January 2 -8 2023
FEAR NOT Brave Investors
Where have we been and where are we going? Join our weekly market thread on Traders Community…
The Week That Was – What Lies Ahead?
Click on the links below to navigate to the relevant section.
- Part A: Stock markets
- 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
The year 2022 began with a record high on January 3, two days later the Fed minutes were released, and we have been selling off for the most part ever since. Markets began the year pricing in an expected 0.82% Fed funds rate by the time of the December 14th FOMC meeting. Two-year Treasuries yielded 0.73%, with the 10-year at 1.51%. Two-year government yields ended the year at 4.43% (up 370bps during 2022). Ten-year Treasury yields ended at 3.88% (up 237bps).
The gigantic “tech” Bubble popped ad nauseum in the high-risk places, crypto, stocks, venture capital, SPACs, private equity and the unintended consequences from that. Swirling greed and know it all came home to roost. FOMO (fear of missing out) and TINA (there is no alternative) ended how they always do.
How was it funded? Well through three quarters, Consumer Credit expanded at the fastest pace since 2001. First-half mortgage Credit growth was the strongest since 2007. Non-Financial Debt (NFD) expanded a seasonally adjusted and annualized (SAAR) $5.438 TN during Q1, $4.318 TN for Q2, and $3.284 TN during Q3.
Headlines sum it all up:
- “US Stocks Suffer Worst Year Since Financial Crisis.”
- “Stock and Bond Markets Shed More Than $30tn in ‘Brutal’ 2022.”
- “Nasdaq Closes Out its First Four-Quarter Slump Since Dot-Com Crash.”
- “Elon Musk Becomes First Person Ever to Lose $200 Billion.”
The big bright spot was energy stocks and futures. The energy sector was the only S&P 500 sector to end 2022 higher, up +59.0%. Quite the variance from the other sectors. The Mega Caps were particularly weak the past month or so, highlighted by the sell offs in Tesla, Meta and Apple. The Vanguard Mega Cap Growth ETF (MGK) fell on the year 34.0%.
Notable Stock collapses in 2022 included Tesla down 65%, Meta/Facebook 64%, Zoom 63%, Rivian 82%, Netflix 51%, Nvidia 50%, Amazon 50%, Intel 49%, Micron 46%, Qualcomm 40%, Alphabet/Google 39%, Moderna 29%, Microsoft 29%, and Apple 27%.
The Philadelphia Semiconductor Index dropped 35.8%, with the NYSE Arca Computer Technology Index down 32.4%.
U.S. Treasuries closed 2022 on point for the year, with higher yields across the curve. The 2s10s inversion remained at 54 basis points. The U.S. Dollar Index closed at 103.50, lows last seen in June but was up 7.8% for the year. The idea that risk doesn’t matter took a battering in 2022. Rising interest rates hurt main street as we saw home values and sales fall. The Bloomberg REIT Index dropped 29.2%.
Perhaps the best example of everything bad in that entitled riskless concept was crypto.
In 2022 Bitcoin dropped 64% in 2022, Solana collapsed 94%, Cardano 81% and Ethereum 68%. Crypto industry bankruptcies included hedge fund Three Arrows Capital, Singapore-based 3AC, Voyager Digital, Celsius Network, BlockFi and Core Scientific. The epitome of greed, fraud and ignorance was FTX. Wunderkind Sam Bankman-Fried (SBF) was lauded by MSN and politicians at peak Bubble “wealth” estimated at $26 billion, he proceeded to leave a $8 billion hole, after switching customer funds for his own benefit.
What was telling of the whole saga was despite this he was still lauded and had puff pieces written for him by the NYT and others, got a standing ovation at a Deal book seminar and his involvement in the DNC with his parents underscored just another thing rotten with US politics and business. SBF is now under court-ordered detention at his parent’s California home on a $250 million bond (facing eight federal counts of “wire fraud, money laundering, and conspiracy, carrying a maximum of 115 years in federal prison”). Let us hope this was peak ignorance and wanton greed and markets grab sturdier legs going forward.
