May 28 – June 3, 2023

FEAR NOT Brave Investors

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The Week That Was – What Lies Ahead?

Contents

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

Editorial

Let’s start off with the best news, Thursday is the first day of the meteorological summer! For financial markets last week was all about the sensational run by NVDA after its spectacular earnings run. In commodities it was about orange juice, cattle and lean hogs. In Bonds it was about the 2-year notes. In currencies it was the week of a US dollar rally led by a 600-pip pop in dollar yen and another weekly slide in copper, silver and gold. For energy, no real surprise, natural gas pulled back from recent gains and oil is waiting for the next OPEC meeting.

In Geopolitical events the two big ones were resolved by Sunday for the most part.

• U.S. President Joe Biden and Speaker Kevin McCarthy have struck a tentative deal on Saturday to raise the US debt ceiling in an ‘agreement in principle’. If approved, it averts a looming default that will bring relief to nervous markets and bring a sense of relief to the global economy.
• The second, Turkish President Recep Tayyip Erdogan extended his rule well into a third decade with his election in the Presidential elections there. That expectation had sent the Turkish currency to new lows and corporate bonds and stocks tumbling.

Two Year Rates Jump in U.S., U.K and E.U on Inflation Fears

US, UK and eurozone yields have begun to rise again anticipating more prolonged rate increases to contend with price rises. Rate hike expectations continued growing with the fed funds futures market now showing a 66.5% implied likelihood of another 25-bps increase in June, up from 17.4% a week ago.

In the U.K. two-year gilts had one of the biggest weekly falls in 20 years. The yield on UK two-year debt rose 0.6 percentage points this week to over 4.5 per cent, its highest level since October. The equivalent German bond yield rose from 2.5 per cent early this month to just under 3 per cent.

The entire Treasury complex fell Friday after the release of stronger than expected data. This week’s underperformance in shorter tenors put significant pressure on the 2s10s spread, compressing it by 18 bps to -76 bps

All week markets again churned with the renewed debt ceiling theatrics. With a nod to Nvidia the stock market closed out the week upbeat. Mega caps continued to rally, boosting index performance, and economic data pointed to continued resilience for the U.S. economy. The Vanguard Mega Cap Growth ETF (MGK) rose 1.9% while the Invesco S&P 500 Equal Weight ETF (RSP) rose 0.8%. The S&P 500 gained 1.3% and closed above 4,200, at its highest level since last August.

Semiconductor stocks continued to rally Friday, driving a 6.3% gain in the PHLX Semiconductor Index (SOX). This came after Marvell (MRVL 65.51, +16.04, +32.4%) reporting pleasing earnings and guidance. NVidia closed389.46 +80.02 (+25.88%) for the week. For the week, the PHLX Semiconductor Index gained 10.7%, leaving it up 18.4% for the month.

The stock market is now taking the Fed raising as a sign of a strong economy, as such the stock market was not deterred by rising expectations of a 25-basis points rate hike at the June FOMC meeting. According to the CME FedWatch Tool, there is a 66.5% probability of a 25-basis points rate hike in June, up from 51.7% yesterday and 13.7% a month ago. This however has made bond markets nervous as we saw them sold off this week again.

Global Debt Monitor

Highlights Unprecedented and Ongoing Surge in Global Debt

Last week, the Institute of International Finance (IIF) released their Q1 2023 Global Debt Monitor (GDM), highlighting the unprecedented – and ongoing – surge in global debt.

GDM Highlights:

• “The global debt stock grew by $8.3 trillion to a near-record $305 trillion in Q123; the combination of high debt levels and rising interest rates has pushed up debt service costs, prompting concerns about leverage in the financial system.”
• “Total debt of emerging markets hit a fresh record high of over $100 trillion (or 250% of GDP) – up from $75 trillion in 2019.”
• “At close to $305 trillion, global debt is now $45 trillion higher than its pre-pandemic level and is expected to continue increasing rapidly.”
• “Rise of private debt markets: Non-bank financial institutions (NBFLs) continue to gain prominence in global credit intermediation. The so-called ‘shadow banks’ now account for more than 14% of financial markets, with the majority of growth stemming from a rapid expansion of U.S. investment and private debt markets.”
• “The Size of Private Debt Markets Surpassed $2.1 Trillion in 2022, Up From Less Than $0.1 Trillion in 2007.”

From the end of Q3 2019 through Q1 2023, Total Global Debt jumped $52.3 TN, or 20.7%, to $305 TN.

Over this period, “Mature” economy debt expanded 13.4%, while “Emerging” economy debt surged 38.9%. It’s worth nothing that in the “Emerging” category, “Household” debt surged 41.7%, “Non-Financial Corporate” 35.1%, and “Government” 55.7%. Since 2016, total global debt-to-GDP has surged from 210% to 360%. Global financial conditions remain loose. When they inevitably tighten, be prepared for serious dislocation.

How is the Consumer Hanging?

The US relies on services for up to 90% of GDP. it relies on the consumer who is being battered by the California and New York regional bank debacle. On top of that is cumbersome if not ignorant politicians, with no clear regard for main street the evidence suggests in their behavior.

