Fundamental Forecast for Japanese Yen: Bearish USD/JPY is quickly approaching the May-high (114.37) ahead of the semi-annual Humphrey-Hawkins testimony, with the pair at risk for a larger advance as the Federal Open Market Committee (FOMC) appears to be on course to further normalize monetary policy in 2017. Fresh comments from Chair Janet Yellen may ultimately yield a bullish reaction in the greenback as Fed officials hold a growing discussion to unload the balance sheet over the coming months. With the economy now projected to expand an annualized 2.2% this year, the central bank head may endorse a more aggressive approach in normalizin...
Life can be difficult for a financial market trader, particularly in the current economic climate. From Donald Trump’s chaotic Presidency in the U.S. to the host of geopolitical conflicts unfolding across the globe, it is almost impossible for even the most deterministic of investors to remain focused on executing their strategies. It is important to remember that the financial markets often gauge the pulse of the economy as a whole, however, meaning that investors who remain focused on the performance of their assets ultimately have the best of identifying long-term trends and making informed decisions. What Are the Markets Really Te...
It’s never easy when bonds and stocks decline at the same time, but despite the much-publicized death of the “risk parity” strategy, I don’t think the past few weeks’ price action qualifies as decisive evidence. After all, the S&P 500 is down a mere 0.6% from its peak in the beginning of June, while US 10-year futures are off only 1.5%. In writing this, though, I remember that many punters in this business use leverage. This acts as an accelerant not only for the volatility of their PnLs, but also for the speed with which a meme can take hold in the peanut gallery. I sympathize with the plight of bond trader...
How does one explain the current political divide? In part, this is done by looking at winners and losers in the process of globalization, a recent Barclays report noted. “The middle class in advanced economies whose income stagnated.” In fact, those that “voted for Trump” have seen the sharp end of the sword, while “global elites” who benefit from capital mobility have flourished. While this is the headline that has ushered in a wave of populism across the developed world, there is a bright side to trade theory and benefits will accrue all, Barclays researcher Christian Keller reassures that in this age of hyperglobalization thi...
Bank stocks have experienced a fairly dramatic turnaround since the beginning of last month, with a number of major bank stocks trading at or near their highs for the year. The Zacks Major Banks industry, which includes all the money-center banks and big regionals like JPMorgan (JPM – Free Report) and PNC Financial (PNC – Free Report) that kick-off the Q2 earnings season for the industry on Friday July 14th, is now up +7%on the year, closing the gap with the S&P 500 index’s +7.8% year-to-date gain. But as you can see in the chart below, the industry has handily outperformed the broader market since early June (blue l...
Not feeling terribly inspired on this quiet Sunday, so I’ll just share with you a couple of positions I’ve got focused on bond funds. The first of these is the high-yield bond fund symbol HYG, which broken beneath this massive pattern below and has been in the throes of rolling over for some time now. Looking closely, you can see the failure of the blue trendline and the going-nowhere-fast action of the past few weeks. A failure of the green horizontal line would really get things kicking. I’ve got an especially large short position in the emerging markets bond fund, below. The channel goes back for years, and even though we’ve alread...
2Q17 earnings season kicks off next Friday with four banks – Citi, JPM, Wells And PNC – reporting results, accounting for roughly 5% of the S&P 500 by market cap. 89% of the S&P 500 is expected to report earnings by August 4th. And while most analysts expects a beat vs. consensus (+7% EPS) in 2Q, BofA warns that analysts’ forecasts continue to look overly optimistic for the 2H, particularly in 4Q. After an “as good as it gets” 1Q17 (EPS growth hit a five-year high, sales growth was the best in over two years, and beats hit a 13-year high) largely thanks to a rebound in energy profits, decelerating trends are expecte...
Fundamental Forecast for the Euro: Bullish EUR/USD Resilience to Recur as ECB Mulls Easing Bias. EUR/USD Technical Analysis: Two-Year Trend Resistance Under Fire. IG Client Sentiment is at -3.35-to-1, as of this writing. Given retail sentiment’s contrarian nature, this is bullish for EUR/USD The European taper tantrum has continued into another week, and Euro interest rate forwards are now pricing in two ten-basis point hikes going out to the end of next year; specifically around ECB meetings in July and December of 2018. This is a stark contrast to just a month ago, when there were no hikes expected over this same period. As we discusse...
The Nasdaq has been hitting some tough days. These days enable setups to show up. One of these setups is Essent Group (ESNT), a mortgage lender, which is surprising. Look for a breakout of the highs and look to risk a small portion of your account size to see if the break out will continue. In trend following in many cases, stocks break out and then break down. This is reality. Keep your losses small…have a watch list....