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
      • 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
      • 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

Must-Know Market Movers To Watch And Lessons For Week of 09 June 2014

admin by admin
June 10, 2014
in Uncategorized
0
0
SHARES
3
VIEWS
Share on FacebookShare on Twitter

by Cliff Wachtel, FX Empire

Strategic lessons for investors in stock indexes, forex and other global markets, both technical and fundamental outlooks, lessons about what’s really moving markets now and what we need to watch in the future. Don’t be fooled by the prevailing calm.

The following is a partial summary of conclusions from our weekly fxempire.com analysts‘ meeting about the weekly outlook for global equities, currencies, and commodity markets.

Summary

  • TECHNICAL OUTLOOK: Bullish for global stocks and other risk assets as upward momentum improves and psychologically important overhead resistance beckons for a test higher.
  • FUNDAMENTAL OUTLOOK: The key supports of the multi-year rally remain in place, now augmented by new ECB stimulus and the promise of more coming.
  • CONCLUSIONS: A quiet economic calendar but many important lessons and potential market movers worth watching.
  • BIGGEST LESSONS: An EU version of QE, QEU, is coming. Many ramifications for all investors. Here’s your chance for fame-name that EU QE. See below for details, prizes.

Technical Outlook

We look at the technical picture first for a number of reasons, including:

Charts Don’t Lie: Dramatic headlines and dominant news themes don’t necessarily move markets. Price action is critical for understanding what events and developments are, and are not, actually driving markets. There’s nothing like flat or trendless price action to tell you to discount seemingly dramatic headlines – or to get you thinking about why a given risk is not being priced in

Support, resistance, and momentum indicators also move markets, especially in the absence of surprises from top tier news and economic reports.

Overall Risk Appetite Medium Term Per Weekly Charts Of Leading Global Stock Indexes

Must-Know Market Movers To Watch And Lessons For Week Of June 9 2014
Weekly Charts Of Large Cap Global Indexes Week of February 2013 To Week of June 2 2014: 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
Key For S&P 500, DJ EUR 50, Nikkei 225 Weekly Chart: 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

Key Points

  • Leading US and European Indexes mostly higher, all maintaining their slow but steady uptrends as continued low rates and supportive central bank policies outweigh the bearish pull of mixed economic data
    • Momentum indicators put the odds in favor of further upside
    • Indexes continue to close in their double Bollinger® band buy zone

  • Moving averages from 10-200 weeks continue trending higher.
  • Asian index trends continue to be too diverse for easy generalizations.

Daily Charts / Short Term Coming Weeks

There’s only one important point from the daily charts that doesn’t show up on the weeklies. US and European indexes made all of their gains on Thursday and Friday following the ECB announcement. Without that the week would have been flat.

The ECB saved the week and kept momentum on the daily charts firmly positive, with the indexes bouncing off the bottom of their double Bollinger® band buy zones, and ending the week at the upper edge of these zones.

This matters because the coming week’s calendar is relatively light, and unlikely to provide any departures from the current themes.

Likely Market Direction: Technical, Fundamental Outlook Suggest Test Higher

The combination of technical and fundamental evidence suggests that stock indexes and most other risk assets continue drifting higher. Here’s why.

Fundamentals Remain Bullish

The same conditions that have sustained the risk asset rally for risk currencies, stocks and other risk assets (excluding certain China related risk assets) since mid-2012 remain in place. These are:

  • All major central banks remain in de-facto easing mode, even if some claim they’re finished and even moving to tighten, no one is planning to materially tighten for about a year at least.
  • No big scary contagion threats. Indeed this latest leg up that began in mid-2012 started with ECB President Draghi’s promise to do “whatever it took” to keep the EU’s sovereigns and banking systems solvent. (Side note: Germany and other core funding nations were hardly guaranteed to fund unlimited lending or back unlimited money printing. Moreover, his bold OMT program to aid Spain’s teetering banking system was never tried because Spain was too repelled by its various conditions to insure accountability for the funds. Yet, markets never tested Draghi’s bravado, and his quelling of EU crisis fears remains one of the greatest acts of sheer bullsh…er, spin control, in the history of modern global finance. Any similarity between that any last week’s promise to do more until it’s enough is of course purely coincidental.)

