Shortly before the US Markets re-opened last night, President Trump’s Economic Advisor Gary Cohn resigned. This surprise move is weighing hard on equity markets this morning with the Dow trading some 380 points lower from where we closed while the S&P is 30 Handles lower. Safe haven currencies like the Swiss Franc and Japanese Yen are higher with USD/JPY now trading at 105.60.
To mark my 1525th 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 This offer is open to both new and existing members and if anyone is interested in this offer can you please email me on firstname.lastname@example.org for details
For anyone following my Platinum Service it made 362 points yesterday and is now ahead by 844 points for March, having made 2256 points in February, 879 points in January, 946 points in December, and 823 points in November. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points.
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The leaders of North and South Korea have agreed to meet at a summit next month, Seoul’s envoy says. It will be the first such meeting for more than a decade and the first since Kim Jong-un took power in North Korea. Mr Kim is said to be open to US talks and would pause weapons testing during such time. In previous programmes to halt its nuclear ambitions, the North has failed to keep its promises, but ‘’risk markets’’ have nevertheless responded in positive fashion to the news.
President Trump’s tweeted response was that ‘’For the first time in many years, a serious effort is being made by all parties concerned. The World is watching and waiting! May be false hope, but the U.S. is ready to go hard in either direction!’’
Immediate market response to the news, was more evident in currencies than stocks or bonds, the risk-sensitive AUD, NZD and SEK showing the largest gains with AUD/USD jumping from around 0.7765 to 0.7842 within two hours. This after some choppy but overall limited AUD price action following yesterday’s release of soft Retail Sales data (+0.1%) While the pre-eminent safe haven currency, JPY, did fall-back, the CHF did not and indeed since this time yesterday, both JPY and CHF are marginally stronger. US bond yields are not much changed while US stocks closed higher untile we got the reversal on the Cohn resignation.
The Japanese Yen had weakened a tad after Bank of Japan Governor Kuroda attempted to row back on his monetary policy comments made last week about the possibility of withdrawing monetary stimulus beginning in FY2019. In his daily appearance before lawmakers yesterday he said fewer stimuli before reaching the CPI target is ‘’unthinkable’’ and that ‘’I said that we would be discussing how to move forward with exit. I never said we would be exiting immediately in fiscal 2019″.
UK Brexit minister David Davis added his voice to UK Prime Minister Theresa May earlier in the week, saying there are good chances of getting a transition agreement in March. That said Bloomberg reports that the EU is planning to keep the final wording on the transitional Brexit agreement on the future trade relationship fairly vague. This would leave the UK in the vulnerable position of having to negotiate substantial chunks of a trade deal after losing much of its leverage.
For now though, getting a transition deal over the line by the March 22 EU Summit should suffice to see GBP/USD back above $1.40 . Sterling is slightly firmer overnight but this is largely in the context of a weaker US dollar post the Korea news (DXY -0.6%). The pound is softer against most other currencies.
As for the state of play on trade tariffs, Trump continues to get significant pushback from fellow Republicans. The Wall Street Journal reports that top Republicans overseeing trade policy have begun circulating a letter to Trump, warning that tariffs are a bad idea and Congressional Republican leaders are not ruling out potential legislative action aimed at blocking such tariffs. Trump’s economic advisor Gary Cohn has been summoning executives from US companies that depend on the metals to meet this week with Trump to try to blunt or halt the tariffs (Bloomberg also reports Trump indicating he thinks Cohn will resign if tariffs go ahead which we now know has happened). Meanwhile the EU is reportedly preparing punitive tariffs on iconic US brands produced in key Republican constituencies.
Heading towards Friday’s important US Employment Report and the March 20-21 FOMC meeting, Dallas Fed President Robert Kaplan has been on CNBC saying ‘’My base case for the year has not changed – its three for this year, I think we should get started sooner rather than later.’’
This morning on the Economic Front we have Euro-Zone GDP at 10.00 am and this is followed at 12.00 pm by US MBA Mortgage Applications. Next we have the ADP Employment Change at 1.15 pm and the Trade Balance plus Non-Farm Productivity including Unit Labour Costs at 1.30 pm. Finally at 9.00 pm we have Consumer Credit.
