Join us in our weekly market thread.
Where have we been and where are we going? Join our weekly market thread on Traders Community…
FEAR NOT Brave Investors
Strange Time But remember The Joker once served as the Iranian ambassador for the United Nations.
Trade Wars, Euro and Dorian
The Week That Was:
The week saw more fear and volatility after last week’s surprise China announcing retaliatory tariffs against the U.S. in front of Fed Chairman Powell, the opening of G-7 in France. Markets sold off hard after Trump tweeted a response to China’s move, ordering US firms to look outside China for replacements. The markets collapsed with the Dow now down 6% from it’s high and oil under $54. After the close POTUS announced an increase in Tariffs to China.
When markets opened Monday they were down further and bounced on Trump saying they had heard from China and they wanted to talk, China denied it but markets rallied. China on Thursday in the early hours said they wanted calm, by Friday we were back to where we came from, despite nothing concrete positive happening.
The U.S. is starting a 15% tariff on about $110 billion in apparel, footwear and other Chinese imports Sunday, with same the duty on the balance of almost $300 billion in toys, phones and laptops and other products delayed until Dec. 15. The levy is increasing on that already in effect on $250 billion in other Chinese goods to 30% from 25% starting Oct. 1, the 70th anniversary of the founding of the People’s Republic of China.
Investors seem be betting ahead of the labor day holiday weekend that the new round of U.S. tariffs on Chinese imports due to be levied will be put on hold. Given the history markets seem overly optimistic about trade. Investors got solace from U.S. consumer spending increasing solidly in July. On the flip side the survey from the University of Michigan showed its consumer sentiment index in August dropping by the most since December 2012. Of note the Consumer Discretionary sector was the S&P’s biggest negative as Ulta Beauty Inc , which had been the S&P’s top performing stock in the decade-old bull market, collapsed 29.6% after the cosmetics company cut its full-year profit forecast.
We still have confusion with the whole mess that is Brexit though Italy’s political situation improved. Negative rates, as foolish as history will remember them are the theme of the moment.
Still the market wants to believe the trade war is constructive, we have warned for over a year about the nonsense of the trade war nearing an end. Very simply you have two different cultures two different political systems and shaming doesn’t do well in either.
This is a market full of players that think its different this time, sure its different negative rates all around, trillions of worthless debt, unstable politics and Central Bankers putting their thumb in their mouths and seeing which way the wind blows. 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”
The indices are gamed by a few high delta stocks leading the way with massive leverage and a game of chicken on daily.
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. We have had mixed economic data, no concrete decision on the China and EU trade wars and a No Deal Brexit looking more likely. Here we are (see what ya wanna see).
The Week Ahead
Another big week for potential volatility, led by trade wars and rate theories. In the U.S. will be watching data that can help us gauge trade war fallout. The RBA interest rate decision and statement will give us a closer look at trade war impacts. The Bank of Canada rate statement is also out. Monthly global PMI’s are out, eyes will be particularly on France, Germany, Australia, UK and the US. We end the week with the US Jobs and trade reports.
To repeat AGAIN …With the trade war, most analysts still say a US-China trade deal will remain out of reach regardless for some time. On repeat “Again the issue is the disconnect between the story telling about the China deal and inconclusion between the Tories and Labor in the UK. What could go wrong?”
It is now over five months since the latest trade deal between the United States with China deadline of March 1. The White house said it needs more time, then turned around and slapped more tariffs on and said hey we are still talking. 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. Argentina and Turkey are red letter risks. Voters will be going to the polls in Poland, Argentina, 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; Caleres Autodesk, Hewlett Packard Enterprises, Bank of Nova Scotia, Bank of Montreal, JM Smucker, Catalent, Eaton Vance, Momo, Brown-Forman, Tiffany, Box, Five Below, Guess, H&R Block, Shoe Carnival, Greif, PVH, Best Buy, Ulta Beauty, Dell, Workday, Cooper Cos, Marvell Tech, American Outdoor Brands, Toronto-Dominion Bank, Dollar General, Dollar Tree, Abercrombie & Fitch, Hain Celestial, Sanderson Farms, Campbell Soup, Yintech Investment
We start off on Monday with:BBQ and Beer …
Tuesday Earnings Include: Coupa Software
Wednesday Earnings Include: American Eagle Outfitters, Michael Cos, Vera Bradley, Pivotal Software, Slack, Cloudera
Thursday Earnings Include: Ciena, Navistar, Barnes and Noble, John Wiley, Signet Jewelers, Donaldson, Zoom Video, CrowdStrike, Dave and Buster’s, DocuSign
Friday Earnings Include: bebe stores inc
-comment section below data-
Geopolitical Tinderbox Radar
Last Week’s Big Stories
The Week That Was – Last Weeks Recap
- Applied Materials Earnings Beat Expectations But China Trade War Drags
- NVidia Beat Earnings and Revenue Targets, Focus on AI Growing
- Tilray Reports Another Big Loss With Marijuana Selling Price Down A Third
- Barrick Gold Higher Production Doubles Profits With Rising Prices
Biggest Stock Winners and Losers Last Week*
Which Stocks Moved US ETF’s Last Week
US Stock Indices Performance
There was a reason why we kept harping on about this risk: The performance in shares of small-cap companies which are domestically focused than the large-cap firms is a concern for the optimism in the markets, belies the ATH optimism. The small-cap Russell 2000 index had gained 16.6% for the year, which has underperformed the benchmark S&P 500 index which had risen over 19.5%. Whereas the DJIA, NDX and SPX have marked new records highs, it remained 9.7% below its August 2018 high.
