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Blue Wave, Lockdowns, Israel and Libya Yesterday can be called the calm before the storm. At the very least, there were no particular reasons for the recovery that were observed across the entire spectrum of financial markets. Europe is closing more and more. Austria, Spain, Italy, Greece, Belgium and other countries have already joined France, Great Britain, Germany, Ireland or are at the stage of accession. The obvious candidate for joining this list is the United States, which last week reached a new all-time high of 100K new cases per day (Anthony Fauci's prophecy came true). Looking at all this, we would like to discuss the case of Israel, which introduced the lockdown on September 25th. No one understood why Israel went to the second murder of the economy. But the fact is that if at the time of the lockdown start the number of new cases per day exceeded 10K, then just in a month it dropped to 500 cases per day, that is, 20 (!) times less. So, Israel is a clear illustration of how everyone should have acted a month ago, and also why further lockdowns are inevitable. Today, despite all the optimism of vaccine manufacturers, lockdowns are the only way to bring the pandemic under control. We have written about the economic consequences of lockdowns more than once. Let's just note that yesterday's growth in oil prices is a reason for buying and nothing more. Especially considering the latest news from Libya. In just 3 weeks, the country was able to increase production from 100K b / d to 800K b / d and is not going to stop there for now. As for today, its main event, without a doubt, is the US elections. Judging by the polls, the analysis of bookmaker bets and the modeling results, the so-called "blue wave" is coming, that is, the Democrats have every chance to take control of not only the White House and the House of Representatives, but even the Senate. And this means tectonic shifts in everything. So, “2020” is unlikely to stop in the foreseeable future.
TVC:USOILShort
by Trade24Fx
Week in a Glance: European lockdowns, US GDP and earnings seasonThe past week turned out to be extremely eventful with very important fundamental events. Its main result was a radical change in market sentiments. Neither record GDP growth rates in the US and the Eurozone, nor excellent reporting by US corporations could change the negative mood. We will talk about this and much more in today's review. After it became finally clear at the start of the week that there would be no new stimulus before the elections in the United States, and the second wave of the pandemic totally covers Europe and the United States, market sentiments changed radically. The massive exodus from risky assets triggered a sell-off in the stock and commodity markets. In the foreign exchange market, the dollar was restoring its previously lost positions. An additional injection of negativity was given by France and Germany, which announced new lockdowns. During this weekend UK and Ausrtia joined them. And if Germany is still talking about a partial restrictions (restaurants, bars, cinemas, theaters and some other similar objects are closed), then France is breaking bad, introducing measures similar to those provided in the spring. The French Ministry of Finance estimates that it will cost the country a 15% drop in economic activity. Negative sentiments could not break either the record figures for GDP growth in the US (+ 33.1%) and the Eurozone (+ 12.7%), or excellent reporting from leading US corporations: Amazon, Alphabet, Facebook, Apple and many others. The commodity markets were also under pressure. In particular, the oil market, for which last week was remembered for a sharp increase in oil stocks in the United States, the announcement of an increase in Libya's production to 1 million barrels per day and a ripening split in OPEC + (Iraq, the United Arab Emirates (UAE) and Kuwait do not want to maintain production restrictions in 7.7 million b / d in 2021). The central banks of Europe, Japan and Canada did not try to turn the tide and left the parameters of monetary policies unchanged. The ECB, for example, decided to take a break until December, when, apparently, a decision will be made on further easing of monetary policy. The coming week is not going to be easy. Everything will begin with the elections in the United States (Presidential and Parliamentary), will continue with the announcement of the results of the meetings of the FRS and the Bank of England, and will end with statistics on the US labor market. Perhaps these events will be able to reverse the current trends and sentiments, but for now, other things being equal, we continue to sell on the US stock market, as well as on the commodity markets. In the foreign exchange market, we give preference to buying the dollar.
