CFDs sind komplexe Instrumente und umfassen aufgrund der Hebelfinanzierung ein hohes Risiko, schnell Geld zu verlieren. 67 % der Konten von Privatanlegern verzeichnen beim Trading von CFDs bei diesem Anbieter Verluste. Sie sollten überdenken, ob Sie die Funktionsweise von CFDs verstehen und ob Sie sich das hohe Risiko leisten können, Ihr Geld zu verlieren.
GameStop Reddit redux, vaccines & Powell deliver hope as equities shrug off higher yields
Who doesn’t like a McFlurry? McDonald’s ice cream may seem like an unlikely trigger for a fresh bout of frenzied retail trading, but there’s still something odd going on with GameStop shares. And it has something to do with ice cream. Shares in the company doubled yesterday – not so amazing you might think given the recent volatility, but the pop came entirely in the final hour and a half of trading amid heavy volume. Trading in GME was halted twice and the move spread to other names that were part of the recent Reddit frenzy. AMC Entertainment rose 18% on exceptionally high volumes. GME shares rose another 83% in after-hours trade to $168, having started the session at $44.70.
Figuring out why all this occurred late in yesterday’s US session is harder to explain than the short squeeze of January. Heavy buying of bullish call options may have exaggerated the move, but didn’t cause it. The CFO’s departure – which is part of the shake-up that investors are hoping for – was known before the opening bell, so shares would have responded before 7pm GMT. It could, though, be related to a tweet from activist investor Ryan Cohen, who posted a picture of a McDonald’s ice cream just before 7pm, a couple of hours before the US cash equity close. Does it signal Cohen, the founder of Chewy.com and leading investor in GameStop, will fix the company the way McDonald’s finally fixed its ice cream machines? (For those who have never set foot in a McDonald’s, the ice cream machines are broken so frequently it has become a meme on Twitter.) Or could it be even more cryptic and related to a new website that tells you in real time whether your local McDonald’s has a functioning ice cream machine? Who knows, stranger things have happened. It looks like the Reddit crowd are at it again.
Yields continued to advance, with US 10 year Treasuries north of 1.4% at a fresh year high, whilst Japanese bond yields rose to their highest in over two years. This failed to worry the market, however, as Fed chair Jay Powell administered more soothing words on inflation. The Dow Jones rallied 1.35% to a record high, briefly touching on 32,000 and closing within 40pts of this marker. The S&P 500 rose over 1%, the Nasdaq recovered 1% and the Russell 2000 of small caps rose by more than 2.3%. European stocks rose tamely in early trade on Thursday. Gains for the FTSE 100 were capped by 13.4pts inn ex-divis but it nevertheless pushed on to almost 6,700. Gold retreated under $1,800, whilst Bitcoin was steady at $50k.
Vaccine progress is underpinning strength in cyclical names, with the Johnson & Johnson covid jab set to get the green light in the US after the FDA staff report said there are no safety concerns with the single-dose vaccine. Energy and Financials are at the top of the Stoxx 600 in Europe this morning. Bond proxies, tech and growth all remain more problematic as yields go higher.
Charlie Munger, long-time friend and partner of Warren Buffett at Berkshire Hathaway has lashed out at Bitcoin, Tesla, Robinhood and SPACs. Sounds like my kind of guy. Asked whether he thought Bitcoin at $50k or Tesla being valued at $1tn was the crazier, he said: “Well I have the same difficulty that Samuel Johnson once had when he got a similar question, he said, ‘I can’t decide the order of precedency between a flea and a louse,’ and I feel the same way about those choices. I don’t know which is worse.” There were some other great nuggets such as: “Bitcoin reminds me of what Oscar Wilde said about fox hunting. He said it was the pursuit of the uneatable by the unspeakable.” To which Bitcoin HODLers would no doubt respond by saying ‘have fun being poor’. Still Munger doesn’t invest in gold, so why would he invest in Bitcoin, since it is clearly not a currency? He also warned about blank cheque special purpose acquisition companies – or SPACs – saying they represent “crazy speculation in enterprises not even found or picked out yet” which is “a sign of an irritating bubble”.
