Latest Posts
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Finance 0
Bi-Weekly Economic Review: The New Normal Continues
There has been a lot of talk about the economic impact of the recent tax reform. All of it, including the analyses that include lots of fancy math, amounts to nothing more than speculation, usually informed by little more than the political bias of the analyst. I am guilty of that too to some degree but I don’t let my personal political views dictate how I view the economy for purposes of investing. I am, to put it mildly, a skeptic. I don’t believe half of what I hear from politicians or economists – sadly not that much different these days – and even less of what I hear from Wall Street. I rely on the markets – the wisdom of crowd... -
Finance 0
What Lies Ahead For Treasury ETFs?
U.S. Treasury yields have been somewhat seesawing as a multitude of factors impact the markets at the moment. The economy registered strong jobs growth in February, while wage growth has been soft. Initially, Treasury yields scaled higher on strength in jobs data, only to fall following strong demand for government debt auctions. Widening budget deficits owing to President Trump’s tax reform and an increase in government spending have driven government debt issuance to record highs. Bond prices move inverse to bond yields. What’s Moving Yields? The U.S. economy added 313,000 jobs in February — the highest since July 2016 — compared wi... -
Finance 0
It’s A Trader’s Market Now
February volatility has clearly signaled a regime change. We’re no longer in a market that rewards ‘hodlers’ to think less and hold more. It’s a traders market now. The S&P finally snapped that ridiculous no pullback streak we’ve all been watching on Fintwit. (Picture below via Bespoke.) And that break caused the largest short volatility unwind in the history of the VIX complex. The one day move on February 5th set records for the largest point move and percentage move in the VIX index. This includes data from the 2008 financial crisis. This up move caused the VIX futures term structure to trade at levels last seen in the ... -
Finance 0
China Toward Sustainable Growth
In the past, Chinese growth was too much fueled by credit. Now it is becoming more sustainable and the emphasis is shifting on living standards, poverty reduction, and environmental protection. In his annual work report, Chinese Premier Li Keqiang said on Monday that China aims to expand its economy by around 6.5 percent this year, or the same as in 2017. However, numbers do not tell the full story. In the past, credit growth was almost twice as high as the growth rate. Now the government’s attention is on credit risks and higher-quality growth. The latter is exemplified by rising per capita incomes, eradication of poverty and the struggle ... -
Finance 0
Strong U.S. Retail Sales Report To Tame EUR/USD Rebound
TRADING THE NEWS: U.S. RETAIL SALES A 0.3% rise in U.S. Retail Sales may spark a limited reaction as it does little to alter the monetary policy outlook, but a marked rebound in household consumption may curb the recent advance in EUR/USD as it boosts the outlook for growth and inflation. Signs of growing demand should keep the Federal Open Market Committee (FOMC) on course to further normalize monetary policy in 2018 as ‘members expected that economic conditions would evolve in a manner that would warrant further gradual increases in the federal funds rate,’ and a positive development may generate a bullish reaction in the greenback as... -
Finance 0
The Big Four Economic Indicators: February Nonfarm Employment
Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method. There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process. They are: Nonfarm Employment Industrial Production Real Retail Sales Real Personal Income (excluding Transfer Receipts) The Latest Indicator Data This commentary has been updated to include Friday morning’s release of Nonf... -
Finance 0
The Big Four Economic Indicators: February Nonfarm Employment
Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method. There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process. They are: Nonfarm Employment Industrial Production Real Retail Sales Real Personal Income (excluding Transfer Receipts) The Latest Indicator Data This commentary has been updated to include Friday morning’s release of Nonf... -
Finance 0
Above The 40 – Here We Go Again – Stock Market Trips Over Trade War Talk
AT40 = 48.7% of stocks are trading above their respective 40-day moving averages (DMAs)AT200 = 51.9% of stocks are trading above their respective 200DMAsVIX = 16.4Short-term Trading Call: bullish Commentary It’s like deja vu again. The smoke just barely cleared from defusing Trump’s tripwire over trade wars, and now the market is wrestling with rumors that President Trump is considering tariffs on $60B in Chinese exports to the U.S. The headlines helped disturb a strong start to the trading day (I suppose Trump’s abrupt firing of Secretary of State Rex Tilerson added more negative weight to the day as well). The day ended for tech ... -
Finance 0
AUD/USD Daily Analysis – Wednesday, March 14
AUD/USD stays above a bullish trend line on its 4-hour and remains in the uptrend from 0.7712. As long as the trend line support holds, the uptrend could be expected to continue and next target would be at 0.7950 area. On the downside, a clear break below the trend line support would suggest that the upside move had completed at 0.7897 already, then another fall towards 0.7600 could be seen.... -
Finance 0
Dollar Bear Celebrates Disappointing CPI
Gold rallied 1000pts after the disappointing US CPI, will the rally continue? Fed is not under any immediate pressure to accelerate tightening of monetary policy after the CPI reading overnight. February CPI headline is in-line with consensus expectations, rising 0.2% after a 0.5% increase in January, and 2.2% y/y from a 2.1% gain in the previous month Latest CPI data will have little impact on March FOMC meeting, at which Fed Chairman Jerome Powell is broadly expected to raise rates by 25 bps – There are be concerns that the White House may have just become a less business-friendly place which fuelled a palpable sense of risk a...
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