DJ:DJIShort
by Trade24Fx
1
Recovery day is over and uncertainty lies aheadThursday was a recovery day after Wednesday's sales. The reasons for the pause were the peak of the earnings season in the US, as well as the US GDP data. US GDP growth in the third quarter exceeded the average expectations of analysts and amounted to a record 33.1%. However, this figure should not be taken as a sign of the end of the problems in the US and world economies. US GDP is still in the red for the year. Given how the situation with the pandemic is developing, there is practically no chance that the US economy will end 2020 in positive territory. But China will most likely end the year in plus. But even this victory is very questionable. Because the rate of growth that is expected will be the lowest for China over the last 40 years. In general, everything is bad everywhere. And the earnings of Apple, Amazon, Alphabet, as well as Facebook, which has traditionally exceeded analysts' expectations, should not be taken as a change from recession to growth. The third quarter and the growth of the economy in it are not the merit of the economy as such, but of money injections from the US Government (CARES act) and the US Federal Reserve. The problem is that since August the US has been living without artificial feeding. The question of stimulus is closed before the elections, and what will happen after them is still unknown. The ECB, as expected, did not change the vector and parameters of monetary policy in the Eurozone yesterday. In fact, the decision was postponed to December - expansion of the quantitative easing program or even more radical measures to support the economy are expected. So the euro continues to be under pressure from pandemic news and information about new restrictions. However, today the euro may receive support from the data on the Eurozone GDP. After yesterday's US data, there is every expectation of exceeding forecasts. But then again, today's data will change little in general. The next month or two (at best), the European economy will suffer heavy losses.
DJ:DJIShort
by Trade24Fx
Acceptance stage, US GDP and ECB meetingJudging by what happened in the financial markets yesterday, the stage of acceptance is finally coming. All those fairly logical and obvious things that we have mentioned over the past weeks and which have been so stubbornly ignored by financial markets are beginning to be realized in prices. Rise of the Japanese yen, a drop in US Treasury yields, an increase in the Fear Index, a fall in stock markets, a selloff in commodity markets - literally no matter what metric you look at, it becomes clear that the markets no longer have the strength to ignore the obvious. The pandemic is gaining momentum, countries are closing with all that it implies. The funny thing is that all this had already happened this spring. It's amazing how short memory markets are. The last hope for buyers of risky assets is today's data on US GDP. The numbers promise to be the best ever recorded, which in theory could inspire optimists. We remain in the camp of realists who know how to calculate 2 + 2 and understand that after falling by 31%, an increase of 31% will not return the indicator to the starting point. Another hope, perhaps, is the earnings season. Apple, Amazon, Alphabet and Facebook are reporting today. These companies generally benefit from the pandemic rather than lose, their financial performance can help maintain the illusion of a bright present and an optimistic future. However, it is more than wrong to take their results at face value, that is, in the context of the market as a whole. Another important event of today will be the announcement of the ECB meeting results. The most likely outcome will be concerns about the uncertainty surrounding the pandemic, as well as guidance on further actions in December. In any case, the ECB is unlikely to bring support for the euro.