For a clearer look with earnings reports from key retailers Lowes (LOW), Best Buy (BBY), Costco (COST), Abercrombie & Fitch (ANF), American Eagle Outfitters (AEO), Dick’s Sporting Goods (DKS), Urban Outfitters (URBN), Big Lots’ (BIG), Kohl’s (KSS) and Dollar Tree’s (DLTR). They all gave a cautionary note with tightened household budgets continue to hit demand for big-ticket items and curb discretionary spending.

We get more earnings from retail companies next week including Macy’s (M) and Lululemon (LULU).

Where is the fear?

We got some movement this past week out of the tight range in markets but as we can see from the VIX chart it quickly reverted back after the initial breaks. We are aware of built-up energy ahead of key central bank decisions from this week and potential fundamentals to set-up rate hikes or not. There is discontent globally with central Banks.

With optionality dominating markets along with quant funds, algorithms, systematic trading and automated trading volatility has collapsed as has been focused on at KnovaWave. The S&P 500 has moved less than 1% in either direction for 36 of the last 46 sessions, according to Dow Jones Market Data, the quietest 46-day stretch since December 2021. This in a period of a regional bank crisis and debt ceiling crisis. These systems have no emotion and trade accordingly.

Driving quant funds is a self-reinforcing dynamic, when market volatility drops, they add which causes those funds that have paid higher volatility to cover and hence we get the churn. At the end of March, quant-focused hedge funds held about $1.13 trillion in assets, according to research firm HFR, hovering just below last year’s record high. That represents about 29% of all hedge-fund assets.

To break out of this requires a continuing break in a major down, or up move to ignite delta chasing or covering.

So-called vol-control and risk-parity funds, which tend to automatically load up on riskier assets during calmer periods, ramped up equity exposure, according to the Deutsche Bank data, available through May 18. Other quants, such as trend-following CTAs, or commodity trading advisers, have similarly piled in.

The dominance of quants has helped explain previous periods of calm trading, including long stretches in 2017 and 2018. Those periods were punctured by rapid selloffs, including the 2018 selloff dubbed “Volmageddon” when the dynamics exerting calm on the market suddenly went away. Some warn a repeat could be ahead.

Caitlin McCabe WSJ

A point well made over at Scotiabank we follow over the past month which helps explain price action. There is a difference between marking down risk appetite within functioning markets—which is happening—versus widespread market dysfunction that can be destabilizing or lead to outright dysfunction—which is not happening to this point.

Talking about manic behavior it is not hard to argue the punter is overwhelming and influencing markets like no other time, well until the next time.

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.

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.

Ahead is Deja Vu: Debt Ceiling Approval, Jobs Reports and PMI

Eyes will be on top macroeconomic reports that will emphasize the health of the US and global economies. Eyes and ears will be on central bankers given the market turmoil and the hiking of rates.

This week will place much of the focus upon debt ceiling approval after the weekend deal in Washington. It is the last full week during which to strike an agreement and have enough time to pass votes in the House of Representatives and the Senate before Treasury Secretary Yellen’s revised June 5th marker on the calendar, after which the potential risks and difficult decisions intensify.

How Hot is the American Economy?

More Macro and Micro data points, some highlights include:

• Monday: US Memorial Day holiday. Markets and federal offices closed
• Tuesday: US consumer confidence,
• Wednesday: Weekly MBA Mortgage, US job openings, Fed’s Beige Book
• Thursday: US construction spending, ISM Manufacturing, light vehicle sales, Weekly Initial and Continuing jobless claims, and weekly natural gas and oil inventories.
• Friday: US May Jobs Report: 180Ke v 253K prior; Unemployment Rate: 3.5%e vs. 3.4% prior; Average hourly earnings M/M: 0.3%e vs. 0.5% prior

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.

Earnings season continues with earnings from technology and retail companies including HP (HPQ), Salesforce (CRM), Okta (OKTA), C3a.i. (AI), Dell (DELL), Macy’s (M) and Lululemon (LULU) report quarterly results.

Click here to see the Full Week Ahead List Below

A reminder in these markets don’t get married to a view, leave biased partisan opinions at the door and find a leader. Right now, NVDA is giving us a good indicator of crowd behavior. Note the divergence and convergence with it and other instruments. Be proactive.

Worth repeating again in the low VIX environment.

Well, 2008 redux didn’t happen in the last few weeks, so the Fed moves have worked for now, much to Xi and Putin’s chagrin.

The doomsayers may be right, but we are seeing constant surprises to that theory. For example, early signs that the US housing market slump is finding a base are emerging, pending home sales having risen for a third month and to a 6-month high. we will keep an eye on consumer sentiment and business activity. We are far from being out of the woods, remember the market is not the economy. Saying that we got quite the distorted job picture per our main job stories which wee reprise below. Are we simply taking some air out or is the beginning of the great meltdown?

What we continue to notice is how this market is still being treated by ‘experts’ as those in the past, hence the volatility and extreme in bulls/bears. Understanding crowd behavior is essential in these markets. The moves have caught analysts and strategists by surprise with the uber bear running amok in the past few weeks. Typical thinking is this from Morgan Stanley strategists; “Given the events of the past few weeks, we think … equity markets are at greater risk of pricing in much lower estimates”, noting that earnings estimates were 15-20% too high even “before the recent banking events.”

