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Republican’s plan, Fed, past and future volatility explosionsAs soon as we had analyzed the current situation in the precious metals market from the standpoint of the general fundamental background yesterday, a record for recent months volatility explosion in gold and silver prices was detected. Considering that there were no changes in the general fundamental background yesterday, we think yesterday movements were the result of technical moments, such as profit fixing and the involvement of that part of traders who catch reversal moments in price dynamics. Again, since the fundamental background is unchanged, we do not see any reason to revise our position yet. Thus, purchases of gold and silver only added to the relevance, and did not lose it. The main event of yesterday, outside the context of price dynamics, was the discussion of the Republicans' plan with the Democrats, since without their support it will not be possible to implement it in practice. So far, the gap between parties does not even allow to approach a compromise, but, in our opinion, it is inevitable - the whole question is what form it will take and when it will be reached. In this light, we continue to believe that the dollar has every chance of a correction this week. Today, the Fed's Open Market Committee will announce its decision on the parameters of monetary policy in the United States. Analysts are not expecting any changes. The point is rather in the comments on the future actions and plans of the Central Bank. Today the heads of the largest tech corporations in the United States will be interviewed at an antitrust hearing in Congress, which could potentially provoke a surge in volatility in the quotes of Amazon, Google, Apple and Facebook. By the way, they will all report on the results of the second quarter as early as Thursday. So there are very volatile days ahead of us.
FOREXCOM:NAS100Short
by Trade24Fx
2
Gold and silver records, pandemic and dollar problemsJudging by the dynamics of gold and silver in recent months, all the negative generated by the global economic system because of the pandemic is incorporated not in the stock market or in the foreign exchange market, but in the precious metals markets. In general, the fundamental background has probably never been so favorable for precious metals, especially for gold and silver. The pandemic, which is only getting worse every week (another outbreak in China and a sharp increase in Spain, a rapid deterioration of the situation in India, etc.) forces the most cautious investors to go into cash or safe-haven assets. Zero interest rates across all the world's leading central banks have made zero-yield assets (like gold) much more attractive than bonds (many government bonds yields are now negative). Huge injections of money from central banks and governments create a surplus of money in the markets, which in turn acts as a reliable basis for the demand for precious metals. The fall of the dollar in the foreign exchange market has recently been an additional factor in favor of the growth of gold and silver. And the last thing to consider: technically, gold and silver have formed stable trend structures that stimulate buyers. In general, it is not surprising that gold has reached the highest prices in history. It will be surprising if it does not try to hit the 2000 mark this week. Also, there is nothing strange about the 100% (!) growth of silver since March. And again, it will be strange if everything ends without attempting at least to touch 30. Meanwhile, dollar problems are getting worse. It is beaten systematically and methodically. To explain this, analysts talk about the growth of the euro and the Japanese yen, which are pushing the dollar down. We find this explanation more than dubious. However, analysts are understandable. By and large, there have been no globally new factors for dollar sales recently (the economic decline, protests in the US, a pandemic, and even tensions with China - all this was already long before the current dollar's problems). And what is happening with the dollar from the standpoint of cause-consequences relationships is really not obvious. Especially when you consider its status as a haven asset in the foreign exchange market. So it’s a little bit too soon to bury the dollar.
FOREXCOM:XAUUSDLong
by Trade24Fx
Prosegur Cash: Head and Shoulders and earningsH&S pattern and earnings outcome on July 31 may drag the price down to new historical minimum levels at 0.58, following long-term bearish channel. Also, second wave in Spain swelling may put pressure downwards on the stock price due to the company's main business: ATM's cash, which in covid19 days people are less keen on using physical money and prefer paying with card. However, Prosegur Cash is trying to keep floating capital with dividend reinvestments and buying its own capital. No analyst recommends to sell and 8 recommend to buy. Q1, CASH reduced profits 10.7% and made -3.9% sales. CASH also blames the currencies' effect to its earnings, so keep in mind that when covid exploded euro was up to 1.14 and now, after European Union took action with its funding 750.000 million, eurusd is up to 1.17. So watch out its Q2 earnings, but also get ready for Q3 in case Q2 are disappointing.
