Traders Market Weekly: March 21 - 28 2021

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FEAR NOT Brave Investors

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

Chaos …. Powell, Bonds and Gamestop

The Week That Was – What Lies Ahead?

Editorial

The bond market ratcheted it up again this past week after the Federal Reserve met Tuesday and Wednesday. We saw more rotation from tech to value stock as the benchmark 10-year Treasury Note reached a high of 1.75% this past week, its highest in 14 months. The Russell 2000 was hit the hardest, losing close to 3% for the week.

Why the angst in the bond market? The FOMC presented new economic projections including a forecast of 6.5% for gross domestic product this year with PCE inflation going to 2.4% this year, but falling to 2% next year. Powell reiterated that the Fed sees only a temporary pickup in inflation this year because of the base effects against last year’s numbers when prices fell. The Fed will target an average range of inflation around 2%, meaning it could exceed that threshold for some time which is a change to the Fed’s ground rules. This week the Philadelphia Fed’s Business Survey Prices Paid Index surged to a 41-year-high. In the New York Fed’s Manufacturing Index, indices of Prices Paid and Received both jumped to highs since 2011.

Powell: “What I would say is we’re committed to giving the economy the support that it needs to return as quickly as possible to a state of maximum employment and price stability. And to the extent having rates low and support for monetary policy broadly – to the extent that raises other questions, we think it’s absolutely essential to maintain the strength and stability of the broader financial system and to carefully monitor financial stability questions,”

The majority of Fed officials did not see any interest rate hikes through 2023. With the passing of the $1.9 trillion splurge a FOMO surge lifted stocks last week but now all eyes on yields dampened the enthusiasm.

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. But since then Crude has fallen over 12% in just a week from those highs. Hence why Powell has 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 this month 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

S&P500 fell 0.8% (up 4.2% y-t-d)
Dow fell 0.5% (up 6.6%).
Nasdaq100 declined 0.5% (down 0.2%)
S&P 400 Midcaps lost 1.2% (up 13.3%),
Small cap Russell 2000 dropped 2.8% (up 15.8%).
Utilities dipped 0.6% (down 2.1%).
The Banks fell 1.7% (up 23.9%), and Broker/Dealers declined 0.9% (up 19.6%).
The Transports added 0.2% (up 13.4%).
The Semiconductors rose 1.6% (up 7.7%). The Biotechs gained 0.6% (down 2.8%).
With bullion gaining $18, the HUI gold index rallied 3.0% (down 6.8%).

Highlights – Europe Stocks

U.K.’s FTSE equities index declined 0.8% (up 3.8% y-t-d).
France’s CAC40 declined 0.8% (up 8.0%).
Germany’s DAX equities index increased 0.8% (up 6.6%).
Spain’s IBEX 35 equities index dropped 1.8% (up 5.2%).
Italy’s FTSE MIB index added 0.4% (up 8.8%).

Highlights – Asia Stocks

Japan’s Nikkei Equities Index added 0.2% (up 8.6% y-t-d).
South Korea’s Kospi index declined 0.5% (up 5.8%).
India’s Sensex equities index dropped 1.8% (up 4.4%).
China’s Shanghai Exchange declined another 1.4% (down 2.0%).
Australia’s S&P/ASX 200 index fell 0.9% for the week.

Highlights – Emerging Stocks

EM equities were mixed to lower.
Brazil’s Bovespa index rallied 1.9% (down 2.3%),
Mexico’s Bolsa fell 1.6% (up 6.7%).
South Korea’s Kospi index declined 0.5% (up 5.8%).
India’s Sensex equities index dropped 1.8% (up 4.4%).
China’s Shanghai Exchange declined another 1.4% (down 2.0%).
Turkey’s Borsa Istanbul National 100 index fell 1.8% (up 3.5%).
Russia’s MICEX equities index dropped 1.8% (up 5.7%).

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

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.

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

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.

NADSAQ 100

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.

Apple $AAPL

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.

