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FEAR NOT Brave Investors
Strange times But remember The Joker once served as the Iranian ambassador for the United Nations.
Isolation – Panic – The Fed
The Week That Was:
Panic and fear continues to ramp up with Covid 19 reaping havoc throughout the world. Economies are shutting down, markets are in chaos. We still stockmarkets, commodities and currencies crumbling adding to the fear. Central banks have been cutting rates and adding liquidity to avoid systematic failure. So far markets have not responded, the US dollar has extended higher putting further pressure on the global system. Where to from here as the world isolates with added financial, fear and psychological damage escalating.
What will right the ship? At this point people seek comfort, nothing short of massive fiscal responses will gve that until the disease fear factor is reduced. Forward two weeks and we have warmer climates in the Northern hemisphere and with that hope, but then there is the Southern hemisphere.Meantime be smart and self isolate and stay in contact with loved ones.
Our best advice is 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 unprecendented just a different catalyst and fuel. Stay tuned. take a breath and think clearly.
Isolation – Joy Division
In fear every day, every evening,
He calls her aloud from above,
Carefully watched for a reason,
Painstaking devotion and love,
Surrendered to self preservation,
From others who care for themselves.
A blindness that touches perfection,
But hurts just like anything else.
Isolation, isolation, isolation. …..
Songwriters: Bernard Sumner / Ian Kevin Curtis / Peter Hook / Stephen Paul David Morris Isolation lyrics © Universal Music Publishing Group
I Wonder To Myself
The week saw more of the same after we saw one of the nastiest weeks ever for markets. No respite for investors this week after the S&P 500′s fastest correction on record, when U.S. stock averages suffered their worst week since the financial crisis as fears about the coronavirus disrupting the global economy scared investors away from risk assets.
Worth noting the Central bank responses, the BoJ bought a record amount of Japanese ETFs. The RBA and Fed both cut by 50 bps, the Korean Central Bank announced record liquidity. in the US we got $8billion in new stimulus and the IMF approved $50 billion, Take a step back and ask is this all just a little too convenient, is it necessary and then look abck at where PMI’s growth globally and other indicators were before the virus.No one ever asks that question. This maybe one of the wizards greatest moments of redirection. “The same extreme bulls are now extreme bears, what did we tell you about the madness of crowds?”
For now the focus is that the virus incubates for around 2 weeks so how many carriers is an exponential number. Patient zero was from Wuhan, a city of over 11 million. (Yet the infections have slowed dramatically) With this knowledge shrewd investors are looking past past earnings rebound and focusing on the spillover impact from the coronavirus on U.S. corporations.
Remember. nothing is as it seems.
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 the potential to impact growth strategies with unexpected consequences with this markets are also vulnerable. In a fully fledged stock mania, nothing matters until it does. That is the feral nature of greed. Is Coronavirus that dreaded black swan?
Behind it all is world wide low interest rates and QE pump priming by the world’s major central banks, the Federal Reserve, Swiss National Bank and ECB all preached more of the same. This has just been ramped up a notch.
Meanwhile tje Fed is committed to about 50 Billion a day in repo, funds into the system to maintain liquidity, in its not QE4 repo program.The consumer has been keeping the economy robust. How will they act to alleviate the panic of the market drop, this is essential given the security of the repos they have out.
The fear of missing out and blind partisan politcs creates intertesting bed fellows. Be alert and put your ear plugs in and watch the whole spectrum its all related, geopolitical, debt markets, commodities, stocks, herds, greed and entitlement,
The spectre of Deutschbank overhangs Europe as does the new British PM, Boris Johnson. Their are other spectres out their we just don’t know it, or want to.
“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”
We remind you to stay on your toes, ad nauseum we repeat; In this surreal world that market prices can only go up, with bizzare acceptance that we can’t go down and you are a fool if you think otherwise. In saying that the old saying, the trend is your friend rings true.
The Week Ahead
This week we expect more volatility with the engulfing uncertainty of the Coronavirus and in commodity markets, particularly in oil not to mention unrest in Libya and Iraq.
Geopolitical risk is on high alert with President Trump under pressure at home and abroad. There are a few American economic reports The biggest risk alert was valuation, the stock market’s record highs and price earnings ratio of more than 18.5. That has obviously been adjusted after this week’s crash.