DJ:DJIShort
by Trade24Fx
3
Peak of the earnings season is close and million bpd from LibyaThe earnings season in the US is approaching its peak (it will happen on Thursday). But it is already clear that it will not be a super-breakthrough, as many believed on the eve of its launch. Yes, analysts' expectations were again greatly underestimated, as a result the companies demonstrate results better than forecasts. But better than forecasts does not mean that the data itself is positive. It is much more correct to use the same period of the last year as a basis for comparison. This will give a more or less real idea of what is happening with the company, taking into account the seasonality factor typical for a number of businesses. For example, BP's profit in the third quarter increased by 100%+ compared to the second quarter. Which without a doubt looks very impressive. But there is one "but". The current $ 100 million in profit compared to $ 2.3 billion in Q3 2019 is not 100% + growth, but a 95% + drop. So it turns out there is nothing to be happy about. But let’s get back to earnigns season. Caterpillar's revenue fell by almost a quarter, while profits fell more than 50%. Restaurant Brands International (Burger King owner) revenues have declined, so have profits. Not even Pfizer was pleased, with Q3 2020 revenues of $ 12.1 billion, down $ 549 million, or 4%, from the previous year's quarter. In general, such earnings cannot be called breakthrough. This means that sales on the US stock market do not lose their relevance. Libya has been the main newsmaker on the oil market for the last 2-3 weeks. During this period, the country has increased production from 100K b / d to 500K b / d (that is, production increased by 5 times). But this seemed not enough to Libya, and just a few days ago the National Oil Company announced that it plans to increase production to 1 million b / d within a month. Considering that hopes for an increase in demand in the current pandemic conditions are fading, a sharp increase in production by Libya is a very powerful bearish signal for the oil market. So keep on selling oil. In terms of news, the present day is interesting because of the announcement of the results of the Bank of Canada meeting. The rate will clearly not be changed and the maximum that can be expected is concerned comments about the uncertainty associated with the current pandemic situation.
TVC:USOILShort
by Trade24Fx
SAP failure, new lockdowns and the end of the stimulusThe biggest week of the Q3 earnings season started with a very minor chord. SAP lost about $ 30 billion (!) of capitalization after the publication of quarterly reports and the fall of shares by 17%. The German software maker (also one of the largest technology companies in Europe) said it is going to reverse its business to the cloud technilogies. This will inevitably hit the financial results of the company for the foreseeable future, but it is a sacrifice that must be made in order to ensure survival in the future (according to the head of the company Christian Klein). Well, the markets didn't like the idea of making sacrifices here and now. In general, the news is very symptomatic and indicative, because this week in the USA almost all FAANG companies will report. After the second wave of the pandemic, a second wave of lockdowns starts in Europe. Following Ireland and the Czech Republic, the ranks of countries with maximum restrictive measures were replenished with Spain (a state of emergency with a curfew was introduced almost throughout the country). Next in line are Italy (they have already introduced the closure of bars and restaurants at 18:00 across the country) and France (the night curfew has been extended, but more stringent measures are not far off). The question of stimulus in the US is formally closed until the elections. Simply because the Senate ended its session yesterday and the senators left Washington. Yes, hypothetically there is the possibility of an urgent recall within 24 hours. But in fact, we have what we have. More precisely, what we don’t have. We don’t have an accepted stimulus package. Given the current pandemic situation in the United States (new all-time highs in the number of new cases were recorded over the weekend) and the obvious consequences of this for the economy, the failure of stimulus is a direct signal for selling in the US stock market. In general, the pandemic ring is shrinking at the neck of the world economy, which means that you can more actively sell in the commodity markets. One can start with oil and palladium, and continue with soybeans and corn.
DJ:DJIShort
by Trade24Fx
4
Week in a Glance: pandemic, no stimulus, but Britain is backThe past week was marked by the pandemic reaching a fundamentally new level. The situation in Europe is many times worse than in the spring, and what is most regrettable is that every day everything is only getting worse. The United States seems to be entering the third wave, and the world as a whole records 400K new cases per day. The announcement of lockdowns by Ireland, Wales and the Czech Republic was quite expected. In addition, some regions of the UK have moved to the maximum level of restrictions. And these are just the first signs. The situation will clearly continue to deteriorate for the foreseeable future. The news that remdesevir has been approved as a cure for coronavirus in the United States do not change anything, just because the effectiveness of the drug is more than questionable. The only thing remdesevir is good for, judging by the research results, is to speed up the healing process somewhat. The start of Pfizer vaccine production before the end of the third phase of testing is encouraging news, but again, it will not solve the problem either here and now or in the coming months. And against the backdrop of all this negativity, Democrats and Republicans in the United States have not been able to agree on a stimulus package for the economy. As expected, everything is postponed until the elections. By the way, about the elections. The debate last week failed to help Trump bridge even part of the gap. A week before the vote, his chances look just as elusive and slim. In general, the US stock market is in danger, as are the commodity markets. So this week we will continue to sell on the US stock market as well as in the oil market. Sales of palladium and a number of grains such as soybeans and corn also look promising. Perhaps the only positive news last week was the return of Great Britain to the negotiating table. But so far, this has not led to the emergence of a trade agreement. So, there is nothing to be happy at. The coming week should finally bury the chances of stimulus in the US before the elections. Breakthrough on Brexit is possible, but is unlikely. In addition, data on US and Eurozone GDP for the third quarter will be published. Considering that analysts' forecasts promise the maximum quarterly growth of indicators for the entire history, this is almost the only hope of buyers in the US stock market. Although no, there is one more - the earnigns season in the United States. This week, the largest corporations in the world are reporting, including almost all of FAANG, so this week will definitely not be bored.