Where to from here? It’s also okay to acknowledge and process any difficult emotions or experiences that you may have had during the past year. Looking back on the past year with perspective can help you to gain a greater understanding of what you have been through and how you have coped. I hope that you are able to find ways to manage any challenges that come your way and that you continue to feel fine moving forward. Embrace the chaos that is headed your way in 2023!
The Credit cycle downturn is coming to the surface.
“Moody’s… raised its forecast for speculative-grade corporate defaults in 2023, warning they could more than quadruple under its most pessimistic scenario. The agency predicts the default rate will climb to 4.9% by November of next year under its baseline scenario, from a forecast of 2.9% for the end of 2022. Last month’s year-ahead projection was 4.5%.”December 16 – Bloomberg (Finbarr Flynn):
China; Behind the Iron Curtain
- “Chinese residents saw their confidence in the job market and their incomes plunge to new lows, while interest in buying homes also fell as the economic slowdown worsened this year. The People’s Bank of China’s Employment Sentiment Index — which is based on a survey of households’ outlook for jobs — declined to 33.1 in the last three months of 2022, worse than the prior quarter’s record low dating back to when data began in 2010… The Income Confidence Index — a gauge measuring expectations for income in the next three months — slid to 44.4, another record low dating back to 2001… Only 14% of respondents to the central bank survey expected home prices to rise next quarter — another fresh low in data going back to 2010. Some 18.5% expected home prices to fall, the highest proportion since 2012.” December 27 – Bloomberg
- “ Xi Jinping secured an historic third leadership term in October, emerging as China’s most powerful ruler since Mao Zedong, bolstered by a Politburo Standing Committee stacked with allies and no successor-in-waiting to challenge him. It was a rare highlight for Xi in 2022, a tumultuous year capped by unprecedented street protests followed by the sudden reversal of his zero-COVID policy and coronavirus infections rampaging across the world’s most populous country. While frustration over zero-COVID and its devastating impact on the second-largest economy did little to disrupt Xi’s march towards five more years as general secretary of the ruling Communist Party, 2022 was a year of crises at home and abroad… China’s economy is on track to grow at around 3% in 2022, far short of its official target of roughly 5.5%…” December 29 – Reuters (Tony Munroe)
The market rupture tripod of destruction.
- Firstly, financial asset overvaluation has swung way past any sound underlying economic wealth structure.
- Secondly over-leverage in crowded bets.
- Thirdly we have greed enthused, as always in these cycles, risk engineering, transfer and management that ignores or understands bifurcation and contagion outcomes.
Leverage has become toxic, a development that if not addressed will have deep and with far-reaching sequels. It’s not too farfetched to suggest that the markets are on the verge of a rupture that would be difficult to contain. Should the crisis of confidence dynamics that hit Britain feed into other markets a powerful global contagion could be unleashed. The markets are dislocated, and financial stability is at risk. A sobering thought is the UK is just the initial first world pension system in this cycle facing the harsh reality of a steep devaluation of assets and the prospect of widespread insolvencies and debilitating negative sentiment.
Inflation with Henry Kaufman
Kaufman is the legendary chief economist and head of bond market research at Salomon Brothers is someone who knows Inflation. Henry Kaufman in an interview with Bloomberg’s Erik Schatzker Jan 14, 2022:
“I don’t think this Federal Reserve and this leadership has the stamina to act decisively. They’ll act incrementally. In order to turn the market around to a more non-inflationary attitude, you have to shock the market. You can’t raise interest rates bit-by-bit.”
“The longer the Fed takes to tackle a high rate of inflation, the more inflationary psychology is embedded in the private sector — and the more it will have to shock the system.”
“‘It’s dangerous to use the word transitory,’ Kaufman said. ‘The minute you say transitory, it means you’re willing to tolerate some inflation.’ That, he said, undermines the Fed’s role of maintaining economic and financial stability to achieve ‘reasonable non-inflationary growth.’”
