U.S. Indices were little changed on Wednesday while T-Notes bull steepened with upside in both assets seen in late trade after the FOMC Minutes. The Minutes were largely as expected, signalling the Fed is in no rush to adjust policy and they should be cautious with future adjustments. However, the commentary that various participants suggested may be appropriate to pause or slow the balance sheet run off until the debt ceiling issue is resolved took the limelight, sending T-Notes to session highs with stocks following suit. Elsewhere, the Dollar was bid but off highs post FOMC Minutes while oil prices settled in the green, but well-off earlier peaks. Focus aside from Fed was largely centered around geopolitics with more issues surrounding Ukraine and Russia peace talks; Russia accused the EU of supporting Ukraine in its attack on the CPC pipeline, while tensions remain with Ukraine excluded from Russia/US talks. US President Trump also called Ukraine President a dictator, adding he needs to move fast, or he is not going to have a country left. Elsewhere, the US saw mixed housing data, with Building Permits beating expectations but Housing Starts missing. Fed’s Bostic also spoke, noting he does not know what the future holds when asked about more cuts in 2025, but said that everything is on the table at every meeting. He also noted it is appropriate to be more cautious with the balance sheet now as they approach the threshold level and to be sure the drawdown does not go too far. The FOMC Minutes were largely as expected but focus centred around discussions on the balance sheet. On policy, the Minutes noted all participants said it was appropriate to hold rates in January, while the vast majority pointed to policy still being in a restrictive stance. In fitting with recent commentary, the Minutes noted they want to see further progress on inflation before making adjustments to rates, while the majority said they must be careful in considering any adjustments. On the neutral rate, a few said that the current rate may not be far above its neutral level. On the balance sheet, various participants said it may be appropriate to consider pausing or slowing the balance sheet runoff until there is a resolution of the debt ceiling dynamics. On US President Trump policies, some said potential changes to policy have a potential to hinder the disinflation process, while some noted it will be difficult to distinguish between persistent changes in inflation and more temporary changes associated with new policies. Elsewhere, on financial stability, several mentioned issues related to the banking system. Meanwhile, a few participants discussed vulnerabilities associated with CRE exposures, noting that risks remained, although there were some signs that the deterioration of conditions in the CRE sector was lessening. Housing Starts fell by 9.8% in January to 1.366 million (exp. 1.390 million) after surging 16.1% in December. Pantheon Macroeconomics noted multi-family starts are exceptionally volatile, although they now appear to be only a bit above their underlying trend. While the agency thinks the drop in single family starts in January “mostly reflects very cold weather”. Ahead, Pantheon contends that Housing Starts will unwind any weather-related weakness soon, although “this might have to wait until March given that February so far has also been unseasonably cold”. Meanwhile, Building Permits rose 0.1% to 1.483 million (exp. 1.460 million) from 1.482 million. Permits for housing with two to four units surged by 13.2% to 60k, offsetting the 1.4% drop in housing with five or more units to 427k, while permits for housing with one unit remained unchanged at 996k. On construction activity, Pantheon expects a significant decline in construction activity, however, in the near term, “Multi-family construction looks set broadly to flatline now that the boom and bust in rental growth during the pandemic shown in our third chart has come to an end”. Elsewhere, Oil closed higher by a further 0.63% while Gold was flat following a volatile trading.
To mark my 3150th 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 310 points yesterday and is now ahead by 2870 points for February. 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 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 0.24% higher at a price of 6144.
The Dow Jones Industrial Average closed 71 points higher for a 0.16% gain at a price of 44,627.
The NASDAQ 100 closed 0.05% higher at a price of 22,175.
The Stoxx Europe 600 Index closed 0.91% lower.
Yesterday, the MSCI Asia Pacific closed 0.2% higher.
Yesterday, the Nikkei closed 0.27% lower at a price of 39,164.
Currencies
The Bloomberg Dollar Spot Index closed 0.10% higher.
The Euro closed 0.2% lower at $1.0421.
The British Pound closed 0.11% lower at 1.2581.
The Japanese Yen rose 0.35% closing at $151.47.
Bonds
Germany’s 10-year yield closed 4 basis points higher at 2.55%.
Britain’s 10-year yield closed 6 basis points higher at 4.61%.
U.S.10 Year Treasury closed 1 basis points lower at 4.54%.
Commodities
West Texas Intermediate crude closed 0.63% higher at $72.30 a barrel.
Gold closed 0.05% higher at $2936.10 an ounce.
This morning on the Economic Front we have German PPI at 7.00 am, followed by Euro-Zone Construction Output at 10.00 am. Next, we have U.S. Weekly Jobless Claims and the Philly Fed Manufacturing Index at 1.30 pm. Fed Members Goolsbee, Jefferson and Barr are speaking at 2.35 pm, 7.30 pm and 7.35 pm respectively. Finally, we have a 30 Year Treasury Auction at 6.00 pm.
