U.S Indices rallied on Tuesday on the return from the long weekend with markets reacting to US President Trump delaying his 50% tariff threat to the EU to 9th July from 1st June, allowing more time for negotiations. The market also caught a bid on the sharp rebound in consumer confidence. Sectors rallied, with Consumer Discretionary, Tech and Communication outperforming (up over 2-3%), while Energy, Utilities and Consumer Staples lagged (but still with gains of 0.7-0.9%). Meanwhile, US Treasury yields were lower across maturities with the curve bull flattening. The downside in long-end yields largely tracked that of JGBs on reports that Japan’s MoF is looking to cut super-long-end issuance, while the Trump/EU trade relief also likely helped. The Dollar outperformed on the reduced trade tensions while the Japanese Yen lagged on lower JGB yields and the rally in equities. Oil prices settled lower ahead of OPEC+ JMMC, although the meeting of the eight OPEC+ countries conducting voluntary cuts will take place on Saturday. Market focus will be on the Saturday meeting, assuming no policy decision is front-run and announced at the Wednesday meeting. Data out of the US saw Durable Goods tumble, but not as much as forecast, albeit it was primarily led by volatile aircraft orders after the surge in the prior month. Meanwhile, Consumer Confidence saw a notable recovery, well above analyst expectations. Fed speak saw Kashkari note that there is a healthy debate on the FOMC over whether to look through the inflationary impact of new tariffs. Barkin toed the usual wait-and-see approach line. US Consumer Confidence rose to 98.0 from 86.0, above the expected 87.0 and even above the top end of the forecast range. The Present Situation Index and Expectations rose to 135.9 (prev. 133.5) and 72.8 (prev. 54.4), respectively, while 12 month inflation expectations ticked lower to 6.5% from 7.0%. Note, that the cutoff date for preliminary results was May 19th – About half of the responses were collected after the May 12th announcement of a pause on some tariffs on imports from China. Consumers saying jobs “plentiful” and “hard to get” both increased. On the responses, Stephanie Guichard, Senior Economist at The Conference Board noted the rebound was already visible before the May 12th US-China trade deal but gained momentum afterwards. Meanwhile, she added consumers were less pessimistic about business conditions and job availability over the next six months and regained optimism about future income prospects. Consumers’ assessments of the present situation also improved. However, consumers were more positive about current business conditions than last month, and their appraisal of current job availability weakened for the fifth consecutive month. Note, that May’s rebound in confidence was broad-based across all age groups and all income groups. It was also shared across all political affiliations. Durable Goods declined by 6.3% in April, beating the expected decline of 7.8%, but falling notably from the prior rise of 7.6%. Ex-defense fell 7.5%, vs the prior 9.0% upside. Ex-transport rose by 0.2%, vs the prior -0.2%. Nondefense Capital Goods Ex-aircraft fell 1.3%, vs the prior +0.3%. The tamer figures in ex-transport show that the fall in the headline was primarily due to a fall in the volatile aircraft orders from the strong March report. However, Pantheon Macroeconomics does highlight that “other headline numbers from this report provide further indication that underlying investment demand is slowing significantly in the wake of the tariff shock.” The consultancy highlights that the 0.2% ex-transport increase is equivalent to a 0.4% decline in real terms, given the 0.6% jump in PPI capital goods last month. It also adds that the 1.3% drop in Nondefense Capital Goods ex-aircraft is consistent with a near 2% decline in real terms. Elsewhere within the report, Pantheon Macroeconomics highlights the Core Capital goods shipments fell by 0.1%, but is consistent with a 0.7% drop in real terms. “That tentatively suggests a moderate decline in equipment investment in Q2, but one month’s data are not definitive.” Elsewhere, Oil fell 1% while Gold was also lower ending Tuesday’s session with a loss of 1.14%.
To mark my 3175th 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 411 points yesterday and is now ahead by 3566 points for May after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 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 2.05% higher at a price of 5921.
The Dow Jones Industrial Average closed 740 points higher for a 1.78% gain at a price of 42,343.
The NASDAQ 100 closed 2.39% higher at a price of 21,414.
The Stoxx Europe 600 Index closed 0.33% higher.
This Morning, the MSCI Asia Pacific closed 0.4% higher.
This Morning, the Nikkei closed 0.23% higher at a price of 37,812.
Currencies
The Bloomberg Dollar Spot Index closed 0.44% higher.
The Euro closed 0.45% lower at $1.1334.
The British Pound closed 0.32% lower at $1.3506.
The Japanese Yen fell 1.03% closing at $144.31.
Bonds
Germany’s 10-year yield closed 3 basis points lower at 2.53%.
Britain’s 10-year yield closed 1 basis points lower at 4.67%.
U.S.10 Year Treasury closed 7 basis points lower at 4.44%.
Commodities
West Texas Intermediate crude closed 0.96% lower at $60.94 a barrel.
Gold closed 1.12% lower at $3304.10 an ounce.
This morning on the Economic Front we already had the release of the German Import Price Index which fell 1.7% versus -1.4% expected. Next, we have the German Unemployment Rate at 8.55 am. This is followed by U.S. MBA Mortgage Applications at 12.00 pm and the Richmond Fed Manufacturing Index at 3.00 pm. Finally, we have the Dallas Fed Services Index at 3.30 pm and a Five-Year Treasury Auction at 6.00 pm. Meanwhile, Fed Members Kashkari and Williams are speaking at 9.00 am and 2.00 pm respectively.