Ahead is Jobs, FOMC Minutes and Santa Claus Rally Hopes
It’s the first week of 2023. How much will supply chains be damaged by the widespread Covid spread? Distortions are upon us; the magnitude and duration of interruptions and inflation risk and inflation expectations are in focus.
For the US center stage is the jobs report and FOMC meeting minutes (last year the selling all began with the same minutes a year ago (Jan 5, 2022); We get ISM manufacturing and services PMI, foreign trade, factory orders, and Jolts Job Openings. Inflation reports for December will be released for Euro Area, Germany, France, Netherlands, Turkey, Switzerland, Philippines, and Indonesia. Manufacturing PMIs from China, India, Spain, South Korea, Canada, Italy, and Switzerland.
Click here to see the Full Week Ahead List Below
Independence – Never Take It for Granted Traders
“In aggregate, the market goes from order to disorder, and on that journey little pockets of order can form, including in commodities, bonds, stocks, currencies that circle back and reorder disorder. Then there is us the market player that reflects through order and disorder in an ever-evolving loop towards independence. It all starts with gravity and ends with equilibrium and back we go.” KnovaWave “The rules of market flux”
The Fed has kicked off its first real tightening campaign since 1994, with securities markets already at the brink of illiquidity and dislocation. Markets could soon be screaming for assurances of the Fed’s “buyer of last resort” liquidity backstop, while the Fed is prepared to begin withdrawing liquidity by selling Treasuries and MBS.
Another important aspect is the Fed doesn’t Control corporate pricing or wage decisions. Let us be clear geopolitical, climate change developments and what an out of depth, politically motivated administration are outside the Fed’s sphere of influence. There has been over $5.1 Trillion new “money” in 126 weeks, it’s a reasonable conclusion the Fed has lost control of Inflation.
The VOLX`s underlying instrument is the Mini VIX™ Future. The CBOE Volatility Index (VIX) is an up-to-the-minute market estimate of expected volatility. The VIX is calculated using a formula to derive expected volatility by averaging the weighted prices of out-of-the-money puts and calls (options) on the S&P 500.
When the VIX is highly reactive, VIX related products can serve as potentially effective hedging tools, when the VIX is not very reactive, traditional hedging techniques may be a better choice.
We need to grasp all the risks to be wary off and received plenty of flak from it. We always talk here about expect the unexpected and now that is front and center, gage the market’s reaction, the market is always right and that’s why we focused on the crowd psychology aspect over the past few weeks.
“We have a market trying to interpret the Fed who is trying to find out how they can interpret their long-only portfolio at a risk parity where rates cannot rise.”– MoneyNeverSleeps
Cboe Daily Market Statistics
Our weekly reminder for risk. The downside is clear with the absence of moral hazard from repeated Federal Reserve market bailouts in an environment of some would say obscene liquidity pumps. Pure greed is the other part, not wanting to miss out on fees. The obvious question is, how deeply ingrained is this attitude through the markets? How do we ween the markets off this continuous dip feed? At this point the Central Banks have kicked that answer down the road.
Part A – Stock Markets
Weekly Highlights – USA
- S&P500 little changed (down 19.4% for 2022)
- Dow slipped 0.2% (down 8.8%).
- S&P 400 Midcaps declined 0.2% (down 14.5%),
- Small cap Russell 2000 was unchanged (down 21.6%).
- Nasdaq100 slipped 0.4% (down 33.0%).
US Markets YTD
- Dow Jones Industrial Average: -8.8% YTD
- S&P Midcap 400: -14.5% YTD
- S&P 500: -19.4% YTD
- Russell 2000: -21.6% YTD
- Nasdaq Composite: -33.1% YTD
- Utilities declined 0.6% (down 2.3%).
- Banks rose 1.6% (down 23.7%),
- Broker/Dealers dipped 0.3% (down 7.7%).
- Transports fell 1.3% (down 18.7%).
- Semiconductors were little changed (down 35.8%).
- Biotechs declined 0.3% (down 4.3%).
- Gold bullion jumped $26, the HUI gold equities index slipped 0.9% (down 11.2%).