Elsewhere, oil prices rose to their highest in over a year despite a surprise build in US crude inventories as the freezing weather in Texas shut refineries. Stockpiles increased by 1.3m barrels, vs expectations for a draw of more than 5m barrels. Stocks at Cushing, Oklahoma, rose for the first time in six weeks as refiners couldn’t take delivery. Bulls were buoyed, however, as US weekly crude output fell by 1.1m bpd, equally the biggest drop on record. The big freeze in Texas has really thrown the weekly numbers out of whack, but it’s clear demand is picking up. Everyone is now looking at the OPEC meeting next week on March 4th and an expected easing of self-imposed supply constraints.
In FX, sterling is trying to mount a fresh challenge at $1.42 after yesterday’s reversal. This looks more like a pause on the way to the $1.45 area for GBPUSD. Turning to Bank of America comments on sterling, which says the “backdrop could not be more conducive to further GBP gains as UK steadily re-emerges from lockdown and vax rollout remains exemplary. BoE discussion on neg rates is likely to be delayed into Q3, whilst GBP should benefit from structural seasonality in April“. That sounds bullish.
How to buy, sell and short GameStop shares
Investing or trading on GameStop shares has become one of the hottest topics of 2021 as a gang of Reddit users has shaken global stock markets.
Buying, selling and shorting GameStop shares
Why is GameStop rising so sharply?
Investors/traders operating out of the /r/Wallstreetbets subreddit forum have set their sights on a variety of companies previously underperforming with GameStop being a favourite. The stock has seen meteoric gains in recent trading as a result, even hitting over $500 per share.
It’s been controversial to say the least. Prior to interest from millennial investors, GameStop had been a company in decline. Its business model is firmly rooted in physical video game media, i.e. the buying and selling of pre-owned and new games. The video game industry has shifted to digital in a big way, so physical retailers like GameStop have been hurt.
GameStop shares fell 80% in value between January 2016 and July 2020 from these changing market conditions. Yet the stock has become a huge favourite for millennial investors, resulting in a massive 3000% price rise from July 2020 to January 2021. This has added billions to GameStop’s market cap – but the activity is now being monitored by financial regulation authorities around the go.
How to buy & trade GameStop shares
GameStop shares are available to buy or trade with Markets.com.
If you are looking to buy shares, and become an investor, you will need a Marketsi account. You can take full ownership of GameStop shares by buying them via our Share Dealing platform*. You can potentially profit if the price increase above the price you initially bought any GameStop shares, but you could lose your investment if it were to collapse.
How to invest
- Create or log into your Marketsi account
- Open the Share Dealing platform
- Search “GameStop” in the top right search bar
- Select the number of shares you wish to buy
- Confirm your purchase and monitor your position
If you want to trade GameStop shares, then you can do so with a Marketsx account. Marketsx is our award-winning trading platform, where you can speculate on GameStop price movements via CFDs or spread bets without owning the shares themselves.
This is also the only way to go short we currently offer. With a CFD or with spread betting, you may open a short position if you think GameStop share prices will drop. These are leveraged products, which have the potential to increase your profits, but also increase your losses too.
How to trade
- Create or log into your Marketsx account
- Open the Marketsx platform
- Search “GameStop” in the top left search bar
- Select how many CFDs you wish to trade
- Select whether you want to go long or short
- Confirm your purchase and monitor your position
All trading is risky and contains a risk of capital loss. Only trade if you can afford the losses.
*Only available in certain jurisdictions
Can Netflix shares rebound on earnings update?
Netflix (NFLX) reports on Jan 19th, with average earnings per shares (EPS) estimated at $1.40 on revenues of $6.6bn, up 20% year-on-year.
Whilst the company has been a big winner from the pandemic as subscriptions leapt with consumers stuck at home, there are worries about the service going forward.