ARK ETF

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 Westport Fuel Systems, Carlotz,Volkswagen, Fuel Cell, Designer Brands, Jabil, Lennar, Coupa Software, CrowdStrike, REI Cintas, Lands’ End, Five Below, Herman Miller, American Outdoor Brands, FedEx, Dollar General, Nike, Petco, Accenture, Commercial Metals, Signet Jewelers, Buckle

This week we hear from:

Monday starts us off with

Tencent Music Entertainment, JOYY, Synnex, Viant, Zentalis, Raven, BioLife, Annexon, Energy Fuels, Bit Digital, Yunji

Tuesday with earnings from

Adobe, IHS Markit, DouYu, GameStop, Steelcase

Wednesday Earnings Include

General Mills, Shoe Carnival, KB Home, RH, Tencent, Embraer, Winnebago

Thursday Earnings Include

Darden Restaurants

Friday Earnings include

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 $5.430 billion, and junk bond funds posted positive flows of $410 million (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 negative 0.0025%.
Two-year government yields were little changed at 0.15% (up 3bps y-t-d).
Five-year T-note yields rose four bps to 0.88% (up 52bps).
Ten-year Treasury yields jumped 10 bps to 1.72% (up 81bps).
Long bond yields rose six bps to 2.44% (up 79bps).
Benchmark Fannie Mae MBS yields surged 14 bps to 2.10% (up 76bps).

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 four bps to an almost nine-month high 3.09% (down 56bps y-o-y).
Fifteen-year rates increased two bps to 2.40% (down 66bps).
Five-year hybrid ARM rates added two bps to 2.79% (down 32bps).
Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates up five bps to 3.28% (down 80bps)..

Highlights – Federal Reserve

Federal Reserve Credit last week surged $105.4bn to a record $7.636 TN.
Over the past 54 weeks, Fed Credit expanded $3.492 TN, or 84.3%.
Fed Credit inflated $4.826 Trillion, or 172%, over the past 436 weeks.
Fed holdings for foreign owners of Treasury, Agency Debt last week rose $6.472bn to a record $3.576 TN.
“Custody holdings” were up $165.4bn, or 4.8%, y-o-y.
Total money market fund assets slipped $6.5bn to $4.386 TN.
Total money funds surged $450bn y-o-y, or 11.4%.
Total Commercial Paper added $5.3bn to $1.116 TN. CP was down $30bn, or 2.7%, 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 jumped 10 bps to 0.91% (up 29bps y-t-d).
Ten-year Portuguese yields increased three bps to 0.23% (up 20bps).
Italian 10-year yields gained four bps to 0.66% (up 12bps).
Spain’s 10-year yields increased two bps to 0.35% (up 30bps).
German bund yields added a basis point to negative 0.29% (up 28bps).
French yields gained two bps to negative 0.05% (up 29bps).
The French to German 10-year bond spread widened slightly to about 25 bps.
U.K. 10-year gilt yields increased two bps to 0.84% (up 64bps).

Highlights – Asian Bonds

JJapanese 10-year “JGB” yields slipped a basis point to 0.11% (up 9bps y-t-d)..

Part C: Commodities

Highights

The Bloomberg Commodities Index fell 1.7% (up 8.3% y-t-d).
WTI crude sank $4.19 to $61.42 (up 27%).
Gasoline dropped 9.6% (up 38%)
Natural Gas fell 2.5% (unchanged).
Copper declined 0.7% (up 17%).
Wheat fell 1.8% (down 2%).
Corn jumped 3.5% (up 15%).
Bitcoin added $1,444, or 2.5%, this week to $58,410 (up 100%).
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

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

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 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

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.

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.

Key Energy Reports

Precious Metals

Highlights

Spot Gold gained 1.0% to $1,745 (down 8.1%).
Silver rose 1.3% to $26.2461 (down 0.6%).

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.

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.

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 U.S. dollar index added 0.3% to 91.919 (up 2.2% y-t-d). .
Majors for the week For the week, on the upside, the Swiss franc 0.2% and the Japanese yen 0.1%. For the week on the downside, the euro 0.4%, the British pound 0.4%, the Australian dollar 0.3%, the Canadian dollar 0.2%.
Minors for the week For the week on the upside, the South African rand increased 1.2%, the Brazilian real 1.2%, the Mexican peso 0.9%, the South Korean won 0.2%, the Singapore dollar 0.2%. For the week on the downside, the Norwegian krone declined 1.2%, the Swedish krona 0.7%, and the New Zealand dollar 0.2%. The Chinese renminbi was about unchanged versus the dollar this week (up 0.28% 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.

