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Week in a Glance: pandemic records, Brexit, US stimulus and IMFThe main event of the week from the point of view of the current, and most importantly potential consequences, were new pandemic records. The number of new cases in the world has exceeded the 400K, while in Europe the current records exceed the spring ones by several times (in some cases, by 5-6 times), and the United States is very close to record levels as well, already exceeding 70K. We think there is no need to explain what this means for the world economy and single countries. We already went through all this in the spring and the scale of the consequences is more or less clear. Seen in this light, the stubborn reluctance of markets to look around the corner continues to amaze. For example, airlines reported last week: revenues collapsed by 80%, the drop in profits is measured by hundreds (!) of percent. And this is just one of many examples of the catastrophic consequences. However, stock markets are hovering around historic highs rather than incorporating the potential impact of a second wave in prices. They were not scared by the updated forecasts from the IMF, which expects a weaker recovery of the global economy in 2021. Despite this, we will continue to sell in the stock markets, especially in the US. Last week we saw the complete lack of progress and, it would seem, an end to the talks on stimulus in the United States: according to Mnuchin, one should not count on a package of assistance to the US economy before the elections. But the markets continue to believe and hope that the injection of a couple of trillion dollars is very close and the god of money will still get more money. In the fields of Brexit, everything is extremely turbulent. The EU summit showed that the Europeans are not going to make concessions, but they do not want to leave the negotiating table, passing the initiative ball to the British. Johnson, after waiting for the end of the summit and making sure that there were no additional proposals, once again stated that in this case there is no point in further negotiations and Britain is ready to leave without a deal. If these words will turn into action this week, the pound will be in trouble. Oil prices are still extremely favorable for short positions. So we will sell oil this week. As for the coming week, the same topics will most likely be procrastinated: the pandemic, stimulus in the US and Brexit.
DJ:DJIShort
by Trade24Fx
2
EU summit, no stimulus, new pandemic recordsYesterday was formally the day (according to Boris Johnson's ultimatum) when Britain has to withdraw from the negotiation process with the EU. Nevertheless, the sides continue to negotiate. EU leaders after the first day of summit called on the UK to "make the necessary moves to make an agreement possible". This once again suggests that a trade agreement will be. It means that purchases of the pound, although they look hopeless in the long term, here and now may be a good trading idea. An even more promising trading idea both in the “here and now” horizon and in the longer term is selling in the stock markets, both in the United States and other countries, for example, India. The pandemic is in full swing again, countries on the verge of despair and new lockdowns, and the issue of stimulus in the United States has finally reached a dead end. At least, according to US Treasury Secretary Mnuchin, who said that it is almost impossible to do anything with stimulus before the elections. In general, we might not see a full stimulus package in 2020 at all. Taking into account the fading economic recovery and the well-founded fears of a new recessive wave, we have an almost ideal situation for selling in the US stock market. The second wave is increasingly covering Europe and the world as a whole. Germany, France, Great Britain and a number of other countries have reached maximum number of new cases, and the situation is getting worse day by day. Accordingly, restrictions are getting tougher, with all the consequences for the economy. And judging by data from the United States on initial applications for unemployment benefits, everything is not very good without it: jobless claims are again about 900K. Oil was under the pressure as well. Motivation mostly the same. Note that this is not all that oil sellers can show, so we continue to be in the sale of the asset.
Long
by Trade24Fx
1
Johnson’s step back, IMF forecasts and blame gameThe foreign exchange market continues to follow with interest the ups and downs of the negotiations between the UK and the EU. Despite the fact that the deadlines are running out, the sides continue to raise rates in the hope that the opponents will be the first to lose their nerves. Apparently, looks like the EU is winning. The point is that Johnson's ultimatum to withdraw from the negotiation process, if there will be no results before the summit, will remain empty threats. At least, according to the latest information, the UK does not plan to leave the negotiating table, which means that the EU has outlived Britain. Well, it also means that the deal is likely to be. So buying the pound in the short term seems like a potential trading idea. However, the medium and long term will still be determined on the pandemic front, and on it for the EU, Britain, and the majority of the world, everything looks more than unsightly. The IMF has lowered its own forecasts for the pace of global economic recovery in 2021. The current 2020 promises to be a disaster for almost all countries, with the exception of China. Among emerging countries, India will suffer the most (the country's GDP will decrease by more than 10% at the end of 2020). In this light, we cannot fail to note that sales in the Indian stock market have not looked so attractive for a long time. And the US stock market continues to look extremely promising due to the current impasse in the US stimulus package. Trump's constant mood swings, the “blame game” of Democrats and Republicans, the last 2 weeks left before the elections - everything strongly indicate that before the announcement of the election results in the United States, one should not count on new stimulus for the economy from the US government.
