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NZDJPY: Improved risk outlook puts bulls in chargeNZD has gained in recent months from the market's improved risk outlook on global vaccine confidence. The NZD's recovery is being aided by China's stronger-than-expected trade figures. According to recent figures, May's imports and exports were likely positive. A rise in commodity prices benefits the currencies of commodity-producing countries. According to Bloomberg, the Reserve Bank of New Zealand (RBNZ) stated on Thursday that it will progressively sell off the government bonds bought during its quantitative easing (QE) program over the next five years. When the (RBNZ) sells bonds, the money supply is reduced because cash is removed from the economy in return for bonds. In the long run, decreasing a country's money supply leads its currency to appreciate.
Long
by TradeyMarkets
1
Radar recap before the breakoutPROFZERO'S TAKE - RADAR RECAP Ever since the very first edition of our daily Parlay, Profs have repeatedly cited their radar to keep track of ongoing macroeconomic developments and forming views. It's about time then for a first full-blown recap of what we are looking at right now, and how do we see the next steps moving: World politics: The war in Ukraine has reshaped European geopolitics, forcing the EU to rethink its entire energy supply and security policy off from Russia, other than bringing the continent back to reassessing the readiness of its armed forces. The blockade of the port of Odesa exacerbated supply-chain tensions that had been simmering since 2021, pushing commodity prices to all-time highs in energy and fertilizers and ushering the risk of famine and social unrest in the Middle East and Africa due to shortage of cereals and calories at large. Meanwhile, the relationships between the U.S. and China remain tense over Taiwan, as the island remains exposed to a potential Chinese invasion - Bearish Monetary policy: Central banks around the world have finally taken inflation seriously, launching interest rate hike and balance sheet trimming plans in an attempt to cool price surges and yet preserve growth and employment in the real economy. U.S. data in May were in fact supportive, with Main Street adding 390,000 jobs and keeping unemployment as low as 3.6%. Yet, the effects of higher interest rates are going to be felt only as they trickle down through the economy, in the form of costlier mortgages for homeowners and more expensive or altogether barred access to debt financing for sub-investment grade nations and corporates. As a result, defaults could sweep the economy, as already seen by the failure of Sri Lanka to pay its foreign-currency debt; the looming default of Russia; and the collapse back in 2021 of Chinese constructions giant Evergrande - Neutral Equities: The secular bull run hit by equities since the fall of Lehman Brothers in 2008, and fueled by loose monetary and fiscal policy on both shores of the Atlantic, hit a major stop in Q1 2022, when investors rushed to the door, spooked by the prospects of Regulators draining liquidity from the system. As a result, Nasdaq plunged 30% from peak (November 2021) to trough (April 2022), while S&P 500 only teetered on the brink of a bear market (negative 19.9% peak-to-trough). Investor fled Growth stocks whose profits are deep in the future, hence exposed to greater discounting by higher interest rates, favoring Value equities thanks to the solidity of their balance sheets and capacity to generate income via dividends. ProfZero argues that within the very Growth space, Value-like equities do already exists - tech giant Microsoft (MSFT) for instance is America's best-rated company (AAA/stable) - Neutral Commodities: After a lost decade, and crude oil trading even in negative price territory for one day in 2020 (April 20, WTI crude contract settling at negative 37.63/boe), commodities came back roaring in 2022, in what analysts at Goldman Sachs have already dubbed the beginning of a new supercycle. ProfZero concurs that commodities - and their supply chains - have been taken for granted for too long; now, in the wake of de-globalization talks, developed as well as emerging economies find themselves rattled by the prospects of unsustainably high - or even unaccessible - key commodities like fuel and fertilizers, or even worse calories. Thinking one step ahead, ProfOne has set its eyes on the minerals of the future - cobalt, lithium and nickel - reminding that these are also highly concentrated in a handful of areas around the globe, thus possibly falling into the same