Global Economic Intersection
Advertisement
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitIQ
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitIQ
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
Global Economic Intersection
No Result
View All Result

Global Markets: Top Market Movers,and Lessons for the Coming Week

admin by admin
February 25, 2014
in Uncategorized
0
0
SHARES
5
VIEWS
Share on FacebookShare on Twitter

by Cliff Wachtel, FX Empire

True Or False: Taper is to tightening as Foreplay is to….Technical and Fundamental Market Drivers And Lessons For The Coming Week And Beyond

GENERAL

Technical Picture: Global Indexes Hit Resistance, Indecision

A snapshot of our sample weekly charts of leading global stock indexes as of the week’s end (below) reveals a major issue for the week ahead.

indecisive


Weekly Charts Of Large Cap Global Indexes With 10 Week/200 Day EMA IN RED: LEFT COLUMN TOP TO BOTTOM: S&P 500, DJ 30, FTSE 100, MIDDLE: CAC 40, DJ EUR 50, DAX 30, RIGHT: HANG SENG, MSCI TAIWAN, NIKKEI 225

FOR S&P 500 AND DJ EUR 50 WEEKLY CHART OCTOBER 2012 – PRESENT:10 WEEK EMA Dark Blue, 20 WEEK EMA Yellow, 50 WEEK EMA Red, 100 WEEK EMA Light Blue, 200 WEEK EMA Violet, Double Bollinger Bands: Normal 2 Standard Deviations Green, 1 Standard Deviation Orange

Source: MetaQuotes Software Corp, www.fxempire.com, www.thesensibleguidetoforex.com

In short, markets have recovered their pre-EM crisis losses, are back near their multi-year or all time highs, and are waiting for a bullish or bearish catalyst to spark a breakout higher or another selloff (likely modest, similar to what we saw at the height of EM fears). In particular:

Note how US and European indexes mostly went nowhere, as indicated by frequent “doji star” weekly candles (shaped like “+) signs. This candle shape generally indicates indecision, and is especially significant when a trend hits major support or resistance, because it shows markets are respecting that resistance and are unlikely to break past it until they get a reason to do so.

Note also in the two charts in which we show double Bollinger bands, the S&P 500 and DJ STOXX50, both bellwethers of US and Europe respectively, not only do both display these dojis as they approach strong resistance of multi-year or all-time highs, they also rest at the edge of their double Bollinger band buy zones.

In sum, we’ve a double-indication that risk appetite is hitting its limits given the current outlook for the fundamentals that have fueled the rally: global growth, earnings, and central bank policy. This price level (the 1850 area on the S&P 500) has been repeatedly tested since December and has held firm, so until we get some material new fundamental drivers (better growth data, new easing?) the odds favor a period of flat range trading within the horizontal channel of the past month or so. On the S&P 500, that would be between the 1750-1850 area.

LIKELY CATALYSTS FOR THE NEXT MOVE?

The above begs the question of what will provide the next catalyst for either a decisive breakout above that strong resistance (like the 1850 zone on the S&P 500).

Here’s a brief rundown of potential big market movers this week.

Updates On Ukraine Default Prospects And Ramifications

On Friday Standard & Poor’s downgraded Ukraine’s credit rating from ‘CCC+’ to ‘CCC’, and warned that the nation is at risk of default. The current turmoil makes previously promised Russian aid uncertain, given that the Russian government’s support for Ukraine is tied to the ousted President Yanukovich’s political orientation away from the EU and toward Russia. While the EU and other Western sources of aid may yet be offered, details and conditions are unknown, leaving a real possibility of default on upcoming debt service payments.

The danger here is in the contagion risk if a default or even imminent risk of one undermines confidence and starts another EM crisis or interbank lending freeze to banks believed to have heavy Ukraine exposure. See here and here for further details.

Part Two of Fed Chair Testimony

Janet Yellen’s semi-annual monetary policy testimony before the Senate Banking Committee, which was rescheduled from last Thursday to this Thursday, could provide answers and new insights to such questions as:

  • Fed taper plans and what it would take to change them.
  • How much we can really blame the weather for the recent weak US data.

See below for more on the Fed

The Debate Over Connection Between US Slowdown and Weather

The US recovery story is under pressure as top-tier U.S. economic data points like employment, housing, and retail sales have been deteriorating in the U.S. over the past two or three months.

The big question is how much of that weakness has been due to unusually harsh winter weather, and thus how much deferred demand will be returned to these data points once the weather abates.

The stakes are high – if in fact the weakness is due to more longer term problems, the outlook for the US, and thus the global economy, would suffer a downgrade.

Goldman Sachs was out with a report last week claiming that the weather was to blame for a bit more than half of the slowdown, and thus that there is more long-term weakness in the US economy.

Even more ominously, it noted a rising frequency of such weather, implying that this degree of weather-related damage may not be such an aberration in the years ahead.

See here for further details.