Six sectors finished higher, and five sectors finished lower last week. The best performing sectors were energy (+4.4%), utilities (+1.4%), financials (+1.4%), and consumer staples (+1.0%). The weakest were the consumer discretionary (-3.1%) and information technology (-2.0%) sectors dragged down by their mega cap components ($TSLA, $AAPL to name two). The Vanguard Mega Cap Growth ETF (MGK) declined 2.1% for the week.
Biggest SPX Stock Winners and Losers Last Week
Global Stock Market Highlights
Highlights – Europe Stocks
- U.K.’s FTSE 100: slipped 0.3% (up 0.9% in 2022)
- Germany’s DAX: was little changed (down 12.3%)
- France’s CAC 40: dipped 0.5% (down 9.5%)
- Italy’s FTSE MIB: fell 0.7% (down 13.3%)
- Spain’s IBEX 35: declined 0.5% (down 5.6%)
Germany’s benchmark Blue Chip DAX 30 index (Deutscher Aktienindex) expanded to 40 companies on 20 September adding 10 new members to the German stock index from the MDAX which will be reduced from 60 to 50 members.
Highlights – Asia Stocks
- Japan’s Nikkei declined 0.5% (down 9.4% for 2022)
- South Korea’s Kospi dropped 3.3% (down 24.9% for 2022).
- India’s Sensex gained 1.7% (up 4.4% for 2022).
- China’s Shanghai recovered 1.4% (down 15.1% for 2022)
- Hong Kong’s Hang Seng: +1.0% for the week (down 14.4% for 2022)
Asia Pacific Region Equity Markets in 2022
- Hong Kong Hang Seng Closes Down 14.4% in Worse Year Since 2011
- Japanese Defense and Reopening Stocks Cushioned the Nikkei Dow and Topix in 2022
- South Korea’s Kospi the Weakest Stock Market in Asia This Year, Closing Down 24.9%
- China’s Shanghai and Shenzhen Stock Markets Plunged in 2022
- India’s Sensex Stock Market Performed the Best in Asia in 2022, Closing Up 4.4% in 2022
- Resilient Australian Stock Market Outperformed in 2022, Supported by Mining and Energy Stocks
Highlights – Australian Stocks
- Australia’s ASX: ended down 5.45% to 7,038.7 in 2022. On the last day of the trading year the ASX was up +0.3% and -0.9% for the week.
- For 2022: Whitehaven Coal Ltd. (+303%) New Hope Corp (+194%) Woodside Energy Group (+64%)
- For 2022: Core Lithium Ltd. (+66%) Sayona Mining Ltd. (+46%) Mineral Resources Ltd. (+43%)
- Resilient Australian Stock Market Outperformed in 2022, Supported by Mining and Energy Stocks
Highlights – Emerging Markets Stocks
EM equities mixed
- Brazil’s Bovespa unchanged (up 4.7% YTD),
- Mexico’s Bolsa index sank 4.2% (down 9.0%).
- Turkey’s Borsa Istanbul National 100 index added 1.0% (up 197%).
- Russia’s MICEX equities index rallied 1.4% (down 43.1%).
Daily: The daily SPX on Friday closed out the year right in the sphere of interest at the cloud twist. The market after spitting the 4100 and 38.2% retracement broke through all near support., though managing to capture the Tenkan on the last day of the year. This underscores the power from the SPX spat of June & October lows with impulse through the tenkan and Kijun energized by the daily cloud twist that fueled this rally. The completive wave came off extreme fear and bear that ended with relief. Now we have sated much of the greed phase and short fear phase. We have completed that cycle and from here we measure the alternatives.
Tracing back from highs the fuel from the top of the channel after completing 3 waves off ATH, accelerated after broke the Tenkan through to the 4600 OI where it reversed with impulse back to Tenkan. Bulls, this is likely a (ii) of a 5. Bears this is 1-2 of (i) completive V of degree. We watch if this low was a (iii), (a) or C. We have to respect the number of alternatives of degree of 5. With such trends keep it simple resistance is Tenkan and Kijun and watch for ABC. From no fear to panic is the driving element.