supply trap of the commodities of the past century - Bullish Blockchain assets: A unprecedented "crypto winter" has gripped investors in the blockchain space, first sending BTC from all-time at USD 68,990 in November 2021 to USD 25,350 on May 12, 2022 (63% peak-to-trough), then decreeing the collapse of Terra/LUNA project in just 3 days on the second week of May this year. Yet, the blockchain space is showing remarkable resilience, with BTC resisting further slides and in fact potentially preparing for a new "golden age", as foreseen by venture capital fund Andreesen Horowitz. ProfZero remains focused on the superiority of the blockchain as a technology, capable to shape the next decade in information processing, automotive, entertainment, finance and healthcare - Bullish
CME:BTC1!Long
by ProfZero
Real economy beating expectations yet markets trading in red 🤔INVESTMENT CONTEXT President Vladimir Putin said that Russia was not blocking Ukrainian wheat from being exported, and that the grain could be dispatched via ports controlled either by Russia or Ukraine. Before the war, Russia and Ukraine accounted for ca. 29% of international annual wheat sales U.S. economy added 390,000 jobs in May, beating analyst expectations (325,000) and showing resilient real economy in the face of rampant inflation and higher interest rates Crude oil inventories in the U.S. fell to 414.7 million barrels in the wake of strong demand, yet limiting chances of further releases to cool domestic energy prices Goldman Sachs COO John Waldron followed JPMorgan's CEO Jamie Dimon saying “This is among if not the most complex, dynamic environment I’ve ever seen in my career". On a similar tone, in a leaked Tesla email, Elon Musk cited having a "super bad feeling" about the economy as the main reason for shedding 10% of the company's workforce PROFZERO'S TAKE When good news are met with S&P 500 dropping more than 1.50%, and Nasdaq doing even worse at 2.47% in the red, we know something is off. That's what happens when bears are in control, and policy makers are desperate to understand how far can they move with tightening before the backlash. A remarkably strong U.S. economy just added 390,000 jobs in May, beating analyst expectations and reassuring the Fed it could maintain the trajectory of 50bps rate hikes in July and August. ProfZero clearly welcomes Main Street's resilience and rising wages - yet, as anticipated in Step99 podcast, it cautions against the forward-looking effects of monetary policy vs. the actual state of the economy. As pointed out by The Economist, "A recession in America by 2024 looks likely" - today's strength of the real economy may at best soften its blow Citigroup CEO Jane Fraser sees "three R" whiplashing EU economy - rates, Russia and recession, this latter happening in Europe ahead of the U.S. because of "the energy side (...) really having an impact". ProfZero has made energy a key theme of this Parlay, with potentially more decisive effects on the real economy than monetary policy. With Brent testing again USD 120/boe and fading cushion inventories from the U.S., it is hard to imagine how the EU will cope with the next cold season without rationing output, hence slashing GDP growth. Regasification plants and last-generation nuclear are definitely tools of the future; but by then, are seaborne imports going to be enough? Equities are definitely off the lows witnessed in April and early May - perhaps Musk's "super bad feeling" and Mr. Dimon's "hurricane" are rather looming on the real economy? Not an inch less worrying... BTC once again confidently breaking up the mid-term triangle pattern and trying to regain 32k after trading below 30k on June 4-5 - and yet ProfZero's eyes are set on the lurking death cross on 200MA PROFONE'S TAKE After sharing about lithium and nickel, ProfOne completes the overview of rare minerals that are crucial for the production of batteries setting its eyes are on cobalt. Cobalt prices soared from USD 30k/ton in January to USD 52k in May - on top of the 2x surge in 2021 vs. 2020. According to the Cobalt Institute, in the next five years cobalt demand is expected to hit 320k/ton, up from 175k/ton in 2021. ProfOne argues that meeting such demand won’t be operatively easy. For once, cobalt is yet another highly concentrated resource: about 70% of world’s cobalt comes from the Democratic Republic of Congo, where production is dominated by Chinese companies and commodities trader Glencore (GLEN). Adding to it that world's second supplier of cobalt is Russia, the metals puzzle turns out to be a fairly intricate one
CME:BTC1!