One, is it as good as it used to be? The library content is shrinking and competition is far more intense these days. Churn is a big concern with one survey showing 32% of respondents indicating they are likely to cancel Netflix in the next three months. This is well up on previous levels and indicates perhaps a degree of subscription fatigue among consumers. Whilst Netflix remains first among equals (people with more than one VOD subscriptions almost invariably have a Netflix account), it’s facing much sterner competition from the likes of Disney, which is throwing some serious effort into new content and has the advantage of established brands and intellectual property like Star Wars.
Two, we’re heading into the other side of the massive pull-forward in demand that really drove the 2020 subscriber growth. Paid net adds hit 26m in the first half but had declined to just 2.2m in Q3. Netflix ended Q3 with 195m paid subscribers and expects a further 6m net adds in Q4 to reach 201m in total. Key will be the subscriber growth in Latin America and Asia Pacific, where growing broadband penetration rates are supportive of ongoing growth. Whilst Netflix has had some notable local-language successes, it will need to keep repeating these to keep growing – content remains king.
Netflix Sentiment Analysis
Stock price analysis
The price action has been very range-bound since July amid ongoing uncertainty about whether Netflix can kick on and build on its pandemic growth, or whether growth rates will never be the same again. Hugging the 50-day SMA at present and looking for breakouts either side of $560 and $470 to be chased.
What are the top Nasdaq stocks of 2020?
November saw a spectacular rally in global equity markets on hopes vaccines will see a return to normality next year. The big theme of the month was the rotation from Growth to Value, with the Russell 2000 small cap index notching its best ever month. The FTSE 100 enjoyed its best month in 31 years and Europe’s Stoxx 600 rose the most in a single month since records began in 1986.
But it’s just worth a little reminder that as far as year-to-date gains go, it’s a story of tech and growth over value, energy and financials. The Nasdaq 100 is up 40% YTD, whilst the FTSE 100 is down 15%.
Here are the top stocks of 2020 on the Nasdaq 100.
|Zoom Video Communications Inc||603.06|
|Advanced Micro Devices Inc||102.05|
|PayPal Holdings Inc||97.95|
|IDEXX Laboratories Inc||76.53|
|Align Technology Inc||72.48|
|T-Mobile US Inc||69.52|
|Cadence Design Systems Inc||67.68|
|Lululemon Athletica Inc||59.8|
|Lam Research Corp||54.81|
|ASML Holding NV||47.91|
|Take-Two Interactive Software Inc||47.44|
|Regeneron Pharmaceuticals Inc||37.43|
|Applied Materials Inc||35.12|
|Maxim Integrated Products Inc||35|
|Charter Communications Inc||34.41|
|Activision Blizzard Inc||33.76|
|Monster Beverage Corp||33.41|
|Costco Wholesale Corp||33.29|
Source: Reuters Eikon, Dec 1st 2020
Pfizer, Biontech vaccine news spurs gains
Stock markets surged on some extremely positive news from Pfizer and Biontech, who say their vaccine is 90% effective in phase 3 clinical trials.
From tracking just under 6,000 all morning the FTSE 100 rallied over 100 points on the news, whilst e-minis went up 70 points or so.
The Dow is now seen up 1,300 points – coming on top of the wave of relief from Joe Biden’s victory it’s proving a spicy cocktail for stocks.
I won’t lay with lots of comment about the trials as I am no vaccine expert, all I can say is this is a good news day. Whilst we are not there yet, news that this vaccine could be highly effective is the best thing markets could hope for.
Public health officials will remind us there is a long road ahead, and many challenges will be faced along the way, but there is an enormous sense of optimism today – light at the end of the tunnel. Let’s just hope the vaccine deniers won’t get in the way, but 2021 just got a lot brighter.
E-mini futures – spot when the vaccine news broke
European stocks rally; all the usual narratives
Vaccine hopes, stimulus rumours Brexit risks, earnings optimism– choose your narrative and apply it accordingly. The truth is the major indices are not really going anywhere right now.