The $SPX continues to trade off our daily speed lines interspersed here with the spit to 4/8 before rallying back through the cloud and tenkan. We see the chaotic pennant shaped as a double zig zag. This is our 6th flip of 61.8% indicating the supply here. Note developing pennant (pink) Best alternatives are a (ii) of wave V higher, a A of a larger 2 or this is i of something more powerful down. There is the alternative that the high was a B Plus and the recent low is a C also. Speed and channel lines in tune with algo calibration curve.
On the weekly SPX we see chaotic moves, spitting the Kijun and closing over it and tenkan. We have a series of vibrations (blue lines) with Murrey Math confluence. Tenkan and 50 wma with a sharply climbing Kijun flattening with the cloud and channel much lower.
10 Year Treasury Note
Energy and Commodities
US Crude Oil (WTI)
WTI spat the channel and 50dma hard after testing the cloud then flew through the kijun and daily tenkan in a sharp 1-2. It did hold the median line at the low and 2/8, Signalling stairstepping ahead. Finished inside the outer daily downtrend channel well under the cloud base under Kijun and 50 dma adding pressure. Watch for spits now with fear in the pricing.
WTI again finished the week under the weekly Kijun, 50wma (green) and Tenkan under the cloud after rejecting the weekly channlel and the kijun and 50 dma crossing over fueling strong impulse higher. Last week we said Key From Last Week ” Expect more work and volatility. Watch Murrey confluence with the cloud acting as support, failure.”
US Natural Gas (Henry Hub)
Natural Gas lifted as the tenkan crossed through the tenkan and closed the week over the 50 dma and just under the daily cloud. The cloud stands in the way for a rally despite record low futures longs the fails are swift. The 1-2 set up retested the flag has potential.
Natural Gas closed over the tenkan a green spug but right at the channel above. A break here puts the flattening Kijun in focus. Its all about the weekly channel and the tenkan
Baltic Dry Index (BDI)
Australian Dollar – AUDUSD
The Aussie dollar continues under pressure since it sold off Kijun and daily cloud, held outside channel. It is in oversold at -1/8 Murrey Math in bottom outer weekly channel but much repair work to be done into the cloud to get a meaningful bounce in.
New Zealand Dollar – NZDUSD
The Kiwi broke throgh inside channel, accelerated weakness since the RBNZ cut, weekly channel in focus above tenkan holds it back. Chikou confluence at the downward channel is rebalancing.
Canadian Dollar – USDCAD
The USDCAD bounce struggles at top of cloud after found support at the tenkan and kijun. Loonie continues to find balance over the cloud. The tenkan is now seen as the pivot aspect. Support is cloud base
Euro – EURUSD
Euro broke under the long weekly channel pennant after rejected by Kijun and Tenkan. Unless this is a spit the potential of the measured move becomes in around 1.0630 and lower. EUR remains a battle between EURJPY and EURCHF selling with EURGBP joining in this week.
EuroPound – EURGBP
EURGBP holding ground after reversed perfectly at the chikou and Murrey 6/8 (+2/8 recalc) to finish back at channel break retest but under Tenkan, Below 50 wma, Kijun & top of channel support.
Japanese Yen – USDJPY
The dollar yen recovery reflects trade war tweets under the tenkan. Still firmly in the channel needing to break the tenkan to get legs higher. Yen buying continued on the crosses, EURJPY and AUDJPY taking away the cloud twist that drew the dollar up.
Mexican Peso USDMXN
Mexican peso weakened further this week with the Argentina rout after Mexico surprise rate cut It closed over Kijun and tenkan and did spit back inside that weekly chaanel which will be a good focus for now. USDMXN is rebalancing chikou. Trade Wars not helping Peso.
