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Macroecomonics

Minor correction S&P fueled by higher unemployment rateNon farm payrolls and the unemployment rate will be released today at 0830. A release higher than expected could fuel a minor correction. The chart displayed shows the negative correlation between the S&P and the total civilian unemployment rate. Because of the uncertainty of the release, RSI very high, and ATR falling; I would stay clear of the equities markets today until this release plays out. Just my thoughts. Happy Trading
TVC:SPX
by Brandon50115
WILL TRUMP’S INFRASTRUCTURE PLAN INFLUENCE THE DIRECTION OF OIL?Hello Traders, In this short weekly outlook it is not about any trading setup rather than an opinion if Trump’s infrastructure plan will influence the direction of Oil prices in 2017 and beyond? First, if we look at the US Oil price we can basically see three phases so far. We will start back in 2014 as oil prices started to plump massively in Q3 of 2014 from around $120/bbl. down to around $50/bbl. by the end of Q4 2014. This was an impressive loss of around 58%! However, this was not the final depreciation of oil as it started to fall further in mid-2015 below the 11year low of $33/bbl. Beginning of 2016, oil found its current button and started to increase again as it currently trades in a narrow range of around $52-53/bbl. Technically speaking, after US president Trump won the election in November 2016, oil prices broke the significant resistance level of $52-54/bbl. ($54/bbl. UKOil) to the upside as it currently trades in a narrow range waiting for significant driver for either direction. Technically speaking, oil seeks to break out of the narrow range in near future as it creates bullish signs in lower timeframes. Target may be around $60/bbl. as it will face there the next significant resistance level. This price target may be the direction oil faces on the technical side for 2017. Now coming to all the factor that oil influences in terms of price movement and direction. After the US elections in November, 2016 took place and president Trump won for the republicans to run office as 44th president of the United States, the oil price rushed a couple days from $43/bbl. towards the major weekly resistance zone of $51.5/bbl. to flirt with that level. Just several weeks later oil formed a narrow range in which it currently trades. Let us break down the price movement of the oil and the current divers. We define 3 main drivers as significant for oil development: Demand/Supply Ratio and their effect on further oil gains Causes of OPEC Output Freeze Sector Development causing massively demand for oil US Policy plan – Infrastructure and border tax plan by President Trump In 2015 oil started to recover a little as it also shows our Supply/Demand Ratio stated to fall in the first half of 2015 to stabilize in the range of $50-60/bbl. However, in the second half of 2015 oil turned again and reached its current swing lows after breaking its 12-year low $33/bbl. and reached $27/bbl. During this time, global oil prices continued to suffer from the oversupply (shown in our ratio), the increased signs of a slowdown in the Chinese economy and a devaluation of price in global equity and commodities markets. In 2016 market saw some wide recovery as the Ratio started to swing towards bullish sentiment. Global supply gave hints of declining non-OPEC supply and efforts to alleviate the persistent supply overgorge. This is also shown in our ratio in our main article. Additionally, OPEC stated started to meet for a possible Output Freeze to bolster demand surplus to strengthen the oil price. This will affect many countries as they depend of oil development (eg. Venezuela, Russia and Brazil just to mention a few). (...) Obviously, we don’t know whether this will happen or not. This analysis could also be wrong. Keep in mind that trading is probably game. Nobody is 100%. With this analysis, we wanted to show you why WE think that oil COULD be supported throughout this year to reach $60/bbl. This is not a guarantee for accuracy and that is will happen. We hope this article clarified some of our objectives on the development of oil. As always trading is a probability game and nobody is 100%. And please do keep in mind that this is just OUR PERSONAL Opinion. Have a great Sunday. Your Secrets2Trade Team
TVC:UKOILLong
by secrets2trade