Treasury yields have barely budged with 10s holding 0.77%, gold is holding a little above $1,900 and the dollar index sits in the middle of the 93.30-93.90 range.
WTI (Dec) trades above $41 ahead of today’s OPEC JMMC meeting which will discuss compliance with cuts. A full meeting at the end of Nov could see OPEC+ put on hold plans to scale back production cuts to 5.8m b/d from the current 7.7m.
European shares rose strongly at the open as investors put an unsatisfactory week behind them and indices continue to run over very well-trodden turf. The FTSE 100 pushed above 5950 as the bounce from last week’s test of the 5780 support zone held.
Wall Street was mixed, with the Dow up 0.4% and the Nasdaq down the same. The S&P 500 split the difference to be flat on the day, arresting three days of losses and finish back where it was the previous weekend. Futures indicate a higher open for US markets.
Rising case numbers across Europe is raising the risk of a second recessionary wave, but ample central bank support means we are holding the Sep-Oct range.
Meanwhile, in the US, House Democrat leader Nancy Pelosi said she is ‘optimistic’ about getting a pre-election stimulus deal agreed. Lots of chatter around this dictating some of the price action but not a lot of substance – what we do know is that some kind of stimulus package is on its way.
What we don’t know is whether the market is really reflecting this just yet. News on Friday that Pfizer will apply for emergency approval for its Covid-19 vaccine candidate is also underscoring a more positive view for equities this morning.
Rebounding growth in China helped lift sentiment a bit after the initial headline miss and gave bulls the excuse to drive up European stocks.
China GDP up 4.9%, which was a little short of the 5.2% expected but still shows solid recovery. Industrial production was up 6.9%.
Meanwhile, Japanese exports fell 4.9% year-on-year in September, vs –2.4% expected. But this was much better than the double-digit declines registered in each of the last six months.
Data on Friday showed US retail sales rose sharply in September with spending above the pre-pandemic level, but there are fears the lack of stimulus will start to bite.
A University of Chicago survey showed that pandemic relief funds worth $600 a week in additional jobless benefits boosted the savings of unemployed Americans, but the bulk of this had run out by the end of August.
Both the UK and EU are trying to revive faltering Brexit talks by saying the other needs to change approach. Michael Gove said on Sunday the door was ‘ajar’ for discussions should the EU be prepared to compromise.
GBPUSD rose at the start of the session to 1.29750 and approach near term resistance around 1.30. We saw last week how headlines and announcements can create significant volatility in sterling crosses but there is no real direction to GBP right now as traders wait for a clearer steer from the trade talks. Right now a skinny deal looks most likely.
Election Watch – 15 days to go
Early voting in the key state of Wisconsin starts Tuesday. Trump has to win this one to stand a chance. Biden’s national lead fell to 8.9pts, whilst in the battlegrounds Trump trails by 4.3pts, which is narrower than it has been for some time.
At this stage in 2016 Trump was 5pts behind in the top battlegrounds but still pulled off a surprise election night win. Fears of a contested election result have receded. Our friends at BlondeMoney crunched the numbers to forecast the outcome of the most important battles in the Senate race. (spoiler: it’s called 51/49 for the Democrats, in line with current polling)
US bank earnings quick take: BoA losing interest – Comment
Interest rates seem to be the emerging story of this quarter’s bank earnings. Q2 was all about trading income and loan loss provisions; Q3 is all about the collapse in net interest income.
It should come as no surprise that US banks are struggling with ultra-low rates, but there has been a significant drop in the core earning capacity of banks this quarter that cannot be masked by strong trading revenues.
Bank of America beat on the bottom line but missed on the top. Net income came in at $4.9 billion, or $0.51 per diluted share, which was a little ahead of the $0.49 expected and down 16% on the year. Provision for credit losses increased to $1.4 billion, driven by COVID-19 impacts in commercial lending.
BoA is very sensitive to rates and shares in pre-market trading did not take well to the decline in rates income, with BAC -1.6% after its 2.84% decline yesterday. Net interest income (NII) was down $2.1bn, or 17%, to $10.1 billion, driven by lower interest rates.
