Americas Indexes
Dow Jones Industrial Average 14,000.57 +0.86% 13,880.62 14,001.19 13,880.62 16:41:30
S&P 500 Index 1,515.60 +0.88% 1,502.42 1,515.64 1,502.42 16:40:38
Europe, Middle East & Africa Indexes
EURO STOXX 50 Price EUR 2,630.05 +1.95% 2,590.02 2,630.46 2,590.02 17:03:04
FTSE 100 Index 6,335.70 +0.70% 6,291.54 6,347.25 6,291.49 11:35:30
EUR-USD 1.3218 +0.0028 +0.21% 16:39:11
USD-JPY 94.5500 +1.4400 +1.55% 16:39:45
GBP-USD 1.5075 -0.0175 -1.17% 16:40:22
USD-CHF 0.9294 -0.0007 -0.18% 16:39:18
U.S. Government Bonds
2-Year 0.2500 2015-01-31 99-00+ / 0.2500 +0.0039 / -0.0020 02/22/2013
10-Year 2.0000 2023-02-15 100.3438 / 1.9627 +0.1328 / -0.0147 02/22/2013
30-Year 3.1250 2043-02-15 99.4688 / 3.1533 +0.2734 / -0.0142 02/22/2013
U.K. Government Bonds
2-Year 5.0000 2014-09-07 107.2150 / 0.2643 -0.0530 / +0.0087 02/22/2013
10-Year 1.7500 2022-09-07 96.9280 / 2.1076 -0.0725 / +0.0089 02/22/2013
30-Year 4.5000 2042-12-07 121.0830 / 3.3723 +0.1355 / -0.0065 02/22/2013
So, I was in a cab home last night, and the driver says to me, did you hear about the UK credit rating downgrade?
And of course my initial reaction was what? I tend to follow markets and news quite closely, however Friday was a very busy day for me at work.
What do I know?
My last post from March 2012, says Long the Dow. Right now, I am anticipating, within the next week or so, for a sell off to begin in global equities. I am looking for a 10-15% correction in the Dow. (However I believe that accomodative global monetary policy is likely to maintain a continuing longer term uptrend in stocks).
So short term, I must also expect the Dollar to Rally.
9:54 Sunday 24th Feb, despite an initial sell off on Friday following the news of Moody's Downgrade, GBP/USD has gapped lower. Currently at 15072. There is no technical support til 1.44 . I am not convinced to short at this point, however once it breaks 1.49, I will look to sell there. (There could quite likely be a bounce to 1.51 early on Monday open).
However technically, and as I believe the Dow is overbought, my contention for the dollar to strengthen vs the pound is a high probability play.
Moody's:
“There is a risk, given the pace of deficit and debt reduction, that the government may not be able to reverse the debt-to-GDP trajectory before the next economic downturn happens.”
What do I not know?
Italian election reuslts are due tomorrow. Will a Berlusconi win trigger a EUR/USD sell off?
Is Austerity the reason behind slowing UK growth? Or is that we have made enough cuts? UK GDP Q4 revision due out next week, could a lower revision impact the FTSE or GBP/USD? (unlikely I think)
What do I think?
Overall I think Equities go lower over the coming month, and while many contend that "it's the end of the bull market in government bonds" Once again I recall the words of Hugh Hendry. Epic bull markets go out with a "bang" not with a whimper!! I believe that US, and also UK (despite moody's cut) will head lower, especially if equities do sell off and we have a bout of risk aversion. I have not yet had time to formulate a longshort US/UK equities/rates strategy.
How to trade it?
Sell IF GBP/USD@ 1.4995, Stop 15100 target 14700 Duration 1-2 weeks
Sunday, 24 February 2013
Wednesday, 14 March 2012
Long the Dow
FOMC acknowledging improvement in economic conditions yesterday led to the market perceiving QE3 as less likely, and intiated a Dollar rally, and marking a key sell off in Gold (currently at $1640). Despite reports of a wider trade deficit in the fourth quarter, the dollar maintained its bullish trend.
US yields surged higher today, in a continuation of this theme, with Bernanke's statement doing nothing to take away from the bullish potential of the Dollar.