Micro & Macro :AUDNZD foreshadows ultimate trend reversal Looking back @ Macro Levels:- Assies remained on a rollercoaster ride against its kiwi counterpart since 2011. Following later pair remained sideways since 2014 (consolidation phase), although in a fair enough trading range of a 1000 pips between 1.1300 - 1.0275. Fast Forward :- Recently, since Nov 2016 (as trump-nomics starts) pair was in triangle/wedge structure. Feb 9,2017 close above 1.0554 has confirmed the triangle break-out. Both Micro and Macro technicals foreshadow a trend reversal cementing the fundamentals, where RBA was less dovish relatively to other central banks while RBNZ on Feb 9 2017 gave clear signal of dovishness, stating that interest rates may remain low for a longer period than market's expectations. Our favorite Inverse H&S for bullish reversal is on cards producing the neckline at 1.0770 area and on Macro level 1.01382 area, Although Macro levels are bit early to anticipate . Our analysis is backed by Deutsche bank's yesterday's remarks that " Aussie may put gains against $US up to .8100 or beyond " We are super excited to trade this pair keeping bullish baise once a valid trading setup develops. Keep following for trade setups... Thanks and Trade with Care..... :)
Long
by ashfaq.hussain.duggal
Falling US T-Notes: A Major Macroeconomic IndicatorThe Bond Market. It is often overlooked by traders despite its instrumental role in the Global economy and determination of large macroeconomic trends. Major technical damage has been done across the board in the bond markets recently and this can be directly attributed to the new President of the United States. Donald Trump plans to explode an already enormous budget deficit. He plans to finance the proposed increases in government spending with low yield 30 Year fixed rate US Government Bonds rather than shorter term Treasury bills. The market is already starting to anticipate this influx of supply. The prices of US Bonds are falling and the yields are rising as a result. At this time the Federal Reserve must hike interest rates to preserve their credibility. Additionally, the US Dollar is currently appreciating relative to all other foreign currencies which erodes the purchasing power of foreigners and discourages the purchase of US Dollar denominated Bonds. Falling demand will contribute to the prices of these bonds declining much further. Unless yields rise significantly faster than inflation rises, which is extremely unlikely, the value of these bonds will continue to decline for the foreseeable future. Please leave your thoughts comments and a like if you enjoyed this post! Happy Trading and may the market move in your favor.
UShort
by IceTrading
STERLING - A HIGHER GBP EQUILIBRIUM: BREXIT, DATA, VOL, RATES GBP moving higher? Data: 1. Leading post brexit data has recovered significantly from 5-10yr lows to firm growth or significant recovery (PMI, Optimism, Confidence) and imo this will be continuing theme given negs arent going to start for another 6-9m, there isnt any impetus to drive us lower again. 2. Also the macro indicators are trading well, e.g. Inflation, employment and GDP are all firm, assuming this continues further BOE action will be impossible & general sterling selling will struggle. Negotiations: 1. EU Exports equal 50% of total exports whilst total exports equal 10% of GDP, so even if we lost all EU exports GDP would only fall by 1% given imports are marginally less than exports thus the cost of losing EU trade is offsetted, its not all one way. UK Domestic demand would pick up the EU import slack so likely only 1% to GDP to be lost. - That is the absolutely worst option. In reality we know negotiations will only realistically lead to at worst international trade inefficiencies e.g. duties/ taxes, which will likely have a less then 0.1% effect on GDP. The EU isnt going to cut all ties. - Also from this point, and GBP 10-20% lower uncertainty is priced so further downside from uncertainty is hard to justify unless we get new political stimulus which is unlikely given how quiet it has been to date. So risks here look to be to the upside e.g. uncertainty/ complacency fading meaning confidence/ optimism rises in the near term (even if wrongly), which sees GBP wash off some of this "gap" and move to a new near term equilibrium. GBP price action: 1. STG crosses have lost 2-4000pips or more in the past 6m, so is relatively very undervalued, thus a 500-1000pip rebalancing higher wouldnt be uncalled for or even relatively aggressive. 2. Topside is also supported by the price action we have seen post brexit, apart from the initial brexit losses, any further downside (weak PMI, BOE easing etc) GBP has failed to hold the lows of the range OR even trade at the lower percentiles for any particular amount of time - we havent seen a new equilibrium lower in sterling weve remained rangebound with a topside skew. We have seen GBP brought quite aggressively on dips, and on reflection, it has actually paid to be a buyer on dips vs a seller on rallies from a risk perspective. Being a bear myself, I know it has been an upward battle to gain any consistent downside, all structural shorts have turned into tactical positions with early profit taking e.g. short GBPUSD for 1.25 was cut early at 1.29 when the bulls faded the move lower. This theme has been consistent despite BOE Easing and strong fwd guidance, with flimsy data. 3. The past week MA i think is much closer to where we will see GBP trade in the future vs the 1m MA at 1.319.. 1.334 on the weekly is where i feel we will find the next months average.