Turkish Lire USDTRY
The USD Turkish Lire caught uo with the emerging market downdraft after the coiling between daily Kijun and tenkan brought impulse. The downtrend formed since May break ran into the cloud for now.
Bitcoin testing bottom of pennant thrown back at the 61.8% of the major move at pace once to the 38% and tenkan confluence to bounce to the 50%. Use your MM rules as algos control the herd here, support is the cloud and tenkan, be wary of sharp ABC, 1-2 moves.
The Week Ahead
Key US Economic and Central Bank Events This Week
Sun Sept 1, 2019
- 18:30 AUD AIG Manufacturing Index (Aug)
- 18:45 NZD Terms of Trade Index (QoQ) (Q2)
- 19:00 AUD Manufacturing PMI
- 19:50 JPY Capital Spending (YoY) (Q2)
- 20:30 KRW Nikkei Manufacturing PMI (Aug)
- 20:30 JPY Manufacturing PMI (Aug)
- 21:00 AUD MI Inflation Expectations
- 21:00 AUD MI Inflation Gauge (MoM)
- 21:30 AUD ANZ Job Advertisements (MoM)
- 21:30 AUD Business inventories (MoM) (Q2)
- 21:30 AUD Company Gross Operating Profits (QoQ) (Q2)
- 21:30 AUD Company Profits Pre-Tax (QoQ) (Q2)
- 21:45 CNY Caixin Manufacturing PMI (Aug)
Monday, Sept 2, 2019
- All Day Holiday Canada – Labour Day
- All Day Holiday United States – Labor Day
- All Day Holiday India – Ganesh Chaturthi
- 02:30 CHF Retail Sales (YoY) (Jul)
- 02:30 AUD Commodity Prices (YoY)
- 03:15 EUR Spanish Manufacturing PMI (Aug)
- 03:30 CHF procure.ch PMI (Aug)
- 03:45 EUR Italian Manufacturing PMI (Aug
- 03:50 EUR French Manufacturing PMI (Aug)
- 03:55 EUR German Manufacturing PMI (Aug)
- 04:00 EUR Manufacturing PMI (Aug)
- 04:30 GBP Manufacturing PMI (Aug)
- 04:30 HKD Foreign Reserves (USD)
- 09:00 EUR French 12-Month BTF Auction
- 19:00 KRW CPI (MoM) (Aug)
- 19:00 KRW GDP (QoQ) (Q2)
- 19:01 GBP BRC Retail Sales Monitor (YoY) (Aug)
- 19:50 JPY Monetary Base (YoY)
- 21:30 AUD Current Account (Q2)
- 21:30 AUD Net Exports Contribution (Q2)
- 21:30 AUD Retail Sales (MoM) (Jul)
- 23:35 JPY 10-Year JGB Auction
Tuesday Sept 3, 2019
- 00:30 AUD RBA Interest Rate Decision & Statement(Sep)
- 02:30 CHF CPI (MoM) (Aug)
- 03:00 EUR Spanish Unemployment Change
- 04:30 GBP Construction PMI (Aug)
- 05:00 EUR PPI (MoM) (Jul)
- 09:00 SGD Manufacturing PMI (Aug)
- 09:30 CAD RBC Manufacturing PMI (Aug)
- 09:45 USD Manufacturing PMI (Aug)
- 10:00 USD Construction Spending (MoM) (Jul)
- 10:00 USD IBD/TIPP Economic Optimism
- 10:00 USD ISM Manufacturing PMI (Aug) 1
- 0:30 NZD GlobalDairyTrade Price Index
- 11:30 USD 3-Month Bill Auction
- 11:30 USD 6-Month Bill Auction
- 15:00 USD Total Vehicle Sales
- 17:00 USD FOMC Member Rosengren Speaks
- 17:00 KRW FX Reserves – USD (Aug)
- 18:30 AUD AIG Services Index (Aug)
- 19:00 AUD Services PMI
- 20:30 JPY Services PMI (Aug)
- 20:30 HKD Manufacturing PMI (Aug)
- 21:00 NZD ANZ Commodity Price Index (MoM)
- 21:30 AUD GDP (QoQ) (Q2)
- 21:30 AUD RBA Chart Pack Release
- 21:30 JPY BoJ Board Member Kataoka Speaks
- 21:45 CNY Caixin Services PMI (Aug)
Wednesday, Sept 4, 2019
- 03:15 EUR Spanish Services PMI (Aug)
- 03:45 EUR Italian Composite PMI (Aug)
- 03:45 EUR Italian Services PMI (Aug)
- 03:50 EUR French Markit Composite PMI (Aug)
- 03:50 EUR French Services PMI (Aug)