Retail Earnings To Provide More Clarity on Weather Damage?

Earnings season is winding down, however coming earnings reports from retailers will be in focus as the weather has added to the sector’s many woes.

Retail earnings set for release next week include Home Depot Inc. (HD), Lowe’s Companies Inc. (LOW), Target Corp (TGT), Macy’s Inc. (M), TJX Companies (TJX), JC Penney Company Inc. (JCP), Best Buy Co Inc. (BBY) and Gap Inc. (GPS). Given that markets have proven willing to blame the weather for weak data, we doubt these reports have much downside potential. Earnings usually have little impact at this time, but if these surprise to the upside they might provide an excuse to rally, especially if the prior days were selloffs and markets are ready for at least a short technical bounce on any excuse.

Q4 Earnings: Good But Not Great, Nor Likely To Be Relevant

Per Reuters here, out of the 441 companies in the S&P 500 that have reported earnings through Friday, 65.3% of earnings were above analysts’ expectations, slightly below the 67% rate for the past four quarters, but above the 63 percent average since 1994.

Fed Groping For Direction & Bearish Implications

Last week, in parts 1 and 2 of our Lessons For The Coming Week series, we reported studies that contradict prevailing Fed and ECB policy, and by implication reminded readers that our leading central banks have much less knowledge than power. They are improvising as they go.

This is a lesson to remember so that you don’t take the current complacency at face value.

  • The current situation of global stock markets does not present an especially compelling value story:
  • Most leading global stock indexes near all-time highs
  • The global economy is at best in “slow recovery”
  • A real chance of a crisis in the EU, Japan, or EMs

Here’s a new reminder central bank policy failure risk from the past week.

Art Cashin, the veteran NYSE trader from UBS Financial Services warned here that the past years’ accumulated cash in banks from global stimulus presented a:

“…very dangerous situation. If that money were suddenly to get velocity, inflation could break out.

Conversely, by pushing on a string and not getting anything done, they may wind up being in a spot where, if the economy moves to stall-speed, we’ll get deflationary pressure. Yes, they’ve begun treating the patient with very, very drastic remedies, and my concern is: Is it ultimately damaging the body in a way that will bring back some of the horrors they tried to avoid?”

FOMC Minutes Key Take-Aways

The FOMC wants to ditch the 6.5% unemployment rate threshold to raise interest rates given that its rapid fall despite ongoing labor market weakness suggests it isn’t an accurate gauge of labor market strength needed to justify starting rate hikes. It’s just proving to be inconvenient as it implies coming rate hikes when the Fed doesn’t want to send that message yet.

The FOMC is uncertain how to change forward guidance, but main idea is that barring a sudden material change in the “slow but steady” US recovery story, taper continues but no rate hikes until mid-2015. Note that when anyone predicts a change 18 months ahead without some attempt to back it up with hard data, we suspect they’re really just guessing, as no one will remember what they said 18 months ago anyway.

The mere fact that interest rate hikes even entered the discussion was mildly bearish, as suggested by the WSJ’s chief Fed-watcher Jon Hilsenwrath

The Fed expressed more concern about low inflation, with some members wanting explicit language saying that it’s equally undesirable to have inflation persistently above or below the Fed’s 2% target.

In sum, don’t expect any changes to the pace of the QE taper or to interest rates from the Fed. There was nothing in the statement to suggest any change in the Fed’s taper policy, so we expect another $10 bln reduction to $65 bln/ month to be announced at the March meeting. However the Fed does appear to be groping for a change in how it communicates its message of continued taper and low rates. The 6.5% unemployment threshold by itself no longer signals coming rate increases because that level does not indicate enough labor market strength to justify wage increases.

Stocks were already completed half of their pullback for the day after the weak housing data, and only fell a bit more afterwards. So this potentially market moving event was not a big market mover given the lack of any material surprises.

As noted in our weekly review here, the modest drop in US stocks Wednesday was due to a combination of weaker housing data and the mildly bearish FOMC minutes, neither of these was a big market mover by itself.

Fed, PBOC QE

QE Giveth, Taper Taketh Away?

QE Taper May Not Be Tightening, But It Sure Feels That Way

Forget about the theoretical debate over whether QE is in fact tightening. The behavior of global markets since the start of the taper suggests the Fed and other central banks that seek to cut back stimulus are confronting a QE trap.

In other words, tapering may not be the same thing as tightening, it’s just having the same effects.

Back in an October article, we mentioned warnings from Nomura’s Richard Koo that central banks’ QE programs risked a nasty payback he called a “QE Trap.” In essence, Koo warned that the benefits of QE – faster recovery due to faster cuts in interest rates, came at a cost of a slower recovery and more volatile rates once the QE taper starts. See here for details.

Key Calendar Events

Overall there isn’t a lot of top tier EU data, and that leaves the pair to move more on two big US data points and overall risk appetite-driving events: The big events for the week are German inflation data, and US durable goods and preliminary CPI, as detailed below.