What non-traders are failing to grasp is this market with so many variables is not trading as they expect and they are constantly wrong. S&P 500 earnings for the first quarter are estimated to have fallen 5% from 2022, followed by an expected 3.9% drop in the second quarter, Refinitiv data shows. During recessions, however, earnings tumble at a 24% annual rate on average, according to Ned Davis Research. However how important is that in such a chaotic market? There is the answer structure your thinking around game theory or even chaos theory.

So how Screwed are We?

• The banking system is on much greater Credit risk than mortgage risks were offloaded during the 2008 mortgage finance Bubble. At $25.6 TN, Banking System Assets ended 2022 almost double the 2007 level.
• Financial Sector debt growth jumped to a 9.66% rate last year, the strongest since 2007’s 13.50% Z.1 data showed. Now we are looking at this given the quick demise of regional banks and the concerns of the commercial structure. Why? we simple note a jump in Financial Sector borrowings signals a surge in risk intermediation. Is this fateful late-cycle intermediation gong to haunt the financial sector and economy when the Bubble bursts.
• If it doesn’t burst well, we circle back to the popular view that Financial Sector debt included in analysis would be “double counting” borrowings already included elsewhere (i.e. mortgage and business). The swift end to backs, the shocking management out there and geopolitical cold war out there has us ready to expect the unexpected and aware of moves to mitigate by Central banks as we saw a few weeks ago.
• GSE Assets expanded an unprecedented $2.094 TN, or 29.4%, over the past three years to a record $9.224 TN. FHLB Assets surged $524 billion, or 72%, in 2022, with indications for Q1 growth upwards of (yes) $400 billion.
• FHLB plays a pivotal role, last year prolonging the lending boom and last month stabilizing bank liquidity.

The Credit cycle downturn is coming to the surface.

We have the reflective destabilizing Monetary Disorder. Take a peek at China and the markets collective cognitive dissonance to the property market there, the shadow banking as just one example. Have a look around the world. The hope is the collective mass continues to evolve and survive, while each time the destruction is evident in massive disproportion shifts of wealth and attempts of mind, if not physical control of the masses. Dial that back and try and get in the minds of those trying to right the ship and the market components that matter, not what the dribblers think matter.

Here’s a thought, knowing about the power of cognitive dissonance does not necessarily protect you from its effects. Traders are only too aware of this eureka moment when you grasp it. Why some of the best trades you ever do, are the ones you don’t. In option parlance, being delta neutral sometimes is the best trade.

Key this coming week will be the commencement of the next round of such indicators that will test whether these gains were one-offs or something that is sustainable. The key will be the extent to which downside risks to the US economy have been reduced enough to influence global central banks, and how markets react.

Some things never change, when you think Greed is Good

Annualizing the New York Fed’s Q4 household borrowing data, Credit card debt expanded at a 26% pace and total debt at a 9.5% rate during the quarter. The Fed’s aggressive tightening cycle has had little affect on loose financial conditions.

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!

China; Behind the Iron Curtain

A big shift in 2022, China’s population is now falling and below that of India. China’s population fell for the first time since 1961 as births have steadily fallen in recent years despite the removal of the “one child policy”. The stalling working age population and its likely decline ahead means that potential growth in China is down from around 10% or so in the 2000s to around 4-5% now.

Growth in China’s metric of system Credit growth, Aggregate Financing, dropped to $175 billion, down significantly from March’s $773 billion and only 61% of estimates. It was also the weakest monthly growth since last October.

“China is warning domestic brokerages not to spread information that compromises national security, reinforcing a campaign that has roiled consulting firms and providers of financial data.”

• “China’s central government borrowed at the fastest pace on record last quarter and weak credit creation will only strengthen its role as borrower of last resort. With non-government sectors burdened by a debt load heavier than Japan’s in the 1990s, policy makers have no choice but to ramp up bond issuance at a time of feeble growth and low rates. Total credit to Japan’s non-financial, non-government sectors, namely households and corporations, reached an all-time high of 214% of GDP in 1994 before gradually easing toward 150% in 2016… The same measure for China topped at around 225% two years ago and has fluctuated within 210%-220% ever since.” May 25 – Bloomberg (Bruce Grant)
• “Something is rotten in the Chinese economy, but don’t expect Wall Street analysts to tell you about it. There has never been a bigger disconnect, in my experience, between some of the rosier investment bank views on China and the dim reality on the ground. Perhaps reluctant to back off their calls for a reopening boom this year, sellside economists keep sticking to their forecasts for growth in gross domestic product in 2023, and now expect it to come in well above 5%. That’s even more optimistic than the official target, and wildly out of line with dismal news from Chinese companies. Hopes for a reopening boom were based on the premise that, once released from lockdown, Chinese consumers would go on a spending spree, but company reports show no sign of one. If China’s economy were growing at 5%, then based on historical trends corporate revenues should be growing faster than 8%. Instead, revenues grew at 1.5% in the first quarter.” May 21 – Financial Times (Ruchir Sharma)

The Market 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 Matters

• Robust Increase in Real Spending with Core PCE Inflation at Persistently High Levels in April
• US Producer Price Inflation Moderates Again in April, +2.3% versus +2.7% in March
• Consumer Inflation in April Eases with Fed Screws Tightening, Core CPI Stays Elevated
• US Core PCE Inflation Held Steady at Persistently High Levels in March
• US Producer Price Inflation Fell Again in March, -0.5% m/m vs 0.0% Expected
• Consumer Inflation in March Eases, Higher Shelter Prices Offsetting Fall in Energy Costs
• FAO World Food Price Index Fell in March for Twelfth Consecutive Month

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.’”