Long
by QuantumLogicTrading
1
This industry is primed to suffer more than any other.The chart above shows assorted real estate stocks, they aren't cherry picked and were random (except RAIT Financial), but you can see the trend. Get the hell out of real estate. Seriously if you have any real estate or RAIT stocks it is a great time to sell. This housing market has gone nuts from the years of 0%. Rental vacancy rates are at a 30 year low and rental prices are through the roof (pardon the pun), with houses that would have a $700 mortgage going for $1200+ with ease. Housing prices are way up too and are around pre-crisis levels. NO I AM NOT SAYING THIS IS ANOTHER HOUSING BUBBLE. I'm not stupid, c'mon. Real estate stocks certainly haven't gone crazy in recent years, given residual investor uneasiness about the sector. However, many symbols have made some nice gains since '08 and they are going to get hammered. As you can see on the chart all these symbols are RAITs and real estate and they are sliding already. A rate hike, even if the FOMC says it's only .01%, will be seen as the start of higher interest rates and thus a decrease in home sales. So get some put options on the sector, I'd say go 4-12 months out with strikes 15%+ lower than last price, it'll pay off. Even if Yellen announces no rate hike in Dec., everyone thinks it's coming, and that's all it takes. The housing market really does need it though, prices are getting a bit too high and rental prices are insane high. Also, don't confuse real estate stocks and bank/financial stocks, banks will benefit from the rate hike (increased lending and profits from interest).
RShort
by RyanMartin
1
Trading FundamentalsI personally follow 4 central banks in detail: FED (USD), ECB (EUR), BoJ (JPY) and BoE (GBP). Knowing the monetary policies of these banks and how they differ, helps me in trading the following 6 major pairs: EU, GU, UJ, EJ, EG and GJ. I also follow three other central banks, be it more at a distance and with less detail: SNB, RBA and BoC. The banks to follow would normally depend on your trading portfolio. Central banks monitor the following five economic areas: I) Growth. Referring to whether an economy is expanding or contracting. On the economic calendar, there are several indicators on the health of the economy such as (not a complete list): -Business climate -Gross domestic product -Personal spending index -Retail sales -Consumer confidence / sentiment II) Inflation. Referring to how costs of goods and services develop. On the economic calendar, you will find: -Consumer price index -Producer price index -Retail price index -Core price index III) Employment. Referring to a countries labour force. On the economic calendar, you will find: -Unemployment change -Unemployment claims -Jobless claims -Non farm payroll IV) Production. Simply put, this refers to the things a country makes. On the economic calendar, you will find: -Factory orders -Core machinery orders -Building permits -Industrial production -Purchasing managers' index V) Geopolitical. Referring to anything non-economic that could cause risk in the market. Think of things like elections, natural disasters and wars. Central banks watch these areas and have specific targets for them (for instance inflation 2%, unemployment 8%). If a central bank is focussed on an indicator and sees it´s off target, there are several tools it can use to affect the indicator. A) Changing interest rates. Raising them cuts inflation and encourages investors to come in, thereby increasing demand for the national currency. For example the FED is believed to plan a rate hike this year that will further strengthen the USD. B) Setting price limits. The value of a currency impacts exports, so banks can make sure a pair will not drop below a certain amount and will spent millions buying foreign currency the weaken their own. For example the SNB until recently had a cap on EURCHF to artificially weaken their currency. We all know what happened when that cap was suddenly removed. C) Quantitative easing. This is basically printing money to spur the economy and inflation. It weakens the currency by increasing the availability of it. Good example is the recently announced powerful QE programme by the ECB, leading to selling pressure for the Euro. D) Using certain language. With press conferences, minutes of meetings, speeches or written statements a central bank can influence the market and thereby the value of its currency. Good examples are public statements by Draghi, president of the ECB. The EU pair can move hundreds of pips while he speaks. The key to trading fundamentals, is understanding what a central bank might do to move the value of an indicator towards its target. So when news comes out, you can asses if it will make the central bank more or less likely to use a certain tool and consequently if that news event weakens or strengthens the currency. For example: towards the end of 2014, the inflation in the Eurozone had fallen to very low values. The ECB had tried several things (like lowering the rates) to up the inflation (for which it has a target of 2%), but to no effect. The only thing left to do, was a QE programme. So with every new Eurozone cpi that came out lower than expected, the probability of a QE program increased, so the euro weakened instantly upon the release of that cpi data.
Education
by JazzForex
18