With the Dow touching 13,200 today, we see a strong move with a rising dollar and rising treasury yields (US 10 yr yields rising 0.142, t0 2.27% a substantial move).
With earnings season coming up, and 3 months to the next ISDA coupon payment date (when Europe will dominate headlines once again) I think the potential is there for a Dow rally, and with good risk reward too.
The Dow looks like it is now in sight of 13,500. With 13,000 as key Support. An interesting play would be to go Long the Dow, and short the ftse as the ftse is still below 6,100 resistance zone (which it has not regained since April)
FTSE 100 5945.43 -10.48 -0.18%
DOW 13,194.10 +16.42 +0.12%
GBP/USD 1.566 +0.00%
GBP/EUR 1.2021 +0.00%
EUR/USD 1.3029 -0.01%
Gold 1,642.40 -0.50 -0.03%
Medium Term Trade:
Long the Dow 13,182 Stop 13,000 Limit 13,390
Short the FTSE 5943, Stop 6050 Limit 5850
(Dow to outperform FTSE with earnings season coming up and
stronger improving US economic fundamentals).
Sunday, 11 March 2012
Greece Restructuring Credit Event Announced
The deicion commitee voted that a Credit Event has occured with respect to the Hellenic Republic.
"collective action clauses (CACs) to amend the terms of Greek law governed bonds issued by The Hellenic Republic such that the right of all holders of the Affected Bonds to receive payments has been reduced."
Markets didn't move much, the Dow sold off 30-40 points, EUR/USD largely unchanged after the notice.
FTSE 100 5887.49
Dow Jones IA 12922.02
GBP/USD 1.566
GBP/EUR 1.19
EUR/USD 1.311
USD/CHF 0.919
USD/JPY 82.5
Where do we go from here?
Firstly non farm pay rolls beat expectations on Friday, and this saw a dollar rally, with EUR/USD now around 1.311 . Further "optimistic" comments from the FOMC on Tuesday could be bullish for the dollar. Particularly mention of higher oil prices contributing to higher inflation could also reduce the probability of QE3 and support the dollar.
Will be interesting to see, if earnings match the trend of beaitng expectations (which has been a hallmark of this bull market since 2009) whether the dollar will rally with the Dow. Given we saw the Dow sell offf somewhat at the start of the week, I will be on the sidelines this week waiting to see if there will be any reaction to the ISDA announcement in european equity markets (which were closed when the news was announced on Friday evening) and any possible reaction on eurozone bond spreads (some analysts saying that attention may now focus on Spain).
"collective action clauses (CACs) to amend the terms of Greek law governed bonds issued by The Hellenic Republic such that the right of all holders of the Affected Bonds to receive payments has been reduced."
Markets didn't move much, the Dow sold off 30-40 points, EUR/USD largely unchanged after the notice.
FTSE 100 5887.49
Dow Jones IA 12922.02
GBP/USD 1.566
GBP/EUR 1.19
EUR/USD 1.311
USD/CHF 0.919
USD/JPY 82.5
Where do we go from here?
Firstly non farm pay rolls beat expectations on Friday, and this saw a dollar rally, with EUR/USD now around 1.311 . Further "optimistic" comments from the FOMC on Tuesday could be bullish for the dollar. Particularly mention of higher oil prices contributing to higher inflation could also reduce the probability of QE3 and support the dollar.
Will be interesting to see, if earnings match the trend of beaitng expectations (which has been a hallmark of this bull market since 2009) whether the dollar will rally with the Dow. Given we saw the Dow sell offf somewhat at the start of the week, I will be on the sidelines this week waiting to see if there will be any reaction to the ISDA announcement in european equity markets (which were closed when the news was announced on Friday evening) and any possible reaction on eurozone bond spreads (some analysts saying that attention may now focus on Spain).
Sunday, 4 March 2012
Dow 17,000?
And now I'm back.
