Better than expected earnings from Bank of America saw U.S. Equity Markets surge to new highs for 2023. The Dow led Tuesday’s gains, closing higher by over 1%. Bank of America (BAC) reported a strong performance in the second quarter, with its profit soaring as its Wall Street businesses outperformed expectations. The bank’s fixed-income and equity traders delivered better-than-expected results, compensating for a minor miss in net interest income. Revenue from the segment rose 18% to $2.8 billion, driven by client activity in response to changing interest rates. The positive performance helped Bank of America exceed analysts’ earnings-per-share estimates. U.S. bank regulators are preparing to unveil their plans for a comprehensive overhaul of capital rules, which will include stricter requirements for large lenders’ residential mortgages that exceed international standards. The proposed rules aim to ensure that big banks do not gain a competitive advantage over smaller ones. The Federal Reserve wants banks of all sizes to treat comparable residential loans equally. The industry is expected to criticise the proposal as burdensome and potentially more stringent than global standards, accusing regulators of “gold plating” U.S. requirements. The Biden administration is working on plans to restrict investments in China, with a particular focus on cutting-edge technology sectors such as semiconductors, quantum computing, and artificial intelligence. The restrictions will apply only to new investments and are not expected to take effect until next year. Officials aim to finalise the proposal by the end of August. U.S. A recent Federal Reserve survey indicates that Americans are facing increased rejection rates when applying for credit, attributed to high interest rates and cautious lending practices among lenders. The survey reveals that the rejection rate for loan applicants reached its highest level in five years, standing at 21.8% in the 12 months leading up to June. Additionally, the overall number of credit applications has declined to its lowest level since October 2020. European Markets closed higher. Russia has suspended its participation in a U.N.-brokered agreement that allows Ukraine to export grain through the Black Sea, raising concerns about potential food price increases that could impact poorer nations. The move comes after an explosion damaged Russia’s bridge to Crimea, with Moscow attributing the incident to a strike by Ukrainian drones. Russia described the incident as a terrorist attack on a critical route used by Russian troops involved in the conflict with Ukraine. Food and drink manufacturers in the U.K. have reduced their prices for the first time in over three years, according to a survey by Lloyds Banking Group. This price reduction is driven by falling costs for manufacturers, providing some relief for households facing rising interest rates and high inflation. It marks the first price cut in the sector since February 2020. The trend is attributed to a decline in global food commodity prices, which fell by 1.4% in June. In Asia, New Zealand Inflation came in higher than expected while the Nikkei closed higher by 0.80% this morning. Elsewhere, Oil rose 2.16% while Gold ended Tuesday with a gain of 1.20%.
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 102 points yesterday and is now ahead by 19 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 0.71% higher at a price of 4554.
The Dow Jones Industrial Average closed 366 points higher for a 1.06% gain at a price of 34,951.
The NASDAQ 100 closed 0.82% higher at a price of 15,841.
The Stoxx Europe 600 Index closed 0.62% higher.
This morning, the MSCI Asia Pacific closed 0.3% higher.
This morning, the Nikkei closed 0.80% higher at a price of 32,755.
Currencies
The Bloomberg Dollar Spot Index closed 0.02% higher.
The Euro closed 0.1% lower at $1.1225.
The British Pound closed 0.8% lower at 1.2964.
The Japanese Yen fell 0.4% closing at $139.40.
Bonds
Germany’s 10-year yield closed 8 basis points lower at 2.36%.
Britain’s 10-year yield closed 9 basis points lower at 4.34%.
U.S.10 Year Treasury closed 3 basis points lower at 3.78%
Commodities
West Texas Intermediate crude closed 2.16% higher at $75.75 a barrel.
Gold closed 1.2% higher at $1978.10 an ounce.
This morning on the Economic Front we already had the release of U.K CPI which came in at +7.9% YoY versus +8.2% expected. At 10.00 am we have Euro-Zone CPI and Construction Output. Next, we have U.S. MBA Mortgage Applications at 12.00 pm, followed by Housing Starts and Building Permits at 1.30 pm. Finally, we have a 20 Bond Auction at 6.00 pm.
