U.S. Indices (S&P +0.8%, NASSAQ 100 +1.9% and RUSSELL 2000 +0.5%) saw broad-based gains on Wednesday with Communications, Consumer Discretionary, and Technology the sectorial outperformers and the former once again supported by Alphabet (GOOG) (+5.5%) strength. Tech was further buoyed by gains in semiconductor names, highlighted by the SOXX ETF firming in excess of 2.5%. Healthcare was the clear sectorial laggard. The key risk event was US CPI, which cemented expectations for a 25bps rate cut by the Fed next week, as the November report printed in line with estimates across all major metrics. Money markets now price a circa 96% chance of that outcome vs. 82% pre-data. The Dollar was firmer to the detriment of most G10 FX, while the Canadian Dollar firmed in reaction to the as-expected 50bps rate cut from the Bank of Canada and the decision to drop language about “it being reasonable to expect further rate cuts if the economy evolves in line with expectations”. The Japanese Yen saw two-way action, albeit eventually weakened, on mixed Bank of Japan reports in the European morning, while the Yuan was supported by Reuters sources that China’s top policymakers are considering allowing the Yuan to weaken in 2025 as Trump tariff looms. The crude complex gained and firmed throughout the US session after being initially pressured in the morning on those aforementioned China reports. T-Notes steepened as in-line CPI anchored December 25bps rate cut expectations, although saw a slight bid after a strong US 10 Year Auction but then sold off into settlement with no specific headline driver, with potential Dollar strength weighing. U.S. CPI November report printed in line with estimates across all major metrics which cemented calls for a 25bps Fed rate cut next Wednesday. Highlighting this, headline M/M rose 0.3% or 0.313% unrounded (prev. 0.2%) with the Y/Y figure rising 2.7% (prev. 2.6%). Core M/M rose 0.3% or 0.308% (prev. 0.3%) and the Y/Y printed 3.3% (prev. 3.3%). On the dataset, the upside pressure predominantly came from used vehicles which jumped 2.0%, following its 2.7% increase in October, and new vehicles lifting 0.6%. Only three subsets declined, that being electricity (-0.4%), energy services (-0.1%), and medical care commodities (-0.1%). Ahead of the Federal Reserve meeting next week money markets firmed up their bets of a 25bps cut, with now a circa 94% chance of such a move seen vs. 84% pre-data. Overall, ING notes U.S. core inflation posted a fourth consecutive 0.3% print, showing that progress towards the Fed inflation goal has clearly stalled, but the Fed’s favoured measure of inflation is doing a little better and the jobs market is cooling. As such, the bank looks for another 25bps Fed cut next week, but new SEP’s should show a shallower series of cuts in 2025. The Bank of Canada cut rates by 50bps, taking the target for the overnight rate to 3.25%, in line with expectations and now matching the top end of the BoC’s neutral rate estimate. The BoC also removed language from the statement about it being reasonable to expect further rate cuts if the economy evolves in line with forecast. Instead, the BoC said it will evaluate the need for further rate cuts one decision at a time, with decisions guided by incoming information and their assessment of the implications for the inflation outlook. The language around the decision to cut by 50bps was maintained, noting it was to support economic growth and keep inflation close to the middle of the 1-3% target range – implying the BoC were not too fussed with the recent uptick in inflation. The Central Bank noted that Q4 growth looks weaker than expected, and a reduction in immigration levels suggest that 2025 GDP growth will be less than their October forecast and effect on inflation will be more muted. The BoC are also cognizant of the proposed Trump tariffs, stating it has increased uncertainty and clouded the economic outlook, although Governor Macklem said in the press conference the BoC cannot front-run policy on something that might not happen. Elsewhere in the Press Conference, the BoC Governor said they discussed a 25 and 50bps rate cut at the meeting, echoing the statement that going forward the BoC will consider further cuts but will be taking a more gradual approach. Macklem added that their policy focus now is to keep inflation close to the target, and that the economy remains in excess supply and the growth outlook appears softer than projected in October. He also stated how the unemployment rate has gone up, but they are yet to see widespread job losses as typically seen in a recession, something the BoC does not expect to occur. Macklem acknowledged the CAD, stating until recently, it has been stable, but most of the depreciation of the CAD is due appreciation of the USD and that CAD vs other major currencies shows very little change. To summarise, the BoC cut rates by 50bps but signalled a slower pace of easing ahead – likely as the BoC approaches the neutral rate, and as it assesses potential tariff updates from US President-elect Trump. Money markets are pricing in 14bps of easing for January, which implies a 55% probability of a 25bps cut, and 45% probability of rates being held steady. Looking ahead through end-2025, money markets imply 61bps of easing, vs the 72bps of easing beforehand as the BoC signals a slower path ahead. Elsewhere Oil closed Wednesday with a 2.43% gain while Gold continues to build value above $2700, rising for the fifth consecutive trading session with a 0.83% gain.