On the downside the Kijun and those June lows now critical and is our trading Bear/Bull pivot in a high vol scenario. Watch each measured 3 wave move on the 240 & Murrey Math highlighted in the podcast. The prices pulled through the downward cloud pulled by the twist ‘helium contusion’ on the completive.
For fractal purposes, SPX completed 5 waves up where it reversed with impulse. Energy fueled from the power impulse down from +1/8 ATH spit of a spit fail. On the way down (just like up) it accelerated after it broke the Tenkan through the rejected Kijun and then through the median after tapping 8/8.
Weekly: In the last week of 2022 we again closed under the Tenkan and 8/8 after the failed rally was rejected at the 50wma and +1/8. Key support is the 38% correction and the previous low. Power came from rejecting the cloud as one would expect in a 3 or C. We have Kijun. the Tenkan and 50wma all above i.e impulse right to the weekly cloud is needed for cycle switching. For that you would have to break the Kijun and 50wma.
We are playing out S&P 500 energy after it held the sphere of influence from Nov 2020 reversed higher after spitting the 38% and key lows. At the time we opined “We do have a weekly cloud twist; however, the energy is waning without sharp impulse.” We got the sharp impulse right to weekly Kijun. For major cycles we watch the S&P 500 over 4,231, the 50% retracement of losses from the Jan. 3 & June 16 close. Since 1950 there has never been a bear market rally that exceeded the 50% retracement then gone on to make new cycle lows. Is this time different, as we tested and spat those June lows?
On the way up each new high evolved after testing Tenkan key support on the way and we are now getting a retest as resistance. We reiterate this needs to be recovered for a resumption of the uptrend meanwhile the bear market plays out. Watch Tenkan this week and watch for Kijun reaction. Extensions are difficult to time, keep it simple.
THE KEY: Key for the impulse higher 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 put/call 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 Chikou rebalances
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
The down move saw Nasdaq spit the weekly Kijun and a 1-2 off tenkan we spat MM 5/8 after holding the key 61.8% Fib. We watch the Tenkan & Kijun confluence above, the breakup level and between the 38/50 Fibs. The Nasdaq is well behind the S&P pace with the weekly cloud and 50wma well above. Support the 61.8% retest.
Recall ATH was after it broke and held the weekly Tenkan to see a spit of a spit fail which is completive of 5 of some degree with Chikou rebalancing. Watch Chikou for divergence for continuation or failure. Divergence with Russell also a clue.
The Dow led the indices and closed above the weekly Tenkan after closing and testing last week. Prior test after the reaction off the June lows and sphere of influence. Support is the channel and Fibs. Tenkan and Kijun after the reaction empowered. Support is the channel and Fibs.
The small cap Russell RUT bounced in double bottom off 1600 5/8 confluence which was the Nov 2020 breakup. Russell 2000 Resistance Tenkan and Kijun, note previous rejections. This is the index showing more of the fast money crowd and is trading like it. Needs to get traction in here for bulls. 7/8 & 8/8 support collapsed on the way down and is now major resistance.
Semiconductors SMH clean with reaction from above reverted with retest & break of the triple top patterning in a pennant. From there been a fractal on each exhaustion. Pull from Chip players $ON $TSM $NVDA $ASML $AMD $QCOM $AVGO $TXN $INTC $AMAT $LRCX $XLNX
NVidia’s latest slide was off earnings, back to lows at 4/8 after a failed breakup retest from May 2021. NVidia is a clear leader of #SOX #SMH look for cues there and ABC failures for changes. Above is the Key Break (mauve) and Tenkan to a flat cloud. Support the recent low at the 61.8% extension.
Heading into another Earnings Apple held the sphere of influence after retesting 7/8 & break up. Kijun and Tenkan are about to touch, with earnings we watch for a kiss of death at the cloud as the story. Apple & other mega-cap names dominant the major indices, and a plethora of funds that hold it as a core position. The Vanguard Mega-Cap Growth ETF (MGK) delta is important to watch.
