Fundamental Forecast for Equity Indices: Bearish S&P 500 To conclude last week the market responded positively to the mixed June jobs report – while the headline NFP figure was a solid beat at +222k vs. the consensus estimate of +178k, wage growth (inflation indicator) was slightly lower to 2.5% YoY from the 2.6% expected. Looking ahead to next week, the big event will be Fed Chair Janet Yellen testifying before Congress and the U.S. House Panel on Wednesday, and then she’ll appear before the Senate Banking Panel on Thursday. Key data prints in the week ahead are CPI, Retail Sales, and UofM Confidence on Friday. Full details, chec...
The US enjoyed a gain of 222K jobs but wages remained stuck at 2.5% once again. What’s next? Here is their view, courtesy of eFXnews: CIBC Research comments on today’s US jobs report for the month of June: “US payrolls showed a significant rebound in employment, but still little progress in terms of wage inflation. The 222K gain in payrolls compared to a consensus forecast of 178K and was accompanied by a cumulative upward revision of 47K to the prior two months. While the unemployment rate ticked up to 4.4%, that was due to a rise in labour force participation. However, even with the return to strong employment gains following a few ...
AUD/USD The Australian dollar continues to be choppy, as the markets have been trying to form some type of ascending triangle. Ultimately, if we can break above the 0.7750 level, the market can go much higher. In the meantime, I think that short-term pullbacks may offer buying opportunities, but short-term at best. USD/JPY The US dollar broke higher during the week, slicing through the 113 level, and even breaking through the 114 level at one point. I believe that short-term pullbacks continue to be buying opportunities, as the central banks of the United States and Japan are diverging when it comes to interest rates. Longer-term I am bullish...
On June 26, the 10-year generic German yield closed at 24.5 basis points. It finished last week a little over 57 basis points. The similar Italian yield has risen 45 basis points to 2.05%. The short-end of the yield curve is constrained by the negative 40 basis point deposit rate. The steepening of the yield curve offsets the price erosion of banks’ bond holdings, and bank share price (in the Dow Jones Stoxx 600) have risen five percent during this period dramatic increase in long-term interest rates). The ECB continues to try to calibrate its communication with the evolving economy and its risk assessment. It appears that the confide...
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We’ve spent a fair amount of time discussing Canada’s housing market over the past several months as Chinese money laundering operations have sprouted up bubbles all over the place.Here’s a modest sampling of our recent work: All Hell Breaks Loose In Toronto’s House Price Bubble Canada’s Housing Bubble Explodes As Its Biggest Alternative Mortgage Lender Crashes Most In History Canada Housing Regulator Warns Of “Strong Evidence Of Housing-Market Problems” The Toronto Housing Market Is About To Collapse By This Measure But, as the Globe and Mail notes, there could very well be a “perfect storm&...
There are a few very high-impact news items scheduled this week, primarily affecting the Canadian Dollar, as well as the U.S. Dollar which is the most important currency in the Forex market. Therefore, volatility this week should be approximately the same, or maybe a little lower, than it was last week. The market will probably be most active on Wednesday and Thursday. Friday is a public holiday in France. U.S. Dollar It will be an important week for the greenback, starting on Wednesday with Janet Yellen’s testimony before the Congressional Financial Services Committee on the Fed’s Semiannual Monetary Policy Report, which continues into T...
The Canadian dollar recorded strong gains for a second straight week, as USD/CAD dropped 110 points. The pair closed at 1.2860, its lowest weekly close since June 2016. This week’s key event is the BoC Rate Statement. Here is an outlook on the major market-movers and an updated technical analysis for USD/CAD. Canadian employment data sparkled for a second straight week, as the economy added 45.3 thousand jobs, well above expectations. As well, the unemployment rate edged lower to 6.5%, down from 6.6%. In the US, the Federal Reserve minutes didn’t do much to raise investor confidence, unlike the upbeat rate statement in June. The min...
Fundamental Forecast for CNH: Neutral Mainland China Launches Bond Trading Link with Hong Kong Australian Dollar Gains Continue After Mixed China Caixin PMIs The Chinese Yuan retraced against the U.S. Dollar last week, but remained within an upward channel (downward for the USD/CNH). Both the July FOMC minutes and the Non-Farm Payrolls report added mixed moves to Dollar pairs, including the USD/CNH; neither was able to generate enough momentum to lead a major breakout in the USD/CNH. Looking forward, a heavy economic calendar has the Yuan at risk from home: Consumer Price Index (CPI), New Yuan Loans as well as China’s exports and import...
The good news is that Gold finally has departed its seemingly inescapable 1240-1280 box. The bad news is that such departure was beleagueredly to the south, price settling out the week yesterday (Friday) at 1212. To be sure, per the above opening panel, Gold’s performance in 2017 has turned from robust promise into no-thrust malaise, the yellow metal being booted about as a commodity rather than as the world’s longest-running, hard asset currency. That said, ’tis paramount not to dismiss what we below view as Gold’s most important graphic. Here we have millennium-to-date the tracks of the StateSide money supply ...