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.

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

Indices

• S&P500 added 0.3% (up 9.5% y-t-d)
• Dow fell 1.0% (down 0.2%).
• S&P 400 Midcaps declined 0.5% (up 0.5%),
• Small cap Russell 2000 was unchanged (up 0.7%).
• Nasdaq100 jumped 3.6% (up 30.7%).

Sectors

• Utilities dropped 2.5% (down 9.9%).
• Banks gained 1.3% (down 22.8%)
• Broker/Dealers rose 1.0% (down 0.4%).
• Transports were little changed (up 3.8%).
• Semiconductors surged 10.7% (up 40.0%).
• Biotechs dropped 2.3% (up 0.2%).
• With bullion down $31, the HUI gold equities index sank 5.0% (up 5.9%).

Biggest SPX Stock Winners and Losers Last Week

Global Stock Market Highlights

Highlights – Europe Stocks

Week/YTD

• U.K.’s FTSE equities index fell 1.7% (up 2.4% y-t-d).
• France’s CAC40 fell 2.3% (up 13.1%).
• German DAX equities index slumped 1.8% (up 14.8%).
• Spain’s IBEX 35 equities index declined 0.7% (up 11.7%).
• Italy’s FTSE MIB index dropped 2.9% (up 12.7%).

Germany’s benchmark Blue Chip DAX 30 index (Deutscher Aktienindex) expanded to 40 companies on 20 September, 2021 adding 10 new members to the German stock index from the MDAX which will be reduced from 60 to 50 members.

Highlights – Asia Stocks

Week/YTD

• Japan’s Nikkei Equities Index added 0.4% (up 18.5% y-t-d).
• South Korea’s Kospi index increased 0.8% (up 14.4%).
• India’s Sensex equities index rose 1.3% (up 2.7%).
• China’s Shanghai Exchange Index dropped 2.2% (up 4.0%).

Highlights – Australian Stocks

• Australia’s S&P/ASX 200: Friday+0.2% 7154.8 (-1.7% for the week)
• Top Stocks this week: Megaport +24/36% PolyNovo +10.32
• Worse Stocks this week: Lovisa -15.22 Lake Resources -15.08

Highlights – Emerging Markets Stocks

Week/YTD 

• Brazil’s Bovespa index was little changed (up 1.1%),
• Mexico’s Bolsa index declined 0.5% (up 11.5%).
• Turkey’s Borsa Istanbul National 100 index recovered 1.8% (down 16.9%).
• Russia’s MICEX equities index gained 2.1% (up 24.5%).

Technical Analysis

S&P 500

Daily: The daily SPX closed again under the Key Spits roof under the 50% & August breakdown as it has coiled since the October Spit. We have energy and with a very low VIX it needs to get past the cloud twist to get through overhead otherwise this becomes a rising wedge. The market after spitting the 4100 and 38.2% retracement broke to capture the Tenkan. 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: The SPX closed over the cloud this week and with 8 sessions (weeks) above the Tenkan +1/8 we come into pivotal time, the VIX and outside events align with this. Eyes up traders! Key support is the 50wma Tenkan and +1/8. Power initially came from launching out of the sphere of influence as one would expect in a 3 or C. We had the Kijun spit also. Above is the channel and +2/8, above the weekly cloud is needed for cycle switching.

In the bigger picture 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

NASDAQ 100

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.

Dow Jones

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.

Russell 2000

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

NVidia $NVDA

NVidia surged 90% in Q! 2023, and kept going after earnings. It has a textbook of KnovaWave methodology and rules from the 61.8% break and reverse through the sphere. NVDA accelerated after it broke the double top spheres at 5/8 giving is a near 4/8 move. A reminder that the dominance was in, The Philadelphia Semiconductor (SOX) Index returned 27.6% for the quarter, with the Nasdaq Computer Index up 25.7% and the NYSE Arca Technology Index gaining 26.1%. The Nasdaq100 (NDX) jumped 20.5%. NVDA took off after the breakup retest from May 2021. NVidia is a clear leader of SOX & SMH look for cues there and ABC failures for changes. NVDA never looked back after the Key Break (mauve) and Tenkan to a flat cloud and holding support the recent low at the 61.8% extension.

Apple $AAPL

Apple has consistently driven upwards after it held the sphere of influence after retesting 6/8 & break up. Kijun and Tenkan crossing and then the 50wma with the cloud twist have been magnetic. 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.