DJ:DJIShort
by Trade24Fx
1
Records vs anti-records and the start of the earnings seasonNowadays financial markets are filled with controversial information. This causes mess. For example, based on the results of yesterday, we can say that the worst for the world economy is over and it is confidently moving towards pre-pandemic levels. This conclusion is based on the trade balance data from China, which showed that the country imported and exported a record amount of goods in yuan-denominated terms in September. On the other hand, we can say that the second wave of the pandemic is dragging the world economy to the bottom, recorded following the first series of lockdowns. We are talking about data from ZEW: the level of economic sentiment in Germany fell sharply and reached the lowest level since May 2020. To prove this we can add the maximum drop in employment in the UK over the past 11 years reported yesterday. Or take, for example, the start of the earnings season in the United States. On the one hand, banks (JP Morgan and CitiBank) showed financial results that were much higher than analysts' expectations (especially profits). On the other hand, revenues turned out to be almost 10% lower than in the second quarter, and in the case of CitiBank, they even came out one of the weakest in the last twenty quarters. Thus, the interpretation of information directly depends on the angle of view. Our position remains unchanged so far: we consider China rather an exception to the general rule. And the general rule is that the world is going through one of the worst economic crises. And during crises, if the stock market is not at the bottom, you have to sell stocks. Oil sales in this light are still in charge. As well as in the light of the latest forecasts from the International Energy Agency, which note that the pandemic has led to the transformation of the oil market. Mostly it concerns demand: its growth estimates continue to downgrade.
DJ:DJIShort
by Trade24Fx
6
The Decisive Week That Decides NothingIn theory, this week could be decisive for both the fate of the stimulus package in the US and the negotiation process between the UK and the EU. But by and large, it is unlikely to decide something. The fact is that even if the Republicans agree on something with the Democrats (means the stimulus package), this is unlikely to change anything simply because there may not be enough time before the elections to go through all the formalities and legal procedures. Therefore, in reality, this issue will still be solved only after the elections. Most likely, the Democrats will have full power, and they will accept whatever they want. As for Brexit, the idea is that the sides should have time to come to an agreement before the EU summit on October 15-16. This is not about the final text, but rather about agreement in principle and basic agreements. And although the chances of a deal, as we have already noted, are quite high, uncertainty still surrounds the process: both sides have said they will not seek a deal "at any cost." The pandemic, meanwhile, continues to advance and pushes the economic recovery back. Tightening the restrictions is becoming more and more necessary with all the ensuing economic consequences. Clouds continue to gather over the US tech giants. Last week, the US House of Representatives discussed a report on their abuse of monopoly power. This week, the Europeans decided to create a list of companies that will be subject to enhanced regulation. First of all, this concerns Apple, Facebook, Google. EU wants to limit their market power even without proof that companies are abusing their monopoly position. In short, the Europeans' complaint is the following: companies earn too much, pay too little taxes and, in addition, destroy competition by dominating the Internet, which in turn destroys traditional business.
TVC:USOILShort
by Trade24Fx
4
Week in a Glance: Trump and stimulus, Brexit and oil growthThe main events of the past week took place in the US and centered around the fate of the stimulus package for the US economy, as well as the presidential race. And if everything is more or less clear with the second, Biden's gap from Trump is too big to disappear in the remaining 3 weeks before the elections. As for stimulus, situation is unpredictable. We don't need to name whom to thank for this. Right after Trump was discharged from the hospital, he announced that he is withdrawing the Republicans from the negotiation process with the Democrats. He is going to return to the issue of stimulus after he would win the election. But the very next day, his position changed: there will be no stimulus package, but single measures (for example, $ 1200 stimulus checks) are quite appropriate. The Democrats quickly replied “no” to this. After that, Trump once again radically changed his position and now the stimulus package is back in the game. According to the latest information, the Republicans are ready to offer $1.8 trillion. This is still less than the Democrats want ($2.2 trillion), but almost 2 times more than the starting position of the Republicans ($1 trillion). Considering that the situation is radically changing literally every day, it is impossible to say with certainty how it will end. Although we believe that, before the election results are announced, the adoption of the stimulus package may give an advantage to one of the parties, which means that it is politically disadvantageous in general. The week of negotiations between the EU and the UK began with Johnson's ultimatum that if there will be no deal in the next two weeks, Britain will leave the negotiation process. The EU responded with its ultimatum - they are ready to be at the negotiating table until the end of October or even the beginning of November. Well, the stakes have been raised to the maximum, which means the end is very close. The past week has left a sense of some progress, but no breakthrough. This means that the risks of no-deal scenario are still relevant. Last week was extremely successful for the oil market. The main reason for the growth were expectations of Hurricane Delta and potential damage to the US oil industry, 17% of which is located in the Gulf of Mexico, as well as an oil strike in Norway. We have mentioned that both factors as short-term force majeure, their duration is very limited, as well as their positive impact on oil prices. So, this week we expect a significant drop in oil prices, when it becomes clear that once again the hurricane spared oil capacity in the United States, and in Norway, production will return to normal after the government and the remaining striking union agree. What to expect from the coming week? First and foremost, the sequel to the stimulus epic in the US: too much is at stake. This means financial markets will continue to be driven by hopes and expectations. The Brexit story will continue. Even though it comes to its logical conclusion. An EU summit will take place this week, at which, in theory, a ready-made trade agreement between the EU and the UK should be discussed, but it still does not exist. Earnings season for the third quarter starts in the USA. It is expected to be less disastrous than in the second quarter, but the numbers still promise to be rather weak. Perhaps this will remind buyers in the US stock market how far the current prices are out of touch with reality.