FTSE 100 5911.13 -20.12 -0.34%
Dow Jones IA 12977.57 -2.73 -0.02%
NASDAQ 2976.19 -12.78 -0.43%
DAX 30 6921.37 -20.40 -0.29%
CAC 40 3501.17 1.44 0.04%
GBP/USD 1.583 84/25 0.00 0.07%
GBP/EUR 1.20 03/09 0.00 0.14%
EUR/USD 1.319 11/39 -0.00 -0.05%
USD/CHF 0.914 41/63 0.00 0.18%
USD/JPY 81.7 61/81 -0.02 -0.02%
GBP/JPY 129.4 92/55 -0.01
Gold $/oz 1710.9 0.40 0.02%
Silver $/oz 34.75 0.05 0.14%
Platinum $/oz 1691.77 -0.65 -0.04%
Palladium $/oz 709.23 -2.77 -0.39%
Brent Oil $/barrel 123.58 -2.21 -1.76%
WTI $/barrel 106.55 -2.36 -2.17%
I have remained on the sidelines of the markets for the past 6 months. Despite the trend for earnings to continue beating estimates, I was wary of the ongoing political uncertainties regarding the Greek bailout situation, and I did not anticipate a high probability decision from Merkel either for or against further bail outs which could have resulted in sharp shocks to the market (and a potential chain reaction taking the market substantially lower).
The LTRO program has helped keep equity markets supported, and paved the way for a subsequent rebound in European Banking stocks. There are still fears of a disorderly default by Greece. Although further cuts have been agreed to, it remains to be seen whether social unrest that has been building in Greece will allow this to be a practical solution.
The Italian 10 yr below 5% now, seems to be a sign that the European banks are playing ball and buying soveriegn debt.
US economic data has continued to beat expectations. With US GDP revised up to 3% for Q4, with Bernanke acknowledging the improvements and making QE3 less likely in the near term (which saw a sharp drop in Gold to the low 1700's).
My bias is to be look to go long the Dow, with the next catalyst to move higher likely to be Q1 earnings season. For the coming week with numerous Central Bank statements, and Non farm payrolls on Friday, the market is likely to remain range bound. 13,000 has proved a difficult number to remain above. And I think the market is due a 2/300 point sell off to bring itself back to trend line.
Questions?
1)I will look to analyse, whether the longer term pattern of long the dow sell the dollar will be suitable in this next potential bull phase of the dow. Given that LTRO is likely to be inflationary in the eurozone (even with the offset of declining growth) and the ECB more likely to be the one cutting rates, this may be a potential time for the long awaited (by myself anyway) positive correlation of the Dow and the Dollar.
2) At what oil price will oil and the Dow become substantially negatively correlated?
3)I saw an interesting interview with Peter Schiff on CNBC lately, where he asks what happens when interest rates rise?
Jeremy Siegel's looking for 17,000 in 2 years? However to what extent will this be due to the devaluing of the dollar?
http://video.cnbc.com/gallery/?video=3000075553#eyJ2aWQiOiIzMDAwMDc2Mjc3IiwiZW5jVmlkIjoibXk1VGpTNE5lVWZKK0NOc2o1MU54QT09IiwidlRhYiI6InRyYW5zY3JpcHQiLCJ2UGFnZSI6IiIsImdOYXYiOlsiXHUwMGEwTGF0ZXN0IFZpZGVvIl0sImdTZWN0IjoiQUxMIiwiZ1BhZ2UiOiIxIiwic3ltIjoiIiwic2VhcmNoIjoiIn0=
FTSE 100 5911.13 -20.12 -0.34%
Dow Jones IA 12977.57 -2.73 -0.02%
NASDAQ 2976.19 -12.78 -0.43%
DAX 30 6921.37 -20.40 -0.29%
CAC 40 3501.17 1.44 0.04%
GBP/USD 1.583 84/25 0.00 0.07%
GBP/EUR 1.20 03/09 0.00 0.14%
EUR/USD 1.319 11/39 -0.00 -0.05%
USD/CHF 0.914 41/63 0.00 0.18%
USD/JPY 81.7 61/81 -0.02 -0.02%
GBP/JPY 129.4 92/55 -0.01
Gold $/oz 1710.9 0.40 0.02%
Silver $/oz 34.75 0.05 0.14%
Platinum $/oz 1691.77 -0.65 -0.04%
Palladium $/oz 709.23 -2.77 -0.39%
Brent Oil $/barrel 123.58 -2.21 -1.76%
WTI $/barrel 106.55 -2.36 -2.17%
I have remained on the sidelines of the markets for the past 6 months. Despite the trend for earnings to continue beating estimates, I was wary of the ongoing political uncertainties regarding the Greek bailout situation, and I did not anticipate a high probability decision from Merkel either for or against further bail outs which could have resulted in sharp shocks to the market (and a potential chain reaction taking the market substantially lower).
