U.S. Equity Markets closed more-or-less flat on Tuesday with the small-cap Russell 2000 (+0.7%) outperforming, while the Dollar saw gains, to the detriment of G10 peers, after US Retail Sales headline M/M surpassed expectations. Treasuries are lower across the curve, with the greatest weakness seen in the short as T-Notes come well off earlier highs induced by a piece from Wall Street Journal’s Timiraos implying that 50bps is still on the table. However, it was later tempered by US data and Fed pricing coming slightly back, with now a circa 60% chance of a larger 25bps cut this evening, as opposed to 67% chance post-Timiraos article. In terms of US data, US Retail Sales were mixed, but as mentioned headline M/M surpassed expectations, while Industrial Production and Manufacturing Output both surpassed Wall St. consensus with the latest Atlanta Fed GDPnow Q3 model revised up to 3.0% from 2.5%. US sectors were mixed with Health and Consumer Staples lagging while Energy sits atop of the pile. The latter was buoyed by strength in the crude complex amid escalating geopolitical updates after thousands of Hezbollah pager devices exploded. Looking ahead, all attention is on the FOMC on Wednesday (preview below), whereby desks are split between a 25bps or 50bps cut, with attention thereafter on the SEPs, accompanying statement, and then Chair Powell’s press conference. The Federal Reserve will release its latest rate decision on this evening at 7.00 pm, alongside the updated Summary of Economic Projections (SEPs). The focus will lie on the rate decision with market pricing leaning towards 50bps, but the analyst consensus is for 25bps, with recent articles from the Wall Street Journal and Financial Times, as well as commentary from former New York Fed President Dudley shifting market pricing since the analyst surveys were released. However, not many analyst desks appear to have revised their calls since these updates, with both JPMorgan and Goldman Sachs retaining their calls (JPM sees a 50bp cut, GS sees a 25bp cut). There will also be attention on the Summary of Economic projections and the statement to gather expectations for the pace of the Fed’s easing process, particularly through the year-end. The Bloomberg survey expects the Fed to pencil in the median 2024-end dot at 4.9% (prev. 5.1% in June SEP), while 44% of economists surveyed expect the Fed will tweak the statement to acknowledge the possibility of further adjustments, and 31% expect the Fed would signal the intention to pursue a string of rate cuts and provide guidance on their pace. Attention will then turn to Fed Chair Powell at 7.30 pm to explain the Fed’s decisions with participants cognisant of any guidance updates from the Chair, and the discussion around 25 or 50bps for September. Overall, the Retail Sales report was mixed. The headline beat expectations, rising 0.1% vs exp. -0.2% with the prior revised up to 1.1% from 1.0% initially. The core, ex-autos, rose by 0.1%, missing the 0.2% forecast and down from the prior 0.4%. The super core, ex gas and autos rose 0.2%, down from the prior 0.4%. The control metric, a good gauge of consumer spending in GDP, rose by 0.3%, in line with expectations while the prior (July) was revised up by 0.1% to 0.4%, which bodes well for Q3 Consumer Spending. In relation to tomorrow’s Fed decision, ING writes “We fully buy into the argument for the Fed moving policy back to neutral swiftly and expect Fed Chair Jerome Powell to push the case for a 50bp cut tomorrow. However, the issue is whether the other FOMC members are as certain. An economy growing at 2.5-3% with low unemployment, inflation above target and equities at all-time highs suggests there will be large pockets of resistance, which makes the outcome tomorrow a coin toss”. Elsewhere, Oil closed Tuesday with a 1.57% gain while a stronger Dollar saw Gold end yesterday’s session with a 0.6% loss.
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For anyone following my Platinum Service it made 180 points yesterday and is now ahead by 1893 points for September having ended August with a loss of 301 points 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 0.03% higher at a price of 5634.
The Dow Jones Industrial Average closed 15 points lower for a 0.04% loss at a price of 41,606.
The NASDAQ 100 closed 0.05% higher at a price of 19,432.
The Stoxx Europe 600 Index closed 0.42% higher.
This morning, the MSCI Asia Pacific closed 0.3% higher.
This morning, the Nikkei closed 0.49% higher at a price of 36,380.
Currencies
The Bloomberg Dollar Spot Index closed 0.16% higher.
The Euro closed 0.1% lower at $1.1110.
The British Pound closed 0.3% lower at 1.3155.
The Japanese Yen fell 0.9% closing at $142.33.
Bonds
Germany’s 10-year yield closed 3 basis points higher 2.15%.
Britain’s 10-year yield closed 2 basis points higher at 3.77%.
U.S.10 Year Treasury closed 2 basis points higher at 3.65%.
Commodities
West Texas Intermediate crude closed 1.57% higher at $71.19 a barrel.
Gold closed 0.6% lower at $2569 an ounce.
This morning on the Economic Front we already had the release of U.K. August CPI which rose 2.2% versus +2.2% Y/Y expected. Next, we have Euro-Zone CPI and Construction Output at 10.00 am. This is followed by U.S. MBA Mortgage Applications at 12.00 pm. At 1.30 pm we have Housing Starts/ Building Permits. Finally, we have the FOMC Statement at 7.00 pm followed by the Powell Press Conference at 7.30 pm.