This comes after JPM reported –9% yesterday and it is a material increase in the pace of the decline from the –11% posted in Q2. This sensitivity is explained by the fact that loans were up 5% to $319 billion; while JPM saw lending decrease, which would lower its exposure to interest rates. In the consumer bank, net income declined $1.3 billion to $2.1 billion, while revenues of $8.0 billion were -17% lower, driven by lower NII from lower rates.
Noninterest income was also lower, declining by 4% to $10.2bn, reflecting a drop in fee income which was offset by better trading and investment banking results. That said, trading revenues weren’t spectacular – FICC +3% and equities +6%, which was not as strong as peers.
Return on equity improved. In Q2 return on equity (ROE) fell to 5.44% from 5.91% in the prior quarter and was down significantly from last year’s Q2 11.62%. Return on tangible equity (ROTE) slipped to 7.63% from 8.32% in Q1 2020 and from 16.24% in Q2 2019. In Q3, ROE rose to 7.24%, while ROTE rose to 10.16%.
Wochenausblick: Riesenwoche für Geschäftsberichte, Federal Reserve Treffen wie geplant
In dieser Woche – wird die Federal Reserve sich auf Anleihenrenditen stützen, und können Amazon, Alphabet, Apple und Facebook die hohen Erwartungen zu ihren Geschäftsberichten erfüllen?
Anleger konzentrieren sich immer mehr in einer Hand voll großer Namen, vor allem im sehr beliebten Tech-Bereich. Die Konzentration ist so groß, dass die größten fünf Aktien beinahe ein Viertel der gesamten Marktkapitalisierung des S&P 500 ausmachen. Diese Aktien haben 35% YTD gewonnen, während die verbleibenden 495 Aktien ein Minus von 5% verzeichnet haben. Mit solch hohen Konzentrationen in Big Tech werden Ertrags-Updates von vier der fünf maßgeblich die Richtung des Marktes beeinflussen.
Von Facebook (FB), Amazon.com (AMZN), Apple (AAPL) und Alphabet (GOOGL) werden diese Woche Zahlen erwartet. Dies gibt dem Markt einen klaren Hinweis zur Belastbarkeit der Gewinne der höchst-kapitalisierten Aktien, sowie eine wichtige Orientierungshilfe für die kommenden Quartale. Lesen Sie unsere Vorschau zu den Amazon Zahlen.
In einer geschäftigen Woche für Quartalsberichte, sind Royal Dutch Shell und AstraZeneca die zwei größten englischen Aktien die ihre Zahlen veröffentlichen, während Luxus unter der Lupe steht, mit den Zahlen von Hermes und LVMH.
Treffen der Federal Reserve – auf das Front-End gelehnt?
Die Rede von einer Zinskurvenkontrolle hält die Leitzinsen niedrig und belastet die Realzinsen, aber es ist unklar, ob die Federal Reserve versuchen wird, sich am Mittwoch weiter auf das Front-End der Kurve zu stützen. Vorsitz Jay Powell betonte, dass die Fed nicht einmal daran denkt, die Zinsen zu erhöhen, während der Rückgang der US-Realrenditen auf Rekordtiefs ein Zeichen dafür ist, dass der Markt möglicherweise glaubt, dass die Fed mehr tun könnte.
Auf der Sitzung in dieser Woche wird keine Änderung der Politik erwartet, aber die Gespräche werden wahrscheinlich die Voraussetzungen für einen Schritt im Herbst schaffen, um den Markt weiter zu unterstützen, nach dem letzten Monat die Fed sagte, dass eine äußerst akkommodierende Politik wahrscheinlich viele Jahre andauern wird. Auf der letzten FOMC-Sitzung wurde vereinbart, dass die Beamten eine genauere Analyse der Zinskurvenkontrolle benötigen, aber es bestand Einigkeit darüber, dass explizitere Leitlinien für die Zinssätze erforderlich sind, die möglicherweise an konkrete Ziele für die Inflation oder das Beschäftigungsniveau gebunden sind. Dies könnte das Front-End der Zinsstrukturkurve weiter verankern und als De-facto-Kontrollmechanismus fungieren.
