IBB
304.68
+0.62
+0.20%
 
AAPL
157.21
-0.29
-0.18%
 
TVIX
19.54
-1.71
-8.05%
 
XIV
77.1
+3.21
+4.34%
 
TNA
48.99
-0.03
-0.06%
 
TZA
18.27
0.00
0.00%
 
UVXY
35.87
-3.1
-7.95%
 
NASDAQ
6213.127
-3.399
-0.0547%
 
S&P500
2428.37
+2.82
+0.12%
 
NYSE
11719.267
+19.436
+0.1661%
 
IBB
304.68
+0.62
+0.20%
 
AAPL
157.21
-0.29
-0.18%
 
TVIX
19.54
-1.71
-8.05%
 
XIV
77.1
+3.21
+4.34%
 
TNA
48.99
-0.03
-0.06%
 
TZA
18.27
0.00
0.00%
 
UVXY
35.87
-3.1
-7.95%
 
NASDAQ
6213.127
-3.399
-0.0547%
 
S&P500
2428.37
+2.82
+0.12%
 
NYSE
11719.267
+19.436
+0.1661%
 
Morning Note July 13, 2016

Education

Wed, July 13, 16

Overnight our descriptive model for global equities remains bracketed from prior session. Central Banks have led a coordinated effort of stimulus conversation in a frantic attempt to bid up global risk assets and commodities. Starting in the EU, where Merkel paints a rosy picture for Italian banks appreciating such assets firmly. GBPUSD trades in overhead resistance in the 1.32 handle, as well as EURUSD cannot break above 1.11 level. DE10/2Y yields print in negative territory as a market braces for Euro Financial uncertainty of their insolvent banks. Our largest concerns are the contagion of Italian banks, as well as Germany’s flagship DB. Perhaps, now we understand why central banks have added more liquidity to markets in preparation of an event. Over to the UK, where the GB2Y yield prints on the cusp of negative territory, Property funds start selling commercial properties as redemption run hot. Over to Asia,  where China’s imports/exports data dropped substantially as global soft demand and abroad continue to plague the largest trading region. Stealth devaluation by the PBOC of the CNYUSD continues posting a 5th straight drop last week, and the longest losing streak this year. In Japan, all the rage is helicopter money as the BOJ has shown it’s in a rut. Forward pricing of markets of USDJPY tagging the high 104 handle, as well as Nikkei in the 16000 handle is the market expecting such fiscal stimulus. Our only concern, is the BOJ better not disappoint due to a market with high expectations. Over in the US, the earnings season has kicked off with the expectation of an earnings recession to continue, but a market irrational exuberant to price in future growth. JPM talks about UST yields, “On Friday stocks rallied b/c of low bond yields and this week they are extending those gains because yields are higher”.  Bullard’s comments on yields curve reflects a flight to safety. On an interesting note, Private-sector hiring rate in JOLTS fell a tenth to 3.8%, the lowest level since Apr 2014 released prior session. Atlanta FED has revised 2Q lower again to 2.4 on July 6 as the overall trend from May is in a decaying fashion.