Expectations are mixed in the UK on whether Boris Johnson will be able to secure a trade deal before the end of the year.
We start off with panic from the oil price war and Covid19 reports
The Coronavirus has created fear in the world which has spread to financial markets, how doe the markets react from here? U.S. politically remains combustible, led by the Democrat impeachment, Turkey, Iran and Saudi moves, trade wars and repo rates.
Watch for the MBA mortgage report also it has had huge swings each week and is key to the economy and homebuilders. In the U.S. investors will be watching data that can help us gauge trade war fallout.
U.S. goods are more expensive due to a stronger dollar boosted by geopolitical woes and negative interest rates in Europe. The dollar index was rampant this week as the attached charts show Investors are also transfixed by oil and bond prices in reaction to the virus attack, recovery and respsonses.
NFIB small business optimism, Super Tuesday primaries, API Oil Inventories
US Mortgage Applications, Consumer price index, Monthly budget statement, EIA Crude Oil Invemtories
- Thursday US Weekly Jobless Claims, Producer price index and EIA Natural Gas Storage,
- Friday Import price index Consumer sentiment, Baker Hughes Oil Rig Count, CFTC Speculative net positions
For emerging markets the high US dollar means the Fragile 5 continue to shake. Argentina and Turkey are red letter risks. Voters will also be going to the polls in Poland, 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 trade wars.
Earnings will see critical updates on production in coronavirus impacted regi and if there is extended halting of operations weighing on multi-nationals. Last week we heard from Thor Industries, Stitch Fix, Franco-Nevada, Dick’s Sporting Goods, Dollar General, Ulta Beauty, Broadcom, Adobe, Gap, Slack
We start off on Monday with:earnings from earnings
Tuesday Earnings Include:
Wednesday Earnings Include:
Thursday Earnings Include:
Friday Earnings Include
-coment section below data-
Geopolitical Tinderbox Radar
Last Week’s Big Stories
The Week That Was – Last Weeks Recap
- Into The Vortex – EIA Reports -201 Bcf Draw in Natural Gas Storage
- US Q4 GDP 2.1% vs +2.0% Expected on Exports and Home Investment Boost
- Federal Reserve Keep Rates Steady as Expected, Repos Through April
- Crude and Gasoline Inventories Continue To Build With Record Production
- Coronavirus Highest Risk International Cities Bangkok, Hong Kong and Taipei
- New Zealand Calls September 19, 2020 General Election
- Assets Currently at Very Elevated Levels says ECB Mersch
- Chevron Earnings Hit By Lower Crude Oil and Natural Gas Prices
- ExxonMobil Earnings Hurt by Lower Oil Prices and Chemical Division
- Electronic Arts Earnings Beat But Lowers Gaming Revenue Guidance
- Amazon Surged Above $1 Trillion in Market Capitalization After Monster Earnings
- General Electric Shares Continue To Rise After Stronger Earnings Than Expected
- AMD Micro Wobbles On Earnings After Misses Revenue Forecast
- Apple Earnings and Margins Beat as iPhone, Airpods and Watch Revenue Soars
- Intel Stock Soars Past Dot Com Bubble Highs After Earnings
Biggest Stock Winners and Losers Last Week*
Which Stocks Moved US ETF’s Last Week
US Stock Indices Performance
We got the impulse expected after the SPXX wave 5 extension which euphoricly ignored both Iran and Covid19 was completitive with impulse accelerating when it closed under the tenkan. From there we see the ABC or 1-2-3 The impulse down found little supoprt until the October 2019 lows over 400 handles from the peak, but not for long. A manic wave 5 or 3 of some degree resolution for the ages. Recall all hallmarks of a mania, +5/8 Daily MM over the chikou in 5 violent waves. Note the 100% extension from the emotove element and MM levels when the spit kicks in.
Acceleration in three waves and through previous IV mark – note channel fractal and adams ruke we are at -3/8 and through Chickou – expect violent off the 3 waves after spit. Weekly tenkan key, Kijun and tenkan kisses to be watched. Watch if a spit or clear break support as chickou rebalances
Semiconductors ETF – SMH
( Leading underlying strength of US Indices)
CBOE VIX INDEX
Data via Ole S Hansen @Ole_S_Hansen
VIX caution: Not only did the net-short hit a record but so did the percentage of total open interest which reached 50%. History tells us that positions this elevated could leave the short side very vulnerable to a sudden change in direction $SPX $SVXY $XIV
Speculators increased their VIX futures net-short by 17k lots to a RECORD 188k lots in the wk to Oct. 29. During the past month the #SPX rally has helped widen the contango thereby fueling short-selling strategies though futures and inverse ETFs $SVXY and $XIV.