Monday

Germany: IFO business sentiment

EU: CPI – any surprisingly strong deflation signs increase the odds for some kind of ECB easing attempt, though as noted below about Friday, the odds of actual ECB action are much better if Germany is also feeling that pain.

Wednesday

US new home sales: a positive surprise could counteract the uniformly negative picture from last week’s housing data, though we’re more likely to see more of the same disappointment.

Thursday

US: Durable goods, weekly unemployment – durable goods is the more important of the two but either could help reverse the string of disappointing US economic data.

Friday

EU Flash CPI: Although EU CPI figures will also be reported, the one that matters is German CPI for February. Note well that the ECB has only actually acted against deflation threats when German inflation figures implied deflation: both the November 2013 rate cut and the July 2012 promise by ECB President Mario Draghi to do “whatever it takes” to save the Euro only came after Germany saw monthly deflation readings. This isn’t so surprising given that Germany is the chief obstacle to easing measures.

US: Preliminary GDP (expected to fall from 3.2% to 2.6%), pending home sales.

Saturday

China mfg PMI – is significant because it could move risk appetite up (bullish for the pair) or down.

To be added to Cliff’s email distribution list, just click here, and leave your name, email address, and request to be on the mailing list for alerts of future posts.

DISCLOSURE /DISCLAIMER: THE ABOVE IS FOR INFORMATIONAL PURPOSES ONLY, RESPONSIBILITY FOR ALL TRADING OR INVESTING DECISIONS LIES SOLELY WITH THE READER.


Previous Post

Gasoline Prices Rise Over Six Cents A Gallon

Next Post

A Few Thoughts on the Recent Deceleration of Student Loan Debt

Related Posts

eBay Unveils Sports-Themed NFT Collection
Business

eBay Unveils Sports-Themed NFT Collection

by John Wanguba
May 25, 2022
SpaceX To Get $1.7B In New Funding To Send Valuation to $127B
Business

SpaceX To Get $1.7B In New Funding To Send Valuation to $127B

by John Wanguba
May 25, 2022
Hyundai Signs Deal to Establish Full EV and Battery Factories in Georgia, US
Business

Hyundai Signs Deal to Establish Full EV and Battery Factories in Georgia, US

by John Wanguba
May 25, 2022
US Tech Giants Meta, Google, and Amazon Could Profit from Ukraine War – Media Guru
Business

US Tech Giants Meta, Google, and Amazon Could Profit from Ukraine War – Media Guru

by John Wanguba
May 25, 2022
Google Looks For New Talent To Lead Global Web3 Efforts
Business

Google Looks For New Talent To Lead Global Web3 Efforts

by John Wanguba
May 25, 2022
Next Post

A Few Thoughts on the Recent Deceleration of Student Loan Debt

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Browse by Category

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Browse by Tags

adoption altcoins banking Binance Bitcoin Bitcoin adoption Bitcoin market Bitcoin mining blockchain BTC business Coinbase crypto crypto adoption cryptocurrency crypto exchange crypto market crypto regulation decentralized finance DeFi digital assets Elon Musk ETH Ethereum Ethereum blockchain finance funding government investment market analysis Metaverse mining NFT NFT marketplace NFTs nonfungible tokens nonfungible tokens (NFTs) price analysis regulation Russia social media technology Tesla the US Twitter

Archives

  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • August 2010
  • August 2009

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized
Global Economic Intersection

After nearly 11 years of 24/7/365 operation, Global Economic Intersection co-founders Steven Hansen and John Lounsbury are retiring. The new owner, a global media company in London, is in the process of completing the set-up of Global Economic Intersection files in their system and publishing platform. The official website ownership transfer took place on 24 August.

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Recent Posts

  • eBay Unveils Sports-Themed NFT Collection
  • SpaceX To Get $1.7B In New Funding To Send Valuation to $127B
  • Hyundai Signs Deal to Establish Full EV and Battery Factories in Georgia, US

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

No Result
View All Result
  • Home
  • Contact Us
  • Bitcoin Robot
    • Bitcoin Profit
    • Bitcoin Code
    • Quantum AI
    • eKrona Cryptocurrency
    • Bitcoin Up
    • Bitcoin Prime
    • Yuan Pay Group
    • Immediate Profit
    • BitIQ
    • Bitcoin Loophole
    • Crypto Boom
    • Bitcoin Era
    • Bitcoin Treasure
    • Bitcoin Lucro
    • Bitcoin System
    • Oil Profit
    • The News Spy
    • British Bitcoin Profit
    • Bitcoin Trader
  • Bitcoin Reddit

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

en English
ar Arabicbg Bulgarianda Danishnl Dutchen Englishfi Finnishfr Frenchde Germanel Greekit Italianja Japaneselv Latvianno Norwegianpl Polishpt Portuguesero Romanianes Spanishsv Swedish