As I go to press I am still waiting for President Trump to announce at a press conference details on the further $16bn of tariffs and more importantly increase the threatened tariff from 10% to 25% on the additional $200bn in tariffs promised on retaliation. Chinese Foreign Ministry spokesman Geng Shuang said yesterday that ’’US pressure and blackmail won’t have an effect. If the United States takes further escalatory steps, China will inevitably take countermeasures and we will resolutely protect our legitimate rights’’. ‘’Unilateral threats and pressure will only produce the opposite of the desired result’’. But so far there has been no press conference, officials back grounding reporters that the US may lift planned tariffs to 25% on the $200b and has not decided on the other $16bn not specified.
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@tradernoblecom for details
For anyone following my Platinum Service it made 93 points yesterday on the first trading session of August, having made 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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Equities
This news took the edge off risk sentiment in the London Session yesterday, denting the European Equity markets especially the FTSE which closed over 1.5% lower, while the Shanghai stock market closed down 1.8%. This news has dominated market attention, the market putting to one side the announcement out of China yesterday of further measures agreed to by the Politburo to support China’s economic growth. These included: putting economic growth ahead of structural reform, pursuing more tax cuts and seeking to boost infrastructure spending. While reiterating deleveraging as the main job, the meeting stressed that the deleveraging needs to be at gradual pace. They also removed the wording of ‘’neutral’’ in the monetary policy stance, keeping prudent monetary policy unchanged, adding to maintain reasonable ample of liquidity.
Whether these are more in the nature of fine tuning or more substantial could indeed turn on how events are shaped, but it is a very clear indication of continued growth intent.
Commodities
On the commodity front, iron ore and Chinese steel rebar futures were both lower on the Dalian exchange, selling spilling over to the LME with the LMEX composite index off 1.99%, high beta Nickel down 3.14%. Copper fell 2.03%. Gold is down 0.71%. Oil prices are also closed lower, WTI by 1.32% and Brent by 2.29%; the market factoring in some recently disappointing costs reported by US shale companies, coming after a mix of results from international oil majors.
Bonds
While risk sentiment has been on the defensive, at least as far as equities and commodities are concerned, global bond yields rose. Admittedly, the catalyst was again from JGBs with the market testing the tolerance of the Bank of Japan for higher yields, the 10y up 6.9bps to 0.131%. This spilled over into European and US markets and was very much in train before the Fed announcement a little earlier last evening. The US 10 year rose 4.66bps and now sits a smidgeon over 3% at 3.0064%, that yield sitting at 2.99% before the FOMC announcement and already having tested 3% in the session.
Currencies
It has been a measured past 24 hours. Commodity currencies have edged lower, but not outside recent ranges and in an orderly manner. The AUD is trading this morning around 0.74 still, down one fifth of a per cent, Kiwi and the CAD also on balance somewhat lower. The outperformer has been the yen, partly ‘’safe haven’’ with Japanese bond yields also supportive. The news of an expected ramp up in the tariff rate on the #200bn to 25% took the edge off equities, hit commodities but had a marginal impact on Aussie and even though the CNY has continued to weaken.
The Fed and Economics
The Fed left Interest Rates on hold but signalled it was still on track for further gradual increases in its Funds Rate, describing the stance of monetary policy as accommodative and not including the ‘’for now’’ rider Powell used in his recent Congressional testimony as a rider to its policy forward guidance. The statement upgraded its description of the economy’s growth from ‘’solid’’ to ‘’strong’’. They described risks to the outlook as roughly balanced.
The US ISM Manufacturing Index missed expectations at 58.1 (59.4 expected, down from 60.2). The report cited already stretched resources and supply chains and called out concerns about the further impact from tariffs and reciprocal tariffs on top of already worrying business input cost pressures. The Atlanta Fed upped its estimate of US Q3 GDPNow to 5.0% form 4.7%.