BME:CASHShort
by alexinve
Week in a Glance: 750 billion for the EU, US vs China, earningsThe past week has been extremely successful for the euro. The reason for this, first of all, is the aid fund worth 750 billion euros. Instead of the prescribed 1 day, the EU summit lasted all weekend and even this was not enough to reach a compromise. It was only on Monday that the EU members came to an agreement: the total amount of grant aid was reduced from 500 to 390 billion euros, and the amount of loans is 360 billion instead of 250. The week ended with an additional injection of positive for euro: data from Markit indices in the Eurozone and Germany, were above 50 (means increase in the economic activity). The problem of stimulus is now facing the United States. Moreover, the Republicans and Democrats have literally a few days left to reach a compromise. So far, their positions are quite distant: Republicans are ready to vote for a package of $ 1 trillion, and Democrats are insisting on $ 3 trillion. So, this week all attention will be focused on this topic. The dollar, which was under the strongest downward pressure last week, canstop the fall this week. But for this, the United States must have a new stimulus package. The main cause for concern of investors last week was another round of escalation in relations between the United States and China. The states ordered China to close the consulate in Houston, and China, in turn, ordered the United States to close the consulate in Chengdu. It is very likely that the sides will exchange new blows this week. Earnings season is at its peak this week. Microsoft, Tesla, Intel, Twitter, At&T and many more reported last week. Airlines have routinely shown a drop in revenues by 80-90% and significant losses. Tesla posted its fourth consecutive quarter of profit, which gives it formal reasons for claiming a place in the SP500 index, although everyone understands that this profit is just on the paper, and the company itself continues to generate losses. This week we expect quarterly results from the rest of FAANG members: Amazon, Apple, Alphabet, Facebook, and after that the earnings season will start to fade. As for macroeconomic statistics, the week will be interesting primarily because of the US GDP data. Obviously, this will be the worst quarter ever. The question is how much. In addition, we are waiting for data on GDP in the Eurozone and Germany, as well as the announcement of the results of the FOMC Fed meeting. In general, the week will be extremely busy.
Short
by Trade24Fx
3
Stimulus, jobless claims, earnings season and BrexitAs usual for this week, the main news of the day were centered around the plans to rescue the US economy, the earnings season and, traditionally for Thursday, jobless claims in the US. As Democrats and Republicans have less time, the process of preparing a new stimulus package has intensified markedly. Republicans seem to have decided on their position: legislators have agreed with the White House on the amount of aid (1 trillion) and its main components. But so far there is no any legislative act, just as there is no agreement with the democrats. The news of today was a message from China about the closure of the US Consulate in Chengdu. In addition, yesterday there was another portion of negativity from the Brexit negotiations: Michel Barnier said that the current negotiating position of the UK makes a new trade agreement unlikely. This is about selling the pound against the dollar today, even though the latter is weak. On the fronts of the pandemic, meanwhile, things are still extremely bad. The number of new cases in the world has confidently passed the 15 million mark, and a number of countries have not even reached their peak in the number of cases. All this will inevitably lead, among other things, to economic consequences for the third quarter. So, we should expect the next downward revisions of the forecasts for the growth rates of the world economy. The situation in the economy is already quite difficult without it. The US labor market is giving clear signals that there is no sign of a quick recovery. Yesterday's data on initial jobless claims showed an increase in the number of unemployed (over 1.4 million new applications). In fairness, it should be noted that the number of people receiving benefits on a permanent basis has decreased (to 16.2 million). Meanwhile, the earnings season in the US continues and yesterday it gave more cause for concern than for optimism. Southwest and American Airlines have traditionally reported 80% + drop in revenues and losses of $ 1 billion and $ 2 billion for this sector, respectively. Twitter reported a 23% drop in ad revenue and reported a billion-dollar loss. And even AT&T showed weak data: revenues fell by $ 2 billion.
