U.S. Indices closed in the red, albeit well off worst levels, as Trump tariff talk dominated markets to start the week. The Dollar saw Index hefty gains to the detriment of G10 FX (with the exception of both Sterling and the Japanese Yen) but saw a large range (108.57-109.88) amid mixed tariff talk. The week began with a gap lower in US equities and T-notes, a gap higher in the Dollar and notable strength in oil in the wake of Trump announcing 25% tariffs on all imports from Canada and Mexico, but Canadian energy products will face a 10% tariff. On China, there will be an additional 10% tariff on top of existing levies, with no exclusion. However, Mexican President Sheinbaum and Trump had a constructive debate whereby he agreed to delay tariffs a month, which saw a large paring of earlier moves with the Mexican Peso wiping out all earlier losses. Nonetheless, tariffs on Canada and China are still due to come into effect today, but at the writing Trump and Trudeau are currently speaking so we await any readout. Elsewhere, ISM Manufacturing Pmi was a strong report but took the backseat with focus on tariffs while the OPEC+ JMMC meeting was a non-event and went as expected. Ahead of QRA on Wednesday, the US Treasury announced it expects to borrow USD 815 billion in privately-held net marketable debt in Q1 25, below the USD 823 billion that was guided for Q1 25 in Q4 24. This is primarily due to a higher beginning-of-quarter cash balance but partially offset by lower net cash flows. On the Fed footing, Bostic and Collins spoke, both echoing Powell in not being in a hurry to cut rates again. Both also noted the uncertainty on US policies, with Collins suggesting tariffs should have an impact on prices. Bostic said there is an outcome where the Fed might look through tariff impact on prices, but also one where it could impact expectations and thus warrant a Fed response. U.S. Construction Spending for December rose 0.5%, above the prior and consensus for a 0.2% gain. However, given it is December data it is dated given we have already had Q4 GDP. Looking ahead, OxEco stresses that trade policy actions matter much more. The desk writes that they “modelled the new higher tariffs on Canada, Mexico, and China. Even if they are watered down this year and eventually lifted, new protectionist measures will cut growth in residential investment and business investment in structures by 1ppt and 1.6ppt, respectively, in 2025.” However, OxEco also add that no matter how the trade war unfolds, there will be pockets of resilience as spillovers from AI support data-centre construction and solid finances guard against the risks to state and local government investment. ISM Manufacturing rose back into expansionary territory in January for the first time in 26 months, as the headline printed 50.9, above the prior 49.2 and the expected 49.8. Within the release, the inflationary gauge of prices paid lifted to 54.9 from 52.5 (exp. 53.5), while employment and new orders soared to 50.3 (prev. 45.4) and 55.1 (prev. 52.1), respectively. Production, supplier deliveries, new export orders, and imports all lifted while the backlog of orders slightly declined. Despite a positive release, the big question is whether this upturn reflects a lasting improvement or a fleeting boost from purchases brought forward in anticipation of tariffs. Desks note pre-emptive purchases driven by worries about tariffs on imported goods from Canada, China, and Mexico surely will unwind sharply if extensive new tariffs are applied to those countries. Nonetheless, Pantheon Macroeconomics said it seems more likely that disruption to supply chains and a hit to demand from higher prices start to weigh heavily on US manufacturing soon. For the record, comments from panellists were also positive, though these would not include reactions to the recent tariff announcement. Elsewhere, Oil closed 1% lower while Gold ended Monday with a 0.6% gain following a volatile trading session that witnessed of two-way price action.
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For anyone following my Platinum Service it made 635 points on the first trading session for February, after closing January with a gain of 2768 points, 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 0.76% lower at a price of 5994.
The Dow Jones Industrial Average closed 122 points lower for a 0.28% loss at a price of 44,421.
The NASDAQ 100 closed 0.80% lower at a price of 21,297.
The Stoxx Europe 600 Index closed 0.87% lower.
Yesterday, the MSCI Asia Pacific closed 1.2% lower.
Yesterday, the Nikkei closed 2.66% lower at a price of 38,520.
Currencies
The Bloomberg Dollar Spot Index closed 0.55% higher.
The Euro closed 0.2% lower at $1.0342.
The British Pound closed 0.2% higher at 1.2429.
The Japanese Yen fell 0.3% closing at $155.30.
Bonds
Germany’s 10-year yield closed 7 basis points lower 2.39%.
Britain’s 10-year yield closed 5 basis points lower at 4.49%.
U.S.10 Year Treasury closed 2 basis points lower at 4.52%.
Commodities
West Texas Intermediate crude closed 0.97% lower% higher at $72.44 a barrel.