BIP-Zahlen – wie schlimm war es?
Nach der Fed, gibt es am Donnerstag noch die Veröffentlichung der vorgerückten US-BIP-Zahlen für das zweite Quartal. Das GDPNow-Model der Fed aus Atlanta deutet darauf hin, dass die größte Marktwirtschaft der Welt im zweiten Quartal um 35% geschrumpft ist. Wir wissen jedoch bereits, dass das Juni-Quartal schrecklich war – die rückwärtsgerichteten Daten könnten sich als weniger aufschlussreich erweisen als der jetzt am Donnerstag fällige US-Wochenbericht zu den Arbeitnehmerzahlen. Vor diesen und vor Beginn der europäischen Sitzung werden die jüngsten deutschen BIP-Zahlen veröffentlicht.
Highlights auf XRay diese Woche
Lesen Sie den gesamten Zeitplan der Finanzmarkt-Analyse und des Trainings.
|07.15 UTC||Daily||European Morning Call|
|12.00 UTC||27-Jul||Master the Markets|
|From 15.30 UTC||28-Jul||Weekly Gold, Silver, and Oil Forecasts|
|17:00 UTC||30-Jul||Election2020 Weekly|
|19.30 UTC||30-Jul||Daily FX recap|
Top Quartalsberichte diese Woche
Hier sind einige der größten, für diese Woche angekündigten Quartalsberichte:
|30-Jul||Procter & Gamble|
Die wichtigsten Wirtschafts-Ereignisse
Behalten Sie die wichtigsten Ereignisse des wirtschaftlichen Kalenders dieser Woche im Auge:
|08.00 UTC||27-Jul||German Ifo Business Climate|
|12.30 UTC||27-Jul||US core durable goods orders|
|07:00 UTC||28-Jul||Spain unemployment rate|
|14:00 UTC||28-Jul||US CB consumer confidence|
|01.30 UTC||29-Jul||Australia CPI inflation|
|14:00 UTC||29-Jul||US pending home sales|
|14.30 UTC||29-Jul||US EIA Crude Oil Inventories|
|18.00 UTC||29-Jul||Federal Reserve statement + press conference|
|06:00 UTC||30-Jul||German preliminary GDP|
|12.30 UTC||30-Jul||US Weekly Jobless Claims|
|12:30 UTC||30-Jul||US advanced Q2 GDP|
|14.30 UTC||30-Jul||US EIA Natural Gas Storage|
|01.00 UTC||31-Jul||China PMIs|
|12:30 UTC||31-Jul||US core PCE inflation, spending|
Stocks nudge higher as investors look beyond trade deal, oil recovers
‘Markets rally on trade deal hopes/tumble on trade war fears’ have been regular refrains of headline writers and commentators for months. The good news, for those of us who detest change, is that these should be applicable in the coming months just as much as over the last year. If you thought phase one was good, wait ‘til you see what’s coming…Trump will be able to keep markets on his leash with tweets and tirades about trade and China for months.
Maybe with the trade deal signed we can refocus on the data and, more importantly, what to the reaction function of the Fed will be to any softness in the coming months.
Nevertheless, putting a natural cynicism to one side, US equity markets made fresh record highs after the US and China put pen to paper on their historic trade deal. The Dow closed above 29k for the first time and the S&P 500 rose 0.2% to 3289.
Yes, the deal may be a bit puny for some, and there are plenty of risks ahead, but in coming to this agreement they’ve apparently averted never ending war. And doubts about the details of the deal had surfaced in recent days, so the fact it’s done is a relief. The truce will require calm on both sides to prevail and for lasting peace – a far more substantive phase 2 deal – to be reached.
Defensive sectors like healthcare and utilities led the gains on Wall St, and US bond yields were down, so it wasn’t entirely a case of risk-on. Indeed, as noted in previous commentary, there are multiple risks ahead, some of which have been crystallised by this agreement.