The LTRO program has helped keep equity markets supported, and paved the way for a subsequent rebound in European Banking stocks. There are still fears of a disorderly default by Greece. Although further cuts have been agreed to, it remains to be seen whether social unrest that has been building in Greece will allow this to be a practical solution.
The Italian 10 yr below 5% now, seems to be a sign that the European banks are playing ball and buying soveriegn debt.
US economic data has continued to beat expectations. With US GDP revised up to 3% for Q4, with Bernanke acknowledging the improvements and making QE3 less likely in the near term (which saw a sharp drop in Gold to the low 1700's).
My bias is to be look to go long the Dow, with the next catalyst to move higher likely to be Q1 earnings season. For the coming week with numerous Central Bank statements, and Non farm payrolls on Friday, the market is likely to remain range bound. 13,000 has proved a difficult number to remain above. And I think the market is due a 2/300 point sell off to bring itself back to trend line.
Questions?
1)I will look to analyse, whether the longer term pattern of long the dow sell the dollar will be suitable in this next potential bull phase of the dow. Given that LTRO is likely to be inflationary in the eurozone (even with the offset of declining growth) and the ECB more likely to be the one cutting rates, this may be a potential time for the long awaited (by myself anyway) positive correlation of the Dow and the Dollar.
2) At what oil price will oil and the Dow become substantially negatively correlated?
3)I saw an interesting interview with Peter Schiff on CNBC lately, where he asks what happens when interest rates rise?
Jeremy Siegel's looking for 17,000 in 2 years? However to what extent will this be due to the devaluing of the dollar?
http://video.cnbc.com/gallery/?video=3000075553#eyJ2aWQiOiIzMDAwMDc2Mjc3IiwiZW5jVmlkIjoibXk1VGpTNE5lVWZKK0NOc2o1MU54QT09IiwidlRhYiI6InRyYW5zY3JpcHQiLCJ2UGFnZSI6IiIsImdOYXYiOlsiXHUwMGEwTGF0ZXN0IFZpZGVvIl0sImdTZWN0IjoiQUxMIiwiZ1BhZ2UiOiIxIiwic3ltIjoiIiwic2VhcmNoIjoiIn0=
Monday, 17 October 2011
CHINA Q3 GDP release tomorrow-Stay on the SIDELINES
Name Price Chg %Chg
FTSE 100 5436.7 -29.66 -0.54%
Dow Jones IA 11397 -247.49 -2.13%
NASDAQ 2614.92 -52.93 -1.98%
DAX 30 5859.43 -107.77 -1.81%
CAC 40 3166.06 -51.83 -1.61%
AEX 479.01 -8.39 -1.72%
GBP/USD 1.57 40/44 -0.01 -0.48%
GBP/EUR 1.1 46/63 0.01 0.53%
EUR/USD 1.37 33/34 -0.01 -1.00%
USD/CHF 0.89 93/95 0.01 0.81%
USD/JPY 76.7 99/14 -0.42 -0.55%
GBP/JPY 120. 88/95 -1.24 -1.02%
Gold $/oz 1671.42 -9.63 -0.57%
Silver $/oz 31.783 -0.42 -1.30%
Platinum $/oz 1548.75 1.50 0.10%
Palladium $/oz 615.25 -4.75 -0.77%
Brent Oil $/barrel 109.85 -2.62 -2.33%
WTI $/barrel 86.43 -0.79 -0.91%
Markets corrected somewhat today, the Dow dropping 250 points as Merkel stated that those hoping for a magic full solution to the Greek Debt issues in November would be disappointed. Technically the market was due a pull back, I was looking for more 100-150 points however..
Given the China GDP release tomorrow..If its on the downside I could see a potential drop back to 11,000's..and in the next week or 2 as earnings releases fade, and attention once again resumes on Merkel and debt issues, I think it's favourable to take profits at this point, and stay out of the market for now. An upside beat (or meeting of expectations even) by China however could take the Dow to around 11,700.However the downside being at least 400 points, the value bet is not there to go long. And profits should also be taken risk FX positions (long GBP/USD etc).