DJ:DJIShort
by Trade24Fx
4
Nobody cares about data, and pauses drag onYesterday's data on jobless claims in the US clearly showed that the markets are now interested in nothing but stimulus in the US. The jobless data came out, if not excellent, then certainly good. At least in terms of tendency. The number of individuals who are currently receiving unemployment benefits fell by a million during the week, and initial ones decreased by more than 50K, dropping below 800K. This is certainly the reason for the growth of the US stock market. But no. The data was ignored completely. The reason for this behavior is that now everything is lost against the background of the global focus - the fate of the stimulus package in the United States. Everyone is tired of this topic, but Democrats, the White House and Republicans continue to pull rubber. The formal reason is the search for a compromise. Real - no one needs an agreement right now on the eve of the elections, because stimulus will give political dividends to the side that shouts first that they won. Given that initially the initiative came from the Democrats, it is clear that they will ascribe to themselves the laurels of the savior of the US economy. The Republicans, who, judging by the polls, are already losing on all fronts, starting from the presidency, ending with the House of Representatives and the Senate, are not interested in this. Especially when you consider that their only chance is the Senate. In general, we continue to bet on the fact that there will be no stimulus before the elections, which means that the US stock market will remain under permanent downward pressure. Moreover, the earnings season cannot yet be called super-successful. The airlines have shown that the depression in the air transportation market is still deep and the companies are by and large on the verge of bankruptcy. Even Coca-Cola had to admit that the closure of cinemas and other entertainment establishments had a negative impact on their financial results. There is also no clarity on the Brexit fronts. Although the sides returned to the negotiating table, there was no breakthrough after that. And it is hardly worth expecting it in the next few days. So, the growth of the pound can be used to sell it. However, the decline will be a reason for buying. Naturally, subject to the status quo in the negotiation process.
DJ:DJIShort
by Trade24Fx
Dead deadlines: Britain Returns, Trump Blames, Oil fallsThe main fun of recent times among the main newsmakers is to outline deadlines and break them. For example, Johnson said that if there is no agreement before the EU summit, the UK will leave the negotiation process. But the EU and the UK continue to negotiate. For example, yesterday's growth in the pound is a direct result of the UK's return to the negotiating table. Apparently, the British did outlast the EU. At least if you believe Barné's statement that the EU will change its approach to negotiations and begin work on a detailed text of the agreement. It's not just the UK that enjoys setting deadlines and breaking them. Democrats in the United States, represented by Pelosi, promised on Tuesday either to end the negotiation process or to conclude an agreement. There is no agreement, but the negotiation process continues. As a result, the markets still hope for something. And after all, the Republicans from the Senate have declared that they will not vote for the option of the deal from the Democrats (at least until the elections), but hope dies last. However, you cannot trust anyone: neither Democrats nor Republicans. Especially after yesterday's demarche by Trump, who literally the day before called on everyone to get together and reach an agreement, and now he himself is destroying all agreements (meaning his tweet, in which he accused the Democrats of unwillingness to help the US economy). So, all that remains is to wait, since the wait will not be long. The fate of the dollar and the stock market directly depends on the outcome of the negotiations. Their failure is the reason for the growth of the dollar and sales in the US stock market. Conversely, success in negotiations will inject positive buyers in the stock market and trigger a new round of dollar sell-offs. The oil market finally got off the ground and showed a significant decline. We have already outlined the reasons more than once in our previous reviews. This once again underlines the fact that with our forecasts we are at least one step ahead of the markets, which are rather slow to react, but still react. The rest of the news was traditionally lost against the background of these mega newsmakers. Today, it is also interesting to follow the data on jobless claims in the US, as well as the continuation of the earnigns season.
