In FX, when I posted on Friday the US dollar was making gains against all currencies, the Euro and Sterling in particular were leaking lower and the offshore Chinese Yuan (CNH) had just risen above 6.72, the latter taking AUD down with it. This moves came just after China loans and money supply numbers were reported showing a further fall in M2 money supply growth (8.0% y/y from 8.3% and versus 8.4% expected), while the broad Aggregate Financing credit numbers showed expansion by a much weaker than expected Y1,1180b. This is a rebound from Y760.8bn in May but well below the Y1,535bn expected. In contrast new Yuan loans grew by a bigger than expected Y1,840bn, a sign that shadow banking activities are being successfully curbed in favour of traditional bank lending. But the overall message is that credit conditions are still tightening.
To mark my 1625th 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 80 points last Friday and is now ahead by 506 points for July, having made 994 points in June, 1927 points in May, 1657 points in April, 1760 points in March, 2256 points in February, 879 points in January and 946 points in December. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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This morning we already had the release of Chinese GDP which came in as expected with a 6.7% print, while Retail Sales were higher than expected coming in at +9.0%.
AUD fell to a session low of 0.7370 from an earlier high of 0.7420, but came back during the New York afternoon to land back exactly at 0.7420 where it is currently trading. There was no obvious catalysts for the turnaround later on Friday, though Sterling mounted a comeback after President Trump publicly apologised for his reported attack on UK PM May’s Brexit strategy and apparent support for Boris Johnson as PM. He suggested the Sun newspaper had omitted a lot of positive things he had said about the PM, and that a trade deal between the US and UK was still possible. His wants the ‘’tough’’ Mrs May as his friend not his enemy, he intoned. ‘’Fake Schmooze’’ is the Sun’s headline on all this this morning!
President Trump has since turned his fire onto the EU, telling CBS over the weekend that he considers the EU a ‘’foe’’ that had taken advantage of the US with its trade practices. This on the day before Trump is due to meet with Russian President Vladimir Putin.
AUD ended up as Friday’s best performing currency (+0.22% on Thursday’s close) and NZD the weakest (-0.43%). DXY ended 0.16% lower at 94.67 having been as high as 95.25. On the week, the USD was stronger across the board with DXY +0.75% while AUD fared best among G10 currencies (down 0.1% versus the USD but higher against all other currencies. JPY and SEK fared worse on the week (both -1.7%) while NZD/USD lost 1.1%. Meanwhile the Euro which traded to an intra-day low of 1.1612 shortly after I posted on Friday is now one big figure higher this morning at 1.1707.
In Equities, US stocks had a good day even though bank stocks fell post the earnings reports from JP Morgan, Citigroup and Wells Fargo. JPM and Citi beat both their earnings and revenue estimates while Wells Fargo missed on both counts, despite which JP Morgan’s shares lost 0.5% and Citi 2.2% (Wells Fargo finished 1.2% lower). JPM’s EPS of $2.29 bear the $2.22 consensus and Citi’s $1.63 its $1.56 estimate. Both banks cited a strong economy and related loan growth as supporting their results.
It was industrials, consumer staples and the energy sector (latter helped by a 1% rise for WTI crude) that drove the 0.1% rise for the S&P500 with the banking sub-index -0.46%. The Dow gained 0.4% while NASDAQ was flat despite record closing highs for Amazon, Facebook and Microsoft. On the week, the S&P gained 1.5% and the NASDAQ 1.8%
In Bonds, US yields were lower across the curve despite stocks market gains, 2s -0.8bps, 5s -2.2bps and 10s -1.9bps to 2.83%. On the week, the 2yr yield is +4bps and 10s +1bp, so the 2/10s curve flatter by another 3bps to a new cycle low of 25bps.
Commodities saw WTI oil gained 70 cents to $71.01 and Brent 90 cents to $75.33. Industrial metals were lower again, with LMEX -0.16% while gold lost $5.40 to $1,241. On the week, LMEX has lost another 1.8% and is now just over 14% down on its early June highs. Brent crude is $1.80 lower and WTI crude off $3.80.