10 Year Treasury Note
Energy and Commodities
US Crude Oil (WTI)
WTI got the panic babounced off the outside trend line undr $20 (April) Friday in 5 waves from the recent highs to -4/8, we got impulse from here, question is was that completing a C or 3 of something larger. Math and crowd behavior tell the story right to the +2/8 and collapsed back to the break up and now through the channel, accelrating when Tenkan and 50 dma crossed. Note 1.618 extension of previous emotive wave.
WTI accelerated lower after broke the weekly uptrend, a fractal of the sharp and all the way to 16yr lows from here we see traction to work out from 3 waves Key resistance is Kijun and 50wma confluence (green) which all failed after the violent spike up. Support channel and fib conflageration with MM 0 -8 and -1-8
US Natural Gas (Henry Hub)
Natural Gas has spat the previous low and -2/8 with an island reversal to test the Kijun and doentrend line or bull flag. The big question is was that a completed move down there or a 3? Resistance from cloud down from impulse. Wave iii or Alt C high. Support on downtrend Tenkan.
Natty has spat lower trend line to test the weekly tenkan. We got the Kijun att he cloud above, remember kiss of death.brought it down Repeat; take a peek at the daily flag possibilities if breaks tenkan.
Baltic Dry Index (BDI)
Gold is back testing the previous wave 3 after it finally cracked the Tenkan after correcting in 3 waves from 1556 to Murrey Math +3/8. Support is Kijun while market decides. From there a C or 3? Watch Fibs and chikou. Watching for corrective 2 waves to tell us what this move is.
Silver diverged further from gold not breaking the previous iii or C as Gold did. Since we have continued a reversal harder , a much more violent impulse than gold after correcting the 3 or C. Key is the 50% after it rallied in 3 waves to retest the September 2017 breakdown here is also a chance this is an X. We watch recent lows if this a 4 down or C complete
Australian Dollar – AUDUSD
The Aussie dollar is floundering around the tenkan after reversed hard after breaching the cloud and tested the 50 wma and around Kijun now support. Fell after the move to MM +1/8 first target.
New Zealand Dollar – NZDUSD
The Kiwi spent the week retesting the breakup after the bounce faltered much like the AUD and came back through the cloud. We are watching as Tenkan and Kijun trying to cross back through which could bring the ‘kiss of death’. The Chikou needs to rebalance.
Canadian Dollar – USDCAD
The USDCAD back retesting old channel after was rejected hard at the 50wma and cloud, closing the week under old channel, tenkan and Kijun Resistance top of cloud and 50 wma. The tenkan remains the pivot aspect.
Euro – EURUSD
Euro hasn’t looked back since it spat the cloud and back through the top of channel in classic ABC and then accelerated after held tenkan Kijun kiss of death it – watch for impulse off Chikou rebalance Again governed by $EURGBP and #Bund volatility. Unless this is a spit the potential of the measured move comes in around 1.0630 and lower. EUR remains a battle between EURJPY and EURCHF.
EuroPound – EURGBP
EURGBP back testing tenkan after bounce, weekly cloud is well above and resistance is the May breakup reflecting Brexit politics. Resistance at kijun withr Tenkan support and Nov 2017 lows
Japanese Yen – USDJPY
Classic failure at USDJPY after weeks over the weekly Kijun and closed at 50 wma and the cloud twist but couldnt get legs up. It was drawn by 38% and Murrey 6/8. It broke out of Wedge as Kijun stayed flat. Yen buying on crosses, EURJPY and AUDJPY taking away the cloud twist that drew the dollar up.
Mexican Peso USDMXN
Found support at last Gann octave as Mexican peso gave up some of recent gains after it held the cloud. Flat Kijun and Tenkan pulling after the USMC trade deal. Watch if a fractal spit on recent highs.
Turkish Lire USDTRY
USDTRY impulse higher continued after found support at daily Kijun and Tenkan to get back above cloud Impulse is needed to pull away from here. Support is the previous break up and tenkan and Kijun. Keep an eye on geopolitical risk factors.