A firm rejection at $175 at +2/8 triggered a waterfall down for Apple. On the way up Apple gently motored up to new ATH over the massive $160 then $170 thru to $180 gamma level on the way down these levels became key energy levels all the way to $132. Support held at the May break (just like NVDA) where from there it spat the cloud pulled by a flat Tenkan and Kijun as it rebalanced Chikou. The old channel break and MM 8/8 is now key. Remember the impact $AAPL has, at least short term on all the major indices.
The ARK Innovation ETF (ARKK) finally found some support at -1/8, 78% off highs and the 423.6% extension! The fund is filled with growth stocks and was the top-performing U.S. equity fund tracked by Morningstar in 2020, it has not been a pretty slide.
The ARKK ETF trading clinically, tested triangle breakdown and failed off 50 WMA. Some work at support at 61.8% of whole move and then wrecked again. Clear crowd behavior, we saw ATH in NASDAQ & SPX, yet this couldn’t raise a bid – very telling negative divergence. $ARKK rebalanced Chikou at week’s end
Part B: Bond Markets
U.S. Treasuries closed 2022 with higher yields across the curve. The 10-yr note yield threatened a breakout above 3.90%, but once again was met with resistance. The 2s10s inversion remained at 54 basis points. The 2-yr note began the year at 0.73%, but settled at 4.42%, up five basis points. The 10-yr note began the year at 1.51% and closed today’s session at 3.88%, up five basis points. The Treasury market will be closed Monday in observance of the New Year’s Day holiday.
Treasury Yield Watch
- 2-yr: +5 bps to 4.42% (+10 bps for the week… +369 bps for the year)
- 3-yr: +6 bps to 4.24% (+15 bps for the week… +328 bps for the year)
- 5-yr: +4 bps to 4.00% (+15 bps for the week… +274 bps for the year)
- 10-yr: +5 bps to 3.88% (+13 bps for the week… +237 bps for the year
- 30-yr: +5 bps to 3.97% (+15 bps for the week… +207 bps for the year)
For our complete Weekly Fixed Interest Analysis and Outlook visit our Bond Traders Weekly Outlook:
- Freddie Mac 30-year fixed mortgage rates jumped 21 bps to 6.41% (up 330bps y-o-y).
- Fifteen-year rates surged 30 bps to 5.80% (up 347bps).
- Five-year hybrid ARM rates jumped 23 bps to 5.62% (up 321bps).
- Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates up two bps to 6.59% (up 336bps).
Part C: Commodities
- Bloomberg Commodities Index added 0.2%, closing 2022 up 13.8%.
- Spot Gold jumped 1.4% to $1,824 (down 0.3%).
- Silver gained 0.9% to $23.95 (up 2.8%).
- WTI crude added 70 cents to $80.26 (up 7%).
- Gasoline jumped 3.2% (up 10%),
- Natural Gas dropped 11.9% to $4.48 (up 20%).
- Copper was little changed (down 15%).
- Wheat gained 2.1% (up 3%),
- Corn rose 1.8% (up 14%).
- Bitcoin fell $200, or 1.4%, this week to $16,600 (down 64%).
Key Long Term Commodity Charts
BDI Freight Index
For our complete Weekly Commodity Analysis and Outlook visit our Commodity Traders Weekly Outlook:
Charts and commentary via KnovaWave on:
- Grains: Wheat, Corn, Soybeans
- Metals: Copper, Aluminum
- Precious Metals: Gold Silver
- Oil and Natural gas are covered separately (see below)
For complete Oil and Natural Gas Coverage please visit our dedicated publications ‘Around the Barrel’ and ‘Into the Vortex.’ – Weekly Analysis and Outlook for Energy Traders and Investors
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.”
- For the week, the U.S. Dollar Index declined 0.8% to 103.49, reducing 2022 gains to 8.2%
- For the week on the upside, the Australian dollar increased 1.4%, the Japanese yen 1.4%, the South Korean won 1.2%, the New Zealand dollar 1.1%, the Swedish krona 1.0%, the Swiss franc 0.9%, the Norwegian krone 0.9%, the Singapore dollar 0.9%, the euro 0.8%, the Canadian dollar 0.3% and the British pound 0.3%. The Chinese (onshore) renminbi gained 1.32% versus the dollar (down 7.86% for 2022).