ARKK ETF

The ARK Innovation ETF (ARKK) finally found some support at -1/8, 78% off highs and the 423.6% extension! The ARK Innovation ETF returned 29% for Q1 2023. 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. For the quarter, Nasdaq Computer Index up 25.7% and the NYSE Arca Technology Index gaining 26.1%. The Nasdaq100 (NDX) jumped 20.5%.

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

ExxonMobil XOM

Part B: Bond Markets

Bond Watch

Treasuries

U.S. Treasuries ended the week lower as yields on short-term government debt in the US, UK and eurozone have begun to rise again anticipating more prolonged rate increases to contend with price rises. Rate hike expectations continued growing with the fed funds futures market now showing a 66.5% implied likelihood of another 25-bps increase in June, up from 17.4% a week ago. In the U.K. two-year gilts had one of the biggest weekly falls in 20 years. The entire Treasury complex fell Friday after the release of sstronger than expected data. This week’s underperformance in shorter tenors put significant pressure on the 2s10s spread, compressing it by 18 bps to -76 bps

Treasury Yield Watch

Friday/Week

• 2-yr: +7 bps to 4.56% (+29 bps for the week)
• 3-yr: +6 bps to 4.23% (+27 bps for the week)
• 5-yr: +3 bps to 3.93% (+18 bps for the week)
• 10-yr: -1 bp to 3.80% (+11 bps for the week)
• 30-yr: -4 bps to 3.96% (+1 bp for the week)

For our complete Weekly Fixed Interest Analysis and Outlook visit our Bond Traders Weekly Outlook:

Mortgage Market

• Freddie Mac 30-year fixed mortgage rates surged 25 bps to a six-month high 6.76% (up 166bps y-o-y).
• Fifteen-year rates jumped 29 bps to 6.09% (up 178bps).
• Five-year hybrid ARM rates spiked 29 bps to 6.28% (up 208bps) – the high since October 2008.
• Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates up 16 bps to 7.17% (up 193bps).

Part C: Commodities

Highlights

• The Bloomberg Commodities Index fell 1.0% (down 11.3% y-t-d).
• Spot Gold declined 1.6% to $1,946 (up 6.7%).
• Silver fell 2.3% to $23.30 (down 2.7%).
• WTI crude rallied $1.12, or 1.6%, to $72.67 (down 10%).
• Gasoline jumped 4.9% (up 10%),
• Natural Gas dropped 6.5% to $2.42 (down 46%).
• Copper declined 1.3% (down 3%).
• Wheat recovered 1.8% (down 22%),
• Corn surged 8.9% (down 11%).
• Bitcoin dipped $150, or 0.5%, this week to $26,750 (up 61%).

Key Long Term Commodity Charts

Copper

Gold

Gold futures on Friday for June delivery GCM23 edged up by 60 cents Friday, or less than 0.1%, to settle at $1,944.30 per ounce on Comex, down 1.9% for the week, a third-straight weekly loss. Well off the $2,072.19 early in May, just shy of its record high of $2,072.49, following the Fed’s hint that its hiking cycle may be ending.

China raised its gold holdings by about 8.09 tons in April, according to data from the State Administration of Foreign Exchange. Total stockpiles now sit at about 2,076 tons, after China increased reserves by about 120 tons in the five months through March.

Energy

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

WTI Oil

Natural Gas

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
• Lumber
• Oil and Natural gas are covered separately (see below)

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 rose 1.0% to 104.21 (down 0.7% y-t-d). 2022 gains were 8.2%
• For the week on the upside, the Mexican peso increased 0.9%, the South Korean won 0.2%, and the Brazilian real 0.1%.
• On the downside, the New Zealand dollar declined 3.7%, the Swedish krona 2.5%, the Australian dollar 2.0%, the Japanese yen 1.9%, the Norwegian krone 1.9%, the South African rand 1.0%, the British pound 0.8%, the Canadian dollar 0.8%, the euro 0.8%, the Swiss franc 0.7%, and the Singapore dollar 0.6%. The Chinese (onshore) renminbi declined 0.74% versus the dollar (down 2.34%).

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.

Cryptocurrencies

Bitcoin

Bitcoin continues to be plaything of levered speculators, this week we saw the markets turn against those short. An incredibly intense squeeze engulfed the Treasury market which flowed through to crypto. Intense squeeze dynamics also spurred a huge rally in crypto, with bitcoin surging a crazy 34%.

Where did this come from? Forced coverage from yield curve punts blowing up. Yen shorts and levered “carry trades” were at risk. JGB and European yields sank. Corporate spreads were blowing out, inflicting losses on levered corporate bond portfolios. Energy prices tanked. The favored (so called safe) financial stocks were collapsing, while the heavily shorted technology stocks rallied. For the week, the KBW Bank Index sank 14.6%, while the Nasdaq100 (NDX) jumped 5.8%.

It had been a 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!

