An otherwise positive Friday for risk sentiment, bond yields (higher) and the US dollar, aided by a reasonably strong set of US economic data, was punctuated late Friday by a Bloomberg source story saying that President Trump has issued instructions to officials to proceed with the long-threatened tariffs on an additional $200bn of Chinese imports, albeit with no specifics as to exact timing or magnitude. This further supported the US dollar via its safe-haven characteristics, seeing AUD, NZD and most EM currencies lose ground in the last few hours of New York trade, but both US stocks and Treasury yields recovered from an intra-day dip to close back near the highs – in the case of 10-year Treasuries, almost bang on 3% (2.995%).
To mark my 1675th 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 88 points on Friday and is now ahead by 667 points for September, having made 599 points in August, 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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Subsequent to Friday’s reports, over the weekend the Wall Street Journal, et al, has reported that an announcement on the tariffs should be forthcoming either today or tomorrow, but that the initial tariff rates would be 10%, not the threatened 25%. That is the good news (given what has surely now been close to being priced in). The bad news is that in moving so soon after US Treasury Secretary Steve Mnuchin had extended an invitation to his counterpart, Chinese Economic Czar Liu He, to attend fresh talks in Washington, China is now minded to give the US the cold shoulder and rsvp in the negative.
Currencies
In a re-run of the previous Friday, the US dollar benefited from both higher Treasury yields and safe haven demand. USD indices added about 0.5% with DXY coming within kissing distance of 95 and closing at 94.97. SEK was the standout loser, failing to recover from the early European day hit on weaker than expected CPI. AUD/USD made an intra-day high of 0.7216 Just after I posted on Friday morning, but fell about 25 pips (from 0.7180 to 0.7154 at NY close) post the Bloomberg tariff report. On the week, DXY and BBDXY are both about 0.5% lower (improved risk sentiment on trade outweighing higher US yields) with NOK the best performer on higher oil followed by Sterling on Brexit Transition Agreement optimism, then CAD on oil prices and NAFTA hopes.
Equities:
A nothing day for US stocks Friday, all the mainIindices ending close to flat, though notable that the S&P fully recovered from the 0.4% hit on the early afternoon Trump tariff report. On the week the Nikkei is the standout winner, the rise in USD/JPY doubtless a contributor, while Shanghai is the only Index to be lower:
Bonds:
10yr Treasuries twice flirted with the 3.0% level on Friday but failed to sustain the initial break (high of 3.0014% first up, 2.999% on the second and closing at 2.995%). The US data was helpful to the cause of higher yields, while perhaps the more telling story was that yields pulled back up to 3% after initially falling back by 2bps or so on the Bloomberg Trump tariff story. On the day, 10s added 2.6bps and 2s 2.1bps. On the week, it has been a bear-flattening theme, 2s +7.5bps and 10s +5.6bps, with the belly performing worse (5s +8.2bps).
Commodities:
Another very mixed performance in commodities Friday, exchange traded metals all lower bar lead but iron ore slightly higher as too steaming (but not met.) coal. WTI crude was up but Brent slightly lower (this following big falls for both on Thursday on the view that Florence-related supply disruptions would not be too bad).
On the week met. coal, up 8%, is the big story as far as Australia is concerned, followed by oil, the latter higher on supply concerns linked more to the approach of Iran sanctions than hurricanes and including perhaps a dose of realism regarding how able and how quickly other producers will be to pick up the shortfall, assuming Iranian exports drop back to their 2006 pre-sanctions levels (about 1 million bpd down on now). Related to this, we are hearing and reading more about the potential for Iran to provoke greater civil unrest in Iraq (Shias on Shias), in particular around Basra, Iraq’s main port from where some 3.5mn bpd of Iraqi oil is currently shipped:
Economic Data
China August new home prices +1.49% vs 1.21% in July; yr/yr 8.0% up from 6.6%
US August Retail Sales +0.1% (0.4%E, 0.7%P revised from 0.5%).
