Despite the ECB Hiking Interest Rates for an unprecedented 10th consecutive Meeting, Global Equity Markets soared across the board in the belief that this will be the last hike. The NASDAQ 100 led U.S. Indexes higher helping the VIX to close lower by 5% at a price of 12.99. Citigroup (C) is planning significant job cuts to restructure the bank and help raise its slumping share price. As part of the restructuring, Citigroup will now operate five primary business units and cut three regional chiefs who oversee operations in approximately 160 countries. While the number of job cuts has not been finalised, various back-office eliminations are expected in finance, human resources, operations, and technologies. This restructuring should help Citigroup become more competitive and improve returns, and hopefully help recoup the nearly 15% share loss it has suffered over the past year. Birkenstock has filed for an initial public offering (“IPO”), adding to the slew of IPOs so far this year. The German footwear company will release its proposed terms in a later filing with the U.S. Securities and Exchange Commission. But early estimates value the company at up to $8 billion. Birkenstock boasts a large customer base in the Americas with 54% of their clientele coming from the Western Hemisphere. According to the filing, Birkenstock has increased its profits to just over $1.33 billion in 2022. That is a significant increase from $313 million in 2014. Birkenstock’s move to go public in the U.S. reflects the attraction of American equity markets for European firms looking for a valuation boost. Intel’s (INTC) shares have recently seen a significant boost. They have risen nearly 20% in the past three weeks. This makes Intel the top performer in the PHLX Semiconductor Index (SOX) over the past month. The semiconductor firm’s success has been driven by a mixture of rising tensions with China and ongoing investments in chip manufacturing facilities in the U.S and Europe. However, the company’s revenue is expected to decline by 17% this year. That is in comparison with the overall sector’s expected 8.6% drop. Despite those gloomy revenue projections, Intel’s CEO Pat Gelsinger has remained optimistic about the company’s future and turnaround strategy. JPMorgan Chase (JPM) is expecting the Federal Reserve to pause interest rate hikes as key inflation data stays on track. While consumer prices saw their largest increase in 14 months, core inflation had its smallest gain in nearly two years. This has made investors confident that the Fed will not increase rates in September. The effect of oil prices on core inflations is expected to be minimal, which boosts hope that inflation is on pace to reach the 2% target by the end of 2024. European Markets closed higher despite yesterday’s 10th consecutive rate hike. The U.K. economy shrank in July at its fastest rate in seven months, sparking worries that a recession is on the horizon. The U.K.’s gross domestic product (“GDP”) sank 0.5%. This came as a surprise to economists who anticipated a 0.2% contraction. A decline in the country’s dominant services sector significantly weighed on GDP growth but was slightly offset by a sizable increase in the consulting and retail sector. The contraction in the services sector was largely attributed to employee strikes and poor weather conditions. This loss of steam in Britain’s economy complicates the Bank of England’s rate decision next week as they must now toe the line between deflationary pressure and a recession. The German government is expected to revise its economic forecast for 2023 to a contraction of as much as 0.3%. That is a stark contrast from the previous prediction of 0.4% growth. The European Commission has also recently lowered its forecast for the German economy. It now predicts a 0.4% contraction for the year. Economic indicators suggest that the German economy is likely to shrink in the third quarter and experience only slight growth in the fourth quarter. But those figures could change with the official report in October. In Asia, overnight, the Peoples Bank of China has cut its 14 Day Reverse Repo from 2.15% to 1.95%, helping Equity Futures prices higher. Elsewhere, Oil closed at a new high for the year with a gain of 2.5% while Gold again closed flat.
To mark my 2875th issue of TraderNoble Daily Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day to demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it lost 90 points yesterday and is now ahead by 566 points for September, after finishing August with 1485 points gain following a small gain of 285 points gain in July, after closing June with a gain of 2683 points. May closed with a gain of 3205 points. April saw a gain of 3354 points while March closed with a gain of 6168 points. The Platinum Service made 3164 points in February, 4687 points in January 2054 points in December, 4789 points in November and a record 9619 points last October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1900 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
Equities
The S&P 500 closed 0.84% higher at a price of 4505.
The Dow Jones Industrial Average closed 331 points higher for a 0.96% gain at a price of 34,907.
The NASDAQ 100 closed 0.82% higher at a price of 15,473.
The Stoxx Europe 600 Index closed 1.61% higher.
This morning, the MSCI Asia Pacific closed 0.8% higher.
This morning, the Nikkei closed 1,1% higher at a price of 33,533.
Currencies
The Bloomberg Dollar Spot Index closed 0.55% higher.
The Euro closed 0.8% lower at $1.0645.
The British Pound closed 0.5% lower at 124.05.
The Japanese Yen fell 0.2% closing at $147.49.
Bonds
Germany’s 10-year yield closed 4 basis points lower at 2.60%.
Britain’s 10-year yield closed 7 basis points lower at 4.29%.
U.S.10 Year Treasury closed 5 basis points higher at 4.29%.