Ethereum

On the Risk Radar

Fed Warnings on Possible Medium To Long Term Risks

 Geopolitical Tinderbox Radar

Economic and Geopolitical Watch

Banks

Major US Banks Deliver Mixed Results in Q1, 2023

America’s big money center banks kick of first quarter earnings next week. There will be extra attention on them with the recent banking turmoil. Guidance will be keenly watched for from the money center banks. Concerns are rising over the banking sector’s exposure to commercial real estate. JPMorgan Chase (JPM), Citigroup (C), PNC Financial Services Group, Inc. (PNC) and Wells Fargo (WFC) reporting Q1 results on Friday. We got a preview from JPMorgan CEO Dimon saying that banking system is strong and sound despite the banking crisis raising the odds of a recession, and that the crisis is not over yet.

Major banks kicking off earnings this quarter, including BlackRock (BLK), Citigroup (C), First Republic Bank (FRC), JPMorgan Chase (JPM) and Wells Fargo (WFC).

• Morgan Stanley Wealth Management Revenue Rose 11% While Investment Banking Revenue Fell 24%
• Goldman Sachs Revenues Miss, Discloses Losses in Marcus and Real Estate
• Bank of America Earnings Benefiting from Higher Interest Rates and Solid Loan Growth
• Wells Fargo Earnings Higher with Net Interest Income Up 45% on Higher Rates
• PNC Bank Earnings Beat Expectations but Lowered 2023 Revenue Guidance
• What Banking Crisis? JPMorgan Shrugs, Record Lending Income and Revenue
• Citigroup Personal Banking Revenue and Indian Exit Boost Earnings

The California and New York Regional Bank Collapse of 2023

So that went quick….. its all about the crisis that just kept holding off until it didn’t

Just when you thought it was safe:

Jay Powell’s FOMC Speech: “We are committed to learning the right lessons from this episode and will work to prevent events like these from happening again.”

“JPMorgan… agreed to acquire First Republic Bank in a government-led deal for the failed lender, putting to rest one of the biggest troubled banks remaining after turmoil engulfed the industry in March… ‘This is getting near the end of it, and hopefully this helps stabilize everything,’ JPMorgan Chief Executive Officer Jamie Dimon said on a call with journalists Monday. Regional banks that reported first-quarter results in recent weeks ‘actually had some pretty good results,’ the CEO said. ‘The American banking system is extraordinarily sound.’” May 1 – Bloomberg (Jenny Surane, Hannah Levitt and Katanga Johnson)

“The trio of bank failures since March has cast a pall over KPMG’s lucrative business as the largest auditor of the US banking sector. Questions over the quality of its work and independence have mounted in recent days, following the release of a Federal Reserve report into the collapse of Silicon Valley Bank and the forced sale of First Republic. The Big Four accounting firm was auditor to both banks, as well as to Signature… In all three cases, KPMG gave the banks’ financial statements a clean bill of health as recently as the end of February. ‘It’s a three-fer,’ said Francine McKenna, a former KPMG consultant who now lectures at the Wharton School… ‘It’s a dubious achievement . . . and we need tough action to back up tough talk from regulators.’” May 3 – Financial Times (Stephen Foley):

“The American Bankers Association on Thursday urged federal regulators to investigate a spate of significant short sales of publicly traded banking equities that it said were ‘disconnected from the underlying financial realities.’ In a letter to U.S. Securities and Exchange Commission Chair Gary Gensler, the lobby group said it had also observed ‘extensive social media engagement’ about the health of various banks that was out of step with general industry conditions.” May 4 – Reuters (Andrea Shalal)

Round One and Two

“The Federal Reserve on Sunday unveiled a new program to ensure banks can meet the needs of all their depositors amid escalating chances of bank runs following the abrupt collapse of two major banks in the space of 72 hours. The Bank Term Funding Program (BTFP) will offer loans with maturities of up to a year to banks, savings associations, credit unions and other eligible depository institutions. Here are some key elements of the Fed’s program: A key element of the program is acceptable loan collateral – including U.S. Treasuries and mortgage-backed securities among others – will be valued at ‘par’… Loans of up to a year in length will be available under the new facility… Interest rates will be the one-year overnight index swap (OIS) rate plus 10 bps and will be fixed for the term of the advance on the day the advance is made… The loan commitments made by the Fed’s 12 regional banks will be backstopped with $25 billion from the U.S. Treasury’s Exchange Stabilization Fund.”

March 13 – Reuters (Dan Burns)

“Just hours after Wall Street opened for trading on Friday morning, US regulators had seized control of Silicon Valley Bank, which had imploded under the strain of depositors pulling out their money en masse. What at first seemed like the failure of a one-of-its-kind lender with deep ties to the technology industry quickly appeared as though it might spiral out of control. Within 48 hours, regulators were preparing a package of emergency measures to quell panic among depositors and prevent contagion in the rest of the banking system. For some working on the effort, it evoked memories of the response to the coronavirus pandemic in 2020 and the great financial crisis of 2008. By Sunday evening, the US government announced it would guarantee all deposits held at SVB and crypto lender Signature Bank, which was also shut down by regulators at the weekend. The Federal Reserve, meanwhile, launched a lending facility that would be available to lots of other banks in order to ensure depositors’ demands could be met.”