In addition to the above, we’ve got new ECB stimulus, with more coming.

The overall theme from weekly economic data from the US, Japan, EU and China continue to reflect their same themes through which stocks have continued to rise. We’ve slow recovery in the US and Japan, stagnation in the EU (ex-Germany), and some slowdown in China, to the extent we can trust Chinese data at all (more on that below). Even if the calendar’s events aren’t stellar, they’re not stopping the rally either.

Technical Outlook Supportive

Medium and short term momentum in the weekly and daily charts, and now If that’s not enough, we’ve another technical factor likely to make itself felt in the coming 1-2 weeks – call it the “round number syndrome.” Simply put, the S&P 500 closed at 1949.44, about 50 points, a 2.5% gain, short of 2000. The DJIA is needs only about a 0.5% gain to hit 17,000. Big round numbers are psychologically important in their own right as support and resistance. When markets get close to them traders tend to test them. Everyone knows this, and that fact alone creates a self-fulfilling prophecy.

Chart trends are generally believed to simply reflect underlying fundamentals. Here however, we’ve a classic case of when nearby major support or resistance directly influences trader expectations and so creates its own fundamental, supply and demand reality.

In sum, US and European indexes are likely to be flat to higher this time next week, and at least test those highs if the coming week’s data is even mildly supportive.

Fundamental Outlook: Lessons, Market Movers For The Coming Week

ECB Stimulus Package

Last week’s only real market mover was the ECB stimulus announcement. Uncertainty ahead of it suppressed price action. Relief that it met expectations and promised more cheap cash to support the bull market in risk assets, was what drove them higher.

This will be a market mover in the months ahead, the question is how and when. Low rates provide general support for EU markets.

Top Lessons, Ramifications

More stimulus is coming: The ECB is already engaged in expanding the money supply and outright debt monetization, is exploring new ways to do this, and appears to be ready to for a full “out of the closet” QE program.

Germany acquiesces to it: Germans may not be cheering, but their silence alone is significant. A year ago anything less than unconditional opposition would have been unthinkable. A combination of the inevitability of the need for outright money printing, plus evidence that deflation is now the more immediate threat for Germany, seems to have convinced the normally inflation-phobic Germans reluctantly accept inflation risks for now.

Rallies On Bad News?: A big question is whether or not really bad data will be seen as bullish because it advances the odds of more stimulus coming sooner, which is the EU’s best hope for higher asset prices.

EU Data Now More Important: The ECB may be done for the coming months, but some kind of EU variant, call it “QEU” for now, is coming (got a better idea for name? See our offer below) . Meanwhile the Fed policy is more set for now, (for reasons we discussed in some depth here) and thus less responsive to monthly data. That means markets will be paying much more attention to EU growth, jobs and inflation data. Don’t be surprised if we start to see indexes and other risk asset markets up on bad EU data and down on good data (if we get any outside of Germany) as QE anticipation starts causing “bad news is good news/good news is bad news” reactions, just as we saw in the US in times of speculation over new QE.

See our special report for further details.

US Data, Even Jobs Reports, Losing Relevance?

The Fed is responding to anything besides longer term trends, so even top tier monthly data needs to really surprise in order to move market perceptions about Fed policy and thus move markets. Friday’s report was in line with expectations, reinforcing the already entrenched slow but steady growth theme. Indeed, the only risk with US data may be that it provides too much upside surprise and gets markets worried about an accelerated Fed tightening. This is our reality.

Not surprisingly then, US data, even the once climactic monthly US jobs reports on which QE speculation once depended, were irrelevant this week, and may well take a back seat to EU data in the near future.

Winter Weakness Argument Gains Support

The recent strength in US data (like last week’s monthly jobs and manufacturing reports) support the argument that earlier weakness was indeed due to harsh winter weather.