TVC:USOILShort
by Trade24Fx
3
Stage of denial, jobless claims and new pandemic recordsFinancial markets continue to deny the obvious facts (a sharp slowdown in economic recovery, the second wave of the pandemic, the absence of a second stimulus package for the US economy, massive bankruptcies, etc.), replacing objective reality with a subjective perception in the form of hopes and expectations. After it became clear that the old mantra called “stimulus” was no longer relevant, not even a day passed when a new one was invented: “stand alone bills”. We are talking about Trump's proposal to take single measures to help the economy. He suggests to start by paying $ 1200 checks for "our great people". That is, they have already forgotten about trillions of dollars and are ready to be satisfied with billions. And this is without taking into account the position of the Democrats, which is more than clear: no single bills - either a package or nothing. In general, this is the classical stage of denial. All that is required under the current conditions is to stay within objective reality and wait until the stage of denial passes to the next evolutionary stages (anger, bargaining, depression and acceptance). So our “sell” recommendations for the US stock market remain valid. Moreover, this week recorded an absolute maximum in the number of new cases of coronavirus disease. That is, the second wave is not just a horror story, but part of the current reality and the consequences of this are obvious, since we went through all this in the spring during the first wave. Jobless claims data yesterday (initial claims) once again reminded that the US labor market will need quarters at best to recover, but most likely years. Prices in the oil market today are the most favorable for sales. Recall that the current drivers of growth (hurricane Delta and oil strikes in Norway) are of extremely short-term nature, which means the days (hours) of oil price growth are numbered.
TVC:USOILShort
by Trade24Fx
5
FOMC minutes, Attack on Internet Giants, Hopes AgainFinancial markets yesterday decided to ignore Trump's decision to close the question of stimulus before the announcement of the US presidential elections results. The explanation for this ignorance is very simple - investors and traders believe that there will be stimulus anyway, maybe partial, maybe not now, but there will be. Commenting on and analyzing the logically emotional plane is generally quite useless. Therefore, once again, we remind that we prefer to stick to the facts. And the facts are that in yesterday's minutes the Fed made it quite clear that the absence of additional financial stimulus would jeopardize the economic recovery. So, we are not going to change our recommendation “sell” in the US stock market. Moreover, it is worth selling the most overbought companies, which undoubtedly include high-tech giants. An additional argument in favor of this was a report from House pf Representatives that concluded that the big tech companies (Apple, Amazon, Google and Facebook) are abusing their market power. Accordingly, it is recommended to force them to radically restructure their business. And more about the facts. The wave of bankruptcies in the United States does not even think about fading away. A number of companies held out from the latter, counting on a quick economic recovery, a return to normal life and, accordingly, a sharp increase in demand. Obviously, this is not happening. As a result, this week restaurant chain Ruby Tuesday is filing for bankruptcy and closing 185 restaurants. The company employed about 7,300 employees. Hurricane Delta, which was so frightened at the start of the week, has weakened to the first category (the week began with category 4), so in light of the latest data on oil stocks in the United States (increased by 0.5 million over the week), oil sales seem to be the only reasonable alternative for trade today.