- On the downside, the Brazilian real declined 2.2%, the Mexican peso 0.7%, and the South African rand 0.1%.
For our complete Forex Weekly Analysis and Outlook visit our Forex Traders Weekly Outlook:
Charts and commentary via KnovaWave on the US Dollar, Euro, Japanese Yen, British Pound, Euro Pound, Swiss Franc, Canadian Dollar, Australian Dollar, New Zealand Dollar, Turkish Lira, Mexican Peso. Currency dynamics are complex. There are myriad facets to analyze and contemplate that influence all markets.
Bitcoin continues to churn following the FTX collapse. BTC had been stuck in the sphere of influence in continuation awaiting a catalyst, and it came. Continues to perform technically to perfection. Impulse begets impulse. To understand panic, understand greed. $BTC tested the top of a rising channel after the preceding sharp downturn which was the downside breakout of an earlier bearish flag, after breaking downside a H&S top and then down it went….
Recall Bitcoin exploded higher following it’s correction impulsively upon completing 5 waves up at +2/8. Each Tenkan and Kijun tap saw an explosive kiss of death until we completed 3 waves to around 28,000. From there we have seen extreme volatility.
Looking back Bitcoin put in a high of $63,000 around Coinbase, the largest US crypto exchange successfully went public which signaled profit-taking. The high over $68,000 came after the launch over the Bitcoin ETF. From that high we have 2 main alternatives a V of a 1 of a V. For bears it a completive five with impulse right to the 50wma – an incredible 26% fall in a Friday night session. That’s impulse!
On the Risk Radar
Geopolitical Tinderbox Radar
Economic and Geopolitical Watch
Major banks kicking off earnings this quarter, including BlackRock (BLK), Citigroup (C), First Republic Bank (FRC), JPMorgan Chase (JPM) and Wells Fargo (WFC).
Major US Banks Deliver Mixed Results in Q3, 2022
The major money cents banks released earnings with many strong results for Q3. Mainly from the interest rate spreads on the positive side. We see a reversal of loss reserve releases from the pandemic kitty as the economy slides into recession.
- Goldman Sachs Bear Market Woes, Trading Revenue up 11%, Investment Banking Revenue Fell 57%
- Charles Schwab Client Assets Fell $1.4 Trillion to $6.6 trillion in the Third Quarter
- Bank of America Earnings Beat as Net interest Income Jumped 24% Thanks to the Federal Reserve
- PNC Bank Earnings Higher with Widening Net Interest Margin
- JPMorgan Benefitting from Fed Rate Hikes with Record Quarterly Net Interest Income
- Wells Fargo Earnings Again Hit by Regulatory Charges with Another $2 billion in Charges
- US Bancorp Earnings Benefitting from Rising Interest Rates and Loan Growth
- Morgan Stanley Investment Banking Drags Down Earnings
- Citigroup Earnings Boosted by Inflation Spiked Credit Card Revenue
- BlackRock Earnings Cushioned by ETF Products as Assets Under Management Fall 16% To 2020 Levels
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.
The Week Ahead – Have a Trading Plan
What Macro and Micro Risks and Opportunities Lie Ahead this week
Next 2 Week’s Risk Dashboard via Scotiabank ..
- Inflation strikes cookies, carrots & milk!
- Monitoring China’s supply chains
- Are nonfarm payrolls overestimating jobs?
- Are Canadian jobs still resilient?
- US, Canadian wage pressures
- FOMC minutes
- EZ CPI: peaking headline, not core?
- Other macro
Central bank Watch
The most notable event is FOMC minutes. St. Louis Federal Reserve Bank President James Bullard is scheduled to give a presentation on the U.S. Economy and Monetary Policy on Thursday. Richmond Federal Reserve Bank President Thomas Barkin and Atlanta Federal Reserve Bank President Raphael Bostic are scheduled to give speeches Friday.
