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FEAR NOT Brave Investors
Banks, BREXIT and Chinese Whispers
The Week That Was:
The risk off levitation in markets continued in the surreal world seemingly in a place that can only go up. The bizzare acceptance that we can’t go down and you are a fool if you think otherwise is at a thunderclap. We started off with miserable Manufacturing PMI’s across the world, though the one outlier of a better than expected Chinese facory number spunked the latest rally. (see what ya wanna see).
We finished with counterweighting service PMIs and a strong US jobs report. Two things to notice the strength is in services, some would argue an abundance of readliy desposed needless jobs. The other is despite the strong jobs numbers POTUS spouted out that the Fed should cut 50 bps and launch another QE. Leaving aside the blatant Fed tampering but why oh why would a stomg economy need such injection? The phrase reckless abandonment comes to mind.
Some homwework, for the first three months of the year, the S&P 500 bounced back from the sell-off in December, 13.1%, its biggest quarterly increase since 2009. However financials underperformed the wider market, gaining 7.9% over the same period as the new low-interest-rate normal that boosted other sectors was a headwind for banks. Second part of your homework is this why POTUS suggested the rate cut to spur on wider bank on lending? Leave your answers below.
Economic reports for the most part continue to dissappoint, as said earlier the odd positive report is latched onto by the market. Be aware of the herd, the machines and the greed. Despite all the chaos we sit just under 2900 on the S&P as the so called Powell Put and POTUS obsession with the Dow has put us in the Twilight zone with risk reward. WTI oil over $63 despite waiver extensions, Citgo sanction reversal and OPEC lowering demand and increasing supply estimates.
Brexit highlight the ineptitude of leadership and disregard of voters wishes, that UK Parliment March 29 deadline to came and went and none of us are the wiser. Apparently there is an extension or maybe No Deal ….
The Week Ahead
We start off the week with the German trade balance for February, with Germany the eurozone’s largest economy so its economic performance dictates expectations for the broader eurozone economy, the European Central Bank’s monetary policy, and the pace of global growth. Watch if Germany’s trade surplus is widening and why.
Sorry but more Brexit, as the UK government and Labour try to agree on a way forward. On Wednesday all of the European Union’s 27 remaining leaders meet on whether to grant the UK another extension to Article 50 and its length. The Bank of England Governor Mark Carney and the MPC’s Jon Cunliffe will be at the International Monetary Fund’s Spring meetings in Washington through Sunday. Lots to talk about.
It is now over a month since the latest trade deal between the United States with China deadline of March 1. The White house has said it needs more time. Are we the only one that sees the constant reset to keep markets elevated? If you have half a non partisan brain it should be all pretty clear the great game going on.
For emerging markets the high US dollar means the Fragile 5 continue to shake. South Africa has Presidential elections on May 8. Voters will be going to the polls in Poland, Argentina, India and 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.
Focus on yourself and what YOU CAN INFLUENCE, set your trading plan and goals in be set for 2019. One suspects it will be a year long Groundhog day for Trump, the GOP and the Democrats. We still have China and the U.S.trade wars.
Earnings last week included Cal-Maine Foods, Constellation Brands, Gamestop, Roots and Walgreens. This week we are back in earnings season with the big banks reporting. On Friday, April 12, JPMorgan Chase & Co, PNC and Wells Fargo & Co to begin the earnings season in earnest. Citigroup Inc and Goldman Sachs Group Inc will report the following Monday, followed by Bank of America Corp and Morgan Stanley on Tuesday. Other earnings to watch include Bed Bath & Beyond, Delta Airlines, WD40 and New IPO Levi Strauss reporting.
-comment section below data-
Geopolitical Tinderbox Radar
- U.S. Adds 15 Oil Rigs, 8 in Permian as US Production Hits New Record
- US Gets Bounce in Jobs Created in March But Wages Rise Less Than Forecast
- Into The Vortex – EIA Reports Build of 23 Bcf in Natural Gas Storage
- Around The Barrel – Crude Oil Builds 7.223 Million Barrels as Production Hits Another All Time High
- Resiliant European Service Sector Contrasts With Weak Manufacturing Output
- RBA Leaves Rate Unchanged With Household Consumption Affected by Housing Markets
- U.S. Manufacturing Sector Stalls But Chicago ISM Rebounds
- European Manufacturing Sector Soft With Germany and Italy Weakest
- U.K. Manufacturing Sector Boosted By Record Stock Purchases Ahead of Brexit
The Week That Was – Last Weeks Recap
- Scandal Ridden Bank Wells Fargo Earnings Outlook
- PNC Bank Earnings Outlook Impacted by Fed U Turn
- JPMorgan Kick Off Bank Earnings Season
Biggest Stock Winners and Losers Last Week*
Which Stocks Moved US ETF’s Last Week
US Stock Indices Performance
The $SPX energised from weekly cloud holding and failure see accelerating momentum down fueled to the +2/8 MurreyMath and the chikou. On the weekly we see the breakdown retest from last year being retested.and at +1/8. All well overbought signals, caution if long with target now met from the 1.618& downside extenstion break retention.