by ProfZero
Crude Oil much longer term perspectiveThe monthly Crude Oil chart shows some seriously nasty ranges. From early 2000s, we have had monthly close check-ins from 20-140; and it does appear that the current dash for the upper end of the range is stronger in momentum (acceleration as seen by the slope and the size of the candlesticks). Taking history into account, it should slow down once crude is about 140, but I suspect the momentum should push it beyond, and as far as 155 in an overshoot. IF we are lucky, ensuing years might see it come back down to 42-45 support area. Unless it maintains above 140, then there would be a massive range breakout. Projections from there would give crude oil another 100 more... yes, 240. But for the nearer term, When crude makes a high above 140 by the end of 2022, things should start getting shaky... watch for it! Phwfffftttttt....
NYMEX:CL1!
by Auguraltrader
OIL 5th JUNE 2022The Organization of the Petroleum Exporting Countries and its allies (OPEC), agreed on Thursday to increase output by 648,000 barrels per day (bpd) per month in July and August instead of the previously agreed 432,000 bpd. OPEC decision to increase production targets slightly more than planned. As a result of that expectation, it will have little effect on tight global supply and by increasing demand as China loosens Covid restrictions. From the existing fundamental trend, the oil price tends to be bullish, it is possible that the price will breakout the resistance area. However, market participants still think the price of oil is too high, this can make the price rebound to the resistance area, and make the price will correct down. OIL 26th MAY 2022
TVC:USOIL
by DNP-FX
The situation with oil is getting worse and worse...Up until a few days ago I believed oil had a chance of getting back down to 75-95$. It can still get all the way down there, but for the price to get there it would need traditional markets to crash badly. The current production is too low, the underinvestment in production is massive and the oil industry isn't incentivized to drill for new wells. At the same time the problem is getting larger and larger as there aren't enough refineries that can use oil to create other products like gasoline, and many of these refineries can't just take any type of oil and use it to produce stuff. OPEC+ has been consistently missing its targets and is unable to increase production, oil released from the SPR isn't able to alleviate these issues, while a significant supply is lost from Russia, Syria, Libya, Iran and Venezuela due to sanctions, wars or other issues. The recent announcement from the EU that there will an oil embargo just makes the situation worse, while at the same time tensions are getting worse and worse as 1 Iranian oil tanker was 'seized' by the US in Greece, and 2 Greek oil tankers were 'seized' by Iran. The more oil output that is lost, the worse the situation is getting, despite the fact that we already have significant demand destruction. If oil stayed around 110 while China had big parts of its population under strict lockdown, what is going to happen as it slowly re-opens? At some point things are going to get very ugly and the high oil prices are going to damage the global economy beyond repair, something that will force oil prices to come down. In some of my previous analysis I did mention some of the potential targets for oil, which could be at 200-300$, but for now the key target remains the 2008 ATH at 140-150$. In my opinion the market will take some time to break that level, but the financial melt down won't come until it gets around 250$. If we take inflation into account, the price of the dollar, as well as the growth of money supply and that of the global stock market capitalization, the 150$ peak in 2008 is now close to 200-250$, however the 150$ peak has psychological significance. As oil is now cheaper than back in 2008-2011, as the market has closed above the 2011 highs and as the structure is very bullish across all contracts is very bullish, the price of oil could go much much higher from here. Gasoline making new ATHs and has turned the 2008 ATHs into support. December contract formed an SFP but not that bearish. The average price of the next five months had a very strong close and there is nothing really bearish to see. Hence my first target for now is 145$, the second target after some consolidation below 145$ is 195$, and the final one where I'd start exiting and potentially shorting oil would be 245$.
