U.S. Indices closed in the red but well off the earlier lows, while T-notes were sold across the curve while the U.S. Dollar was strong. The focus continues to lie on Trump’s tariff letters, with the latest seeing a 35% tariff on Canada, while the EU letter is still expected to be announced before Monday. The inflationary fear aspect of higher tariffs pressured T-notes across the curve with yields bear steepening, resulting in lows seen at settlement amid commentary from Fed’s Goolsbee, who warned rate cuts may be delayed due to Trump’s fresh tariff announcements. Note, there was some pressure in equities after FHFA Director Pulte made a statement cheering on rumours that Fed Chair Powell was resigning, albeit it is not clear where these supposed rumours are emanating from, and Indices pared the initial downside. In FX, the Dollar was bid with the move higher in yields pressuring THE Japanese Yen, while Sterling lagged after soft GDP data. Gold prices surged despite the movement in the Dollar and Treasury yields, with the upside predominantly supported by the uncertainty regarding upcoming EU tariffs. Gold held its bid despite the move from lows in US equities. Oil prices were bid in anticipation of a “major statement on Russia” from US President Trump on Monday. Elsewhere next week, the focus largely lies on US CPI to help gauge the inflationary impact of Trump’s tariffs so far. The Federal Budget in June posted a USD 27 billion surplus, a huge improvement vs the May USD 316 billion deficit and also better than the expected deficit of USD11 billion. While the surplus was not expected via the consensus, keep in mind the analyst forecast range was USD -85 billion to USD 105.5 billion, and the CBO estimated a USD 24 billion surplus. The shift to a surplus was supported by a record high revenue in US gross customs duties, USD 27 billion, +301% due to tariffs. Regarding the report, Oxford Economics noted timing effects have helped produce a surplus last month (likely on tariff revenue preceding OBBB’s tax cuts and spending costs). Ahead, Oxford look for the budget shortfall to dip in FY2025, and recent developments tied to fiscal and trade policy will only reinforce this move lower. Goolsbee the Chicago Fed President warned that US President Trump’s latest tariff threats could delay rate cuts, via a Wall Street Journal interview. He said the threats could spark fresh concerns about inflation and force the Fed to maintain its wait-and-see approach. Meanwhile, on a Moody’s podcast, he said the new round of tariffs makes it messy to truly say how the economy is doing. Goolsbee wants to wait until the anxiety dies down before being comfortable that the US is back on track to a soft landing. He also noted that if they go into an environment where prices start rising again, he will be nervous. Elsewhere, both Oil and Gold surged on Friday closing higher by 3% and 1% respectively. On Saturday President Trump announced a 30% Tariff on both the E.U. and Mexico. So far, the fallout from this announcement has been muted.
To mark my 3200th 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 made 375 points on Friday and is now ahead by 1350 points for July after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 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 0.33% lower at a price of 6259.
The Dow Jones Industrial Average closed 279 points lower for a 0.63% loss at a price of 44,371.
The NASDAQ 100 closed 0.21% lower at a price of 22,780.
The Stoxx Europe 600 Index closed 1.01% lower.
This Morning, the MSCI Asia Pacific closed 0.3% lower.
This Morning, the Nikkei closed 0.25% lower at a price of 39,471.
Currencies
The Bloomberg Dollar Spot Index closed 0.22% higher.
The Euro closed 0.25% lower at $1.1690.
The British Pound closed 0.71% lower at $1.3489.
The Japanese Yen fell 0.45% closing at $147.44.
Bonds
U.K.’s 10-Year Gilt closed 2 basis points higher at 4.63%.
Germany’s 10-Year Bund Yield closed 6 basis points higher at 2.69%
U.S.10 Year Treasury closed 4 basis points higher at 4.42%.
Commodities
West Texas Intermediate crude closed 2.82% higher at $68.45 a barrel.
Gold closed 1.1% higher at $3355.10 an ounce.
Today on the Economic front we have no data of note from either the E.U. or the U.S. To say this is unusual is an understatement.