Short
by Trade24Fx
2
Sitmulus (again), new lockdowns and oil pricesThe deadline for agreeing on a large stimulus package for the US economy expired yesterday. Republicans and Democrats have not been able to agree (as expected). But at the same time, they continued to radiate optimism and assure that there will be a deal. Trump also added positively, saying that he wants a package larger in size than the Democrats are proposing. Let us remind you that this is the same person who ordered to withdraw from negotiations a couple of weeks ago, because the Democrats are asking too much. In general, schizophrenia as it is. Our trading positions are based on facts, but in fact there are no stimulus yet, so we continue to sell on the US stock market. Especially when you consider that the global pandemic continues to gain momentum, and Europe is already moving to new full-fledged lockdowns. In particular, Ireland and Wales broke down first and closed their economies. For example, Ireland closed the economy for 6 weeks. Taking into account that in Germany the number of new cases continues to update records, and France, Great Britain and other European countries have been doing this for several weeks, it is obvious that Ireland and Wales can become only the first swallows. In this light, sell in the oil market are getting more and more relevant. During the spring we already went through what do the lockdowns mean for the global oil demand. And if at that time the losses in demand were partially compensated by the countries that bought oil for future use due to ultra-low prices, now this support should not be expected (the prices are not the same, and the storage facilities are full). So, absolutely everything points in favor of an imminent drop in oil prices. The earnings season in the US continues. So far, it can hardly be called a breakthrough in terms of financial results. And the tactic of selling before publishing reports generally works much better than buying.
DJ:DJIShort
by Trade24Fx
5
Time expires: Pelosi’s 48 hours, Last Days of Brexit, OPEC+Markets are still interested only in two topics: stimulus in the US and Brexit. All other information is tangential. For example, the earnings season in the United States, China's GDP data (worse than forecasted, but still +4.9% compared to the same period last year in the current reality is just an excellent result), industrial production (+ 6.9% y / y ) and retail sales (+ 3.3% y / y), as well as retail sales in the US (last week they came out much higher than forecasted), a sharp deterioration in the epidemiological situation in the world. The only thing that pleases in all this: time is running out. The case of stimulus for the United States, according Democratic spokesman Nancy Pelosi expires in 48 hours (starting Monday) – if there will be no deal, the issue of stimulus will be closed until the elections, which means almost certainly until 2021. Brexit is also on the finish line. Despite Johnson's withdrawal from the negotiations, they continue and the markets are full of hopes for a deal. An additional reason for optimism is inspired by the expectation that the Internal Market law will be revised. But again, the countdown goes on. In theory, the deadline is early November. But in reality, at any moment the situation can change, so trading with the pound in such conditions is extremely risky, but interesting and promising. Meanwhile, yesterday the oil market was awaiting for the meeting of the OPEC + technical committee. But nothing radically new has happened. All the most interesting, obviously, has been postponed to December. When OPEC + will need to decide to keep 7.7 million bbl / d of voluntary production cuts, or, as previously agreed, increase production by another 2 million barrels per day. So, our recommendation is unchanged - we are actively selling oil from the current prices. Pfizer, meanwhile, took the lead in the vaccine race. The company is so confident in its vaccine that it has already begun mass production without waiting for regulatory approval. In this light, we cannot but remind that purchases of Pfizer shares are one of the few noteworthy purchases in the US stock market nowadays.
TVC:USOILShort
by Trade24Fx
6
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