The Federal Reserve raised rates as expected by 25 basis points, signalling their unwavering commitment to tackling inflationary concerns. This forthcoming measure was the 11th rate increase since early 2022, with interest rates now in a range of 5.25% to 5.50%. The Dow led yesterday’s gains, closing higher for a 13th consecutive trading session, matching a record from January 1987. The S&P reversed earlier losses to close flat while after the close futures prices are higher following better results from Meta. The current state of the resale housing market, with limited inventory and rising prices, has made it difficult for entry-level buyers to find affordable homes. In response to this demand, homebuilders are downsizing the ‘American Dream’ by offering smaller, more affordable homes with fewer options and upgrades. This strategy is driven by the need to attract first-time buyers who are facing challenges in the market. Many of these buyers are opting for new builds because there are still too few previously owned properties available for sale. Additionally, with low mortgage rates, existing homeowners are reluctant to sell, further exacerbating the inventory shortage. JPMorgan Chase (JPM) is bullish on Gold, expecting prices to surge beyond $2,000 an ounce by the end of the year and reach new records in 2024. The bank predicts that falling real yields in the U.S., coupled with potential rate cuts by the Federal Reserve, will be significant drivers for the precious metal. Gold has already experienced a 15% rally in the past year, supported by indications that the U.S. rate-hiking cycle was nearing its end, increased central bank purchases, and periods of safe-haven demand. In May, it came close to its all-time high of $2,075.47 an ounce, achieved in 2020. European Markets closed lower. Europe’s major banks, including Deutsche Bank and Lloyds Banking Group, are warning of an increasing risk of bad loans amid the global economic challenges of slow growth and high inflation. Financial regulators and investors are closely monitoring how banks manage the uncertain economic climate, particularly concerning stress in their loan portfolios. The recent earnings reports from European banks reveal broader trends in the global banking industry, with investment banks facing pressure due to a lack of deals, while higher interest rates are aiding profitability in retail banking. Porsche is exploring the possibility of establishing an electric-vehicle battery factory with potential financial and strategic partners. The project is estimated to cost up to €3 billion ($3.3 billion). The luxury carmaker is evaluating locations in proximity to Germany, the U.S., and Canada, with a focus on regions where electricity prices are competitive and renewable energy is abundant. The proposed plant is intended to have a capacity of up to 20 gigawatt-hours with Chief Financial Officer Lutz Meschke emphasising the importance of competitive energy costs in the decision-making process. In Asia, Taiwan and Britain announced their plans to initiate an Enhanced Trade Partnership, which will concentrate on various areas such as investment, digital trade, and energy. Despite not having formal diplomatic relations, Taiwan considers Britain to be a significant democratic partner. Taiwan’s support for Britain stems from its concern about increased Chinese military activities near the island, which China claims as its own territory. The partnership aims to strengthen economic cooperation and collaboration between the two nations. Elsewhere, Oil fell 0.92% while Gold closed higher by 0.5%.
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 200 points yesterday and is now ahead by 140 points for 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 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 0.02% lower at a price of 4566.
The Dow Jones Industrial Average closed 82 points higher for a 0.23% gain at a price of 35,520.
The NASDAQ 100 closed 0.40% lower at a price of 15,499.
The Stoxx Europe 600 Index closed 0.53% lower.
This morning, the MSCI Asia Pacific closed 0.3% higher.
This morning, the Nikkei closed 0.68% higher at a price of 32,891.
Currencies
The Bloomberg Dollar Spot Index closed 0.4% higher.
The Euro closed 0.2% higher at $1.1091.
The British Pound closed 0.7% higher at 1.2948.
The Japanese Yen rose 1% closing at $140.06.
Bonds
Germany’s 10-year yield closed 6 basis points higher at 2.46%.
Britain’s 10-year yield closed 1 basis points higher at 4.28%.
U.S.10 Year Treasury closed 4 basis points lower at 3.84%
Commodities
West Texas Intermediate crude closed 0.92% lower at $78.90 a barrel.
Gold closed 0.5% higher at $1965.10 an ounce.
This morning on the Economic Front we already had the release of German GFK Consumer Confidence Survey which came in at -24.4 versus -24.7 expected. Next, we have the ECB Rate Announcement at 1.15 pm followed by ECB President Lagarde’s press conference at 1.45 pm. Meanwhile, at 1.30 pm we have the Weekly Jobless Claims, Durable Goods Orders, GDP, Wholesale Inventories and the Trade Balance. Finally, we have Pending Home Sales at 3.00 pm and the Kansas City Fed Manufacturing Activity Index at 4.00 pm.
