U.S. Indices (SPX +0.2%, NDX flat, DJIA +0.3%, RUT -0.5%) were mixed on Wednesday, as were sectors, with the small-cap Russell 2000 the clear underperformer. Health and Consumer Staples were the relative outperformers, while Communication Services, Energy, and Health all sit in the red. Risk sentiment was initially hit in the European morning, on a couple of factors; firstly it was by weakness in the fixed income space, led by U.K. Gilts plummeting, before being further weighed on by CNN sources noting President-elect Trump is reportedly considering a national economic emergency declaration to allow for new tariff programme. However, as the US day progressed Treasuries and stocks managed to pare most of the losses in a choppy session. After T-Notes were hit by the aforementioned Gilts, they were seemingly supported by a dovish Waller who supports further rate cuts this year and noted he does not expect tariffs to produce persistent inflation and thus is not likely to influence views on appropriate monpol. US 30 Year Treasury Auction was solid and the best US auction of the week, before the latest FOMC Minutes which unveiled little new but largely paved the way for a January pause. In wake of the Minutes, the Dollar pared some of its gains which provided impetus to stocks and T-Notes, with the latter hitting intra-day highs, although the former swiftly pared any strength. On the data docket, ADP and Initial Jobless claims both printed way under expectations. The Dollar is stronger to the detriment of all G10 FX peers, while unsurprisingly Sterling lags with Gilts hit hard. The crude complex was lower on Wednesday and fell foul to the Dollar bid and broader risk-off sentiment, as opposed to anything energy specific. In the latest FOMC Minutes, which surrounded the December meeting whereby the central bank cut by 25 basis points, with one hawkish dissenter, they noted participants indicated the Fed was at or near the point at which would be appropriate to slow the pace of easing. Moving forward, participants indicated if data came in about as expected, it would be appropriate to continue to move gradually toward a more neutral policy stance. On the magnitude of the cut in December, the vast majority saw it as appropriate to lower the target range by 25 basis points, while some noted there was merit in keeping rates unchanged, citing the higher risk of persistently elevated inflation. As a reminder, Hammack was the sole voting dissenter, but the dot plot suggests there were at least four members who wanted to keep rates on hold. In addition, many observed that the current high degree of uncertainty made it appropriate for the Committee to take a gradual approach as it moved toward a neutral policy stance. A “majority” of participants thought the decision to ease policy in December was “finely balanced” and many participants suggested that a variety of factors underlined the need for a careful approach to monetary policy decisions over coming quarters. On the incoming President-elect Trump’s admin, a number of participants indicated they had Incorporated ‘placeholder assumptions’ regarding potential trade and immigration policy changes into their projections. Again reminding, at the December Powell press conference, the Chair highlighted that some incorporated policy changes into their projections, but others did not. Further, Fed staff projected slightly lower GDP growth and ‘a bit’ higher unemployment rate than the previous baseline forecast after incorporating recent data and placeholder assumptions of potential policy changes from the incoming administration. Lastly, and on the inflation footing, almost all participants judged that upside risks to the inflation outlook had increased. As reasons for this judgment, participants cited recent stronger-than-expected readings on inflation and the likely effects of potential changes in trade and immigration policy. Fed Member Waller said inflation will continue to make progress towards the 2% goal and that he will support further cuts in 2025, however, the pace of cuts will depend on further inflation progress. He acknowledged recent inflation progress has been slow, but the higher inflation readings from early in 2024 will begin to drop out of inflation numbers in January. This should result in a significant step-down in the 12-month inflation numbers through March. The influential Governor added that the economy is on a solid footing overall, and there is nothing to suggest the labour market will weaken dramatically in the coming months. Looking ahead, and referencing the upcoming Trump administration, Waller does not expect tariffs to produce persistent inflation and thus not likely to influence views on appropriate monetary policy. Later in the Q&A section, Waller said he does not think the Draconian tariffs will be implemented and he does not think there will be a huge impact on inflation from tariffs in the near term. Moreover, Waller stated long-term yields may have more of an inflation premium, but the Fed will fix that, and US deficits may also be driving long-term yields higher. Elsewhere, Oil closed 1.2% lower on Wednesday while Gold was firm ending yesterday’s session with a gain of 0.5%.
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For anyone following my Platinum Service it made 95 points yesterday and is now ahead by 336 points for January after closing December with a gain of 1997 points 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 0.16% higher at a price of 5918.
The Dow Jones Industrial Average closed 106 points higher for a 0.25% gain at a price of 42,635.
The NASDAQ 100 closed 0.04% higher at a price of 21,180.
The Stoxx Europe 600 Index closed 0.23% lower.
This morning, the MSCI Asia Pacific closed 0.4% lower.
This morning, the Nikkei closed 0.94% lower at a price of 39,605.
Currencies
The Bloomberg Dollar Spot Index closed 0.51% higher.
The Euro closed 0.3% lower at $1.0310.
The British Pound closed 0.95% lower at 1.2357.