US August Industrial Production +0.4% (0.3%E, 0.4%P revised from 0.1%, June 0.6% from 1.0%
US August Manufacturing Production 0.2% (0.3%E, 0.3%P)
University of Michigan preliminary Sep. consumer sentiment 100.8 (96.6E) from 96.2 in August
US August Import Prices -0.6%m/m (-0.2%E); yr/yr 3.7% down from 4.9% and 4.2%E
Sweden August CPI 2.0% (2.2%E, 2.1%P)
This morning on the Economic Front we have Euro-Zone CPI at 10.00 am and this is followed at 11.00 am by the German Bundesbank Monthly Report. Finally at 1.30 pm we have the New York Empire State Manufacturing Index.
Speaking wide today the ECB’s Coeure, Praet and Mersch are speaking at 10.00 am, 12.15 pm and 2.00 pm respectively.
September S&P 500
Late on Friday after the latest Trump announcement the S&P traded lower to my 2899 buy level before having a nice bounce into the close. As my three US Indices hit at the same time I covered my long S&P position at 2901 and I am now flat. One worry that I have with this market is the number of Hindenburg Omens being registered. Last Friday we had the ninth consecutive H.O. and 11th since August. This tells us that the market is fragile and could plunge at any time. This run of consecutive H.O’s has not happened in the last 40 years. However as long as we can hold above the key 50 Day Moving Average I will continue to be a buyer on dips. Today my buy level will be from 2885/2893 with a 2879 tight stop. Given the positive price action I still do not want to be short the market at this time.
EUR/USD
Shortly after the U.S. Markets opened on Friday the Euro traded lower to my 1.1660 initial buy level. As I did not want to have a position into the 3 pm University of Michigan Sentiment release I emailed my Platinum Members to exit any long position at 1.1665 and I am still flat. As a result of the stronger Economic data on Friday the Euro continued to sell-off and currently trades at 1.1630 this morning. The Euro has strong from 1.1560/1.1600 and today I will be a buyer on any dip to this area with a 1.1525 stop.
December Dollar Index
I have now rolled to the December Contract as the September Contract expires today. No change as I am still a buyer on any dip lower to 93.40/93.80 with the same 92.95 stop.
September DAX
The DAX traded in a narrow sideways pattern on Friday and I am still flat. The market needs to hold the 11950/12020 support level or else we could see a sell-off to the key 11750 long term support as I mentioned in detail last week. Today I will still be a small buyer from 11940/12010 with a 11885 stop.
September FTSE
I am still flat the FTSE which also traded sideways on Friday. Today I will lower my buy level slightly to 7210/7250 with a 7165 stop.
Dow Rolling Contract
My Dow plan also worked well on Friday with the market trading lower to my 26080 buy level before rallying to an overnight high at 26165. As I wanted to be flat over the weekend I covered this long position at my revised 26105 T/P level and I am now flat. Today I will again look to buy the Dow on any dip lower to 25830/25980 with a 25745 stop. I still do not want to be short the Dow at this time.
September NASDAQ
As I mentioned above in the S&P commentary, all three of my buy levels for the US Indices hit at the same time. After I bought the NASDAQ at 7525 I covered this position for a small gain at 7538 and I am now flat. The NASDAQ has strong support from 7435/7475 and today I will be a buyer on any dip to this area with a tight 7405 stop.
December BUND
Late on Friday the Bund traded lower to my 159.05 buy level before rallying to my 159.20 revised T/P level and I am now flat. Despite the negative price action in the Bund I am reluctant to chase this market lower. Today I will again look to buy the Bund on any further move lower to 158.45/158.85 with a 158.10 stop.
Gold Rolling Contract
Gold traded lower to my 1194 buy level on Friday afternoon on the back of the stronger US Dollar. As I am long Silver I did not want to hold both positions over the weekend and I emailed my Platinum Members to exit any long Gold position at 1195 and I am still flat. Gold continues to outperform Silver at this time. Gold needs to hold above the 1160 August low or else we could see an acceleration lower to at least the next support level from 1120/1130. Today I will again look to buy Gold from 1176/1185 with a 1169 stop.
Silver Rolling Contract
Despite the record number of short Futures Contracts in Silver the market so far is unable to get anything going on the upside. I am still long at 14.18 with the same 13.80 stop level. I will now lower my T/P level on this position to 14.25. If any of the above levels are hit I will be back with a new update for my Platinum Members.
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