Cash S&P 500
Last week saw record retail inflows at the beginning of the week only to see things roll over from one bear flag to the next. Friday’s down gap driven by a Trump tweet suggesting 50% tariffs on the EU beginning June 1. On Sunday he canceled that move and the previous July 9 date (which is the original 90-day extension deadline) is back in effect. And that headline hit literally a few minutes following futures open. The result: A massive gap up on Tuesday morning again screwing everyone that stayed away from long positioning into the weekend. Ultimate pain trade. Nobody gets in. This ‘Open Gap’ held throughout yesterday’s session which had a low at 5885 – 83 Handles above Friday’s 5802 Chicago close. The S&P has now had a strong rally off its 200 Day Moving Average tag. In addition to the daily 20MA and weekly 20MA holding, the S&P also defended the monthly 5 EMA as support. I am pointing all these things out to highlight that the rally reaction since the Friday lows had a lot of technical factors that supported it, the Trump reversal on EU tariffs of course exacerbating the current action we are seeing. As you know in April I proposed they wanted higher markets to be able to pass the tax cuts. The House has now signed off on the bill that is now going before the Senate. They are trying to pass this bill through the reconciliation process to avoid the filibuster. With that only a simple majority is needed to pass it. the GOP has a 53-47 majority in the Senate. Folks like Rand Paul and Ron Johnson are opposed due to the massive debt increase to finance the bill and the GOP can only afford to lose 3 votes with JD Vance a potential tie breaker. That is a razor thin margin of error. So, passage of the bill is not guaranteed at all. If the bill fails to pass it would be a major problem for markets. If it passes it would be a major argument for margins holding up and some of the tariff impact on consumers being mitigated somewhat. Yesterday, my S&P plan worked well as the market was trading at the bottom of Tuesday’s buy range when I posted for a 5890 long position before rallying to my revised 5914 T/P level as emailed to my Platinum Members and I am now flat. With the $NYSI again posting a maximum overbought position we may see some profit taking that will allow some of Friday’s ‘Open Gap’ to be filled. Today, I will be a buyer from 5845/5865 with a lower 5829 ‘Closing Stop’. Ahead of Nivida’s earnings this evening I will now lower my S&P sell level to 5980/6000 with a lower 6021 ‘Closing Stop’.
EUR/USD
I am still flat the Euro as the market never came close to yesterday’s sell range, trading 80 points lower from where I marked prices on Tuesday morning at 1.1300. The main reason that I am skeptical of further rallies in Equity Markets is the fact that the Dollar has not recovered much of its 11% fall in March and the fact the Treasury Yields are so high. The Euro has strong support below from 1.1150/1.1230 where I will be a buyer with a 1.1085 ‘Closing Stop’. I will now lower my Euro sell level to 1.1380/1.1460 with a lower 1.1525 ‘Closing Stop’.
Dollar Index
My latest 99.20 long Dollar position worked well as the market rallied to my 99.60 T/P level and I am now flat. Today, I will again be a buyer of the Dollar on any further move lower to 98.40/99.10 while leaving my 97.75 ‘Closing Stop’ unchanged. If I am taken long, I will have a T/P level at 99.60.
Russell 2000
I am still flat as the Russell never came close to Monday’s buy range. This morning, the Russell is trading at a price of 2090. I will now raise my buy level to 1980/2050 with a higher 1925 ‘Closing Stop’.
FTSE 100
My FTSE plan worked well as the rallied to my 8820 sell level before trading lower to my 8780 revised T/P level and I am now flat. Today, I will again be a seller from 8840/8900 with a higher 8955 ‘Closing Stop’. I still do not want to be long the FTSE at this time.
Dow Rolling Contract
After the Dow rallied to my 42300-sell level, I emailed my Platinum Members to exit any short position at my revised 42250 T/P level and I am now flat. Despite the rally off the lows on Friday the Dow continues to trade heavy. We have further resistance from 42550/42800 where I will be a stronger seller with a higher 43005 ‘Closing Stop’. I no longer want to be long the Dow at this time.
Cash NASDAQ 100
NVIDIA reports after the close this evening. Looking ahead to the earnings, while obvious attention will be on the quarterly figures and guidance, participants will be cognizant of what is said about China-US relations, chip bans, and the new China chip. On top of this, NVDA investors will be looking for definitive answers on how much US chip curbs on China will cost the Company, even as a pullback in other regulations is expected to open up new markets. Yesterday’s surge in the NDX saw the market hit my sell range for a now 21380 short position. I will add to this position at 21560 while leaving my 21705 ‘Closing Stop’ unchanged. I will now raise my T/P level to 21260. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
December BUND
Lower Treasury Yields sees the Bund trading a further 4 basis points lower this morning from where I marked prices on Tuesday morning. I am still flat. I will now raise my buy level to 129.50/130.30 with a higher 128.75 ‘Closing Stop’. If I am taken long, I will have a T/P level at 131.10. I still do not want to be short the Bund at this time.
Gold Rolling Contract
No Change: I am still flat. I will not chase Gold higher as I leave my 3220/3245 buy level unchanged with the same 3199 ‘Closing Stop’.
Silver Rolling Contract
Silver traded lower to my 32.80 buy level before rallying to my revised 33.21 T/P level and I am now flat. Today, I will again be a buyer on any dip lower to 31.50/32.50 with the same 30.35 wider ‘Closing Stop’. If I am taken long, I will have a T/P level at 33.20.
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