Cash S&P 500
Despite the low volume a late rally for the third consecutive trading session saw the S&P close at yet another all-time high. However, the 500-point reversal in the German DAX yesterday (which I have written about in the FTSE Commentary below) is a warning how things can change on a dime. It is amazing that a $52 trillion market cap stock market can move so quickly higher in the last 20 minutes of trading. We all know about the liquidity equation, the buybacks, Central Banks intervening, and even the Treasury in the last couple of years with fiscal dominance. Even the introduction of ODTE with all of the above contributing to a permanently ascending market ever more disconnected from a base economic and fundamental foundation. Owning the MAG 7 did not just become amazing investments for so many. It ended up being a reserve holding of some central banks, just like Treasuries and Gold. As of the end of December 2024 filings, the Norwegian Central Bank owns 324 million shares of NVIDIA, to use one example, the 10th largest holder. Meanwhile the Swiss National Bank owns 69 million shares. No wonder everything is disconnected from everything. The Monthly RSI for the DAX was over 80 before yesterdays’ strong reversal. Wednesday’s late rally saw the S&P hit my 6146 sell level before selling off after the close to my revised 6135 T/P level and I am now flat. Today, I will again be a seller on any further rally to 6160/6180 with a higher 6205 ‘’Closing Stop’’. If triggered, I will have a T/P level at 6135. Given the number of extremities that I wrote about in Monday’s Commentary, I have no interest in buying the S&P at this time. If this view changes, I will be back with a new update for my Platinum Members.
EUR/USD
I am still flat the Euro. Today, I will continue to be a buyer on any dip lower to 1.0310/1.0380 with the same 1.0235 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 1.0440.
Dollar Index
The Dollar rallied, hitting my tight 107.30 T/P level on my latest 107.00 average long position and I am now flat. The Dollar has support below from 106.10/106.80 where I will again be a buyer with a lower 105.55 ‘’Closing Stop’’. If triggered, I will have a T/P level at 107.30.
Russell 2000
I am still flat the Russell as the market again traded in a narrow range. We have short-term support below from 2170/2230 where I will continue to be a buyer with the same 2115 ‘’Closing Stop’’. If I am taken long, I will have a T/P level at 2275.
Cash FTSE
My latest 8780 short position worked well as the market traded lower to my 8740 T/P level and I am now flat. Since the December lows the FTSE has ramped higher leaving one unfilled gap after another below. As you know all ‘’Open Gaps’’ eventually are filled. Today, I will again be a seller from 8780/8860 with the same 8925 ‘’Closing Stop’’. If triggered, I will have a T/P level at 8725.
For those members following the DAX: The DAX made a new all-time high shortly after the European Open at a price of 22936 before having an ugly reversal, closing on the lows following a 500-point rout. This is the price action that I have been looking for over the past six months. As a result of this large reversal, I will be a small seller from 22700/22850 with a 23005 wider ‘’Closing Stop’’. If triggered, I will have a T/P level at 22540.
Dow Rolling Contract
The Dow hit a low at 44312 yesterday afternoon before rallying 300 points into the close and I am still flat. Today, I will continue to be a buyer on any dip lower to 43950/44200 with the same 43795 ‘’Closing Stop’’. Despite the Dow underperforming the other main Indexes, I still do not want to be short the market at this time. If I am taken long, I will have a T/P level at 44360.
Cash NASDAQ 100
The NDX just missed my initial sell level before falling 80 points into the close and I am still flat. Today, I will continue to be a seller on any further rally to 22240/22400 with the same 22505 ‘’Closing Stop’’. I still do not want to be long the NDX at this time. If I am taken short, I will have a T/P level at 22110.
December BUND
The Bund traded lower to my buy range for a now 131.20 long position. I will add to this position on any further move lower to 130.60 while leaving my 129.95 ‘’Closing Stop’’ unchanged. I will now lower my T/P level to 130.80. If any of the above levels are hit, I will be back with a new update for my Platinum Members.
Gold Rolling Contract
My latest 2932 short Gold position worked well as the market traded lower to my 2919 T/P level and I am now flat. Given how overbought Gold is trading I will continue to be a seller of rallies. Gold has short-term resistance from 2970/2990 where I will again be a seller with a higher 3003 ‘’Closing Stop’’. If triggered, I will have a T/P level at 2953.
Silver Rolling Contract
I am still flat. Today, I will continue to be a buyer on any dip lower to 31.30/32.20 with the same 29.95 ‘’Closing Stop’’. If triggered, I will have a T/P level at 32.90.
Please Note: There will 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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