The Japanese Yen fell 0.25% closing at $158.43.
Bonds
Germany’s 10-year yield closed 5 basis points higher 2.52%.
Britain’s 10-year yield closed 11 basis points higher at 4.80%.
U.S.10 Year Treasury closed 1 basis points lower at 4.68%.
Commodities
West Texas Intermediate crude closed 1.19% lower at $73.37 a barrel.
Gold closed 0.5% higher at $2662 an ounce.
This morning on the Economic front we already had the release of German Industrial Production which rose 1.5% versus +0.5% expected. With American Markets closed for former President Jimmy Carter’s funeral, the only other data of note is Euro-Zone Retail Sales which will be released at 10.00 am.
Cash S&P 500
Trump’s Tuesday press conference continues to affect Global Markets where he spoke about heavy tariffs coming for both Mexico and Canada has not helped any sustained recovery in the S&P despite a number of my technical signals being oversold. Trump being Trump of course covered a wide range of subjects including annexing the Panama Canal, Canada and Greenland (not taking economic or military force off the table for the latter). Windmills, Whales, you name it. But also $20 billion investments in data centres, calling again for eliminating the debt ceiling and for lower Interest Rates. How much of this is actionable remains to be seen of course and there is no point in me trying to handicap all this, but clearly markets have reacted over the past 48 hours and hence my comments yesterday that under Trump the market volatility can be market impacting at any time. If the heavy tariffs get extended to China and Europe then short-term it will be difficult for stocks to rally. All this uncertainty may keep buyers sidelined until after the inauguration on January 20th. However, as long as the key 5800 support level and December low continues to hold, I will be a buyer of dips against this now key pivot point. The S&P just missed my buy range by nine Handles yesterday before subsequently rallying 50 Handles before selling off again overnight. The S&P has support from 5854/5870. I will now raise my buy level to this area with a 5859 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 5884. Given how oversold the technicals are, I still do not want to be short the S&P at this time as we are still in a seasonally strong time of the year, believing the S&P can take off to the upside without notice. If this view changes, I will be back with a new update for my Platinum Members.
EUR/USD
The Euro saw follow through to the downside following Tuesday’s reversal. This move lower saw the Euro hit my 1.0300 buy level. I am still long with a now lower 1.0360 T/P level. I will add to this position on any further move lower to 1.0230 while leaving my 1.1065 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
The stronger Dollar saw the market rally to my 108.95 sell level. I am still short with a now higher 108.40 T/P level. I will add to this position on any further move higher to 109.65 while leaving my 110.15 ‘’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
Shortly after I posted the DAX rallied to my second sell level at 20460 for a 20395 average short position. Subsequently, the market fell over 100 points, hitting my revised 20355 T/P level and I am now flat. Given both the economic and political backdrop the DAX should be at least 10% lower but is not much to my frustration. However, the old rule ‘’of a market that will not go down on bad news has to respected’’ keeps playing in my head. Although I must respect the price action I just cannot bring myself to be a buyer of the market. The bearish flag for the DAX is holding for now following Wednesday afternoon’s late sell-off. The DAX has resistance at yesterday’s higher from 20470/20570 where I will again be a seller with a higher 20705 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 20400.
Cash FTSE
My FTSE plan worked well as the market sold off to my 8195-buy level before rallying to my 8250 T/P level and I am now flat. As long as the FTSE can hold the 8070/8150 key support level I will continue to be a buyer of dips despite Gilt Yields rising to close at 4.80% last night. Today, I will be a buyer on any dip to this support area with a lower 7995 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 8205. I still do not want to be short the FTSE at this time. If this view changes, I will be back with a new update for my Platinum Members.
Dow Rolling Contract
The Dow never came close to Wednesday’s buy range, and I am still flat. With U.S. Markets closed today for former President Jimmy Carter’s funeral I would expect the American Indexes to trade in narrow ranges. Given how oversold a number of my technical signals are, I will now raise my Dow buy level to 42160/42380 with a higher 41895 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 42470. I still do not want to be short the Dow at this time. If this view changes, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
The NDX again fell shy of yesterday’s T/P level leaving me still long at an average price of 21230. I will now lower my T/P level to 21260 while leaving my 21005 ‘’Closing Stop’’ unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
March BUND
Following the release of the FOMC Minutes the Bund sold off to my second buy level at 131.45 for a now 131.80 average long position. I will now lower my T/P level to 132.40 while also lowering my ‘’Closing Stop’’ to a price of 130.65. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
No Change: I am still flat Gold despite Friday’s volatile trading session which witnessed plenty of two-way price action. As I am still long Silver, I have no interest in chasing the price of Gold higher. Therefore, I will continue to be a buyer on any dip lower 2575/2591 with the same 2559 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2603.
Silver Rolling Contract
No Change: I am still long Silver at an average price of 30.95 with the same 28.95 ‘’Closing Stop’’. I will leave my 31.40 T/P level unchanged. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Please Note: There will be 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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