • 09:00 GBP BoE MPC Member Cunliffe Speaks
  • 12:00 RUB Russian Real Wage Growth (YoY) (Jan)
  • 12:00 RUB Retail Sales (YoY) (Feb)
  • 12:00 RUB Unemployment Rate (Feb)
  • 13:00 USD U.S. Baker Hughes Oil Rig Count
  • 16:30 GBP 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. 

 

 

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