NYMEX:CL1!Long
by BitcoinMacro
Brent Oil - Mid Term Roller CoasterIt is near impossible to following all the developments in the geopolitics and try to forecast the price of Oil but what does technical analysis suggest? Technical Analysis (Elliott Waves): Since the sharp fall of March 2020 it is likely that we are observing the development of a zig-zag ABC Five waves of the first impulse A completed in July 2021 Wave B took shape of a complex Running Correction WXY finishing in November 2021 And since then we can see formation of another impulse in wave C Waves 1 to 3 of this impulse culminating in March 2022 are quite clear which have been followed by a contracting triangle The crux of the analysis is developing right now when the price started moving in a very choppy way There are two alternatives in this scenario - (1) wave 4 of C has not completed yet, but then it becomes too lengthy and disproportional to the whole wave, (2) wave 5 is created by an Ending Diagonal with 3-3-3-3-3 structure The preferred scenario is the latter where waves 1-3 have formed and we can expect correction of wave 4 to last at least until end of June, followed by the last zigzag to top the high of $138 This is quite complex scenario so it needs to be monitored against all the rules of Ending Diagonal which can also find the Educational post below. What do you think about Brent Oil and its short term prospects? Also let me know if you would like to see other stocks, indices, Forex or Crypto analysed using Elliott Waves. Thanks Educational post on Ending Diagonal
TVC:UKOILLong
by vitalalyt
5
Bulls roaring back! Is it really the bottom? Not so soon...INVESTMENT CONTEXT Russia's Minister of Foreign Affairs, Sergey Lavrov, said that "liberating" the Donbas region of Ukraine was still Russia's "unconditional" priority Germany's economy minister, Robert Habeck, warned the EU resolve on sanctions to Russia was starting to "crumble" Turkey President Recep Tayyip Erdogan is still expected to maintain his veto on Sweden and Finland joining NATO Stores and offices reopened in Beijing on Sunday, after officials announced COVID-19 outbreaks were under control. Similarly in Shanghai authorities announced loosening testing requirements to enter public places as new cases hit their lowest since March LUNA 2.0 launch is off to a rough start, with investors rocking the asset down 70% on the very day of the airdrop PROFZERO'S TAKE ProfZero welcomes the renewed risk-on attitude that seems to be permeating markets. With the S&P 500 finally breaking a 7-week red streak, and Nasdaq regaining 12k support, investors are trying to shrug off the worst of this year's meltdown. Yet, can we call the worst already to be behind? ProfZero thinks - not today. There are yet too many pockets of pent-up volatility to be resolved before buys may be considered organic - inflation is still being driven by energy and soft commodities, Fed and ECB have not completed setting up monetary policy to adjust interest rates and and the consequences of the war in Ukraine are inflicting pain to several developing economies in the Middle East and North Africa, potentially leading to unrests. The progressive reopening of China is definitely behind of the rebound in risk assets - yet ProfZero peacefully reminds that China announced literally last week that it will struggle to score positive growth in Q2. Markets are always 1 if not 2 quarters ahead - positive surprises would be all too welcome even ahead of that Crumbling European's resolve on sanctions to Russia is expected to erupt on May 30, as EU leaders are set to meet and discuss how to implement new restrictions on Russian energy still flowing to the continent. With a full-blown embargo now off the table, as it would cripple the energy security of the landlocked economies of Hungary, Slovakia and Czech Republic, talks are ongoing to limit seaborne imports while not touching volumes via pipeline. ProfZero has long indicated energy as the true table for negotiations to happen - with fading unity on crude oil, no better cohesion can be expected by the EU on gas down the road Russia apparently avoided default again on May 27 by delivering EUR 100mln interest payments on two Eurobonds - ProfZero sees this simmering narrative as a silent hope of diplomatic channels being open After failing to trail the market on May 27's rally, blockchain assets came roaring on May 30, on the back of broader investor enthusiasm. BTC reclaiming 30k mark and altcoins springing back from earlier lows are even more noteworthy as investors whiplashed LUNA 2.0 project relaunch - selection effects may now be once again at work after correlations peaked. ProfZero's are glimmering at the sight of markets - doing their job
CME:BTC1!