March 13 – Financial Times (Colby Smith, James Politi, Ortenca Aliaj and James Fontanella-Khan)

“The biggest banks in the U.S. swooped in to rescue First Republic Bank with a flood of cash totaling $30 billion, in an effort to stop a spreading panic following a pair of recent bank failures. JPMorgan…, Citigroup Inc., Bank of America Corp. and Wells Fargo are each making a $5 billion uninsured deposit into First Republic, the banks said… Morgan Stanley and Goldman Sachs… are kicking in $2.5 billion apiece, while five other banks are contributing $1 billion each. The bank’s executives came together in recent days to formulate the plan, discussing it with Treasury Secretary Janet Yellen and other officials and regulators in Washington, D.C…”

March 16 – Wall Street Journal (David Benoit, Dana Cimilluca, Ben Eisen, Rachel Louise Ensign and AnnaMaria Andriotis):

“Credit Suisse shares rebounded sharply on Thursday after the lender revealed plans to borrow up to SFr50bn ($54bn) from the Swiss central bank and buy back about SFr3bn of its debt in an attempt to boost liquidity and calm investors. The Swiss National Bank had said on Wednesday it was willing to provide a liquidity backstop following a plunge of as much as 30% in the troubled lender’s stock… In a statement on Thursday, Credit Suisse said it had taken the decision ‘to pre-emptively strengthen its liquidity’ by borrowing the funds from the Swiss central bank under a loan facility and short-term liquidity facility.”

March 16 – Financial Times (Joshua Frankli, Owen Walker and Laura Noonan)

The Week Ahead – Have a Trading Plan

What Macro and Micro Risks and Opportunities Lie Ahead this week

Global Watch

Next Week’s Risk Dashboard via Scotiabank

Central Bank Watch

The bond market is turning nervous as we continue to see bond and currency markets roiled by renewed debt ceiling theatrics and more data this week (PCE, GDP Price Index, Services PMI, Personal Income and Spending, Jobless Claims) pointing to resilient demand and inflation. The futures market is now pricing in a 69% probability of a 25-bps hike on June 14th, with peak Fed funds now at 5.33% for the July 26th meeting. Higher for longer is the pricing, the market has shifted the December 13th meeting 5.00% policy rate up 36 bps this week and 70 bps in 11 sessions.

Last week we saw RBNZ, Bank of Korea, Bank Indonesia and the Turkish Central Bank do large;ly expected and the SARB hiking more than expected.

Eyes and ears will be on central bankers. We have the backdrop of a more hawkish Fed Chair in the face of escalating systemic risk. How will this affect Fed policy given the massive treasury positions out there and the risk of uninsured funds? In this environment we get pivots daily. How much damage is the Federal Reserve willing to do in the guise of controlling inflation?

This Week’s Interest Rate Announcements (Time E.T.)

In the week ahead we get no central banks delivering policy decisions.

For our complete Central Bank Analysis and Outlook visit our Central bank Watch:

Economic Data Watch

US Data Focus

• Monday: Markets closed for Memorial Day.
• Tuesday: Dallas Fed Manufacturing Activity, May (-17 expected, -23.4 previously) FHFA House Price Index, March (+0.2% expected, +0.5% previously); S&P CoreLogic Case-Shiller, 20-City Composite, month-over-month, March (-0.05% expected, +0.06% previously); S&P CoreLogic Case-Shiller 20-City Composite, year-over-year, March (-1.70% expected, +0.36% previously); Conference Board Consumer Confidence, May (99.1 expected, 101.3 previously) at 10:00 ET
• Wednesday: Weekly MBA Mortgage Index (prior -5.7%) at 7:00 ET; May ADP Employment Change (prior 296,000) at 8:15 ET; May Chicago PMI (prior 48.6) at 8:30 ET; April job openings (prior 9.590 mln) at 10:00 ET; and May Fed Beige Book at 14:00 ET
• Thursday: Weekly Initial Claims (prior 242,000), Continuing Claims (prior 1.799 mln), Q1 GDP — second estimate (prior 1.1%), and Q1 GDP Deflator — second estimate (prior 4.0%) at 8:30 ET; April Pending Home Sales (prior -5.2%) at 10:00 ET; weekly natural gas inventories (prior +99 bcf) at 10:30 ET; and $35 bln 7-yr Treasury note auction results at 13:00 ET
• Friday: April Personal Income (prior 0.3%), Personal Spending (prior 0.0%), PCE Prices (prior 0.1%), Core PCE Prices (prior 0.3%), April Durable Orders (prior 3.2%), Durable orders ex-transportation (prior 0.3%), April advance goods trade deficit (prior -$84.60 bln), April advance Retail Inventories (prior 0.7%), and April advance Wholesale Inventories (prior 0.1%) at 8:30 ET; final May University of Michigan Consumer Sentiment survey (prior 57.7) at 10:00 ET. Treasury market to close at 14:00 ET