Nothing new for Bitcoin, more of the same as it continues to falter after 61.8% spit. Well under the tenkan and kijun. Needs to test downtrend for higher correction. Use your MM rules as algos control the herd here, support is the cloud – we said be wary of sharp ABC, 1-2 moves.
The Week Ahead
Key US Economic and Central Bank Events This Week
Sunday, March 1, 2020
Monday, March 2, 2020
- 00:30 AUD Commodity Prices (YoY)
- 01:00 RUB Markit Manufacturing PMI (Feb)
- 03:15 EUR Spanish Manufacturing PMI (Feb)
- 03:30 CHF procure.ch PMI (Feb)
- 03:30 HKD Retail Sales (YoY) (Jan)
- 03:45 EUR Italian Manufacturing PMI (Feb)
- 03:50 EUR French Manufacturing PMI (Feb)
- 03:55 EUR German Manufacturing PMI (Feb)
- 04:00 EUR Manufacturing PMI (Feb)
- 04:30 GBP BoE Consumer Credit (Jan)
- 04:30 GBP M4 Money Supply (MoM) (Jan)
- 04:30 GBP Manufacturing PMI (Feb)
- 04:30 GBP Mortgage Approvals (Jan)
- 07:30 EUR ECB’s De Guindos Speaks
- 09:30 CAD RBC Manufacturing PMI (Feb)
- 09:45 USD Manufacturing PMI (Feb)
- 10:00 USD Construction Spending (MoM) (Jan)
- 10:00 USD ISM Manufacturing PMI (Feb)
- 11:30 USD 3-Month Bill Auction
- 11:30 USD 6-Month Bill Auction
- 16:45 NZD Terms of Trade Index (QoQ) (Q4)
- 18:00 KRW CPI (MoM) (Feb)
- 18:00 KRW GDP (QoQ) (Q4)
- 18:50 JPY Monetary Base (YoY)
- 19:00 AUD HIA New Home Sales (MoM)
- 19:00 NZD ANZ Commodity Price Index (MoM)
- 19:30 AUD Building Approvals (MoM) (Jan)
- 19:30 AUD Current Account (Q4)
- 19:30 AUD Net Exports Contribution (Q4)
- 19:30 AUD Private House Approvals (Jan)
- 22:30 AUD RBA Interest Rate Decision (Mar)
- 22:30 AUD RBA Rate Statement
- 22:35 JPY 10-Year JGB Auction
Tuesday, March 3, 2020
- 00:00 JPY Household Confidence (Feb)
- 01:45 CHF GDP (QoQ) (Q4)
- 02:45 EUR French Government Budget Balance (Jan)
- 03:00 EUR Spanish Unemployment Change
- 03:00 EUR ECB’s De Guindos Speaks
- 04:00 EUR Italian Monthly Unemployment Rate (Jan)
- Tentative GBP BoE FPC Meeting Minutes
- 04:30 GBP Construction PMI (Feb)
- 05:00 EUR Core CPI (MoM) (Feb)
- 05:00 EUR CPI (MoM) (Feb)
- 05:00 EUR PPI (MoM) (Jan)
- 05:00 EUR Unemployment Rate (Jan)
- 08:00 SGD Manufacturing PMI (Feb)
- 08:55 USD Redbook (MoM)
- 09:45 USD ISM NY Business Conditions (Feb)
- 09:45 USD ISM-New York Index (Feb)
- 10:00 USD IBD/TIPP Economic Optimism
- 10:20 NZD GlobalDairyTrade Price Index
- 14:50 USD FOMC Member Mester Speaks
- 16:00 KRW FX Reserves – USD (Feb)
- 16:30 USD API Weekly Crude Oil Stock
- 16:30 AUD AIG Construction Index (Feb)
- 16:30 AUD AIG Services Index (Feb)
- 16:45 NZD Building Consents (MoM) (Jan)
- 17:00 AUD Services PMI
- 18:00 USD Total Vehicle Sales
- 18:50 USD Chicago Fed President Evans Speaks
- 19:00 AUD MI Inflation Gauge (MoM)
- 19:30 AUD GDP (QoQ) (Q4)
- 19:30 AUD RBA Chart Pack Release
- 19:30 JPY Services PMI (Feb)
- 19:30 HKD Manufacturing PMI (Feb)
- 20:45 CNY Caixin Services PMI (Feb)