Cash S&P 500
The S&P had a volatile trading session yesterday where we saw plenty of two-way price action. Having made a new all-time high at 5671, the S&P subsequently fell almost 50 Handles before buyers returned with the S&P trading at a price of 5644 as I go to post. My S&P plan worked well as the market traded the whole of my sell range for a 5661 average short position before selling off to my 5650 revised T/P level and I am now flat. The S&P has now closed higher for seven consecutive trading session helped by the Microsoft news that it will have a new buyback programme for up to $60 billion worth of its shares. Microsoft also announced a 10% dividend. The Fed has become a circus. We can spend hours speculating whether they will cut by 25bp or 50bp. A 25bp would be too little and disappoint and raise fears of them being too late while a 50bp cut would be easing those fears but raise concerns that the Fed knows it is too late. None of that speculation is useful here frankly, what it comes down to its positioning, liquidity and expectations. Although a lot of my technical signals are jammed to the upside the Daily RSI is not even close to being overbought. In the meantime, liquidity keeps being injected via reverse repo drainage and once it drains completely the next QE programme is basically around the corner. Despite the high valuations it is so difficult to be short the markets as bears are not given any chance of success. The S&P has now closed higher for 10 of the 11 past months as my theme of ‘’Nothing Matters’’ continues. The S&P has further resistance from 5680/5700 where I will again be a seller with a 5715 ‘’Closing Stop’’. If I am taken short, I will have a T/P level at 5662. I no longer want to be long the S&P at this time, preferring to wait for a correction first. If this view changes, I will be back with a new update for my Platinum Members.
EUR/USD
The Euro hit a high at 1.1147 yesterday morning before having a small 40-point fall into the close. I am still flat. As the Euro is short-term overbought, I am reluctant to chase the market higher. Therefore, I will continue to be a buyer on any dip lower to 1.0960/1.1040 with the same 1.0895 ‘’Closing Stop’’. I still do not want to be short the Euro at this time.
Dollar Index
No Change. I am still long the Dollar from early Monday morning at a price of 100.80. I will continue to look to add to this position on any further move lower to 100.20 while leaving my 99.75 ‘’Closing Stop’’ unchanged. I will now lower my T/P level to 101.10. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Cash DAX
Yesterday’s German ZEW Survey was a total disaster – no matter as the DAX again rallied but the overarching message keeps mounting: Weak growth in China, Germany and the U.K. How do you get a 15% earnings growth in 2025 with a global slowdown all around us? Extremely difficult is my answer. I am still flat the DAX. I just cannot chase the market higher given the backdrop. Today, I will continue to be a buyer on any dip lower to 18330/18430 with the same 18195 ‘’ Closing Stop’’ which is just below las week’s low print. If I am taken long, I will have a T/P level at 18505. I still do not want to be short the DAX at this time
Cash FTSE
The FTSE hit a high early Tuesday at a price of 8350 before falling 60 points off this high into the London close. I am still flat. Ahead of the FOMC this evening, I will now lower my buy level to 8150/8230 with a lower 7985 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 8275. I still do not want to be short the FTSE Market at this time. If this view changes I will be back with a new update for my Platinum Members.
Dow Rolling Contract
Although the Dow made a new all-time intra-day high at 41840 early yesterday afternoon the market quickly fell 200 points from this high before trading sideways for most the session before having a late spike into the close. I am still short at a price of 41280 from Friday with the same 41705 ‘’Closing Stop’’. With the $BPINDU (Bullish Percent Index for the Dow) RSI closing at 82 last night I just cannot be a buyer with a reading this high as history tells us that this does not last. I will add to this short position on any further move higher to 41880. If this level is hit, I will be back with a new update for my Platinum Members.
Cash NASDAQ 100
My NDX plan worked well as the market rose to my 19600-sell level before falling over 200 points. This move lower saw my revised 19530 T/P level triggered and I am now flat. The NDX has strong resistance from 19650/19810 where I will be an aggressive seller with a higher 20005 ‘’Closing Stop’’. Given the number of negative divergences over the past few days as the NDX made new recovery highs I have absolutely no interest in being long the market. A combination of weak seasonals and buybacks stopping is another strong reason why I have no interest in buying the NDX at this time. If this view changes, I will be back with a new update for my Platinum Members.
December BUND
The boring sideways price action for the Bund shows no sign of ending. I am still flat as the Bund fell 25 points shy of yesterday’s sell range before falling 50 points from this high into the European close. Hopefully we get some clarity on Bond Yields at this evening’s FOMC Statement and Powell press conference. The Bund has resistance from 135.60/136.30 where I will be a small seller with the same 137.05 ‘’Closing Stop’’. Meanwhile, my only interest in buying the Bund is still on a move lower to 133.20/133.90 with the same 132.65 ‘’Closing Stop’’.
Gold Rolling Contract
Gold continues to find some selling above 2580. However, with Gold trading 25% higher for the year-to-date we are due at least a short-term correction, possibly back to the 2500 area which is key support. Today, I will be a buyer from 2495/2510 with a 2479 ‘’Closing Stop’’ Ahead of the Fed this evening I do not want to be long Gold. If this view changes, I will be back with a new update for my Platinum Members. If I am taken long, I will have a T/P level at 2522.
Silver Rolling Contract
Silver hit a low at 30.50 yesterday and I am still flat. Today, I will continue to be a buyer from 29.40/30.20 with the same 27.95 wider ‘’Closing Stop’’ unchanged. If I am taken long, I will have a T/P level at 31.10.
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