FOREXCOM:NAS100Short
by Trade24Fx
1
Trump's demarche, Johnson's ultimatum and hurricane DeltaFinancial markets on Tuesday lived exactly the same as on Monday: in the US – were waiting of stimulus, in the UK - a trade agreement, and the rest of the world continued to look at the numbers on the pandemic. At the beginning of the day, there were no breakthroughs in any of the key topics. The Democrats continued to negotiate with the Republicans, creating the illusion of progress, which in fact does not exist. But then traditionally Trump came and destroyed everything. We are talking about the withdrawal of the negotiators from the Republicans by his order. That is, exactly what we wrote about for a long time is happening - there will be no stimulus until the results of the Presidential elections. So, Trump goes all-in in an attempt to win back at least part of the gap with Biden (the gap is now more than 14% in Biden's favor). Boris Johnson uses a similar “all in” tactic in negotiations with the EU. The British prime minister has essentially delivered an ultimatum to the EU: if there is no progress within the next two weeks, he will tell the British that a deal is impossible. The EU also decided to go "all in" and said that they did not plan to offer concessions. As can be seen, every day it is more and more interesting to follow the news, although the end is already near, as time is running out. So, the decline in the British pound and the US stock market yesterday is quite natural. Meanwhile, another hurricane is approaching the United States (as if Trump is not enough for the United States). Since the letters of the English alphabet ended, they had to use Greek letters. And it has already come to Delta. Hurricane expectations are traditionally accompanied by shouts of "we are all going to die" and an increase in oil prices in anticipation of the collapse of oil production in the US (17% of US oil production is concentrated in the Gulf of Mexico). But once again we note that this is already the 26th (!) Hurricane this year for the United States and everyone is still alive. So, you shouldn't rely too much on Delta in this regard. This means that the growth of oil at the start of the week is a great opportunity for sells and nothing more.
DJ:DJIShort
by Trade24Fx
4
Tightening restrictions, Trumps race and two blue linesThe main thing that worries financial markets now is Trump's health. The US President left the hospital, so the treatment is successful (with the use of experimental drugs). But it seems to us that we need to look at least one step ahead. Namely, the presidential race seems increasingly hopeless for Trump. The chances of Trump even without Covid were very low simply because the US economy is in the worst shape over the past decades (if not since the Great Depression), which means that in the eyes of voters, everything is more or less clear with the culprit. So the impossibility of running an election campaign negates the ghostly chances that Trump had. But the impression is that the financial markets, and especially the US stock market, point-blank refuse to recognize this. In our opinion, this is a good opportunity to earn money. So sales on the US stock market remain relevant. The only chance for the US stock market is new stimulus package. But it is still only a dream and expectation. What is not a dream is the pandemic situation in the world. The total number of cases in the world has exceeded 35 million. Schools are being closed in New York, bars in France, the UK is preparing for a tough winter. Anyway, progress does not stand still. In India, a paper test for COVID has reportedly been invented, which makes it possible to determine cheaply (about $ 7) and quickly (less than an hour) whether a person is sick or not with a confidence level of over 95%. Two blue stripes - a person is sick with COVID, one blue - healthy. But again, this does not solve the problem of a pandemic here and now, so reasons for optimism are only on the horizon. Oil prices jumped yesterday on information about the strike of oil workers in Norway. That is, in the short term, oil production in the country may decrease by 330K barrels per day. In our opinion, yesterday's growth in oil market is an excellent opportunity to sell at better prices and nothing more. The strike in Norway certainly is not a factor that radically changes situation in the oil market.
TVC:USOILShort
by Trade24Fx
1
Week in a Glance: Trump and coronavirus, stimulus and BrexitThe past week main events took place more in the political sphere than in the economic one. But they did not become less significant for the financial markets because of this. Trump's coronavirus unexpectedly hit the main focus of the past week (stimulus in the US, Brexit and statistics from the US labor market) on Friday. About this and much more in today's review. Let's start with the main shock of the past week: Trump and his coronavirus. The news is important not even because Trump is at risk (age plus overweight), but because it means that the presidential campaign is on the verge of collapse. Recall that Trump's situation was already extremely deplorable: according to The Economist's models, Biden's chances of winning 7 out of 8, judging by the bookmaker rates, Trump loses 61 to 39. The presidential debate last week only worsened the situation for Trump, because otherwise as a shame what was happening the press has not named. In general, it is worth preparing for the new president and the corresponding changes. But the stock markets are trying their best to put on a good face with a bad game. The expectations now are on the adoption of a new stimulus package. To be honest, expectations are overestimated. During the past week, Democrats and Republicans have tried to come to an agreement and work out a common position. But the size of the discrepancy between them is still $600-$700 billion. As a result, the Democrats could not stand it and voted their package of 2.2 billion. This act will be buried in the Senate. So, the markets are wrong. Which gives us a reason to recommend sells in the US stock market. Statistics on the US labor market sent another clear signal in favor of sells in the stock market: the economy is clearly losing momentum in its recovery and one should not expect a quick return to pre-pandemic levels. NPP data came out worse than forecasted. Another key event of the past week was the final (or not) round of negotiations between the UK and the EU. The results were not announced even on Friday. But on Saturday at a joint press conference, EU and UK leaders said that there is progress in negotiations. Still, there is no deal on table yet. The upcoming week promises to be relatively calm in terms of macroeconomic statistics. But in terms of politics, everything will remain uncertain: what about Trump and the presidential race in the United States? What about stimulus? Brexit?