Cash S&P 500
Nothing matters. On the Economic front, June Industrial Production fell 0.5% versus 0.0% expected, June Manufacturing Production fell 0.3% versus 0.0% expected while June Retail Sales only rose 0.2% versus +0,5% expected. Yet Equity Markets saw a melt up across the board ignoring all the above economic data. Yet again the S&P has closed outside the top of its Bollinger Band with a 14-day RSI at 74.25. The corrective case is getting stronger by the day but it is difficult when Retail continue to pile money into the S&P despite excessive valuations. Bubbles make a mockery of signals, resistance levels, etc and I am clearly being challenged here in a way that I have not been challenged in a very long time. As you know normally my service is a buyer on dips but when I see all my signals urging me to be short I have to follow them as they have worked so well over the past 25 years. The Platinum Service has generated a lot of points over the past 24 months in particular. I have decided to play with some of these points by staying short the S&P at 4505 with no stop. I will add to this position at 4580. If this level is triggered, I will come back with a T/P level and Stop to my Platinum Members.
EUR/USD
The Euro sold off to my revised 1.1211 T/P level on my 1.1240 average short position as emailed to my Platinum Members and I am now flat. As I am aggressively short American Indexes, I decided to reduce risk and margin by cutting some positions yesterday afternoon. With the 14-Day RSI at 74, I will continue to be a seller of rallies. The Euro has resistance from 1.1260/1.1330 where I will again be a seller with a higher 1.1405 ‘’Closing Stop’’.
June Dollar Index
The Dollar had a small rally yesterday, enabling me to cover my 99.70 long position at my revised 100.10 T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 98.80/99.50 with a lower 98.25 ‘’Closing Stop’’.
Cash DAX
After the DAX hit my initial 16140 sell level, I emailed my Platinum Members to exit any short position at my revised 16117 T/P level and I am now flat. Despite yesterday’s rally, the stronger Euro is weighing on the DAX. The DAX has strong resistance from 16250/16330. I will be a seller in this range with a higher 16405 ‘’Closing Stop’’. I still do not want to be long the DAX at this time.
Cash FTSE
The FTSE is trading 120 points higher from where I marked prices 24 hours ago, as the market finally plays some catchup with the rest of the world. Today, I will raise my buy level to 7410/7470 with a higher 7355 ‘’Closing Stop’’. I still do not want to be short the FTSE at this time. If I am taken long, I will have a T/P level at 7520.
Dow Rolling Contract
The Dow led yesterday’s gains helped by the 3% rally in the Bank Index following much better-than-expected earnings from Bank of America. The Dow has now closed higher for seven consecutive trading sessions. This new bubble has certainly stretched my expectations. This move higher saw the whole of my sell range triggered for a now 34845 average short position. How the Fed will react to all this pure speculation is anybody’s guess, but in principle it is hard to see how a new asset bubble with rapidly easing financial conditions and expanding wealth effect will contribute to inflation going back down to 2% as opposed to picking up again. In my opinion we are close to the low of CPI for 2023. I will now raise my T/P level on this short Dow position to 34780 while leaving my 35105 ‘’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
Microsoft announcing a $30 service announcement without anybody having a clue what that even means in future revenue never mind earnings saw Microsoft rise 4% yesterday to new all-time highs. This move higher out of thin air saw an incredible $150 Bn in market cap added to its value. The NDX has now closed the past six days above its Daily Bollinger Band which is something that I have never seen happen before. In the process, the NDX hit my second sell level at 15770 for a now 15695 average short position. I will leave my 15905 tight ‘’Closing Stop’’ on this position while raising my T/P level to 15620. If any of the above levels are hit, I will be back with a new update form my Platinum Members.
September BUND
I am still flat. European Bond Yields closed up to 10 basis points lower yesterday. This move lower came despite a rising Euro. The Bund Yield has fallen over 40 basis points in the last two weeks. This is an enormous move. The Bund is now overbought. We have resistance from 135.20/136.00 where I will be a small seller with a 136.55 ‘’Closing Stop’’. I no longer want to be long the Bund at this time.
Gold Rolling Contract
I am still flat. Gold hit an afternoon high at 1984 before having a small $10 sell-off into the close. I will now raise my buy level to 1943/1958 with a higher 1931 ‘’Closing Stop’’.
Silver Rolling Contract
I am still flat as Silver continues to build value above 24.50. I will now raise my buy level to 23.80/24.50 with the same no stop. If I am taken long, I will have a T/P level at 25.20.
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