Commodities
West Texas Intermediate crude closed 2.50% higher at $90.72 a barrel.
Gold closed 0.1% higher at $1911.10 an ounce.
This morning on the Economic Front we Euro-Zone Trade Balance at 10.00 am. This is followed by U.S. New York Empire State Manufacturing Index and the Import/Export Price Index at 1.30 pm. At 2.15 pm we have Industrial Production and Capacity Utilisation. Finally, we have the University of Michigan Consumer Sentiment Index at 3.00 pm.
Cash S&P 500
Despite the Dollar soaring on stronger than expected U.S. Economic data and a Euro that closed 0.8% lower against the Dollar, the S&P surged yesterday, closing above its 50 Day Moving Average. I have flagged this move for the last few weeks as Asset Managers are caught short. Overnight, the S&P has rallied further after the Peoples Bank of China cut its Reop Rate to 1.95%. Bears have been run over again and from what I am seeing I can see nightmare charts for Bears and under invested long positions everywhere. The NDX filled Wednesday’s closing gap before surging to fill two of the four open gaps above. This helped the VIX to get crushed closing near the low of the year with a 12 Handle. This low close in the VIX could be a concern. It will be interesting to see if we get the usual Friday crush in the VIX today. At the same time the $BPSPX is just getting started on the positive divergence play that I outlined over the past few days. This signal has plenty of room to move higher dragging the U.S. Indexes with it. Yes, there is every chance that this move could be the bears worst nightmare: China just cut rates, the ECB subtly indicated that perhaps they are done with rate hikes without saying it while Treasury Secretary has just come under political pressure from Warren. The only negative is the 12 Handle in the VIX so bulls cannot be complacent. Yesterday was extremely frustrating with a number of my equity buy levels just missing including my 4464-buy level in the S&P when the post ECB Rate hike low was 4468 before surging to sit at 4514 this morning. I will now raise my buy level to 4482/4498 with a tight 4469 ‘’Closing Stop’’. I still have no interest in being short the S&P at this time.
EUR/USD
The aggressive sell-off in the Euro post the ECB rate hike saw the May low of 1.0635 tested and hold for now. This move lower saw the whole of my buy range triggered for a now 1.0670 average long position. I will leave my 1.0585 ‘’Closing Stop’’ unchanged while lowering my T/P level to 1.0720. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
September Dollar Index
The 0.55% rise in the Dollar saw my second sell level at 105.30 triggered, for a now 105.00 average long position. I will now raise my T/P level on this position to 104.70 while leaving my 105.85 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members
Cash DAX
Really annoying as the DAX hit a low at 15588 yesterday missing my buy level by eight points before rallying hard to sit at 15950 this morning. Thankfully we had no sell level yesterday. The DAX has support from 15770/15850 where I will be a small buyer with a 15695 ‘’Closing Stop’’. If I am taken long I will have a T/P level at 15920.
Cash FTSE
Wrong! I was completely wrong in trying to sell the FTSE as the bullish formation that I had mentioned played out sooner than I expected. The FTSE traded the whole of my sell range for a 7615 average short position before stopping out at the New York close at 7705 and I am now flat. This is a bullish breakout in the FTSE and has to be respected. The FTSE has support from 7630/7690 where I will be a buyer with a tight 7585 ‘’Closing Stop’’.
Dow Rolling Contract
I am still flat the Dow as the market never came close to yesterday’s buy level. This move higher in the Dow saw the market close above its 50-Day Moving Average (34817) for the first time in over two weeks. I will now raise my buy level to 34500/34750 with a higher 34395 tight ‘’Closing Stop’’.
Cash NASDAQ 100
Really frustrating as I have had the correct view in being a buyer of dips of the NDX given the positive reaction to negative news. The NDX missed my 15320 by level with a 15335 low print. As the NDX built value during the day, I emailed my Platinum Members to buy the NDX at 15463. This is something that I rarely do. I will add to this position at 15333. I will have a T/P level at 15590 while my stop is at a ‘’Closing Price’’ of 15245. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
December BUND
The Bund missed yesterday’s buy level by 15 points before having a nice 80-point rally on the latest ECB rate hike. I am still flat. I will now raise my buy level to 129.90/130.60 with a higher 129.25 ‘’Closing Stop’’.
Gold Rolling Contract
No Change. Gold continues to trade heavy, and I am still flat. I will continue to be an aggressive buyer on any further dip lower to 1881/1896 with the same 1869 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. I am still long at an average rate of 24.05. Silver is trading higher at 23.10 this morning which is a surprise given the strength of the Dollar. Buying the dip has worked almost every time in Silver over the past two years. However, just like Gold finding strong resistance from 1960/2000, Silver is seeing a lot of selling between 24.00 and 25.00. I will leave my ‘’Closing Stop’’ unchanged at 21.95. If Silver drops from here, I will come back with a new level to add to my existing long position. I will now lower my T/P level to 24.25. If any of the above levels are hit, I will be back with a new update for my Platinum Members
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