Wednesday, March 11, 2020
- 03:00 GBP BoE QE Total (Jan)
- 03:00 GBP BoE Interest Rate Decision (Mar)
- 04:00 EUR Spanish Retail Sales (YoY) (Jan)
- 04:00 CNY Chinese Total Social Financing
- 04:01 CNY M2 Money Stock (YoY) (Feb)
- 04:01 CNY New Loans (Feb)
- 04:01 CNY Outstanding Loan Growth (YoY) (Feb)
- 05:00 GBP BoE Press Conference
- 05:00 EUR Italian PPI (MoM) (Jan)
- 05:30 GBP Construction Output (MoM) (Jan)
- 05:30 GBP GDP (MoM) 05:30 GBP Index of Services
- 05:30 GBP Industrial Production (MoM) (Jan)
- 05:30 GBP Manufacturing Production (MoM) (Jan)
- 05:30 GBP Monthly GDP 3M/3M Change
- 05:30 GBP Trade Balance (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
- 07:00 USD OPEC Monthly Report
- Tentative GBP Autumn Budget
- 08:30 USD Chicago Fed National Activity (Feb)
- 08:30 USD Core CPI (MoM) (Feb
- ) 08:30 USD CPI (MoM) (Feb
- ) 08:30 USD Real Earnings (MoM) (Feb)
- 08:30 CAD Capacity Utilization Rate (Q4)
- 10:00 GBP NIESR Monthly GDP Tracker
- 10:30 USD Crude Oil Inventories
- 11:00 USD Cleveland CPI (MoM) (Feb)
- 12:00 USD Thomson Reuters IPSOS PCSI (Mar)
- 13:01 USD 10-Year Note Auction 14:00 USD Federal Budget Balance (Feb)
- 19:50 JPY BSI Large Manufacturing Conditions (Q1)
- 19:50 JPY PPI (MoM) (Feb)
- 20:00 AUD MI Inflation Expectations
- 20:01 GBP RICS House Price Balance (Feb)
- 22:30 SGD Unemployment Rate (Q4)
Thursday, March 12, 2020
- 01:00 SGD Retail Sales (MoM) (Jan)
- 02:45 CHF SECO Economic Forecasts
- 05:00 EUR Italian Quarterly Unemployment Rate
- 05:30 ZAR Gold Production (YoY) (Jan)
- 05:30 ZAR Mining Production (Jan)
- 06:00 EUR Industrial Production (MoM) (Jan)
- 08:30 USD Continuing Jobless Claims
- 08:30 USD Core PPI (Me Decision (Mar)
- 09:30 EUR ECB Press Conference
- 10:30 USD Natural Gas Storage
- 11:30 USD 4-Week Bill Auction
- 1:30 USD 8-Week Bill Auction
- 13:01 USD 30-Year Bond Auction
- 17:00 KRW Export Price Index (YoY) (Feb)
- 17:00 KRW Import Price Index (YoY) (Feb)
- 17:00 NZD Westpac Consumer Sentiment
- 17:00 NZD Business NZ PMI (Feb)
- 17:45 NZD FPI (MoM) (Feb)
Friday, March 6, 2020
- 00:30 JPY Tertiary Industry Activity Index (MoM)
- 03:00 EUR German CPI (MoM) (Feb)
- 03:00 EUR German HICP (MoM) (Feb
- ) 03:45 EUR French CPI (MoM) (Feb)
- 03:45 EUR French HICP (MoM) (Feb)
- 04:00 EUR Spanish CPI (MoM) (Feb)
- 04:00 EUR Spanish HICP (MoM) (Feb)
- 08:30 USD Export Price Index (MoM)
- 08:30 USD Import Price Index (MoM) (Feb)
- 10:00 USD Michigan Consumer Sentiment (Mar)
- 13:00 USD U.S. Baker Hughes Oil Rig Count
- 15:30 USD CFTC speculative net positions s
Saturday, Feb 29, 2020
- 19:00 KRW Exports (YoY) (Feb)
- 19:00 KRW Imports (YoY) (Feb)
- 19:00 KRW Trade Balance (Feb)
Stock Buyback Watch
Via Emad Mnati @EmadMnati and MarketBeat
Note these charts, opinons news and estimates and times are subject to change and for indication only. Trade and invest at your own risk.