We will look to tomorrow to see how the market reacts to the news, and reassess.
FTSE 100 5436.7 -29.66 -0.54%
Dow Jones IA 11397 -247.49 -2.13%
NASDAQ 2614.92 -52.93 -1.98%
DAX 30 5859.43 -107.77 -1.81%
CAC 40 3166.06 -51.83 -1.61%
AEX 479.01 -8.39 -1.72%
GBP/USD 1.57 40/44 -0.01 -0.48%
GBP/EUR 1.1 46/63 0.01 0.53%
EUR/USD 1.37 33/34 -0.01 -1.00%
USD/CHF 0.89 93/95 0.01 0.81%
USD/JPY 76.7 99/14 -0.42 -0.55%
GBP/JPY 120. 88/95 -1.24 -1.02%
Gold $/oz 1671.42 -9.63 -0.57%
Silver $/oz 31.783 -0.42 -1.30%
Platinum $/oz 1548.75 1.50 0.10%
Palladium $/oz 615.25 -4.75 -0.77%
Brent Oil $/barrel 109.85 -2.62 -2.33%
WTI $/barrel 86.43 -0.79 -0.91%
Markets corrected somewhat today, the Dow dropping 250 points as Merkel stated that those hoping for a magic full solution to the Greek Debt issues in November would be disappointed. Technically the market was due a pull back, I was looking for more 100-150 points however..
Given the China GDP release tomorrow..If its on the downside I could see a potential drop back to 11,000's..and in the next week or 2 as earnings releases fade, and attention once again resumes on Merkel and debt issues, I think it's favourable to take profits at this point, and stay out of the market for now. An upside beat (or meeting of expectations even) by China however could take the Dow to around 11,700.However the downside being at least 400 points, the value bet is not there to go long. And profits should also be taken risk FX positions (long GBP/USD etc).
We will look to tomorrow to see how the market reacts to the news, and reassess.
Sunday, 16 October 2011
Market Update- Outlook Unchanged
Name Price Chg %Chg
FTSE 100 5466.36 62.98 1.17%
Dow Jones IA 11644.49 166.36 1.45%
NASDAQ 2667.85 47.61 1.82%
DAX 30 5967.2 52.36 0.89%
CAC 40 3217.89 30.95 0.97%
AEX 487.4 7.90 1.65%
GBP/USD 1.58 20/39 0.00 0.01%
GBP/EUR 1.14 11/21 0.00 0.20%
EUR/USD 1.38 69/75 -0.00 -0.04%
USD/CHF 0.89 17/34 0.00 0.02%
USD/JPY 77/02 -0.20 -0.26%
GBP/JPY 121. 81/22 -0.33 -0.27%
Gold $/oz 1679.3 -1.27 -0.08%
Silver $/oz 32.17 0.06 0.19%
Platinum $/oz 1545.18 16.18 1.06%
Palladium $/oz 620.75 27.25 4.59%
Brent Oil $/barrel 112.47 3.37 3.09%
WTI $/barrel 87.22 2.65 3.13%
Stay Long the dow, Short the dollar.
FTSE 100 5466.36 62.98 1.17%
Dow Jones IA 11644.49 166.36 1.45%
NASDAQ 2667.85 47.61 1.82%
DAX 30 5967.2 52.36 0.89%
CAC 40 3217.89 30.95 0.97%
AEX 487.4 7.90 1.65%
GBP/USD 1.58 20/39 0.00 0.01%
GBP/EUR 1.14 11/21 0.00 0.20%
EUR/USD 1.38 69/75 -0.00 -0.04%
USD/CHF 0.89 17/34 0.00 0.02%
USD/JPY 77/02 -0.20 -0.26%
GBP/JPY 121. 81/22 -0.33 -0.27%
Gold $/oz 1679.3 -1.27 -0.08%
Silver $/oz 32.17 0.06 0.19%
Platinum $/oz 1545.18 16.18 1.06%
Palladium $/oz 620.75 27.25 4.59%
Brent Oil $/barrel 112.47 3.37 3.09%
WTI $/barrel 87.22 2.65 3.13%
Stay Long the dow, Short the dollar.