Gold closed 0.6% higher at $2814 an ounce.
This morning on the Economic Front we have no data of note from either the Euro-Zone or the U.K. At 3.00 pm we have U.S. Factory Orders and JOLTS Job Openings. Finally, we have speeches from Fed Members Bostic at 4.00 pm and Daly at 6.15 pm.
Cash S&P 500
The second consecutive Futures Smackdown saw all Indexes magically saved again following the late U-Turn from Trump re tariffs due to be imposed on both Canada and Mexico postponed for a further four weeks. I said from the beginning that the Trump Presidency guarantees plenty of two-way volatility and this is exactly what has happened since he took office two weeks ago. The Seasonal chart still signifies trouble ahead before we get a tradeable low in late Feb/early March. Last week’s new all-time high above 6120 following the largest weekly inflow in two years there is a lot of trapped supply above the market. My own view is that it will take some more magic to break the now strong resistance from 6090/6120 and I will use any rallies to this area to be a seller. I have written extensively how expensive this market is over the last two weeks so there is no need to repeat my views again today. The S&P has short-term resistance from 6045/6065 where I will be a small seller with a 6081 ‘’Closing Stop’’. My only interest in buying the S&P is on a large move lower to 5920/5940 with a 5899 wider ‘’Closing Stop’’. Sunday’s 5927 long position worked well as the market rose to my 5959 T/P level. If I am taken short today, I will have a T/P level at 6028. If I am taken long, I will have a T/P level at 5965.
EUR/USD
A late rally in the Euro meant my 103.15 ‘’Closing Stop’’ remained intact. I am still long the Euro from last week at an average rate of 1.0400 with the same stop. I will now lower my T/P level to 1.0430. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Dollar Index
My 109.45 short Dollar position worked well as the market sold off to my 108.80 T/P level and I am now flat. This morning, the Dollar is trading lower at a price of 108.74. We have resistance from 109.20/109.80 where I will again be a seller with a lower 110.45 ‘’Closing Stop’’.
Russell 2000
My 2210 long Russell position worked well as the market rallied to my 2260 T/P level and I am now flat. This morning, the Russell is trading at 2266. We have support below from 2140/2220 where I will again be a buyer with the same 2075 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2270. I still do not want to be short the Russell at this time.
Cash FTSE
The FTSE traded heavy all of Monday and could not get any upward momentum even when the American Indexes turned late in the afternoon. Given how overbought the FTSE is trading I will continue to look to sell rallies. I will continue to be a seller from 8630/8700 with the same 8755 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 8580.
Dow Rolling Contract
Frustratingly, the Dow missed my 43800-buy level by just 10 points before rallying to sit at 44575 this morning. Investors are programmed to buy every dip. With 14 Billionaires part of Trump’s Cabinet, it is hard to see how we do get a well overdue correction which is certainly something these Billionaires have no interest in seeing. The Dow has further resistance from 44800/45050 where I will be a small seller with a 45305 ‘’Closing Stop’’. I no longer want to be long the market at this time.
Cash NASDAQ 100
The idea of continuing to buy dips despite the inflated valuations continues to pay dividends. Unfortunately, the NDX just missed Monday’s buy level before rallying over 600 points off Monday’s low print and I am still flat. This morning, the NDX is trading higher at a price of 21460 on the back of the late announcement from Trump that Canadian Tariffs will not start until March1. The NDX has resistance from 21600/21750 where I will again be a seller with a 21905 ‘’Closing Stop’’. I have no interest in chasing the NDX higher especially as NVIDIA closed a further 3% lower yesterday in what looks like a technical break lower. If this view changes, I will be back with a new update for my Platinum Members.
March BUND
Bund Yields have fallen over 20 Basis points since the ECB cut rates for a fifth time on Thursday. With Bund Yields at 2.39% I just cannot be a buyer given the inflation risks for the Euro-Zone, especially if Trump carries out his threat of more tariffs. The Bund has resistance from 133.60/134.30 where I will be a seller with a 135.05 ‘’Closing Stop’’.
Gold Rolling Contract
Shortly, after I posted Gold hit an overnight low of 2773. This move lower saw my 2785 T/P level triggered and I am now flat. Gold has further resistance from 2850/2866 where I will again be a seller with a higher 2881 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 2835. I still do not want to be long Gold at this time
Silver Rolling Contract
Silver never came close to Monday’s buy range, and I am still flat. Given the strength of the Dollar, I am reluctant to chase Silver much higher. Silver has support from 29.70/30.40. I will continue to be a buyer on any dip to this area while leaving my 28.55 ‘’Closing Stop’’ unchanged.
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