Cash S&P 500
The S&P 500 moved lower this past week. Apart from the Canada tariff headlines on Thursday, the week was relatively uneventful. One notable observation is the shift occurring in the Dollar. The RSI readings are improving, and the DXY is on the verge of breaking above two significant downtrends. With Saturday morning’s announcement of 30% tariffs on the EU, the EURUSD weekend trading is down 3 0 basis points. This move will likely be sufficient to push the DXY above the trendline which it has this morning. Although this shift may not occur immediately, there is a strong chance the DXY is headed back towards the 101 level. That likely means that the EURUSD is heading back to the 1.12 region. In the meantime, we are seeing 30-year rates moving higher and positioned to potentially surpass the 5.1% level observed in mid-May. It appears the 30-year rate broke out of a bull flag on July 7 and has since advanced to 4.96%. Even a 61.8% extension of this flag suggests the 30-year rate could reach 5.17%, while a 100% extension points toward 5.35%. This move higher in rates makes it extremely difficult for the Fed to cut rates anytime soon. Netflix reports results this week, and the chart does not look great heading into the announcement. The RSI is rolling over, and volume has been increasing on recent down days. Additionally, shares have broken below an uptrend at $1,260, within what appears to be a larger rising broadening wedge pattern. If this pattern plays out, it would not seem unreasonable for the stock to decline back to around $1,100. Equity Market valuations are off the charts. Market Cap to GDP is now at a mindboggling 209%. With so many charts so stretched one cannot be a buyer. The Bank Index Charts has gone vertical in the past three months. The reason for this large move is the Fed loosening regulations and asset prices have surged as a result. My S&P plan worked well as late Thursday the S&P traded higher to my 6285-sell level before selling off Friday morning to my 6257 T/P level and I am now flat. This morning the S&P is trading lower at 6225. We have strong short-term support as the previous 2025 high at 6147. Therefore, I will be an aggressive buyer from 6145/6165 with a 6129 ‘Closing Stop’. The S&P has resistance from 6262/6282 where I will again be a seller with a 6301 ‘Closing Stop’. If I am taken long, I will have a T/P level at 6188. If I am taken short, I will have a T/P level at 6244.
EUR/USD
The Euro is trading 30 points lower from Friday’s close on the back of the 30% EU Tariff announcement from President Trump. Given the level of bullish sentiment towards the Euro and bearish sentiment for the Dollar, it is only a matter of time before the Euro moves lower in my opinion. I will now lower my Euro sell level to 1.1710/1.1790 with a lower 1.1865 ‘Closing Stop’. If I am taken short, I will have a T/P level at 1.1630. I still do not want to be long the Euro at this time.
Dollar Index
I am still long the Dollar at an average rate of 97.40 with the same 98.80 T/P level. This morning the Dollar is back above 98, trading at a price of 98.05 as I go to press. I will leave my 96.35 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Russell 2000
I am still flat as I continue to be a buyer of the Russell on any dip lower to 2100/2180 with the same 2065 ‘Closing Stop’. If I am taken long, I will have a T/P level at 2240.
FTSE 100
Shortly after I posted on Thursday the FTSE traded higher to my second sell level at 8940 for a now 8905 average short position. Given the weak GDP Report on Friday I would have expected the FTSE to sell-off. One of my old rules of trading is that a market that cannot move lower on bad new has to be respected. I will now raise my T/P level on this position to 8890 while leaving my 9005 ‘Closing Stop’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members
Dow Rolling Contract
I am still flat as the Dow again fell shy of my sell range before trading lower. I will now lower my sell level to 44500/4750 with a lower 45005 ‘Closing Stop’. If I am taken short, I will have a T/P level at 44280. I still do not want to be long the Dow at this time.
Cash NASDAQ 100
It is not easy trying to short the NDX especially as NVIDA hit a $4 trillion Market Cap. In 2017 Apple was the first company ever to hit $1 trillion in market cap and here we are: six companies with a combined market cap over $17 trillion. This is unfathomable. For reference that is a higher combined market cap than the combined yearly GDPs of Germany, India, Japan and the U.K. which are only the 3-6 largest economies on the planet. The PE’s on the main NDX stocks are screaming overvalued on everything. Yes, there is a lot of growth but even with these highly bullish forward projections these companies are not cheap. Even Walmart has a forward 33 P/E. There is no doubt that everything is super expensive but as we know valuations have not mattered for years and I do not know when they do. Despite the positive price action I cannot be a buyer here against this backdrop. On Friday morning the NDX finally hit my 22700 T/P level on my latest 22750 average short position and I am now flat. With the 14-Day RSI close to 70 I will again be a seller from 22800/22950 with a higher 23105 ‘Closing Stop’. If I am taken short, I will have a T/P level at 22660.
December BUND
I was lucky as 15 minutes after I posted on Thursday the Bund hit my 129.95 T/P level on my latest 129.50 long position and I am now flat. This morning, the Bund is trading at a price of 129.20. We have strong support below from 127.90/128.60 where I will be a buyer with a lower 127.15 ‘Closing Stop’. If I am taken long, I will have a T/P level at 129.20. Despite the extremely low yields I still do not want to be short the Bund at this time.
Gold Rolling Contract
I am still flat and have no interest in chasing the price of Gold higher as I prefer to wait for a move lower before buying. Gold has support below from 3260/3280. I will now raise my buy level to this area with a higher 3245 ‘Closing Stop’. If I am taken long, I will have a T/P level at 3304.
Silver Rolling Contract
Silver rallied hard on Friday, ending the session with a 3% gain and a new high for the year. I am still flat. I will now raise my buy level to 37.30/38.30 with a higher 35.95 ‘Closing Stop’. If I am taken long, I will have a T/P level at 39.20.
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