Despite the US news wire coverage over the past 24 hours of the former Trump campaign manager Manafort’s conviction on eight counts of tax and bank fraud charges and former Trump Lawyer Cohen pleading guilty to illegal campaign finance charges and implicating Trump, the US Dollar is unmoved. There was more reaction immediately after the release of the Fed Minutes but that proved to be fleeting. US stocks were mixed, the Dow and the S&P off smalls but the Nasdaq up 0.38%, the major tech FANG Index up 0.8%. The KBW Bank index was down 0.21% and US Home builder stocks dipped 0.58%, dipping a little further after the release of the July Existing Home Sales report revealing a little more incremental softness in US real estate activity.
To mark my 1650th 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@tradernoblecom for details
For anyone following my Platinum Service it made 105 points yesterday and is now ahead by 328 points for August, having made 1074 points in July, 994 points in June, 1927 points in May, 1657 points in April, 1760 points in March, 2256 points in February, and 879 points in January. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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Currencies
As I go press it was just announced that there may be another leadership challenge in Australia and this could happen as early as today. The AUD is pretty well unmoved, trading this morning at 0.7350, well within the range that we have seen since the start of the week with the USD having receded overall, the AUD one of the major FX beneficiaries. Elsewhere in the over the past 24 hours, major FX currency moves have been very limited. Bucking the trend has been the Mexican peso on reports (from Mexico) that US-Mexico NAFTA negotiations are nearing a conclusion.
Fed Minutes/Economics
The August 1 FOMC Minutes came and went without undue impact for the USD, nor for Treasuries. The USD initially dipped as the first headline appeared calling out trade, housing and emerging markets downside risks, but the move was unwound as quickly as it appeared. A read through of the Minutes further confirmed that the FOMC remains on track for a hike at the upcoming September 26 meeting. ‘’Many participants suggested that if incoming data continued to support their current economic outlook, it would likely soon be appropriate to take another step in removing policy accommodation’’.
The US Interest Rate market continues to price in a high probability that the Fed will lift its target range another 25 bps at the September 26 meeting, though the outlook beyond then is looking less definitive. While trade, tariff and emerging market risks are there on the downside, the economy continues to run hot (the Atlanta Fed’s GDPNow for Q3 is currently 4.3% after 4.1% GDP in Q2) and the fiscal stimulus is still very supportive.
One further point to remain alert to is the characterisation of the stance of monetary policy. Described to now rightly as accommodative, the Minutes drew attention to the likelihood that they will need to soon revise this description, the target rate (very likely at 2-2.25% by September) approaching the zone of the neutral rate, the neutral rate thought to be 2-3% by the FOMC, likely reached/breached next year.
Bonds
With little data to report and an uncontroversial Fed Minutes, there has been little net move in Treasuries, the 10 year down 1.1bps, at 2.8189%, the German 10 year bund up 1.3bps to 0.344%.
Commodities
The biggest move among commodities has been in oil with WTI and Brent both up 3%-plus, reversing the pullback of the previous 24 hours, the intra-day rally coming from a much larger than expected weekly drawing down of US crude inventories reported by the US EIA reported yesterday afternoon. Inventories almost depleted the large 6.805mb increase reported last week, down 5.836mb last week.
This morning on the Economic Front we have German and Euro-Zone Manufacturing/Services PMI at 8.30 am and 9.00 am respectively. This is followed at 11.00 am by the latest ECB Minutes. Next we have the US Weekly Jobless Claims at 1.30 pm and Manufacturing PMI at 2.45 pm. Finally we have US New Home Sales and Euro-Zone Consumer Confidence at 3.00 pm.
The annual Jackson Hole gathering of key global central bankers and other invitees (e.g. key academic economists) starts tonight with a welcome dinner, followed Friday morning with the conference getting underway in earnest with an opening address from the Fed Chair. Powell opens the conference Friday morning US time, speaking on ‘’Monetary Policy in a Changing Economy’’. The theme of this year’s gathering is ‘’Changing Market Structure and Implications for Monetary Policy’’, seemingly covering medium to long term productivity, growth, digital disruption and low real wages and still subdued inflation even though the US economy has surpassed the level of full employment.
The market of course will be alert any new clues or sound bites on growth, any update on the ‘’rate hikes appropriate for now’’ comment (still pushing on gradually this year and next toward the presumed neutral rate?), and winding down the Fed’s balance sheet. There are also the spill-overs to EMs from the strong dollar and rising US rates as well as the developing trade/tariff news and current US-China official discussions in Washington and growth- and inflation-supportive US fiscal policy. (The full programme of speakers won’t be released by the Kansas City Fed until tomorrow morning.)
September S&P 500
Thankfully by the time you got to read my Daily Commentary yesterday morning the S&P was trading close to my 2849 buy level before rallying again as expected with the market hitting an intra-day high of 2867. This move higher enabled me to cover my latest long position at 2857 and I am now flat. Yesterday the S&P’s bull market hit a new record lasting 3,453 days since the low on March 9, 2009 when the S&P traded to a low of 666. The big question is how long this bull market will last? As I mentioned yesterday as long as the S&P can hold the key 2790/2810 support level then the S&P will continue to be a buy on dips. Today I will again look to buy the market on any dip lower to 2846/2853 with a 2840 stop. I still do not want to be short the market at this time.
EUR/USD
Thankfully the Euro traded lower to my 1.1565 T/P level on my 1.1590 short position and I am still flat. Today I will raise my sell level slightly to 1.1650/1.1690 with a 1.1735 higher stop. I am reluctant to chase this market higher especially ahead of the ECB Minutes this morning and I therefore I will leave my buy level unchanged from 1.1445/1.1485 with the same 1.1405 stop.
September Dollar Index
No change as I am still a seller on any rally higher to 95.70/96.15 with a 96.45 tight stop.
September DAX
Yesterday the DAX traded in a narrow range on light volume as the market waits for the ECB Minutes later this morning for any hints of a policy change. I am still flat the market and today I will raise my buy level slightly to 12170/12230 with a 12115 tight stop. I still do not want to be short the DAX at this time.
September FTSE
The FTSE finally caught up with the other Indices yesterday by rallying. I am still flat and today I will now raise my buy level to 7475/7515 with a 7435 stop.
Dow Rolling Contract
For once the Dow underperformed both the S&P and NASDAQ yesterday. I am still flat the market and today I will continue to be a buyer on any dip lower to 25420/25580 with a 25345 higher stop. Meanwhile I will lower my sell level slightly to 25920/26080 with a 26170 stop.
September NASDAQ
The NASDAQ finally outperformed the Dow yesterday after spending the previous few sessions trading sideways. I am still flat as the NASDAQ again just missed my buy level before rallying 80 points. The NASDAQ has strong resistance from 7510/7550 and today I will be a small seller in this area with a 7585 stop. I no longer want to be s buyer of the NASDAQ at this time.
September BUND
The Bund again traded with a 163 handle on low volume making it difficult to make any points. Today I will lower my sell level slightly to 163.90/164.20 with 164.55 stop. I still do not want to be long the Bund at this time.
Gold Rolling Contract
Gold tested $1200 yesterday which is $40 above last week’s low print. Despite the strong rally the Daily Sentiment Index has only improved from 6% to 23% as of last night. I am still flat the market and today I will continue to be a buyer on any dip lower to 1175/1185 with an 1166 stop.
Silver Rolling Contract
No change as I am still long at 14.75 with the same 14.35 stop. I will now lower my T/P level on this position to 14.93. If any of these levels are hit I will be back with a new update for my Platinum Members.
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