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.

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

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.

British Pound – USDGBP

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.

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

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.

Turkish Lire USDTRY

The Turkish Lire had corrected back to the weekly cloud to bounce to the Kijun, correcting back through Tenkan after the 200bp hike by the Turkish Central Bank. The USD/TRY had fallen to around 7,80 to bounce to 8/8. The move is a question of degree. Keep an eye on geopolitical risk factors.

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.

On the Risk Radar

Fed Warnings on Possible Medium To Long Term Risks

Geopolitical Tinderbox Radar

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

COVID-19 cases are rising in 21 states, including New York, Pennsylvania, West Virginia, and Alabama. The U.S. seven-day moving average of new infections plateaued at 54,666 following weeks of decline.
Chief Medical Advisor Dr. Anthony Fauci warn a highly transmissible variant of COVID-19 first detected in the U.K. called B.1.1.7 could account for 30% of U.S. infections.
The U.S. has recorded more than 29.7 million cases of COVID-19 so far, with at least 541,000 deaths, according to John Hopkins University. According to the CDC, at least 121 million vaccines have been administered in the U.S. with more than 156 million distributed.
Fauci believes 70%-85% of the population must be vaccinated to reach herd immunity.
Europe surpassed one million deaths on Friday as the continent battles a third wave. France, Italy, and Poland have introduced new restrictions. In the U.K., more than 50% of adults have received the first dose of the vaccine.

Banks

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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”

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 22 2021

9:00 a.m. Fed Chairman Jerome Powell at Bank for International Settlement summit
1:00 p.m. San Francisco Fed President Mary Daly
1:30 p.m. Fed Vice Chairman Randal Quarles
7:15 p.m. Fed Governor Michelle Bowman

Tuesday March 23, 2021

04:00 EUR ECB’s Enria Speaks
04:40 GBP BoE MPC Member Haldane Speaks
05:55 GBP BoE MPC Member Cunliffe Speaks
07:00 GBP BoE MPC Member Cunliffe Speaks
07:50 GBP BoE Gov Bailey Speaks
09:00 USD FOMC Member Bostic
09:00 USD. St. Louis Fed President James Bullard
10:10 USD FOMC Member Bostic Speaks
11:00 USD FOMC Member Barkin Speaks
12:00 USD Fed Chairman Powell, Treasury Secretary Janet Yellen at House Financial Services Committee
13:15 CAD BoC Deputy Governor Gravelle
13:25 USD FOMC Member Brainard Speaks
14:45 USD FOMC Member Williams Speaks
15:45 USD FOMC Member Brainard Speaks
19:50 JPY Monetary Policy Meeting Minutes

Wednesday March 24, 2021

10:00 a.m. Fed Chairman Powell, Treasury Secretary Yellen at Senate Banking Committee
1:35 p.m. New York Fed’s Williams
3:00 p.m. San Francisco Fed’s Daly
7:00 p.m. Chicago Fed President Charles Evans

Thursday March 25, 2021

04:30 CHF SNB Interest Rate Decision
04:30 CHF SNB Monetary Policy Assessment
05:00 EUR ECB Economic Bulletin
05:30 GBP BoE Gov Bailey Speaks
05:30 USD FOMC New York Fed’s Williams
05:30 CAD BoC Gov Macklem Speaks
05:30 EUR German Buba President Weidmann Speaks
05:30 EUR ECB President Lagarde Speaks
10:10 USD FOMC Fed Vice Chairman Richard Clarida
10:30 USD FOMC New York Fed’s Williams
12:00 USD FOMC Member Bostic Speaks
13:00 USD Chicago Fed President Evans Speaks
19:00 USD San Francisco Fed’s Daly

Friday March 26, 2021

05:00 GBP BoE FPC Meeting Minutes
08:00 GBP BoE MPC Member Saunders Speaks
08:10 EUR German Buba Mauderer Speaks
12:00 USD Dallas Fed PCE (Feb)
12:45 GBP MPC Member Tenreyro 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 Fed Chairman Jerome Powell as he testifies before Congress twice this week, and a dozen other Fed speeches are slated for next week. Other central bank speakers this week include Fed Vice Chairman Richard Clarida, Vice Chairman Randal Quarles, Fed Governor Lael Brainard, and New York Fed President John Williams.