Short
by Trade24Fx
Tesla and Microsoft, US vs China and jobless claims aheadYesterday was primarily interesting for the reports from some of the most overvalued companies in the US stock market (at least, judging by the basic investment metrics): Tesla and Microsoft. Tesla, as expected by hook or by crook, was able to show profit, or rather its illusion. But this opens the way for it to be included in the SP500 index and is another reason for optimism among buyers. As a reminder, we do not share it in any way and consider Tesla shares a bubble that will surely burst. As for Microsoft, despite the good numbers, shares at the premarket were under pressure. The reason for disappointment is the decline in the growth rate of revenue from cloud services, which is the main driver of the company's growth as a whole. Among other news, it is worth noting the continued growth of tensions between the United States and China. This time, the escalation took place not in the economy, but rather in politics. We are talking about the closure of the Chinese Consulate in Houston. Markets are waiting for the reaction from China. It is obvious that the development of the situation will invariably move from the sphere of politics to the plane of the economy. All in all, there is little cause for optimism. As for the United States, the focus is not so much on the problematic relations with China, but on the fate of the new package of economic stimuli, which should replace the package under the CARES act. Democrats and Republicans are still far from a compromise and exchange threats and curses at each other through the press. Meanwhile, the clock is ticking, counting is already going on for days. The current week is extremely poor for important macroeconomic statistics. Nevertheless, today is an exception in this regard - weekly data on jobless claims in the last 3-4 months has caused increased interest in the financial markets. So far, the situation in the labor market does not confirm the hopes of optimists in any way: 1.3 million new applications for unemployment benefits and 18-20 million people receiving them on an ongoing basis indicate that there is no confident recovery yet. Given the number of companies that have filed and continue to file for bankruptcy, it is not yet possible to expect a sharp improvement in the situation.
NASDAQ:TSLAShort
by Trade24Fx
1
Dreams of a bright future and their consequencesFinancial markets yesterday continued to dream of a bright future under the influence of magic pills news. The effect was complex: from the decline in the VIX index and the growth of stock markets, ending with the growth of commodity markets and a decline of the dollar. The latter is under strong pressure, as a result the Dollar Index moved below the base support of 96, which opens the way for a further decline. Moreover, the euro, pound, Australian dollar and a number of other currencies simultaneously break important levels, which again opens the way for them to further growth against the US dollar. Since we do not share the optimism prevailing in the markets, simply because the reason for the growth is expectations, not facts, we are not in a hurry to sell the dollar, but the recommendation to buy it has been withdrawn. The earnings season in the US is going pretty well. That is, in most cases, the main reason for joy is the exceeding of analysts' forecasts, and not the actual growth of the financial performance of companies, but this is enough for positive-minded markets. Today in this regard will be extremely interesting, because of reports from Microsoft and Tesla. Both stocks are extremely overvalued (although even an overpriced company like Microsoft looks relatively undervalued compared to Tesla), so it will be interesting to see if they what they have got and markets reaction. Oil yesterday also became hostage to a general wave of rising risk sentiments in financial markets and was able to break through key resistance. True, at the end of the day, buyers' sentiment was spoiled by data on US oil stocks from the API, which showed a sharp increase in reserves (by 7.54 million barrels). However, today's official data may bring them back into good spirits. Or not, if the numbers from the API will be confirmed.
NASDAQ:TSLAShort
by Trade24Fx
1
Agonizing summit, stimulus and magic pillsThe EU summit, which instead of one day on Friday dragged on for the entire weekend and smoothly turned on Monday, become of the most difficult and longest in the history of the EU. It should be reminded that the fate of the 750-billion-euro aid fund was decided there. The price is more than serious, so it is not surprising that there was no unity in the ranks of Europe. The stumbling block was not so much the size of the fund as its distribution and control mechanisms. At the end of Monday, it seems that a compromise has been reached. At the same time, the size of the fund has not changed - 750 billion euros, but the structure of its distribution has undergone significant changes. The total amount of gratuitous aid (will be distributed in the form of grants) has been reduced from 500 to 390 billion euros, and the size of loans is 360 billion instead of 250. Although these news for the euro are generally positive, it seems to have exhausted its entire upward potential. In general, the issue of stimulus to the economy this week came to the fore not only in the EU, but also in the United States. By and large, the United States has only a week to agree on a new stimulus package. Otherwise, next week the US economy will face a situation of survival in a crisis without government assistance. All this is happening against the backdrop of a worsening pandemic situation in the United States. The mayor of Los Angeles said he is ready to return a full-fledged lockdown in the city. Meanwhile, the vaccine race continues. The UK has already agreed to purchase 90 million doses from Pfizer and Valneva, and seek effective treatments. Pfizer has released additional information on its tests (positive). In terms of treatment and medicine, AstraZeneca excelled by announcing the results of clinical trials of their experimental drug developed in collaboration with Oxford University. Preliminary results showed that the drug kills not only the virus, but also the cells affected by the virus. In general, a magic pill in its purest form. And small British company Synairgen more than tripled its capitalization after announcing the results of its Covid treatment option. Amid the news, the US tech sector saw another impressive rally led by Amazon and Tesla.
Short
by Trade24Fx