To mark my 3100th issue of TraderNoble Daily Commentary I am offering a special 2-Year rate of Euro 2750 for my Platinum Service which includes 1 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 was made 85 points yesterday and is now ahead by 368 points for December after closing November with a gain of 3049 points having finished October with a gain of 2179 points. September saw a gain of 4402 points following a 301-point loss for August after closing July with a gain of 1918 points while June closed with a gain of 2074 points, having made 1843 points in May. The Platinum Service made 4010 points in April after ending March with a gain of 2113 points. February closed with a gain of 1606 points, after closing January with a gain of 3675 points. December saw a gain of 1890 points after finishing November with a gain of 1734 points. October ended with a gain of 3184 after closing September with a small gain of 228 points, after finishing August with a gain of 1485 points, following a small gain of 285 points gain in July, after closing June with a gain of 2683 points. 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 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 0.82% higher at a price of 6084.
The Dow Jones Industrial Average closed 99 points lower for a 0.22% loss at a price of 44,148.
The NASDAQ 100 closed 1.85% higher at a price of 21,763.
The Stoxx Europe 600 Index closed 0.28% higher.
This morning, the MSCI Asia Pacific closed 0.6% higher.
This morning, the Nikkei closed 1.21% higher at a price of 39,849.
Currencies
The Bloomberg Dollar Spot Index closed 0.34% higher.
The Euro closed 0.3% lower at $1.0522.
The British Pound closed 0.05% higher at 1.2759.
The Japanese Yen fell 0.5% closing at $152.09.
Bonds
Germany’s 10-year yield closed 1 basis points higher 2.13%.
Britain’s 10-year yield closed 1 basis points lower at 4.32%.
U.S.10 Year Treasury closed 4 basis points higher at 4.27%.
Commodities
West Texas Intermediate crude closed 2.48% higher at $70.29 a barrel.
Gold closed 0.83% higher at $2716 an ounce.
This afternoon at 1.15 pm we have the ECB Rate announcement where the consensus is for a further 25 basis point cut. This is followed at 1.45 pm by the President Lagarde Press Conference. In between, we have U.S. Weekly Jobless Claims and PPI at 1.30 pm. Finally, we have a 30 Year Treasury Auction at 6.00 pm.
Cash S&P 500
It is amazing that the Fed have a 2% target level for inflation yet because yesterday’s CPI printed 2.7% which was expected the S&P rallied 60 Handles. How the Fed can justify next week’s 25 basis point rate cut is mind boggling especially as Financial Conditions are easier now than at the start of QE back in 2009. The SOX sector was on the verge of a major breakdown given the price action over the past week yet magically got saved yesterday with a 2.5% rally. Having spent almost five months in Florida this year I can tell you that inflation is not falling and will come back to bite in 2025 given the easier Monetary Policy, lower tax rates from the new administration and debt levels that continue to soar by the minute. I will make a prediction that at some stage in 2025 the Fed are going to have to reverse policy and hike rates. Maybe this will be the catalyst for bursting this asset bubble with bitcoin back above 100K this morning. Wall Street keeps pumping out ever higher target levels for 2025 with Oppenheimer the latest with a 7100-target price. This is the same guy that had a target level for 2024 at 5200. However, any imagined spanking of excessive optimism is all conjecture at this point until we see actual follow through. Underneath the market we are witnessing another stealth correction in the Indices as the internals have been horrid all of December. While the NDX closed at a new all-time high last night, the Dow is trading over 1200 points lower from its November high. Yesterday’s move higher saw the S&P trade the whole of my sell range for a 6079 average short position. As I am now short both the NDX and the DAX, I emailed my Platinum Members to exit any short position at 6075 and I am now flat. Today, we have U.S. PPI and of course the ECB rate announcement. The S&P has further resistance from 6105/6125 where I will again be a seller with a 6141 ‘’Closing Stop’’. My sell range is significant as it is the top of a major trendline and is outside the top of the Daily Bollinger Band. My only interest in buying the S&P is still on a large dip lower to 5988/6006 with a higher 5975 tight ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 6098. If I am taken long, I will have a T/P level at 6025.