DJ:DJIShort
by Trade24Fx
1
Crucial Friday: US Labor Market, Stimulus and BrexitThe list of major events yesterday was the same as on any other day of this week - stimulus in the US, Brexit and situation in the US labor market. On each of these issues, rather contradictory information was received and there is still no clarity in any of them. Let’s take Brexit as an example. The European Union announced yesterday morning that it is starting a legal action against the UK over Prime Minister Boris Johnson's plan to break the terms of the Brexit divorce. As a result, the pound rapidly lost about a hundred points. But later there was information from a number of British officials that there is significant progress in negotiations between UK and EU. After that the pound not only won back the previous losses, but also added about 50 points from above. However, the EU did not confirm this information and the further growth of the pound stalled and downward pressure returned. Today, in theory, the sides should summarize this week of negotiations and possibly shed light on the real level of progress. As a reminder, we believe that there will be a deal, and accordingly this week we recommend to be very cautious with shorting the pound. The situation is similar with incentives in the United States. On the one hand, Republicans say that $2.2 trillion is not a subject for conversation in principle, but on the other hand, they offered $1.6 billion package. Democrats ultimately do not vote on their bill, hoping to vote for that version, which will have a chance of passing the Senate and Trump. But at the same time, they note that $1.6 billion is a half-hearted measure, and there is no point in agreeing to it. As a result, the question continues to hang in the air. As a reminder, we believe that the parties will not come to an agreement before the US elections, which means that the current growth of the US stock market is an excellent opportunity to sell higher. With the US labor market, everything is far from clear as well. On the one hand, the numbers from ADP and statistics on jobless claims set up positive expectations. On the other hand, massive layoffs by Disney, Shell, American Airlines and a number of other large companies, coupled with a sharp increase in the number of bankruptcies in the United States, speaks in favor of a serious crisis in the US labor market. In general, Friday may well be the day when answers to all the main questions of the week will be found. This means that potentially financial markets can literally explode. 200-300 or even more pips for pound pairs are quite possible today. The same goes for the behavior of the US stock market, gold prices, etc. In general, we are preparing for a very busy day and do not forget that today the dynamics will be directly determined by factors of a fundamental nature. So, follow the news and make decisions after the facts.
DJ:DJIShort
by Trade24Fx
2
K-shape, ADP data, layoffs and bankruptciesSince the current week is the week of the US labor market data, let's talk about what is worth and what not to expect from Friday's statistics. Formally, yesterday's data from ADP tunes in a positive mood (+ 749K against the forecast of + 650K), but the real picture is somewhat different. The jobless claims figures show that there are still many months (at best) to return to normal. The number of people constantly receiving unemployment benefits is 6-7 higher than it was before the pandemic. One of the consequences of the pandemic and the economic crisis was a sharp increase in the number of bankruptcies and mass layoffs by leading companies. A recent example is Disney's firing of 28,000 employees. With about 6,000 stores closed in retail alone in the US, Disney's numbers are just the top of the iceberg. So it is extremely naive to expect a sharp increase in the number of new jobs against such a background. The illusion of a rapid economic recovery (the so-called V-shape) is becoming less visible every day (only Trump and the Republicans see it now). It is more appropriate to speak of either the W-form or the K-form. The gist of the latter is that the stock market may be doing well and rich people are recovering relatively quickly, but for others the situation is very different. Since the “others” are millions of low-paid workers, there is no reason to expect a breakthrough in the labor market. Democrats, meanwhile, continue to try to realize their vision of the economic recovery package. Judging by the position of White House Economic Adviser Larry Kudlow, who was skeptical about the need for such a large package, there is little chance of its approval in the Senate. Still negotiations with Mnuchin are in progress and markets prefer to think that chances are.
TVC:DXYLong
by Trade24Fx
12
Winter is Coming, stimulus and Presidential Debate, BrexitThe number of deaths from coronavirus in the world has exceeded 1 million people. That is, in terms of the absolute number of deaths, the coronavirus is almost like tuberculosis and is close to deaths on the roads. And given how things are going and the fact that it is far from the end of the year and many experts say that winter can sharply intensify the incidence of diseases, there is every chance of catching up and overtaking diabetes and entering the top 5 causes of death in 2020. That in itself makes one think about the seriousness of the problem and its not far-fetched, as many still think. Democrats in the United States, meanwhile, have finalized their vision for the new stimulus package. We are talking about the aid package to the US economy in the amount of $ 2.2 trillion. (in the previous version of HEROES act it was $ 3.4 trillion), which will include $ 1,200 stimulus check; $ 600 Extra Federal Unemployment Benefit; State and City Aid ($ 436 billion); Small business support; Funding For Airline Industry Workers; Education and childcare ($ 225 billion); and other items covering election security, U.S. Postal Service funding, worker safety, food security, and coronavirus testing, tracing, and treatment. We have already noted that the chances of the adoption of the bill in this version are minimal, therefore the optimism associated with this aid package is clearly unfounded. The UK and the EU started the final round of talks yesterday. Financial markets are waiting for a breakthrough in the negotiation process. The chances of this are quite high, given that both parties need a deal. But the contradictions between the EU and Britain are very significant. So we will observe with interest the progress of the negotiations and their outcome. It was no less interesting to watch the US Presidential Debate yesterday. If we sum up the press, we get the following characteristics: the worst debate in history, disgrace, mess, circus. As it is not difficult to guess, the initiator of this was Trump, who was rude, constantly interrupted the opponent, lied and behaved extremely inappropriately, however, as usual.