- 03:55 EUR German Composite PMI (Aug)
- 03:55 EUR German Services PMI (Aug)
- 04:00 EUR Markit Composite PMI (Aug)
- 04:00 EUR Services PMI (Aug)
- 04:30 GBP Composite PMI (Aug)
- 04:30 GBP Services PMI (Aug)
- 05:00 EUR Retail Sales (MoM) (Jul)
- 05:40 EUR German 5-Year Bobl Auction
- 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 Trade Balance (Jul)
- 08:30 CAD Labor Productivity (QoQ) (Q2)
- 08:30 CAD Trade Balance (Jul)
- 08:55 USD Redbook (MoM)
- 09:25 USD FOMC Member Williams Speaks
- 09:45 USD ISM NY Business Conditions (Aug)
- 09:45 USD ISM-New York Index (Aug)
- 10:00 CAD BoC Rate Statement & Interest Rate Decision
- 13:00 USD FOMC Member Kashkari Speaks
- 14:00 USD Beige Book
- 15:15 USD Chicago Fed President Evans Speaks
- 16:30 USD API Weekly Crude Oil Stock
- 21:30 AUD Trade Balance (Jul)
- 23:35 JPY 30-Year JGB Auction
Thursday Sept 5, 2019
- 01:45 CHF GDP (QoQ)
- (Q2) 02:00 EUR German Factory Orders (MoM) (Jul)
- 04:40 EUR Spanish 10-Year Obligacion Auction
- 05:00 EUR French 10-Year OAT Auction
- 05:45 GBP 10-Year Treasury Gilt Auction
- 06:30 EUR Spanish Consumer Confidence
- 07:30 USD Challenger Job Cuts (Aug)
- 08:15 USD ADP Nonfarm Employment Change (Aug)
- 08:30 USD Continuing Jobless Claims
- 08:30 USD Initial Jobless Claims
- 08:30 USD Jobless Claims 4-Week Avg.
- 08:30 USD Nonfarm Productivity (QoQ) (Q2)
- 08:30 USD Unit Labor Costs (QoQ) (Q2)
- 09:45 USD Markit Composite PMI (Aug)
- 09:45 USD Services PMI (Aug)
- 10:00 USD Cap Goods Ship Non Defense Ex Air (MoM)
- 10:00 USD Durable Goods Orders (MoM)
- 10:00 USD Factory Orders (MoM) (Jul)
- 10:00 USD ISM Non-Manufacturing PMI (Aug)
- 10:30 GBP MPC Member Tenreyro Speaks
- 10:30 USD Natural Gas Storage 1
- 1:00 USD Crude Oil Inventories
- 1:30 USD 4-Week Bill Auction
- 11:30 USD 8-Week Bill Auction
- 12:00 CHF SNB Chairman Thomas Jordan speaks
- 18:30 AUD AIG Construction Index (Aug)
- 19:30 JPY Household Spending (MoM) (Jul)
- 19:50 JPY Foreign Reserves (USD)
Friday Sept 6, 2019
- 01:00 JPY Coincident Indicator (MoM) (Jul)
- 01:00 JPY Leading Index (MoM) (Jul)
- 02:00 EUR German Industrial Production (MoM) (Jul)
- 02:45 EUR French Current Account (Jul)
- 02:45 EUR French Reserve Assets Total (Aug)
- 02:45 EUR French Trade Balance (Jul)
- 03:30 GBP Halifax House Price Index (MoM) (Aug)
- 04:00 EUR Italian Retail Sales (MoM) (Jul)
- 04:30 GBP Inflation Expectations
- 05:00 EUR Employment Change (QoQ) (Q2)
- 05:00 EUR Employment Overall (Q2)
- 05:00 EUR GDP (QoQ) (Q2)
- 08:30 USD Average Hourly Earnings (MoM) (Aug)
- 08:30 USD Average Weekly Hours (Aug)
- 08:30 USD Manufacturing Payrolls (Aug)
- 08:30 USD Nonfarm Payrolls (Aug)
- 08:30 USD Participation Rate (Aug)
- 08:30 USD Private Nonfarm Payrolls (Aug)
- 08:30 USD U6 Unemployment Rate (Aug)
- 08:30 USD Unemployment Rate (Aug)
- 08:30 CAD Employment Change (Aug)
- 08:30 CAD Full Employment Change (Aug)
- 08:30 CAD Part Time Employment Change (Aug)
- 08:30 CAD Unemployment Rate (Aug)
- 10:00 CAD Ivey PMI (Aug)
- 13:00 USD U.S. Baker Hughes Oil & Gas Rig Count
- 15:30 GBP CFTC speculative net positions
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.