Yesterday we had the UK Budget where UK growth estimates have been marked down from low productivity. Growth for 2017 was cut down from 2.0% to 1.5%, 1.4% growth expected for 2018, then to 1.3% for 2019 and 2020. This is a far cry from the 2½-3% growth not only in the US but now in Europe. There will be a reminder of this later this morning with the second estimates of UK growth while in the last few minutes we just had the release of German GDP which came in at 0.8% for Q3 and 2.8% y/y.
To mark my 1475th 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. This offer is open to both new and existing members and 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 37 points yesterday and is now ahead by 851 points for November, having made 657 points in October, 447 points in September, 1560 in August, 1096 in July, 1023 in June, 1076 in May, 1335 in April, 1375 in March, 1481 in February and 1734 in January. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points.
A cut to official UK growth forecasts into the lower “1s” and deficits as far as the eye can see picked up a large measure of understandable UK press coverage and saw some initial selling of Sterling. (Consensus forecasts for the UK are around 1½% this year and the next two years, so somewhat less dour.) Trading though was choppy and Sterling was supported by an emerging softer US Dollar after Fed Chair Yellen’s comments in her “fireside chat” yesterday with ex-BoE chief King with wider audience Q&A in NY.
Yellen said yesterday in a warning that tightening too quickly risked stranding inflation below the Fed’s 2% target. She also called out the continuing heightened level of uncertainty over the inflation outlook, even though she said that most FOMC members were using a working assumption that the downside mystery on inflation this year (including from idiosyncratic factors) would not re-appear next year. Such a low conviction view didn’t impress the USD market, the USD falling back, as have US Treasury yields. The EUR/USD is 80 points higher than when I marked prices 24 hours ago at 1.1835.
Last night we had the release of the FOMC Minutes from the November 2nd Meeting. This suggested that a December hike (baked into pricing) is still on (“many Fed policy makers saw `near term’ rate hike as warranted”), a “few” opposing it on the grounds of weak inflation. The quote that “many officials observed that low inflation `might reflect not only transitory factors, but also the influence of developments that could prove more persistent” suggests that FOMC members might be on the verge of wavering on their dot point forecasts for 2018. They may well hang tough in December; the outlook for the Fed Funds will be determined by the data runs. In the end, the Minutes noted that “nearly all participants” reaffirmed the view that gradual rate hikes would be warranted.
US Durable Goods Orders for October was a little softer than expected for both headline and core orders, though the trend remains positive. Jobless Claims in the week of 18 Nov fell back from 252K to 239K, consistent with a still strong job market.
This morning on the Economic Front we have German Manufacturing and Services/Composite PMI at 8.30 am. This is followed at 9.30 am by UK GDP. There’s quite a bit of ECB/policy focus with the release of the ECB’s October 26 Governing Council Minutes at 12.30 pm, which the decision to continue with QE without specifying an end date was not unanimous, let alone the issue of reversing negative rates. With the US Markets closed for the Thanksgiving Holiday we have no US Data today.
Finally, there are several opportunities for the French to voice their concerns with the Banque de France Governor Villeroy scheduled to speak twice along with a speech from the ECB’s Benoit Coeure.
December S&P 500
I am still flat the S&P which is selling off this morning on the back of the weaker German Equity market. With the US Markets closed today and the Futures Market only open for a few hours I would expect the S&P to trade in a narrow range. The S&P has strong support at 2580 and today I will now lower my buy level slightly to 2579/2585 with a 2574 stop. Given the strong seasonality I still do not want to be short the S&P at this time.
EUR/USD
My Euro plan worked really well yesterday with the market trading lower to my 1.1735 buy level before rallying 100 points. Unfortunately as I wanted to make up for Tuesday’s non-event I emailed my Platinum Members to exit any long Euro position at 1.1752 or higher and I am now flat. There is no doubt the break back above 1.1800 is significant as in my opinion despite the strong Employment data that the US Market will enter a recession sooner than most analysts expect. Today I will again look to buy the Euro on any dip lower to 1.1760/1.1800 with a 1.1730 stop which is just below yesterday’s 1.1731 low print.
December Dollar Index
Unfortunately the Dollar just missed my 94.05 sell level by a few points before falling 80 points and I am still flat. The Dollar has strong support at 92.80 and this level must hold or else we could see an acceleration lower in the Dollar. Given the significance of this support level I will now be a buyer on any dip lower to 92.50/92.85 with a tight 92.20 stop.
December DAX
My DAX plan worked well yesterday with the market trading lower to my 13110 buy level before bouncing over 50 points and this move higher enabled me to cover this position at my revised 13125 T/P level and I am now flat. Thankfully for those of you long the DAX, the market held up for a few hours after hitting my buy range before getting slammed late in the day. This move lower has continued this morning with the DAX now trading over 250 points lower than yesterday’s intra-day high. The DAX has strong support at last week’s 12840 low print and today I will be a buyer on any further dip lower to 12785/12845 with a 12730 stop.
December FTSE
On the back of the stronger Sterling and much weaker DAX, I emailed my Platinum Members to lower their buy level in the FTSE to 7325/7360 with a 7295 stop. With GDP at 9.30 am this will set the stall for the FTSE market for the rest of the day. Given how close we are to the 100 Day Moving Average at 7385 I do not want to be short the FTSE at this time.
Dow Rolling Contract
Frustratingly the Dow missed my initial 23500 buy level by a few points on three occasions before having a nice rally each time. After the US markets closed last night I emailed my Platinum Members to lower their Dow buy level to 23470 and this was filled earlier this morning. As I want to get all members on the same page I covered this position at my revised 23475 T/P level and I am now flat. Tomorrow is ‘’Black Friday’’ which even though the US markets are only open for a half day, tends to be bullish and today I will now look to buy the Dow on any further dip lower to 23370/23430 with a 23325 stop. Remember a break and close below the 23250 strong support level is bearish and could well see a quick move lower to at least 22800.
December NASDAQ
In contrast to the previous week the NASDAQ was the strongest of the US Indices in yesterday’s trading. I am still flat and I will continue to be a buyer on any dip lower to 6285/6325 with the same 6250 stop.
December BUND
I am still flat the Bund which continues to defy gravity with its insanely low yield despite German growth coming in earlier this morning at 2.8% y/y. Today I will now lower my sell level to 163.40/163.75 with a 164.05 stop.
Gold Rolling Contract
Gold continues to trade sideways moving up one day and down the next in what has been an unbelievably narrow range for the past number of months. I am still flat Gold which had a nice rally late yesterday on the back of the weaker US Dollar. In light of this I will now raise my buy level to 1269/1276 with a 1262 stop.
Silver Rolling Contract
No change as I am still long Silver at 17.10 with the same 17.20 T/P level. I will still only add to this position on any move lower to 16.70 with the same 16.40 stop. Again if any of these scenarios happen I will be back with a new update for my Platinum Members.
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