This afternoon the Fed’s Dudley and Bostic are both due to speak on the US Economy.
March S&P 500
It is difficult to take your eyes off the screen given the incredible volatility that we are witnessing this year in comparison to last year’s non- event. Yesterday morning after I posted the S&P traded higher to my 2732 sell level before incredibly trading overnight to a low at 2681.50 on the Cohn resignation news. As so many of my calls hit at the same time yesterday morning I covered my short S&P position at my revised 2730 T/P level and I am now flat. Hopefully you managed to get more points as the S&P traded to an intra-day low at 2710.50 before rallying into the close. On the re-open of the US Markets at 11.00 pm the S&P traded lower to my 2694 buy level. I emailed my Platinum Members to add to this position on any move lower to 2684 with a 2678 stop and a 2702 T/P level. Thankfully my second buy level was filled before we traded high to my revised T/P level and I am now flat. Long may this two-way volatility continue. I cannot see the US Markets leaving such a large ‘’Open Gap’’ when we open this afternoon and today I will again look to buy the S&P on any dip lower to 2682/2692 with a wider 2674 stop. Yesterday’s 2735 level is key resistance and today I will again look to sell the market on any rally higher to 2725/2737 with a 2745 stop.
After the Euro traded higher to my initial 1.2390 sell level I emailed my Platinum Members to exit any short position at my revised 1.2383 T/P level and I am now flat. The Dollar weakened on the Korean news and today I will now look to buy the Euro on any dip lower to 1.2320/1.2365 with a 1.2280 stop. I do not want to be short the Euro at this time.
June Dollar Index
The Dollar traded lower to my initial 89.75 buy level but so far has missed my second buy level at 89.35. I am still long and I will now lower my T/P level on this position to 89.85. If my second buy level is filled I will then lower my T/P level to 89.60.
My DAX plan worked well yesterday with the DAX trading lower to my 12130 buy level before rallying to my revised 12156 T/P level and I am now flat. The stronger Euro is hindering the DAX at this time but I still do not want to be short the market. Today I will again look to buy the DAX on any dip lower to 11910/11980 with a 11860 stop.
My FTSE plan worked well as the market re-opened below the bottom of my 7080 buy range at 7060. Subsequently I emailed my Platinum Members to lower their stop to 7020 with a 7110 T/P level which was filled earlier this morning and I am now flat. Today I will again look to buy the market on any dip lower to 7040/7080 with a 7010 stop.
Dow Rolling Contract
What a day with the Dow trading higher to my 25030 sell level after I posted yesterday morning before falling nearly 700 points from the highs on the Cohn news. After I went short I covered this position at my revised 24990 T/P level. Subsequently on the re-open last night the Dow was trading near the bottom of my buy range at 24540 before rallying to my revised 24620 T/P level overnight and I am now flat. We are not getting more points moves in one day than took three to four weeks to happen last year. The Dow has strong support at 24400 and today I will be a buyer on any dip lower to 24290/24420 with a 24210 stop. If I am taken long and subsequently stopped out of this position I will be a more aggressive buyer on any further dip lower to 23980/24100 with a 23920 stop. I do not want to be short the Dow at this time.
Unfortunately the NASDAQ just missed my 6945 sell level with a 6939 high print before selling off and I am still flat. The NASDAQ has strong support at 6780 and today I will be a buyer on any dip lower to 6755/6805 with a 6720 tight stop.
Unfortunately shortly after I posted I was topped out of my 157.08 long position at 156.65. Thankfully the Bund traded lower to my more aggressive buy level at 156.35 before rallying and I was able to cover this position at my revised 156.60 T/P level and I am now flat. This morning the Bund has traded to a rebound high at 156.88 which hopefully gave you a chance to make up for any loss earlier in the Bund market. Today I will again look to buy the Bund on any dip lower to 155.95/156.35 with a 155.60 stop.
Gold Rolling Contract
I am still flat Gold and I will now raise my buy level to 1312/1322 with a 1305 stop.
Silver Rolling Contract
My latest long 16.40 Silver position worked well with the market trading higher to my 16.65 T/P level and I am now flat. In my opinion it is only a matter of time before Silver breaks out to the upside and today I will now look to buy the market on any dip lower to 16.20/16.60 with a 15.90 stop.