10 Year Treasury Note
US Crude Oil (WTI)
WTI energized after a spit of a spit of the 50 wma (green) and previous break retest from a year ago into the weekly cloud. Kijun Sen (pink) to bring chikou back in balance (blue) tenkan remains support – watch Murrey confluence.
US Natural Gas (Henry Hub)
Natural Gas tested the downside again but showed little energy as the weekly view shows with the tenkan holding. The resistance clearly the weekly cloud and previous 61.8% Fibbo converging with the breakdown. Downside clear with 100% also the 2017-18 low – nothing new here
Baltic Dry Index (BDI)
Australian Dollar (AUDUSD)
The Aussie dollar after the RBA meeting and Budget remains trapped between Tenkan and Kijun, do we get a break on the event risk? Range is 1/8 to 3/8 Murrey Math until proven otherwise.
New Zealand Dollar (NZDUSD)
The kiwi can be best described as in balance for now closing under the 50% Fin and was been in the Weekly Cloud for a few week’s now, it would need to break out from that to move from the sideways action.
Canadian Dollar (USDCAD)
The Loonie has been flirting with the tenkan (orange) on the downside and the Murray Math 3/8 and Chikou, still inconclusive outside of that range. The Kijun is trying to close through the Tenkan.
The Euro Weekly sits just over the recent lows again after testing the channel, Again we now evaulate if the previous spit reversal after breaking the highlighted Fib was conclusive. If we do get a rally over Tenkan Adam’s Theory should apply. Meanwhile same elements.
The channel that is Brexit with a spit of the Tenkan as the EURUSD component sold off, back testing the chikou and lower band. Another vote this week, another fail, when will it end?
Japanese Yen (USDJPY)
The dollar yen is still rebalancing after the rally that came after the $AAPL warning sell where risk off rushed to Yen reversed. Downside is tenkan (orange) which held and the effective double bottom from Mar/Dec 2018. The weekly cloud and pennant break (blue) the range,
Mexican Peso (USDMXN)
The Mexican peso strengthened this week after it had weakened with the rest of the emerging markets since the double bottom in the USDMZN at the Daily 0/8 Murrey Math, for now the cloud restrains weakness.
Turkish Lire (USDTRY)
Smaller range in $USDTRY this week, we are locked between +1/8 Murrey Math off the daily cloud with Tenkan energy anf the downsode the Kijun, The 50 also supported.
Last week we noticed Bitcoin volatilty is the lowest seen for years as it still works through the bubble burst, it is retesting the breakdown of February at 1/8 on the daily Murrey Math grid. From their BOOM to 5/8 a 4/8 move. Use your MM rules as the algos control the herd.
The Week Ahead
Key US Economic and Central Bank Events This Week
Mon Apr 8 2019
- 01:00 JPY Economy Watchers Current Index (Mar)
- 01:00 JPY Household Confidence (Mar)
- 02:00 EUR German Trade Balance (Feb)
- 04:30 HKD Foreign Reserves (USD) (Mar)
- 04:30 EUR Sentix Investor Confidence (Apr)
- Tentative GBP Inflation Expectations
- 08:15 CAD Housing Starts (Mar)
- 08:30 CAD Building Permits (MoM) (Feb)
- 10:00 USD Cap Goods Ship Non Defense Ex Air (MoM)
- 10:00 USD CB Employment Trends Index (Mar)
- 10:00 USD Factory Orders (MoM) (Feb)
- 11:30 USD 3-Month Bill Auction
- 11:30 USD 6-Month Bill Auction
- 20:30 AUD Westpac Consumer Sentiment (Apr)
- 21:30 AUD Home Loans (MoM) (Feb)
Tues Apr 9 2019
- 01:45 CHF Unemployment
- 04:00 EUR Italian Retail Sales (MoM) (Feb)
- 04:00 EUR ECB Bank Lending Survey