In economic news, the main US data point on Friday was the preliminary University of Michigan Consumer Sentiment Index, which at 97.1 was down on 98.2 in June and a fell a little short of the 98.0 expected, but still very strong in absolute terms and with no signs as yet that trade fictions are impacting sentiment (the sharp rise in the price of washing machines notwithstanding). Current conditions fell to 113.9 from 116.5 while expectations held up, 86.4 from 86.3. Of some significance, 5-10yr inflation expectations, closely watched by the Fed, fell to 2.4% from 2.6%
Atlanta Fed president Raphael Bostic spoke Friday, saying he favours one more interest rate hike this year ‘’as things currently stand I may be okay with four’’ moves this year if the economy dictates that stance, he said.
The Fed released the formal text for Jay Powell’s Semi-Annual Testimony to Congress this week, in which the Fed outlines its base line view for further gradual rates rises. Of some note and at a time when President Trump is railing against high petrol prices and demanding higher OPEC production, the report notes that ‘’much and of the negative effect on GDP from lower consumer spending is likely to be offset by increased production and investment in the growing U.S. oil sector. Consequently, higher oil prices now imply much less of a net overall drag on the economy than they did in the past, although they will continue to have important distributional effects.”
This morning on the Economic Front we have Euro-Zone Trade Balance at 10.00 am. This is followed at 11.30 pm by US Empire Manufacturing and Retail Sales. Finally at 3.00 pm we have Business Inventories.
September S&P 500
My S&P plan worked well on Friday with the market trading lower to my 2794 buy level after the US Markets opened before rallying to my 2800 T/P level and I am now flat. With the NASDAQ again closing at new all-time highs it is only a matter of time before the S&P finally breaks it’s January 26 high at 2878 before we finally see a more meaningful top in the market. As long as the S&P can hold the 2760/2770 support level then we should continue to move higher. Today I will again look to buy the S&P on any dip lower to 2788/2796 with a 2782 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer from 2763/2771 with a 2755 wider stop. I still do not want to be short the S&P at this time.
EUR/USD
The Euro had a nice reversal off Friday’s 1.1612 low print to currently trade above 1.17 as the 1.1510 Double Bottom continues to offer strong support below the market. The Euro has strong resistance from 1.1780/1.1820 and today I will move my sell level to this area with a 1.1855 stop. I will also raise my buy level to 1.1600/1640 with a 1.1570 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer from 1.1480/1.1530 with a 1.1445 stop.
September Dollar Index
I am still flat the Dollar and today I will now lower my buy level to 93.60/93.95 with a 93.25 stop. I still do not want to be short the Dollar at this time.
September DAX
Frustratingly the DAX just missed my 12470 initial buy level with a low of 12475 before the market rallied over 100 points and I am still flat. I am still reluctant to chase this market higher especially with the Euro trading above 1.17. For this reason I will now lower my buy level slightly to 12380/12450 with a 12325 stop.
September FTSE
I am still flat the FTSE which also juts missed my buy level before rallying. With Sterling stronger this morning I will also lower my buy level in the FTSE to 7520/7565 with a 7485 stop. Despite the negative price action I still do not want to be short the market at this time.
Dow Rolling Contract
I am still flat the Dow which also just missed my initial buy level on Friday before turning around to rally 200 points. Thankfully we had no sell levels in the Dow over the past few days with the market now trading over 1200 points higher since the low made 10 days ago. Today I will now raise my buy level to 24740/24920 with a 24630 stop. I still do not want to be short the Dow at this time.
September NASDAQ
Thankfully the NASDAQ sold off to an intra-day low of 7367 on Friday and this move lower enabled me to cover my average 7385 short position at my revised 7380 T/P level as outlined to all members in Friday’s commentary. The NASDAQ has strong resistance from 7480/7520 and today I will be a seller on any rally to this area with a 7555 stop. I will also be a small buyer on any dip lower to 7285/7335 with a 7250 stop.
September BUND
The BUND finally rallied to my 163.15 sell level. As I did not want to have a short position on board over the weekend I covered this position at my revised 163.00 T/P level and I am still flat. This morning the Bund is trading slightly weaker at 162.90 and today my only interest in selling the market is on a rally higher to 163.35/163.75 with a 164.05 stop.
Gold Rolling Contract
No change as I am still a buyer on any dip lower to 1225/1233 with the same 1219 stop.
Silver Rolling Contract
Silver traded lower to my second buy level at 15.70 for a now average long position at 15.90. I will now lower my T/P level on this position to 16.00 while leaving my stop unchanged at 15.45. If any of the above levels are hit I will be back with a new update for my Platinum Members.
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