Equity Markets closed lower on Friday led by the 1% fall in the NASDAQ 100 which broke an eight-week winning streak that began in late April. Oil saw a weekly decline of over 3% following indications from the Federal Reserve that additional interest rate increases would be necessary. This dampened risk appetite, strengthened the Dollar, and raised concerns about a potential economic slowdown. The prospect of a strengthened U.S. Dollar resulted in the attractiveness of commodities priced in the U.S. currency to fall, including oil. West Texas Intermediate (WTI) crude oil remained stable below $70 per barrel after experiencing a 4.2% drop on Thursday. Ford (F) is reportedly preparing for another round of layoffs in the coming weeks as part of its ongoing efforts to improve operational efficiency and cut costs. The layoffs, primarily targeting salaried workers in the U.S., would be one of several initiated by the automaker within a year. The exact number of employees affected in this round of layoffs is unknown, but it is expected to impact individuals in Ford’s gas-engine business, as well as its electric-vehicle and software division. Treasury Secretary Janet Yellen expressed optimism about the U.S. economy, stating that the risk of a recession has diminished. She highlighted the resilience of the labour market and the declining trend in inflation as factors contributing to this positive outlook. Yellen acknowledged that the trade-off of slower consumer spending could be necessary to achieve the goal of containing inflation. According to a forecast by Capital Economics, U.S. office buildings are projected to face a significant decline in value and are unlikely to reach their pre-pandemic peak values until at least 2040. The report suggests that values may plummet by 35% from the peak by the end of 2025, and it could take an additional 15 years or more for the market to recover. This prolonged recovery is attributed to the changing dynamics of work, as hybrid and remote arrangements reshape the real estate landscape. The forecast highlights the enduring impact of the pandemic on the commercial property sector and reflects the ongoing shift in demand for office space. In May, the U.S. housing market experienced its largest year-over-year decline in existing-home prices in over 11 years, primarily due to the impact of rising interest rates. According to the National Association of Realtors, the national median existing-home price dropped by 3.1% compared to the previous year, reaching $396,100. This decline marks the most significant drop since December 2011. European Markets closed lower for the fifth consecutive session. The economic momentum in the Euro-Zone significantly slowed in June, indicating the potential end of the bloc’s recovery from its winter decline. According to the purchasing managers index (“PMI”) compiled by S&P Global, the Index dropped to a five-month low of 50.3. This result was below analyst expectations, who had anticipated a slight decline to 52.5 from the previous month. The decline was mainly driven by France, which has been grappling with strikes, while Germany’s struggling manufacturing sector also contributed to the slowdown. ECB Vice-President Luis de Guindos emphasised the importance of passing on the recent interest rate hikes by the European Central Bank (“ECB”) to savers. He emphasised the need for the impact of monetary policy to be reflected in deposit rates as well as loans. De Guindos’ comments highlight the ECB’s objective of ensuring that the effects of its monetary policy measures, such as interest rate changes, are felt throughout the banking system. By encouraging higher deposit rates, the ECB aims to support savers and ensure that the positive effects of its policies are fully felt throughout the economy. In Asia, Consumer prices in Japan rose at a faster pace than anticipated in May, surpassing economists’ expectations. Excluding fresh food prices, the consumer price index increased by 3.2% compared to the previous year, slightly lower than the 3.4% rise seen in April. However, the reading still exceeded analysts’ projections of a 3.1% increase. Additionally, a measure of the underlying inflation trend indicated further strengthening, suggesting that prices have more upward momentum than initially anticipated. This outcome has led to speculation that the central bank may revise its inflation forecasts in July and potentially adjust its stimulus programme. Elsewhere, Oil fell 0.50% while Gold rose 0.4% after another volatile session.
To mark my 2800th 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 325 points on Friday and is now ahead by 2448 points for June. 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 0.77% lower at a price of 4348.
The Dow Jones Industrial Average closed 219 points lower for a 0.65% loss at a price of 33,727.
The NASDAQ 100 closed 1.0% lower at a price of 14,891.
The Stoxx Europe 600 Index closed 0.34% lower.
This morning, the MSCI Asia Pacific closed 0.5% higher.
This morning, the Nikkei closed 0.25% lower at a price of 32,698.
Currencies
The Bloomberg Dollar Spot Index closed 0.47% higher.
The Euro closed 0.5% lower at $1.0892.
The British Pound closed 0.1% lower at 1.2715.
The Japanese Yen fell 0.6% closing at $143.65.
Bonds
Germany’s 10-year yield closed 14 basis points lower at 2.36%.
Britain’s 10-year yield closed 5 basis points lower at 4.32%.
U.S.10 Year Treasury closed 6 basis points lower at 3.74%.