Lesson: Market Complacency Brings Lack of Volatility, Buy Insurance For When That Ends

After the ECB stimulus program, the only big theme was market complacency, also referred to as lack of volatility.

Translated, the lesson here is that nothing has happened to alter market perceptions of value enough to change ongoing trends. For example:

  • As noted above, continued low rates, ultra-accommodative central bank policies and lack of any immediate threats allow risk assets to keep drifting higher
  • Central banks dominate markets more than ever as they control the stimulus drip to which markets have become addicted. With the exception of last week’s new ECB stimulus, policies of the largest central banks are holding steady.

The only useful other lesson here are that low volatility and complacency mean insurance against volatility, aka trend reversals, (selloffs for stocks, for example) is now cheap. Thus it’s a good idea for to insure long stock positions with some low cost SPY puts, etc.

A Great Summary From Morgan Stanley: Why Worry?

In one sentence, this is our market: risk on, very low interest rates for the foreseeable future, and almost no volatility to speak of anywhere. That was the succinct summary from Morgan Stanley’s latest Global Strategy Outlook.

Risk on:

ScreenHunter_03 Jun. 09 13.10

Interest rates low:

ScreenHunter_02 Jun. 09 13.09

Volatility low as markets see drift higher for months ahead per the CBOE volatility index (VIX) for stocks

ScreenHunter_04 Jun. 09 13.13

In sum, interest rates are unsustainably low, so bond yields will spike when investors believe the Fed thinks that the economy is solidifying and/or inflation is a threat, and the Fed will hike rates at that point, which is currently believed to be no earlier than mid-2015, and very possibly later, for reasons we discussed in depth last week here.

Geopolitical Situations Remain On Low Simmer

Ukraine: More Fighting, More Business As Usual

Fighting continues as Ukraine battles Russian forces comprised of a local separatists and discreetly placed units of Russian military personnel (uniformed and plain clothes) providing a mixture of firepower and advisory support, including cyber-warfare experts, per a Financial Times report last week.

Meanwhile, Russian oil giant Rosneft (US: OCRNL, ROSN:MICEX) signed a new energy deal with Azerbajian last Tuesday, and of course, no sign of meaningful sanctions coming.

Is China Un-Investable? Red Flags On Chinese Data, Growth Model, Risks To Global Economy

Another great lesson from last week came via Worth Wray’s Looking at the Middle Kingdom with Fresh Eyes , one of the best articles I’ve read for understanding China as it impacts markets. Key points included:

  • Official Chinese Data Is Uniquely Unreliable And At Times Manipulated: Sometimes the most revealing insights lie in the disagreement between the official and unofficial reports… suggesting that official data is useful only to the extent that we think about it as state-sanctioned propaganda. In other words, it tells us what Chinese policymakers want the world to believe.
  • China Growth Fueled Mostly By Fixed Asset Investment, Not Exports: While China is still the world’s largest manufacturer, its growth is more from fixed asset investment fueled by unsustainably high debt, which in turn is based on high levels of domestic savings on which banks pay minimal interest. Savers subsidize the borrowing.
  • Government and government-sponsored borrowers in uncompetitive industries consume the majority of the country’s credit: This means that households and SMEs (small and medium sized private enterprises) must borrow through shadow banks at massive risk premiums.
  • Lack of access to cheap credit and low returns on savings hampers China’s transition to a consumption driven economy, because households and SME disposable income is essentially transferred to the state companies and those sponsored by them. However weaning these firms off of cheap credit risks a greater slowdown that could spark an economic crisis, including capital flight and exploding debt bubbles with massive waves of defaults. To prevent spooking markets, Chinese officials need to keep the zombie state companies going and minimize divergences between official and real Chinese economic data.
  • China growth is definitely slowing but not collapsing.

The scariest tidbit from above is that in our interconnected global economy, we don’t really know about the state of our largest growth engine. That leaves disturbingly high potential for markets to wake up one day and find they’ve massively underestimated risk and overpriced assets (aka a global market selloff or crash).

The above is in line with what we’ve been reading in recent years.