Global Data Focus

• OPEC: Sunday in Vienna Austria, Opec ministers meeting in Vienna
• Canada: Q1 GDP figures, S&P Global Bank manufacturing PMI data
• Brazil: Q1 GDP figures
• Mexico:
• Europe: Italy, Turkey Q1 GDP figures. France, Germany: May harmonized index of consumer prices (HICP) and consumer price index (CPI) inflation rate data. Germany, May unemployment rate. ECB May policy meeting accounts. 25th anniversary of the ECB replacing the European Monetary Institute ECB president Lagarde speaks at the 27th German Savings Banks Conference 2023 ‘Because it’s about more than money’ in Hanover. EU S&P Global manufacturing PMI data, Nationwide house price survey. France, monthly industrial production figures. Latvia parliamentarians elect the country’s next president.
• Russia:
• Turkey: Q1 GDP figures
• UK: Bank of England Monetary Policy Committee member Catherine Mann takes part in a panel discussion on central banks, inflation and monetary policy, hosted by Swiss bank Pictet in Zurich. FTSE index quarterly review. UK S&P Global manufacturing PMI data. UK one-day strike by Aslef union members across 16 train operating companies in their ongoing dispute over driver pay. UK, rail workers in the RMT union begin a 24-hour strike in their ongoing dispute with the train operating companies over pay
• China: NBS manufacturing PMI, Caixin manufacturing PMI data
• Japan: April labor force survey, monthly industrial production, Jibun Bank manufacturing PMI data
• India: Q1 GDP figures
• South Korea: S&P Global manufacturing PMI data, flash Q1 GDP figures
• Australia: S&P Global manufacturing PMI data In Singapore, Australian prime minister Anthony Albanese will deliver the keynote address at the opening of the Shangri-La Dialogue Asia security summit
• New Zealand: S&P Global manufacturing PMI data

US Stocks Watch Earnings and Event Watch

Earnings Highlights This Week:

• Monday includes Markets closed for Memorial Day.
• Tuesday includes Box (BOX), HP Inc. (HPQ), Hewlett Packard Enterprise (HPE), U-Haul (UHAL)
• Wednesday includes Advance Auto Parts (AAP), Capri Holdings (CPRI), Chewy (CHWY), Crowdstrike (CRWD), C3.ai (AI), Nordstrom (JWN), Okta (OKTA), Purestorage (PSTG), Salesforce (CRM)
• Thursday includes Broadcom (AVGO), Dell Technologies (DELL), Dollar General (DG), Five Below (FIVE), Hormel Foods (HRL), Land’s End (LE), Lululemon (LULU), Macy’s (M), Zscaler (ZS)
• Friday includes No notable earnings.

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. 

Events

Notable conferences running during the week include:

Monday

• Belgium, France, Germany, the Netherlands, Norway, Switzerland and several other countries: Whit Sunday public holiday. Financial markets closed
• UK, Spring bank holiday. Financial markets closed
• US, Memorial Day federal holiday. Financial markets closed
• Nvidia’s founder and chief executive Jensen Huang and Arm’s chief executive Rene Haas will deliver keynote speeches at the start of the Computex technology conference in Taipei
• Nigeria, former governor of Lagos state Bola Tinubu to be inaugurated as Nigeria’s president after winning the country’s disputed presidential election in February with 36.6 per cent of the vote

Tuesday

• US, Theranos founder Elizabeth Holmes begins her prison sentence for one count of conspiracy and three counts of wire fraud

Wednesday

• UK, FTSE index quarterly review, deciding which companies have been promoted into and relegated from FTSE indices by market capitalization
• Latvia, parliamentarians elect the country’s next president
• Norway, an informal two-day meeting of Nato foreign ministers begins in Oslo. Nato secretary-general Jens Stoltenberg is due to speak ahead of the gathering
• UK, a one-day strike by Aslef union members across 16 train operating companies in their ongoing dispute over driver pay. A further walkout is scheduled for Saturday, creating major disruption for Manchester City and Manchester United fans trying to reach London to watch the FA Cup final at Wembley Stadium
• US, Abu Agila Mohammad Mas’ud Kheir Al-Marimi is due to appear in a Washington court charged with destruction of Pan Am flight 103 in 1988. An explosion in the aircraft that was flying over the Scottish town of Lockerbie resulted in the deaths of 270 people — including 190 Americans and 43 UK citizens — 11 of whom were on the ground

Thursday

• First day of the meteorological summer
• EU, 25th anniversary of the ECB replacing the European Monetary Institute
• US, Goldman Sachs president John Waldron speaks at the Bernstein 39th annual strategic decisions conference in New York
• US, President Joe Biden to deliver the commencement address at the Air Force Academy in Colorado for the class of 2023

Friday

• Austria, European Space Agency Ready for the Moon conference begins in Vienna, debating the issue of space exploration for Europeans
• Singapore, Australian prime minister Anthony Albanese will deliver the keynote address at the opening of the Shangri-La Dialogue Asia security summit
• Former Mastercard chief executive Ajay Banga becomes World Bank president
• UK, rail workers in the RMT union begin a 24-hour strike in their ongoing dispute with the train operating companies over pay
• UK, Purplebricks shareholders vote on the proposed sale of its trading business and assets to Strike for £1

Sovereign Rating Updates

• United Kingdom (Fitch)
• France (S&P)
• Finland (Moody’s)
• Germany (DBRS)
• United Kingdom (Fitch)

IPO Wrap

US IPO Week Ahead:

Focus on yourself and what YOU CAN INFLUENCE, set your trading plan and goals in be set for 2022.

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