EUR/USD
The boring sideways action in the Euro shows no sign of ending. Maybe after this afternoon’s ECB rate cut we may see an increase in volatility. I am still long the Euro at an average rate of 1.0665. Given how oversold the Euro is I will add to this position on any further move lower to 1.0440 with no stop for now. I will leave my T/P level unchanged at 1.0690. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
I am still flat the Dollar as the market again traded in a narrow range on Wednesday. The Dollar has resistance from 107.20/108.00 where I will be a small seller with the same 108.55 tight ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 106.75.
Cash DAX
The price action in the DAX continues to frustrate me as I cannot seem to get an edge on this market. The total MARKET CAP for the German Equity Market is an incredible $2.5 trillion. Yesterday the DAX rallied to my sell range which I did not expect for a now 20410 short position. I will add to this trade at 20510 while leaving my 20605 ‘’Closing Stop’’ unchanged. I will now raise my T/P level to 20360. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash FTSE
My latest 8245 long FTSE position worked well as the market rallied to my revised 8290 T/P level and I am now flat. This morning the FTSE is trading at 8310. We have support from 8180/8250 where I will again be a buyer with a 8095 wider ‘’Closing Stop’’. The FTSE has pretty much ignored a lot of the U.S. Equity Movement so far in 2024. We have a gap below at 8150 which if tagged will see me be a large buyer. If I am taken long, I will have a T/P level at 8305.
Dow Rolling Contract
This morning the Dow surprisingly traded lower to my 44040-buy level. I am still long with a now lower 44190 T/P level. I will continue to look to add to this position on any further move lower to 43800 with the same 43595 ‘’Closing Stop’’. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
Wow! New all-time highs in the NDX following a 360-point rally on Wednesday. This move higher has me short at a price of 20630. I will add to this position on any further spike higher to 20830 with a now higher 20955 ‘’Closing Stop’’. I will now raise my T/P level to 20540. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
March BUND
All eyes are on this afternoon’s expected 25 basis point rate cut from the ECB. I am still flat the Bund with the market trading in narrow ranges all week as it goes on hold ahead waiting to see what ECB President Lagarde has to say in her press conference. I will not chase the price lower as I continue to be a seller from 136.70/137.50 with the same 138.15 ‘’Closing Stop’’. Although Yields have risen seven basis points since last Thursday’s Commentary was posted I have no interesting in buying the market. If this view changes, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
Gold closed a further 0.85% higher last night in New York following further continued aggressive buying by the Chinese. I still do not trust the price action in Gold given the fact that it already up nearly 30% for the year and as a result I have no interest in chasing the price higher. Gold has support from 2620/2636. I will move my buy level to this range with a higher 2607 tight ‘’Closing Stop’’. If triggered, I will have a T/P level at 2648.
Silver Rolling Contract
Despite Gold rallying hard yesterday Silver continues to attract selling above $32. I am still flat. Silver has support below from 30.60/31.40 where I will continue to be a small buyer with the same 29.45 ‘’Closing Stop’’.
Please Note: There will no Daily Commentary tomorrow. Any of my calls that are not hit today and are subsequently triggered on Friday will see me return with updated emails for my Platinum Members.
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