FOREXCOM:NAS100Short
by Trade24Fx
1
Trump’s taxes, China slowdown, stock market risksAs the US Presidential Race reaches the final stage, the war of compromising evidences is gaining momentum. The attack of the Democrats at the start of the week looks pretty convincing. We are talking about information about the taxes paid by Trump, published by the New York Times. According to their information Trump in the year of his election, paid only $ 750 in income tax. Thus, almost any resident of the United States can now claim to have paid more taxes than the President. In addition, information appeared that Trump is losing millions of dollars on his golf courses and has hundreds of millions of debts that need to be paid off in the nearest future. Among other news, it is worth noting the return of optimism to the global stock markets. As a result, even the European stock markets have strengthened noticeably, and the Copenhagen Stock Exchange index was able to renew its historical highs. Note that the markets generally have no particular reason for optimism. Stimulus in the US are far from the adoption, the second wave in Europe has not gone away, the number of deaths from COVID-19 exceeded 1 mln, and the recovery of the Chinese economy, according to Bloomberg estimates, has slowed in September amid weak real estate and car sales, declining stock market, and deteriorating confidence in the business environment. That is, economic growth in China began to lose momentum. Morgan Stanley, meanwhile, named 4 main risks for the US stock market: budget crisis; the second wave of coronavirus in the United States; the exhaustion of the monetary policy potential and the Presidential elections of the US. So, the current rise in stock markets can be used as an opportunity to sell more expensive.
DJ:DJIShort
by Trade24Fx
5
Week in a Glance: best week for USD and worst for stock marketIn terms of price dynamics in financial markets, last week was the best since April for the US dollar and one of the worst for the US stock market this year. There were many reasons for this behavior of assets: the week started with a banking scandal, and ended with the second wave of the pandemic in Europe. In addition, the head of the Fed, Jerome Powell, spoke three times in Congress, urging Congressmen to adopt a new stimulus package to save the economy. We will talk about this and other events of the past week in this report. The week kicked off with the publication of an investigation by the International Consortium of Investigative Journalists (ICIJ), according to which several global banks were involved in transactions marked as possible money laundering. The total amount of these transactions exceeded $ 2 trillion over a nearly 20-year period. As a result, shares of these banks fell and pulled the stock market in general. According to BofA, the outflow of funds from the US stock market exceeded 26 billion, which was the third-largest weekly capital outflow on record. Our recommendation “sell” has worked well, but has not lost its relevance. A full-fledged second wave of the pandemic began in Europe, as a result, some countries reached absolutely record values of new cases per day (for example, France). So, the V-shape economic recovery in such conditions looks less and less probable and, at best, it is worth counting on the W-pattern. Against this backdrop, Fed Chairman Jerome Powell made three testimonies in Congress insisting on a new stimulus package. And it looks like his efforts were successful. Democrats have begun drafting a new stimulus bill that includes an estimated $ 2.4 trillion. The proposal could be voted on in the House of Representatives next week. However, there is a high probability that the Senate will block it again. Against this background, the dollar took full advantage of the status of a safe-haven asset and showed the best week since April. In general, while the Dollar Index is above 93.60, we do not see any threats for its further growth, and therefore this week we will look for opportunities to buy it. As for the coming week, the main event in terms of economic data will be the publication of statistics on the US labor market on Friday. In addition, a possible vote on the Democratic stimulus package and negotiations on Brexit will generate increased interest. Speaking about our recommendations for the week, in addition to buying the dollar, we will sell oil and gold, as well as look for opportunities to sell in the stock market.