Key conclusion: exercise extreme caution if investing in Chinese or related assets (that includes many Australian and other commodity investments, which are essentially proxy investments in China growth.

Top Calendar Events To Watch

It’s a relatively light economic calendar, topped by US retail sales and little other really top tier reports.

Sunday:

China trade balance

Monday:

Nothing likely to materially influence the EURUSD. We have Swiss, French, German bank holidays. Forex brokers open but lower liquidity that can make for very low volatility, but occasionally very dramatic volatility if sudden major surprises.

Tuesday

China: CPI, PPI y/y

US: JOLTS job openings, said to be an important metric now for the Fed, however US jobs announcements have lost some of their importance because the Fed’s policy is believed to be set for now. For reasons we discussed two weeks ago in our special report 2014’s Biggest New Investment Theme: Lower US Rates For A Much Longer Time, fed policy is believed to be fixed in dovish mode for the foreseeable future unless there are major changes in the current “slow but steady” US recovery story, be they bullish or bearish. Thus market sentiment on Fed policy direction is no longer influenced by any one month’s labor statistics, as it was back when fed policy was seen as more fluid and influenced by each month’s jobs data. Monthly jobs reports will only again become more influential again when they appear to be forming a new trend, be it bearish (implying more dovish fed policy) or bullish (suggesting faster tightening and rate increases).

Wednesday

Nothing likely to materially influence the EURUSD.

Thursday

US retail sales, weekly new jobless claims

Friday

China: Industrial production y/y, fixed asset investment ytd/y

US: CPI, PPI, m/m, preliminary UoM consumer sentiment

Your Chance To Be Famous: Name That ECB QE Contest

Here’s your chance for fame. We’re all going to need a name for the coming ECB QE to distinguish it from that of the Fed, which already owns plain old QE. Here are a few examples to inspire you.

  • Simple adaptations: QEU, QEZ, QECB, QEEU, QEER (QE-Europe, easier to say than QEE)
  • Others: QEGA (QE German Approved)

You get the idea. First prize is a copy of my award winning book. Second prize is a copy of the same, but you must agree to read it.

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. For information on a free intro to currencies video course based on my award winning book, see here.

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


Previous Post

Market Commentary: Markets End Session Barely Alive, Mixed And Flat

Next Post

Uber Becomes the World’s Most Valuable Startup

Related Posts

What Are BRC-30 Tokens?
Econ Intersect News

What Are BRC-30 Tokens?

by John Wanguba
June 2, 2023
XRP Explosive Boom Results In Record-Breaking Address Activity
Economics

XRP’s Explosive Boom Results In Record-Breaking Address Activity

by John Wanguba
June 1, 2023
What To Consider When Evaluating Low-Code And No-Code Platforms
Business

What To Consider When Evaluating Low-Code And No-Code Platforms

by John Wanguba
June 1, 2023
Crypto Bear Phase Gone, ‘Explosive’ Bull Market Imminent – Veteran Investor
Economics

Crypto Bear Phase Gone, ‘Explosive’ Bull Market Imminent – Veteran Investor

by John Wanguba
June 1, 2023
Only 2 Exchanges Registered In Hong Kong As Crypto Ban Is Removed
Economics

Only 2 Exchanges Registered In Hong Kong As Crypto Ban Is Removed

by John Wanguba
May 31, 2023
Next Post

Uber Becomes the World's Most Valuable Startup

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 bank banking banks Binance Bitcoin Bitcoin adoption Bitcoin market blockchain BTC business China crypto crypto adoption cryptocurrency crypto exchange crypto market crypto regulation decentralized finance DeFi Elon Musk ETH Ethereum Europe Federal Reserve finance FTX inflation investment market analysis Metaverse NFT nonfungible tokens oil market price analysis recession regulation Russia stock market technology Tesla the UK the US Twitter

Archives

  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • 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

  • What Are BRC-30 Tokens?
  • XRP’s Explosive Boom Results In Record-Breaking Address Activity
  • What To Consider When Evaluating Low-Code And No-Code Platforms

© 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