Personal consumption expenditures inflation data will be released at the end of the week, which includes the PCE deflator, the Fed’s preferred inflation measure. The direction of bond yields could continue to drive stocks, after the 10-year reached a high of 1.75% this past week, its highest in 14 months.The Treasury auctions $60 billion 2-year notes Tuesday; $61 billion 5-year notes Wednesday, and $62 billion 7-year notes Thursday.

Sunday, March 21, 2021

Tentative NZD Westpac Consumer Sentiment
21:30 CNY PBoC Loan Prime Rate

Monday, March 22, 2021

All Day Holiday South Africa – Human Rights Day
01:00 JPY Coincident Indicator (MoM) (Feb)
01:00 JPY Leading Index
05:00 HKD CPI (YoY) (Feb)
05:00 EUR Current Account (Jan)
07:00 EUR German Buba Monthly Report
08:30 USD Chicago Fed National Activity (Feb)
9:00 USD Fed Chairman Jerome Powell at Bank for International Settlement summit
13:00 USD San Francisco Fed President Mary Daly
13:30 USD Fed Vice Chairman Randal Quarles
19:15 USD Fed Governor Michelle Bowman
10:00 USD Existing Home Sales (MoM) (Feb)
11:30 USD 3-Month Bill Auction
11:30 USD 6-Month Bill Auction
22:00 NZD Credit Card Spending (YoY)

Tuesday, March 23, 2021

01:00 JPY BoJ Core CPI (YoY)
01:00 SGD CPI (YoY) (Feb)
03:00 GBP Average Earnings
03:00 GBP Claimant Count Change (Feb)
03:00 GBP Unemployment Rate (Jan)
04:00 EUR ECB’s Enria Speaks
04:40 GBP BoE MPC Member Haldane Speaks
05:00 EUR Italian Industrial New Orders
05:00 EUR Italian Industrial Sales
05:55 GBP BoE MPC Member Cunliffe Speaks
07:00 GBP CBI Industrial Trends Orders (Mar)
07:00 GBP BoE MPC Member Cunliffe Speaks
07:50 GBP BoE Gov Bailey Speaks
08:00 GBP Steel Production (Metric Ton) (Jan)
08:30 USD Current Account (Q4)
08:55 USD Redbook
09:00 USD FOMC Member Bostic
09:00 USD FOMC Member Bullard
10:00 USD Fed Chair Powell Testifies
10:00 USD New Home Sales (MoM) (Feb)
10:00 USD New Home Sales (Feb)
10:00 USD Richmond Manufacturing Index (Mar)
10:00 USD Richmond Services Index (Mar)
10:10 USD FOMC Member Bostic Speaks
11:00 USD FOMC Member Barkin Speaks
13:00 USD 2-Year Note Auction
13:00 USD 52-Week Bill Auction
13:15 CAD BoC Deputy Governor Gravelle
13:25 USD FOMC Member Brainard Speaks
14:45 USD FOMC Member Williams Speaks
15:45 USD FOMC Member Brainard Speaks
16:30 USD API Weekly Crude Oil Stock
17:00 KRW PPI
17:45 NZD Trade Balance
18:00 AUD Manufacturing PMI
18:00 AUD Services PMI
19:50 JPY Monetary Policy Meeting Minutes
20:30 JPY Manufacturing PMI (Mar)
20:30 JPY Services PMI (Mar)