- 06:00 USD NFIB Small Business Optimism (Mar)
- 08:55 USD Redbook (MoM)
- 10:00 USD JOLTs Job Openings (Feb)
- 12:00 USD WASDE Report 13:00 USD 3-Year Note Auction
- 16:30 USD API Weekly Crude Oil Stock
- 18:45 USD FOMC Member Clarida Speaks
- 19:01 GBP BRC Retail Sales Monitor (YoY) (Mar)
- 19:50 JPY Core Machinery Orders (MoM) (Feb)
- 19:50 JPY PPI (MoM) (Mar)
- 20:30 AUD Westpac Consumer Sentiment (Apr)
- 22:30 AUD RBA Assist Gov Debelle Speaks
Wed Apr 10 2019
- 02:00 JPY Machine Tool Orders (YoY)
- 02:15 JPY BoJ Governor Kuroda Speaks
- 02:45 EUR French Industrial Production (MoM) (Feb)
- 04:00 EUR Italian Industrial Production (MoM) (Feb)
- 04:30 GBP Construction Output (MoM) (Feb)
- 04:30 GBP GDP (MoM)
- 04:30 GBP Industrial Production (MoM) (Feb)
- 04:30 GBP Trade Balance (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 MBA Mortgage Market Index
- 07:00 USD MBA Mortgage Refinance Index
- 07:00 USD OPEC Monthly Report
- 07:45 EUR ECB Monetary Policy Statement
- 07:45 EUR ECB Interest Rate Decision (Apr)
- 08:30 USD CPI (MoM) (Mar)
- 08:30 USD Real Earnings (MoM) (Mar)
- 08:30 EUR ECB Press Conference
- Tentative GBP NIESR GDP Estimate
- 09:00 GBP NIESR Monthly GDP Tracker
- 10:30 USD Crude Oil Inventories
- 11:00 USD Cleveland CPI (MoM) (Mar)
- 13:00 USD 10-Year Note Auction
- 14:00 USD Federal Budget Balance (Mar)
- 14:00 USD FOMC Meeting Minutes
- 18:45 NZD FPI (MoM) (Mar)
- 19:01 GBP RICS House Price Balance (Mar)
- 21:00 AUD MI Inflation Expectations
- 21:30 CNY CPI (MoM) (Mar)
- 21:30 CNY PPI (YoY) (Mar)
- 22:30 AUD RBA Assist Gov Debelle Speaks
Thur Apr 11 2019
- 02:00 EUR German CPI (MoM) (Mar)
- 02:00 EUR German HICP (MoM) (Mar)
- 02:45 EUR French CPI (MoM) (Mar)
- Tentative CNY New Loans
- 04:00 USD IEA Monthly Report
- 05:30 ZAR Gold Production (YoY) (Feb)
- Tentative USD OPEC Meeting
- 08:30 USD PPI (MoM) (Mar)
- 08:30 CAD New Housing Price Index (MoM) (Feb)
- 08:30 USD Continuing Jobless Claims
- 08:30 USD Initial Jobless Claims
- 08:30 USD Jobless Claims 4-Week Avg.
- 09:30 USD FOMC Member Clarida Speaks
- 10:30 USD Natural Gas Storage
- 11:30 USD 4-Week Bill Auction
- 11:30 USD 8-Week Bill Auction
- 13:00 USD 30-Year Bond Auction
- 18:30 NZD Business NZ PMI (Mar)
- Tentative KRW BOK Financial Stability Board Meeting Minutes
- 21:00 SGD GDP (QoQ) (Q1)
- 21:30 AUD RBA Financial Stability Review
- 23:00 CNY Trade Balance (USD) (Mar)
Friday April 12, 2019
- 02:00 EUR German WPI (MoM) (Mar)
- 03:00 EUR Spanish CPI (MoM) (Mar)
- Tentative CNY FDI
- 05:00 EUR Industrial Production (MoM) (Feb)
- 08:30 USD Export Price Index (MoM) (Mar)
- 08:30 USD Import Price Index (MoM) (Mar)
- 10:00 USD Michigan Consumer Sentiment (Apr)
- 13:00 USD U.S. Baker Hughes Total Rig Count
- 15:30 USD CFTC speculative net positions
Notable Earnings Reports This Week
*EPS estimates via Morningstar where available
Monday Apr 8
- RENESOLA LT-ADR SOL
After Market Close
Tuesday Apr 9
- LINDSAY CORP LNN
- SHAW COMMS-CL B SJR
- COGECO COMMUNIC CCA
- LEVI STRAUSS&CO LEVI
- PRICESMART INC PSMT
- RICHARDSON ELEC RELL
- SIMULATION PLUS SLP
- WD 40 CO WDFC
Wednesday Apr 10
- DELTA AIR LINES DAL
- MSC INDL DIRECT MSM
- BED BATH&BEYOND BBBY
- FIRAN TEC GP-TS FTG
- FIRAN TECH GRP FTGFF
- VINCE HOLDNG CP VNCE
Thursday Apr 11
- APOGEE ENTRPRS APOG Before Open
- FASTENAL FAST B
- RITE AID CORP RAD
Friday Apr 12
For More Earnings and estimates visit Morningstar Earnings Here
Note these estimates and times are subject to change and for indication only. Trade and invest at your own risk.