by ProfZero
ECB playing it cool; hope it won't have to drop it like it's hotINVESTMENT CONTEXT According to the minutes of the latest Federal Open Market Committee meeting held in early May, policymakers remarked the need to keep raising the Fed's interest rate, noting that "a restrictive stance of policy may well become appropriate depending on the evolving economic outlook and the risks to the outlook" Russia heavily cut interest rates for the second time since the beginning of the war in Ukraine, bringing it from 14% to 11% as annual inflation cooled from 17.8% in April to 17.5% as of May Thematic investment management giant Fidelity sees increased recession risk as volatility is set to persist After the collapse of LUNA, Terra project has voted to preserve the community and launch of a new blockchain, LUNA 2.0 PROFZERO'S TAKE While markets ambiguously read the minutes from FOMC meeting in May, ProfZero sees a rather coherent stance by policymakers, who won't refrain from exacerbating the already tightening monetary policy in order to tamp down inflation. What stood as a surprise to ProfZero was instead Ursula von der Leyen tone at Davos, where the EU Commission President said the EU won't be rushed into withdrawing monetary stimulus, and that supply-fueled inflation should not cause investor "panic". ProfZero concurs inflation in EU is largely imported; yet it fails to agree with Madame von der Leyen - the EU is caught between ailing growth, sticky inflation (flat around 7.5%) and threatened by massive debt loads (Italy above all). A tangle monetary policy alone may hardly undo all on its own Crude oil bull run is persisting deep into Q2, thus likely translating into yet another bumper quarter for energy majors. With Brent crude firmly above USD 100/boe and European natural gas (TTF) futures above 80 points after years below 20, ProfZero expects more good news for investors in the segment, especially in the form of greater dividend stability and buyback plans. Yet, as now several energy stocks trade at all-time highs (Cheniere, LNG; Chevron, CVX; Equinor, EQNR), ProfZero cautions against potential steep reversals should catalysts form to put a lid on prices - the ramp up in U.S. shale gas production should already alarm industry players, while on the opposite side it would play as a highly welcomed agent of deflation for economies at large When one of the world's most respected macroeconomists shares his views, ProfZero stands, and listens. Olivier Blanchard warned about swelling inflation as early as February 2021; now the former MIT Professor and Chief Economist at the International Monetary Fund (IMF) sees a "0.9 probability" the economy will return to a low-interest rates scenario, overcoming the tendency for markets to "focus on the present and extrapolate it forever". ProfZero has long been advocating in favor of keeping "cool heads" and focusing on underlying value fundamentals. Professor Blanchard would be proud to know ProfZero is really puzzled about the dynamics of semiconductor industry. One of the key commodities of the future has been in chronic undersupply for over a year. Yet, sector equities fail to impress, despite the apparent surge in pricing power. NVIDIA's (NVDA) beat on top and bottom line (USD 8.29bn revenue vs. 8.10 forecast; USD 1.36 EPS vs. 1.29) sent the stock sliding 7% in the after market, plunging it down 50% since the November 2021 peak. ProfZero well remembers how beaten energy stocks were during the pandemic, before roaring back in 2022. Is the same narrative brewing the semiconductor space?
CME:BTC1!
by ProfZero
Brent: GlueyBrent is currently glued to the resistance at $114.74, where it has finished wave b in blue. However, we expect it to let go of this mark soon to fall into the turquoise zone between $101.67 and $99.83. There, it should complete wave a in turquoise and move back above $104.67 afterwards to finish wave b in turquoise. After that is settled, Brent should gradually fall below the support lines at $104.67, $97.56 and $93.57. There is a 40% chance, though, that Brent could climb above $114.74 and make a detour through the green zone between $117.78 and $133.52 first before moving downwards.
TVC:UKOIL
by MarketIntel
2