Commodities
West Texas Intermediate crude closed 0.50% lower at $69.16 a barrel.
Gold closed 0.4% higher at $1920.10 an ounce.
This morning on the Economic Front we have German IFO Business Climate at 9.00 am. The only other data of note is U.S. Dallas Fed Manufacturing Business Index at 3.30 pm.
Cash S&P 500
The S&P finally had a down week which is no surprise as it coincides with the reduction in liquidity. Although the VIX closed higher by 4% on Friday, Goldman Sachs came out with a report showing that the 10-day realised positive correlation between the VIX and S&P hit a new record high. We have seen bank stocks dropping all last week, yet the VIX also keeps falling. This goes against all history which shows that when the Bank Stocks fall the VIX rises. My concern here is that I keep wondering if risk continues to be mis-priced or is this a very clever way to control the market and minimise any downside. Either way it prevents sell-offs from gathering steam and are subject to this drip action of lower prices. Longer term a market that does not subject itself to a natural price discovery forces becomes ever further disconnected from reality and risks being subjected to a major accident as artificial price constructs are by definition a bubble. On Friday, the S&P hit my 4345 buy level before rallying to my 4354 revised T/P level and I am now flat. The S&P has now fallen over 100 Handles off it June Expiration 4447 high. The S&P has short-term support from 4317/4332 where I will be a strong buyer with a 4305 ‘’Closing Stop’’. I no longer want to be short the S&P at this time.
EUR/USD
The PMIs were released just as I posted on Friday. The Euro sold off to a 1.0843 low on this news. I bought the Euro at 1.0865. I am still long with a now lower 1.0925 T/P level. I will add to this position at 1.0815 while leaving my 1.0755 ‘’Closing Stop’’ unchanged. There is no doubt that the Euro dynamic is changing as no matter how weak the Economic Data, the Euro is attracting buyers on any dip. If any of the above levels are hit I will be back with a new update for my Platinum Members.
June Dollar Index
The Dollar never came close to Friday’s buy level and I am still flat. I will now raise my buy level to 101.70/102.40 with a higher 101.15 tight ‘’Closing Stop’’.
Cash DAX
I do not like the price action in the DAX. Given the weakness of the recent economic data it makes no sense to me to be long German Equities despite the positive price action over the past seven months. However, the positive price action makes it difficult to be short. For bears to regain control the DAX needs to break and close below 15300 for a few days. On Friday after the DAX hit my 15785 buy level we rallied to my revised 15835 T/P level and I am now flat. This morning, the DXA is opening higher at 15860. We have support from 15630/15700 where I will be a buyer with a lower 15565 ‘’Closing Stop’’. I still do not want to be shorty the DAX at this time.
Cash FTSE
No Change. I am still long from Thursday at 7495. I will continue to look to add to this position at 7435 while leaving my 7375 ‘’Closing Stop’’ unchanged. I will now lower my T/P level to 7530. If any of the above levels are triggered, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
My Dow plan worked well as after the market hit my 33680 buy level we had a nice rally to my revised 33785 T/P level and I am now flat. Although the Dow sold off into the close we are trading slightly higher at 33770 this morning. The Dow has support at its 50-Day Moving Average (33619) where I would expect good support on any initial test. As a result, I will be a buyer from 33400/33620 with the same 33295 ‘’Closing Stop’’. I still do not want to be short the Dow at this time.
Cash NASDAQ 100
The NASDAQ ended an eight-week winning streak, by closing 1.30% lower last week. Despite aggressive retail buying over the past month, the QQQ saw a huge three Billion Dollars of outflows last week. I am still flat the NDX as I continue to be a strong buyer from 14550/14700 with a now lower 14395 ‘’Closing Stop’’. Meanwhile, I will continue to be a seller on any further rally to 15110/15260 with the same 15355 ‘’Closing Stop’’.
September BUND
The awful PMI data saw Bund Yields fall a huge 15 basis points on Friday making the ECB again looking like fools with their latest rate hike. They were behind the curve 18 months ago and now behind the curve again more concerned about inflation instead of the recession that is now staring them in the face. The Bond Market has been right all year by being a buyer of dips. Today, I will raise my buy level to 132.80/133.50 with a higher 131.95 ‘’Closing Stop’’.
Gold Rolling Contract
Gold rallied above 1932 before falling $12 into the New York close. This initial move higher saw my 1922 T/P level triggered on my latest 1913 long position and I am now flat. Today, I will again be a buyer on any dip lower to 1895/1910 with a lower 1883 ‘’Closing Stop’’.
Silver Rolling Contract
No Change. I am still long at an average rate of 23.63 with the same 24.40 T/P level. I will continue to have no stop on this position. If this changes I will be back with anew update for my Platinum Members.
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