Wednesday March 24, 2021

03:00 GBP CPI
03:00 GBP PPI Input
03:00 GBP PPI Output
03:00 GBP RPI
04:15 EUR French Manufacturing PMI (Mar)
04:15 EUR French Markit Composite PMI (Mar)
04:15 EUR French Services PMI (Mar)
04:30 EUR German Composite PMI (Mar)
04:30 EUR German Manufacturing PMI (Mar)
04:30 EUR German Services PMI (Mar)
05:00 EUR Manufacturing PMI (Mar)
05:00 EUR Markit Composite PMI (Mar)
05:00 EUR Services PMI (Mar)
05:30 GBP Composite PMI (Mar)
05:30 GBP Manufacturing PMI (Mar)
05:30 GBP Services PMI (Mar)
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 Durable Goods Orders (MoM) (Feb)
09:45 USD Manufacturing PMI (Mar)
09:45 USD Markit Composite PMI (Mar)
09:45 USD Services PMI (Mar)
10:00 USD Fed Chair Powell Testifies
10:30 USD Crude Oil Inventories
11:00 EUR Consumer Confidence (Mar)
13:00 USD 5-Year Note Auction
13:45 USD FOMC Member Williams Speaks
15:00 USD FOMC Member Daly Speaks
19:00 USD Chicago Fed President Evans Speaks
19:50 JPY Foreign Bonds Buying ‘
19:50 JPY Foreign Investments in Japanese Stocks
22:00 NZD RBNZ Offshore Holdings (Jan)

Thursday, March 25, 2021

03:00 EUR GfK German Consumer Climate (Apr)
03:45 EUR French Business Survey (Mar)
04:00 EUR Spanish PPI (YoY)
04:30 CHF SNB Interest Rate Decision
04:30 CHF SNB Monetary Policy Assessment
04:30 HKD Trade Balance
05:00 EUR Italian Trade Balance Non-EU (Feb)
05:00 EUR ECB Economic Bulletin
05:00 EUR Private Sector Loans (YoY)
05:30 GBP BoE Gov Bailey Speaks
05:30 USD FOMC Member Williams Speaks
05:30 CAD BoC Gov Macklem Speaks
05:30 EUR German Buba President Weidmann Speaks
05:30 EUR ECB President Lagarde Speaks
07:00 GBP CBI Distributive Trades Survey (Mar)
08:30 USD Jobless Claims
08:30 USD Core PCE Prices (Q4)
08:30 USD Corporate Profits (QoQ) (Q4)
08:30 USD GDP (QoQ) (Q4) 08:
30 USD GDP Price Index (QoQ) (Q4)
08:30 USD PCE Prices (Q4)
08:30 USD Real Consumer Spending (Q4)
10:10 USD FOMC Member Clarida Speaks
10:30 USD FOMC Member Williams Speaks
10:30 USD EIA Natural Gas Storage
11:00 USD KC Fed Composite Index (Mar)
11:00 USD KC Fed Manufacturing Index (Mar)
11:30 USD 4-Week Bill Auction
11:30 USD 8-Week Bill Auction
12:00 USD FOMC Member Bostic Speaks
13:00 USD 7-Year Note Auction
13:00 USD Chicago Fed President Evans Speaks
17:00 KRW Consumer Confidence (Mar)
19:00 USD FOMC Member Daly Speaks
19:30 JPY Tokyo CPI (YoY) (Mar)

Friday, March 19, 2021

01:00 SGD Industrial Production (MoM) (Feb)
03:00 GBP Retail Sales
03:00 EUR Spanish GDP
05:00 GBP BoE FPC Meeting Minutes
05:00 EUR Italian Business Confidence (Mar)
05:00 EUR Italian Consumer Confidence (Mar)
05:00 EUR German Business Expectations (Mar)
05:00 EUR German Current Assessment (Mar)
05:00 EUR German Ifo Business Climate Index (Mar)
06:00 EUR EU Leaders Summit
06:00 EUR Euro Summit
08:00 GBP BoE MPC Member Saunders Speaks
08:10 EUR German Buba Mauderer Speaks
08:30 USD Goods Trade Balance (Feb)
08:30 USD Retail Inventories Ex Auto (Feb)
08:30 USD Wholesale Inventories (MoM)
09:30 USD PCE price index (MoM) (Feb)
09:30 USD Personal Income (MoM) (Feb)
09:30 USD Personal Spending (MoM) (Feb)
09:30 USD Real Personal Consumption (MoM) (Feb)
10:00 USD Michigan Consumer Sentiment (Mar)
11:00 CAD Budget Balance (Jan)
12:00 USD Dallas Fed PCE (Feb)
12:45 GBP MPC Member Tenreyro Speaks
13:00 USD U.S. Baker Hughes Oil and Gas Rig Count
Tentative USD US Federal Budget
16:30 US CFTC speculative net positions ‘
21:30 CNY Chinese Industrial profit YTD (Feb)

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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Traders Market Weekly: March 21 – 28 2021

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