– what if the renminbi breaks 7 again – how does Washington respond? The provisions on the currency are far from watertight – e.g. commitments relating to fx positions don’t amount to much as they’re already published.
– when does phase 2 start and what will be its scope and ambition? A phase 2 agreement of any substance won’t be done quickly. Which means tariffs are here to stay. The Sphinx-like Mike Pence said talks on phase two had begun.
– does Trump take a hard line pre-election? With the ‘victory’ secured on paper, and tariffs still in place, Mr Trump has a free pass to threaten to walk away from the phase one deal.
– does the US turn its trade gaze to Europe?
– with tariffs staying put, what is outlook for growth or inflation? GDP probably won’t be much affected, but inflation may be different.(though inflation is the dog that didn’t bark).
Markets were also cheered by suggestions the Trump administration is working on tax cuts 2.0. Details are of course sketchy and anything of this nature would be difficult to do before the election, but markets will lap it up nonetheless.
Earnings are helping too – four-fifths of S&P 500 companies
that have reported have beaten estimates. There’s a clear sense that after the
lacklustre growth seen in 2019 (and Q4 will only be +1-2% at best) that
there’ll be a significant pick up in 2020. After multiple expansion in 2019
drove the vast part of the stock market’s gains, it’s over to earnings to drive
Asia’s response to the trade deal has been sanguine, with the major indices flat. Global stocks just nudged a record high in the wake of the trade deal being signed. In Europe, yesterday the DAX was a touch softer while the FTSE rallied 0.3% to 7642.80.
Ahead of the open, futures indicate Europe is treading water following the trade deal signing – the key question is where do we go from here. There are many possible routes.
overnight showed Japanese machinery orders up 18% in November. German CPI came
in as expected at +0.5% MoM, 1.5% YoY.
Inventory data yesterday sent oil for a brief tumble but WTI has since reclaimed the $58 handle and is trying to hold onto the 50% Fib level of the rally from the Oct 2018 low to the recent high, which sits around $58.30. Although crude stocks fell more than expected, the build-up of products was huge. Crude inventories dropped by 2.55m barrels for the week through to January 10th vs -474k expected. But gasoline inventories were up 6.7m barrels vs +3.4m expected. Distillate stockpiles rose 8.2m vs +1.2m expected. Rejection of the 100-day moving average at $57.30 and the doji candle formed yesterday looks bullish but the momentum remains to the downside.
In FX, it’s steady as she goes. EURUSD is stalking around 1.1140, although it did make a stab at 1.1160 as the dollar was offered amid the fall in Treasury yields. Clearance of 200-day and 200-hour moving averages seem to be snapping a two-week downtrend. Bulls need to clear the swing high at 1.11680 before a push to 1.12.
GBPUSD is starting to push north of the 1.30 level
and has cleared the 50-day moving average at 1.3030 to trade close to 1.3050,
although it’s still got a strong attraction to this round number, like a moth
to a flame. Markets still undecided on whether a rate cut is coming this month
so if the Bank does move to ease it opens up possible fresh downside towards
the 1.28 region. USDJPY is just a little shy of 110 and has moved below
the 200-week moving average again.
On tap today
ECB meeting minutes – looking for clues about future monetary policy from the Dec meeting. The first minutes from a Lagarde meeting could be interesting, but this was a dead meeting. Lagarde is no Draghi but she’s smart and buying herself time. She is due to speak in Frankfurt later also.
US retail sales – how strong is the US consumer? Probably still pretty strong by all accounts. Forecast +0.3%, or +0.5% for the core reading.
Stocks advance as trade deal looms, pound slips as BoE doves circle
European stocks are a tad higher after a lacklustre end to
the week. US-China trade deal will be the main talking point for risk. Early
doors Monday the FTSE 100 is back above 7600 and the DAX is north of
13,500 – will that all-time high be achieved this week? Asia has been higher,
with Japan closed for a holiday. On Friday, US stocks fell after the bell as
bulls tried to shake out the weaker hands before staging the rally that took
the Dow to 29k. But gains were quickly unwound and selling built through
the day to close -133pts. US futures are pointing a touch higher today.