This Week’s Interest Rate Announcements (Time E.T.)
- None Seen
For our complete Central Bank Analysis and Outlook visit our Central bank Watch:
Economic Data Watch
US Data Focus
- Monday: Bond and equity markets closed for New Year’s Day holiday
- Tuesday: December IHS Markit Manufacturing PMI – Final; November Construction Spending
- Wednesday: MBA Mortgage Applications; December ISM Manufacturing Index; November JOLTS – Job Openings
- Thursday: December ADP Employment Change; Initial and Continuing Jobless Claims; November Trade Balance; December Final IHS Markit Services PMI; EIA Natural Gas Inventories; EIA Crude Oil Inventories
- Friday: December Employment Situation; December ISM Non-Manufacturing Index; November Factory Orders
Global Data Focus
- Canada: Balance of Trade, Employment Change
- Brazil: Industrial Production MoM
- Europe: Preliminary estimates for inflation rate for Euro Area and Germany. Eurozone business survey, unemployment rate and producer prices; Germany jobless rate, domestic and international trade and factory orders; Switzerland CPI and retail sales; and Turkey inflation rate and balance of trade. S&P PMIs will be released. National Bank of Poland rates
- UK: BoE’s monetary indicators, updated S&P Global PMIs and Halifax housing prices
- China: December’s Chinese Manufacturing PMI data
- Japan: Consumer confidence gauge for December.
- India: India manufacturing PMI figures
- South Korea: South Korea manufacturing PMI figures.
- Australia: Judo Bank Manufacturing PMI Final Judo Bank Services PMI Final Retail Sales
- New Zealand:
Earnings and Event Watch
US Stocks Watch
Investors (and algos) will focus on the conference calls and outlooks. Last quarter 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.
- Monday. The U.S. stock markets will be closed for observance of the New Year’s Day holiday.
- Tuesday Bank of America warned earnings pre-announcements possible for Alnylam Pharmaceuticals (ALNY), Amicus Therapeutics (FOLD), Neurocrine Biosciences (NBIX), and Ultragenyx (RARE). Electric vehicle delivery watch: Nio (NIO), Li Auto (LI), and XPeng (XPEV) report on monthly deliveries amid some concerns on demand. Tesla (TSLA) and Rivian Automotive (RIVN) Q4 deliveries reports expected. Nvidia (NVDA) will share latest innovations ahead of the highly anticipated CES trade show in Las Vegas
- Wednesday Shareholders with Mount Rainier Acquisition Corp. (RNER) will vote on the proposed merger with Israeli firm HUB Cyber Security. Shareholders with CENAQ Energy Corp (CENQ) will vote on the deal to take Bluescape Clean Fuels public in a SPAC deal. AMD (AMD) keynote address at CES.
- Thursday – Lordstown Motors (RIDE) will participate in the Mobility in Harmony press conference at CES.
- Friday – The FDA action date for Biogen (BIIB) and Eisai’s (OTCPK:ESALY) (OTCPK:ESALF) Lecanemab will be watched closely after a third patient died while taking the experimental Alzheimer’s treatment. BlackBerry Limited (BB) will host an interactive Q&A with management regarding its announcements and demonstrations at CES 2023.
Earnings Highlights This Week:
- Monday includes The U.S. stock markets will be closed for observance of the New Year’s Day holiday.
- Tuesday includes SMART Global (SGH).
- Wednesday includes Simulations Plus (SLP).
- Thursday includes Walgreens Boots Alliance (WBA), Conagra Brands (CAG), Constellation Brands (STZ), and Lamb Weston (LW).
- Friday includes Greenbrier (GBX).
US IPO Week Ahead:
Focus on yourself and what YOU CAN INFLUENCE, set your trading plan and goals in be set for 2022.
-comment section below data-
Subscribe and Follow
Find us at www.traderscommunity.com
Follow our contributors on Twitter @traderscom @thepitboss16 @knovawave @ClemsnideClem
Note these charts, opinions news and estimates and times are subject to change and for indication only. Trade and invest at your own risk.