TVC:USOILShort
by Trade24Fx
6
US unemployment and fake marketsYesterday's data on jobless claims (applications for unemployment benefits) gave further confirmation in favor of the fact that the "fast recovery" of the economy is a wishful thinking that cannot be passed off as real. And the point is not even that the data came out worse than forecasts, but that almost 4 months have passed since the United States formally left the lockdown, and the number of unemployed still remains 6-7 times higher than the pre-pandemic level (based on the Continuing Jobless Claims indicator). Not surprisingly, more and more analysts refuse to deny the obvious: the US stock market has completely lost touch with reality. The perpetrators of this gap are generally understandable - the central banks, which literally flooded the financial markets with money. As a result, markets ceased to perform one of their basic functions - informational. Since the current stock prices do not give any idea of what is happening in the economies. Michael Hartnett, chief investment strategist at Bank of America, suggests using the term “fake markets” to describe stock markets today. In general, it is difficult to disagree with him. Nevertheless, we believe that sooner or later this stage in their development will pass and the markets will return to normal existence. But this will not be possible without a radical reduction in prices. So, we continue to recommend selling on the US stock market. There was some news in favor of bulls in the US stock markets. Democrats in the U.S. House of Representatives are working on a $2.2 trillion coronavirus stimulus package that could be voted on next week. Another injection of money can lead to increase of demand in the market. Sales of new homes rose to their highest level in nearly 14 years in August which is also positive signal.
Short
by Trade24Fx
On business activity, oil prices and the W-formBusiness activity data from Markit were released yesterday, prompting markets to speculate about a W-shaped economic recovery. In Germany and Eurozone, the manufacturing sector continues to recover, but the services sector is experiencing problems (indices are below 50, that is, activity is declining). In the UK, the situation is generally better, but given the latest pandemic trends, one should not be too hopeful. In the US, both components are above 50, so buying the dollar against the euro and the pound remains the basic trading idea for the FOREX today. Given such data and current statistics on the pandemic in Europe and the world as a whole, the economic recovery may well take a W-shape. That is, after a rather sharp recovery in the summer, the economy will sink to the bottom again. So short positions in the overpriced stock markets are our trading ideas for today and the nearest future. As a result, the ECB, campaigning for additional stimulus. In particular, Board Member Fabio Panetta said on Tuesday that it would be better to do too much than too little. There are more and more voices from the Fed for additional support for the economy, but not by the Central Bank, but by the Government. As for commodity markets, the dollar's rise is a reason for gold and oil sales. Moreover, news from Libya (a sharp increase in oil exports from the country is expected) is definitely set up for oil sales. The data for oil reserves in the United States (according to EIA, again decreased by 1.6 million barrels) are unlikely to be able to change the situation on the market.
Short
by Trade24Fx
1
Mnuchin and Powell, remote work and the second waveThe situation with the pandemic in the world is not improving: in a number of countries it is significantly worsening. Last week we wrote that Israel has already introduced a second lockdown and it is far from a fact that it will be an exception. The second wave is increasingly covering Europe, especially the UK. As a result, the UK government asks citizens to work from home, and if the situation does not begin to improve in the near future, a new lockdown may also be introduced in the country. According to one of the country's top scientific advisers, the number of new cases in the UK by mid-October may exceed 50,000 (so far, the number is 4,000). So, sells of EURUSD and GBPUSD look like a promising idea today in the FOREX. In general, remote work is becoming a universal long-term phenomenon: many corporations, following the results of the first lockdowns, have come to the conclusion that this approach is cost-effective. Which, again, can radically change the current economic landscape in the world. In this light, for example, the return of demand in the oil market to pre-pandemic values becomes less and less likely, at least in the foreseeable future. According to Eurasia Group in 2020 global oil demand will decline by more than 10% from last year to about 90 million barrels per day (this will be the largest demand shock in the industry's history). So our recommendation to sell oil remains valid. The pandemic continues to generate heightened economic uncertainty. In this regard, US Treasury Secretary Steven Mnuchin and Fed Chairman Jerome Powell were testified in Congress yesterday. Both have expressed cautious optimism that the US economy is recovering from the recession caused by the pandemic. But the situation remains uncertain and the economy needs additional help from the government. In general, their speeches did not bring anything radical new. "Battery Day" for Tesla was not so successful (a decrease in the company's shares by 5% hints at this). On the one hand, the new batteries will help Tesla reduce the size of its cars by about 10% and increase their range by 56% (the total range will be about 800 km) and, in the future, bring the price down to $ 25,000. On the other hand, if all this becomes a reality, then not earlier than 2022.