Cash S&P 500
I stated a number of times how long it takes for the lag effects of the 11 rate hikes to hit the underlying economy. The general view is it takes 12/18 months. The truth is nobody knows with any sort of precision as it is complicated. Even the Fed does not know and has admitted as much. When the Fed paused in 2006 it took nearly 18 months before it really impacted markets and the economy and then things blew up. After all markets ended up making a new high in September 2007 before reality hit and the economy went into recession, resulting in the S&P falling over 50%. In 2006/07 Debt to GDP was 60% and is over 120% now and will be rising further next year. We can already see the immediate effect on Government Interest payments which is enormous and will jump higher when the next data point is released next week. The best case we have now is the recession is delayed but not averted. Yesterday’s new 2023 highs for the S&P came on further negative divergence. I do not know when this will matter but the fact is the U.S. is heading for recession as the inverted yield curve has been telling us this for most of the past 12 months. Finally, $NYMO keeps screaming danger given the negative divergences as shown by the channel patterns on the chart that continue to hold and narrow. In my opinion it will be difficult for inflation to fall further given the large rise in Oil and Orange Juice amongst a number of categories over the last two months. I am still short the S&P at an average rate of 4542 with no stop. I have this position too long and I will now raise my exit level to 4550. If this view changes I will be back with a new update for my Platinum Members.
EUR/USD
Following the latest FOMC Statement, the Euro rallied to my 1.1095 T/P level on my latest 1.1060 long position and I am now flat. Today, I will again be a buyer on any dip lower to 1.1000/1.1060 with the same 1.0935 ‘’Closing Stop’’. I still do not want to be short the Euro at this time
June Dollar Index
Overnight, the Dollar traded lower to my initial 100.70 buy level. I am still long with a now lower 101.05 T/P level. I will add to this position at 100.10 while leaving my 99.55 ‘’Closing Stop’’ unchanged. If any of the above levels are hit I will be back with a new update for my Platinum Members.
Cash DAX
The DAX got slammed shortly after I posted yesterday morning following calls from the IMF that Germany will be in recession later this year. The DAX fell 250 points on this report before attracting buyers, trading near unchanged from 24 hours ago at a price of 18180 this morning. I will now lower my sell level to 16220/16300 with a lower 16405 ‘’Closing Stop’’.
Cash FTSE
The FTSE just missed my initial 7610 buy level by a few points before rallying to sit at 7680 this morning. I will now raise my buy level to 7560/7620 with a higher 7495 ‘’Closing Stop’’. The FTSE has resistance from 7790/7860 where I will be a seller with a 7915 tight ‘’Closing Stop’’.
Dow Rolling Contract
The Dow closed higher for a the 13h consecutive trading session, helping the VIX to get crushed by 5%. The last time we saw winning streaks for the Dow of this magnitude was in 1929, 1970 and 1987. History tells us that each time this happened the market crashed. Year after year we now see things in markets that we have never seen before. When is it going to end? Recession says it should end at any moment. History says it should end at any moment. But this market has left reason at the March door when the Fed pumped liquidity to stem the banking crisis as the FOMO hits record levels, so who knows. I am still short the Dow at an average rate of 35368 with a now higher 35235 T/P level, while leaving my 35705 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
My NDX plan worked well as the market sold off to my 15470 T/P level on Tuesday’s 15580 short position and I am still flat. The NDX continues to be affected by last week’s Key Day Reversal that came on a strong Negative Divergence. As long the market stays below 15700, I will continue to be a seller of rallies. Today, my sell range will be from 15650/15800 with a higher 15905 ‘’Closing Stop’’. I still do not want to be long the NDX at this time.
September BUND
I am still flat. The Bund sold off again following the latest Fed Hike as we wait for today’s ECB announcement of their 25-basis point rate hike. Despite negative comments about the imminent recession in the Euro-Zone as forecast by the IMF, the Bund still traded lower yesterday. I will continue to be a strong buyer on any dip lower to 131.40/.132.20 with the same 130.85 ‘’Closing Stop’’. I no longer want to be short the Bund at this time.
Gold Rolling Contract
I am still flat with no change despite Gold having a small rally yesterday. I will continue to be a buyer on any dip lower to 1927/1942 with the same 1915 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 1953.
Silver Rolling Contract
This morning, Silver is trading higher at 25.05. I have now exited my latest 24,50 long position here and I am now flat. Silver has support from 23.80/24.80 where I will again be a buyer with no sto
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