The US-China trade deal is the focal point. White House officials are adamant it’s a fait accompli, save translating the 86-page document into Chinese. It’s expected to be signed on Wednesday.
With the phase one deal baked in, what markets want to know is how quickly – if at all – the two sides can move things forward to phase 2. There’s no doubt that building on this deal is going to take a lot more effort and compromise. Of course, phase one could unravel at any moment if either side wants to walk. Enforcement is an issue too.
It’s easy to miss it, but US earnings season gets underway this week as the big banks begin reporting on Jan 14th. Weak corporate earnings growth could dent optimism around US stocks, but with the fourth quarter of 2019 out of the way, the market’s real focus is going to be whether we get the 10% earnings growth forecast in 2020. As ever the focus is on the guidance.
Consensus estimates indicate a 1-2% decline in Q4 earnings, but the tendency to beat expectations suggests we will see earnings growth, albeit small.
Last year we saw multiple expansion massively outweigh earnings growth as the driver of the 28% rise in the S&P 500 last year. This poses problems as it means valuations are already rather stretched and reliant on strong EPS growth in 2020. The S&P 500 forward PE has jumped to 19 from about 14 at the beginning of 2019, having averaged 16-17 over the last five years.
to see some focus on the US presidential election with the key Iowa
Caucus on Feb 3rd. A poll last week showed Sanders leading Warren.
Oil – speculative long positioning hasn’t been this stretched since 2018, partially explaining why we saw such a sharp turnaround last week. Net longs rose 567k contracts. WTI has recovered the $59 handle but weakness is evident throughout. Saudi energy minister on the wires today saying that OPEC+ will take a decision on extending cuts in March.
Gold – likewise long positions were stretched, as net longs rose to 322k. We’ve not seen such a crowded long trade in years. Prices holding around the $1550 level for the time being.
In FX, still lots of uncertainty about the dollar in the wake of that NFP release. We have chewed on this but ultimately it doesn’t tell us much new. We have an average earnings figure that was well short of expectations, which will tame any tentative Fed hawks as it suggests inflation won’t run hot. Payrolls were a tad light at 145k but not by enough to be a worry about USA plc. Wages though were substantially short at 2.9% annual vs 3.1% expected (0.1% vs 0.3% monthly). Unemployment steady at 3.5%. Revisions to the last two months were modest at -14k.
A dule of doves? Or a cote of doves? Either way, they’re gathering at Threadneedle St. A cut is coming. The pound is under pressure at $1.30, briefly taking a $1.29 handle, as Bank of England doves circle. MPC member Gertjan Vlieghe said he’d like vote to cut if data doesn’t show a turnaround sharpish. He’s joined Carney and Tenreyro in arguing that more stimulus may be needed sooner rather than later. One senses the Bank doesn’t want to get behind the curve and is seeking to get a jump on markets whilst still teeing up the cut. Michael Saunders – who along with Jonathan Haskell has voted to cut at the last two MPC meetings – speaks on Wed and will no doubt reiterate his belief a cut is needed now.
Doubts about the UK’s ability to negotiate a trade deal with the EU this year are dragging on the pound. On tap today – November month Industrial Production, Manufacturing Production, monthly GDP and trade numbers will be a smorgasbord if delights but not the main course.
USDJPY is stalling at 109.60. Having cleared the 200-day and other MAs bulls seem to have now decisively broken resistance on the trend line drawn from the falling highs since the swing high of Oct 2018, at 109.50. Long term 61% Fib level to cross at 109.60 where we have seen rallies hit a wall several times lately. This area is offering a decent amount of resistance as a result but if taken out could see a sharp spike higher. The 200-week moving average sits just above at 109.70/80 – a break here calls for a sustained drive back to 112. EURUSD is holding a 1.11 having bounced off key trend support and the 50-day SMA.