The US dollar is moving higher against nearly all the other major foreign currencies today. As far as we can tell, the driving force remains interest rate considerations. US rates are rising in absolute terms and about Europe and Japan. The US 10-year yield is moving above the downtrend that has been in place since the day after the Fed hiked rates last December. It is now near 2.53%.The US two-year yield is making new multiyear highs today. At the same time, official, investors and collateral-related demand for German paper have continued to widen the interest rate differential. The correlation (60-day, percentage change) between ...
The US Dollar is vulnerable to a sharp upside repricing if the Fed hikes rates at the March FOMC. Although the market has already swiftly repriced the likelihood of a March hike following the recent Fed comments, the pricing for the cumulative increase in rates over the next two years has only changed slightly. A hike in March could pave the way for two more hikes over 2017 if data remains consistent over the year. GBPUSD Considering the current environment in terms of tactical positioning and political risk, GBP looks like the best vehicle for expressing a long USD bias. Macro and monetary policy both suggest a lower GBPUSD rate with politic...
Most investors incorrectly think of “risk” as the possibility that the market value of a financial asset might fall below the amount that has been invested… OMG, how could this be happening! Wall Street does everything in its power to support such misconceptions. The ideas that lower market price = loss or bad and that higher prices = profit or good are the greatest risk creators of all. They invariably cause inappropriate actions by individuals and advisors who are less familiar with the ways of the investment gods than they should be. Risk is the reality of financial assets and markets: the current value of all “mar...
Bojangles, Inc. (BOJA), a national restaurant franchise company yesterday reported their fiscal fourth quarter and full year 2016 financial results. Bojangles reported fourth quarter adjusted earnings of $0.28 per share which beat analyst expectations of $0.21 per share. Bojangles reported fourth quarter revenues of $139.4 million which fell short of analyst expectations of $140.4 million. Bojangles, Inc. President’s Comments “We are pleased the Bojangles’® system has now achieved 27 consecutive quarters of comparable restaurant sales growth through the fourth fiscal quarter of 2016 and that Adjusted Diluted Net Income per Share gr...
S&P 500 The S&P 500 fell slightly during the day on Tuesday as we continue to see a bit of a malaise when it comes to the indices. However, I believe there is more than enough support just below to keep this market afloat, so I’m looking at this pullback award this grind sideways is an opportunity to pick up value. Given a supportive candle or a touch of the green 20-day exponential moving average, I’m willing to start buying at this point. I have no interest in shorting, and believe that the absolute “floor” in this market is the 2300 level, so I have no interest in selling into we break down below there. Quite frankly, I don...
S&P 500 The S&P 500 fell slightly during the day on Tuesday as we continue to see a bit of a malaise when it comes to the indices. However, I believe there is more than enough support just below to keep this market afloat, so I’m looking at this pullback award this grind sideways is an opportunity to pick up value. Given a supportive candle or a touch of the green 20-day exponential moving average, I’m willing to start buying at this point. I have no interest in shorting, and believe that the absolute “floor” in this market is the 2300 level, so I have no interest in selling into we break down below there. Quite frankly, I don...
EURUSD intra-day analysis EURUSD (1.0563): EURUSD was seen retracing the gains made from last Friday with price action likely to test 1.0551 sometime today. Establishing support here could put the bias balanced on both sides, with the scope of a rally that could see 1.0700 being tested while a breach of 1.0551 could trigger a move to 1.0500 at the minimum. EURUSD is unlikely to make any major moves today ahead of tomorrow’s ECB meeting. No changes are expected from the central bank, but the markets are expecting a hint of hawkishness from the central bank. EURCAD intra-day analysis EURCAD (1.4163): EURCAD was bearish yesterday coming o...
Defense stocks have been rallying since the election on hopes of a big boost in military spending. In his address to the Congress, President Trump said that his upcoming budget would seek “one of the largest increases in national defense spending in American history.” The budget is expected to be released later this month. Trump is also expected to put pressure on other NATO member nations to step up defense spending. He has also said that China could easily tackle the nuclear threat from North Korea if they wanted to, thus putting pressure on China. And, North Korea continues to pursue nuclear development, escalating geopolitical tension...
Markets are anxious about several upcoming European elections, all featuring anti-European Union (EU) or anti-euro parties. Last year proved upsets can happen, but we believe European near-term political risks are probably overstated. Written by Richard Turnill (BlackRockBlog.com) The Netherlands holds elections next week, soon to be followed by France, and later Germany and Italy. We are most focused on the outcomes in France and Italy, where populist parties could potentially gain power. Government yields there are up sharply, as evident in the chart below, with spreads at some of the widest levels since the eurozone sovereign debt crisis. ...
Surveys Confirm That Analysts Are Expecting 3 Rate Hikes in 2017….. The time is nigh for rate hikes. On Tuesday, 13 March and Wednesday, 14 March, the Fed FOMC will be meeting to plot out the course of monetary policy vis-à-vis the Federal Funds Rate. The CME Group FedWatch tool now indicates an 86.4% probability of interest rates rising by 25-basis points on Wednesday, 15 March. This is up from 84.1% on Monday, 6 March 2017. With a rate hike all but assured, the more pertinent question is how this will affect binary options trading activity. For starters, we can limit our focus to 3 key areas: the USD, commodities, and Wall Street equitie...