Short
by Trade24Fx
Laundering scandal, battery day, UK and lockdownThe week for the US stock market started on a minor note. Not only because Friday close for Nasdaq below 11,000, which looked like a verdict to buyers (at least from the standpoint of the current market sentiments), but also because the International Consortium of Investigative Journalists (ICIJ) published the results of an investigation where JPMorgan Chase & Co., Deutsche Bank AG and several global banks have been involved in transactions flagged as possible money laundering. The total amount of these transactions exceeded $ 2 trillion over a nearly 20-year period. As a result, the shares of the banks mentioned in the report fell (shares of Deutsche Bank AG fell more than 7.5%, and shares of HSBC Holdings Plc fell to a 25-year low). This fall created the necessary background for the general decline in the US stock market. However, today Tesla may give reason for some optimism. Company on Tuesday is holding an annual meeting of shareholders timed to coincide with "battery day". Tesla as expected will announce details about its new type of battery cells. We will not be surprised by the growth of Tesla shares by the end of the day, but we believe that they are extremely overpriced. As for other trading ideas, in the foreign exchange market it is primarily the sale of the British pound. The country is on the verge of a second lockdown, will increase the downward pressure on the pound. Over the past 2-3 weeks, the number of new infections in the UK has increased several times and the process is clearly becoming uncontrollable. The dollar rose quite well yesterday by the end of the day, having tested the upper boundary of the Dollar Index mid-term range, which in itself is a reason for selling it. So, buy EURUSD today or sell USDJPY seems like a pretty good trading opportunities, as well as buy gold.
FOREXCOM:XAUUSDLong
by Trade24Fx
2
Week in a Glance: Fed and Bank of England, mega-deals and oilThe past week turned out to be very eventful with all sorts of fundamental events. Three leading central banks announced their decisions on the parameters of monetary policy in the USA, Japan and the UK. The OECD has updated its economic forecasts and Japan has a new Prime Minister. Oil showed its best week since June, and a number of mega-deals took place in the US stock market. We will talk about this and much more in today's review. The Fed, Bank of Japan and Bank of England left the parameters of monetary policy unchanged. And if the US Central Bank made it clear that zero rates are for a long time (at least until 2023), then the Bank of England decided to start discussing the issue of negative rates. For the pound, the news is more than negative, so this week we will continue to look for an opportunity to sell it intraday and mid-term, at least while there is no progress in the negotiations between the EU and the UK. Also we will buy the Japanese yen this week, as the new Prime Minister of Japan, Yoshihide Suga, was approved last week, who, as Shinzo Abe's right hand, should continue the current economic policy of Japan. The US stock market was also saturated. The reason is not only " the witching day" on Friday, when it was the day of expiration of futures and options contracts for major US stock indices, but also a large number of megadeals. For example, SnowFlake, which held the largest IPO of 2020 and the largest in the history of a software company. NVIDIA wants to buy British chip maker Arm from Japan's SoftBank Group Corp for $ 40 billion, and Gilead Sciences has offered to pay $ 21 billion for the biotech company Immunomedics. It is symptomatic that against the backdrop of all this (mega deals, ultra-soft Fed), as well as improved forecasts for economic growth in 2020 from the OECD, the Nasdaq index closed the week below 11,000 (a very negative signal for bulls). Since we have been systematically recommending sells in the US stock market, this signal for us is positive, it proves our rightness. Oil finished its best week since June. But we believe that this is just a reason for more aggressive sells, because now prices are just much better for this and nothing more. Last week OPEC lowered its forecasts for the oil demand in 2020. Same have done the International Energy Agency and British BP. Trafigura Group (the second largest oil trader in the world) warns that the oil market is again close to a surplus. As for the OPEC + meeting, we have an obvious failure in compliance (its level for the case of the UAE fell to 10%). Only the threats of Saudi Arabia to punish everyone can be treated as some positive for oil.
TVC:USOILShort
by Trade24Fx
2
Bank of England hits pound, jobless claims and OPEC meetingCentral Banks of Japan and England announced the results of their meetings yesterday. Following the Fed, they decided to leave the parameters of monetary policies unchanged. But at the same time, the Bank of England dealt a rather painful blow to the British pound, noting that it will intensify the discussion of negative interest rates due to the increased uncertainty in the economy. However, everything is unclear not only in England. Although the US economy is recovering, it has been doing it quite slowly lately. Yesterday's data on jobless claims is a vivid proof of this. On the one hand, the number of both primary and secondary applications has decreased. But, on the other hand, they are still several times higher than the pre-pandemic values. And if they continue to improve at such a pace, then it will take at least another six months to reach the pre-pandemic levels. Republicans and Democrats have not stopped trying to negotiate a new stimulus package for the United States. Perhaps there has been some breakthrough. At the very least, Trump's words that he is open to additional costs and the final package of $ 1.5 trillion are definitely a step towards a compromise with the Democrats. OPEC + members met online yesterday. Despite the downward revision of forecasts for oil demand, OPEC+ did not begin to expand the volumes of the voluntary production cuts. They can be understood because a number of countries do not even comply with the current obligations. According to the IEA, the UAE alone exceeded its oil production quotas in August by an average of 520,000 bpd. OPEC+ once again shook a finger at the violators. In total, nothing that can be interpreted as a reason for oil growth at the end of yesterday did not happen, which means that current prices are an excellent opportunity for sales.
Short
by Trade24Fx
1