This morning on the Economic Front we have Euro-Zone PPI at 10.00 am. This is followed at 12.00 pm by the UK Rate Announcement. The Bank of England is expected to hike, lifting rates from 0.5% to 0.75%, but then remain on hold for some time, it is over 90% priced in the market. Next we have US Weekly Jobless Claims at 1.30 pm. Finally at 3.00 pm we have Factory Orders.
September S&P 500
My S&P plan worked well with the market trading lower to my 2808 buy level before rallying to my 2813 T/P level and I am now flat. The S&P had a volatile trading session having hit an intra-day high over 2825 before falling 20 Handles on the latest threat on tariffs from President Trump with China. As I have said for the last few months until we break and close below the 50 Day Moving Average (2766) and 200 Day Moving Average (2698) I will still be a buyer on dips as this strategy has worked for most of the past nine years. Shorter term the S&P has strong support from 2780/2790 and today I will again look to buy the market on any dip lower to 2796/2804 with a 2789 stop. Again if I am taken long and subsequently stopped out of this position I will be a more aggressive buyer from 2775/2785 with a wider 2765 stop. I still do not want to be short the market at this time.
EUR/USD
The Euro has traded within a 100 point range for most of the past six weeks with very little movement on a daily basis. I am still flat and today I will leave my buy level unchanged from 1.1590/1.1630 with the same 1.1555 stop.
September Dollar Index
I am still flat the Dollar and today I will raise my buy level slightly to 93.70/94.10 with a 93.35 stop.
September DAX
The DAX had traded heavy over the past few trading sessions as the market continues to make lower lows and lower highs. I am still flat and I am still reluctant to be a seller of this market unless we can take out the key 12500 support level. Today I will again lower my buy level slightly to 12530/12590 with a 12480 stop.
September FTSE
Yesterday the FTSE reversed all of Tuesday’s gains with the market falling a hefty 1.5%. This move lower saw the FTSE trade the whole of my buy range for an average long position at 7615. I did not like the price action and I emailed my Platinum Members to exit any long position at 7610 and I am still flat. The FTSE now has strong resistance at 7700 and it will take a break and close over this level for the bulls to return. The FTSE also has support at the 7500 area and today I will be a small buyer on any dip lower to 7480/7530 with a 7445 stop.
Dow Rolling Contract
My Dow plan worked well with the market eventually trading lower to my 25285 buy level shortly after the release of the FOMC Statement. Subsequently the Dow had a nice rally and I used this rally to cover my long position at my 25335 revised T/P level and I am now flat. As I mentioned yesterday the Dow has strong support at the 25200 area and very strong support below here at 24800. This second support is just below the 50 Day MA which comes in at 24865. Today I will again look to buy the Dow on any dip lower to 25030/25190 with a 24950 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer on any further dip lower to 24720/24880 with a 24650 stop.
September NASDAQ
The NASDAQ was the strongest of the US Indices yesterday after its drubbing last week and again on Monday. I am still flat and I will leave my buy range unchanged from 7140/7185 with a 7095 stop. Meanwhile I will now lower my sell level slightly to 7330/7375 with a 7410 tight stop.
September BUND
The Bund gapped lower on the European open yesterday morning with the market eventually hitting my initial 161.20 buy level. Subsequently the Bund made an intra-day low of 160.85 before rallying post the FOMC Statement. As I did not want to have a long position on board overnight I emailed my Platinum Members to exit any long position for a small loss at 161.17 and I am now flat. With sentiment at such negative extremes towards the US Bond market, in my view it is only a matter of time before the US 10 Year Note rallies and this in turn will help the Bund to rally. Today I will again look to buy the Bund on any dip lower to 160.30/160.70 with a 159.95 tight stop.
Gold Rolling Contract
Sentiment remains bearish to an extreme for Gold. I am still flat as I am still long Silver I will now lower my Gold buy level slightly to 1200/1208 with a lower 1193 stop.
Silver Rolling Contract
No change as I am still long at 15.49 with the same 14.95 stop. I will look to add to my long position at 15.15 and if this level is filled I will then lower my T/P level to 15.40. Otherwise I will leave my T/P level unchanged at 15.70. If any of the above levels are hit I will be back with a new update for my Platinum Members.
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