Monday, 10 October 2011
Dow at 11,400-Alcoa earnings tomorrow-If you get Dow 11,200 BUY!
Name Price Chg %Chg
FTSE 100 5399 95.60 1.80%
Dow Jones IA 11433.18 330.06 2.97%
NASDAQ 2566.05 86.70 3.50%
DAX 30 5847.29 171.59 3.02%
CAC 40 3161.47 65.91 2.13%
AEX 471.77 6.65 1.43%
GBP/USD 1.565 38/57 0.01 0.67%
GBP/EUR 1.14 77/86 -0.01 -1.09%
EUR/USD 1.36 34/38 0.02 1.74%
USD/CHF 0.90 44/47 -0.02 -2.32%
USD/JPY 76. 64/68 -0.15 -0.20%
GBP/JPY 119. 97/.1 0.56 0.47%
Gold $/oz 1681.33 37.48 2.28%
Silver $/oz 32.23 0.56 1.76%
Platinum $/oz 1523.25 28.25 1.89%
Palladium $/oz 613.25 29.30 5.02%
Brent Oil $/barrel 109.15 3.38 3.20%
WTI $/barrel 85.62 2.93 3.54%
10-Year 2.125 08/15/2021 100-13¾ / 2.08
2-Year 0.125 09/30/2013 99-21¾ / 0.29
US Dollar Index 77.62
Alcoa due to release tomorrow, if earnings are poorer than expected. WHICH I HOPE (sorry Alcoa), and the Dow then sells off initially, it'll be a great buying opportunity (ideally around 11200-11270). The market sometimes acts like Alcoa is some sort of indicator for coming releases and gets paniced into selling..
Furthermore, GBP/USD has hit its medium term target I set last week, of 1.565. And with rumours now building of potential for QE3. Long Dow Short Dollar looks good for now.
Markets were lifted today by news that Sarkozy and Merkel will release a consolidated plan of Action for the eurozone at the start of November. So until then, with only earnings on the board, and reduced estimates by analysts influenced by the last quarters market declines and poorer than expetced economic indicators, odds for upside gains in equities continue to look good.
FTSE 100 5399 95.60 1.80%
Dow Jones IA 11433.18 330.06 2.97%
NASDAQ 2566.05 86.70 3.50%
DAX 30 5847.29 171.59 3.02%
CAC 40 3161.47 65.91 2.13%
AEX 471.77 6.65 1.43%
GBP/USD 1.565 38/57 0.01 0.67%
GBP/EUR 1.14 77/86 -0.01 -1.09%
EUR/USD 1.36 34/38 0.02 1.74%
USD/CHF 0.90 44/47 -0.02 -2.32%
USD/JPY 76. 64/68 -0.15 -0.20%
GBP/JPY 119. 97/.1 0.56 0.47%
Gold $/oz 1681.33 37.48 2.28%
Silver $/oz 32.23 0.56 1.76%
Platinum $/oz 1523.25 28.25 1.89%
Palladium $/oz 613.25 29.30 5.02%
Brent Oil $/barrel 109.15 3.38 3.20%
WTI $/barrel 85.62 2.93 3.54%
10-Year 2.125 08/15/2021 100-13¾ / 2.08
2-Year 0.125 09/30/2013 99-21¾ / 0.29
US Dollar Index 77.62
Alcoa due to release tomorrow, if earnings are poorer than expected. WHICH I HOPE (sorry Alcoa), and the Dow then sells off initially, it'll be a great buying opportunity (ideally around 11200-11270). The market sometimes acts like Alcoa is some sort of indicator for coming releases and gets paniced into selling..
Furthermore, GBP/USD has hit its medium term target I set last week, of 1.565. And with rumours now building of potential for QE3. Long Dow Short Dollar looks good for now.
Markets were lifted today by news that Sarkozy and Merkel will release a consolidated plan of Action for the eurozone at the start of November. So until then, with only earnings on the board, and reduced estimates by analysts influenced by the last quarters market declines and poorer than expetced economic indicators, odds for upside gains in equities continue to look good.
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