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Morning Note July 12, 2016

Education

Tues, July 12, 16

Global Equities continue to advance on central bank speculation of more monetary accommodations. Global indices have stalled in the 430am hour Pre US Cash session. A large market player in the 7am hour spiked WTI +100bps in an attempt to boost SPX futures higher. The failed attempt signals SPX focus today is not as much WTI, but perhaps the continuation in HY, as we speculate is bidding on the backs of ECB bond purchases. Over in EU, the EURUSD attempts to tackle the 1.11 handle in the overnight session, as well as GBPUSD testing 1.31. In particular, we are watching the developments out of DB: it has requested €150 billion bailout of “European banks”. DB CoCo bonds soar to 11.5% yield following such bailout demands over the weekend. Italy’s Unicredit and Spain’s Banco Santander have higher CoCo bond yields. More social destabilization out of Europe as riots explode in Berlin. The oddity of civil unrest exploding onto the shores of major DM countries signals all is not well. Over in the US,  DXY prints at the sustained 96 handle, and if held such level an upside target for latter part of the summer is 97.25-98.50 unless a central bank comments throws a wrench in the mix. On the topic of central bank comments, nearly a handful of FED speakers kick off in the 9am hour EST. As euphoria plagues the markets, an interesting comment from FITCH: Flat Yield Curve Will Pressure U.S. Bank Margins In H2 2016. Earnings season has commenced with AA: EPS of $0.15 on revenue of $5.3 billion vs. est. EPS of $0.10 on revenue of $5.2 billion. FACTSETs latest estimates an earnings decline of -5.6% for SPX 2Q. As markets equity markets hit all time highs, UST yields have plummeted to new lows. NY Times exclaims “Can We Ignore the Alarm Bells the Bond Market is Ringing?”. In other words, the market is in an earnings recession euphoric about future growth. The Felder Report puts it at: “It’s simply the greatest dichotomy that we have ever seen before in the financial markets”.

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Morning Note July 11, 2016

Education

Mon, July 11, 16

Global equity indices continue rebound extending from prior week NFP report. Much enthusiasm from Japan overnight as Abe confirmed new $100 Billion stimulus program to be unleashed. In return USDJPY was squeezed to the 102 handle along with AUDJPY to the 77 level. JPY 2/10s yields remain deep in negative territory as the Nikkei rebounds +371bps. Over to EU, where hopes of bailouts pushed bank stocks higher in Italy. We believe the epicenter of the next banking crisis is to stem from the German/Italian banks in the not to distant future as DB chief economist Welt am Sonntag calls for a new round of bailouts. EURUSD balances on the 1.10 handle as GBPUSD is having trouble sustaining the 130 handle. DXY tests the high 96 handle on the cusp of an upside breakout with 97-98.50 price targets. Optimism is rolled over from prior week’s NFP with 10 and 30 year USTs yields hitting fresh record lows. Unofficially, the US earning season kicks of with AA. As of last Friday, FACTSET estimated sales decline for SPX for Q2 is -.07%. The railing 12 month P/E ratio for SPX now stands at 18.8. Along with a continued earnings recession as 2Q earnings decline is expected to be -5.6% as of last Friday. Ending the week, we hone in on US Banks (JPM,C, & WFC) reporting end of week.

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Morning Note July 7, 2016

Education

Thur, July 7, 16

Collectively global equities have been flat in the overnight session leading up to the pre-cash-US session. USDJPY prints on the 100 handle as the Nikkei was under pressure due to strong YEN woes. Australia lost its triple A credit rating as AUDUSD dipped into the 74 handle. AUDJPY has levitated the high 75 handle in congestion since late 7-6-16 session. The path of PBOC devaluations via CNYUSD is clearly evident as the DXY maintains the 96 handle. US ADP total employment report for June is 172k vs. 160k. ADP also reports construction -5k and manufacturing jobs -21k. We continue to monitor UST yields short and long dated plunges which signals a risk off market, but equities continue to live in a distorted reality. WTI has been under pressure ever since the Nigerian Delta Terrorist lost their Twitter Account. Today’s EIA report will be at 1030am for WTI due to a holiday driven week. API data released prior session calls for large draws which is typical for the season. China petroleum reverses as well rig counts remains our largest concern. Over to the EU, the EURUSD has maintain the 1.10 handle for numerous sessions, along with the GBPUSD stuck at the 1.29 handle. EU Banks such DB & CS remain a large concern as well as the property management companies. An ex-ECB official states panic is starting to hit the market as people start withdrawing. Overall, Brexit appears to be the partial trigger event for future market woes on a global scale. Not by chance but months earlier, BIS,OECED,IMF, and other various entities have been warning the public on imminent danger. Perhaps, the dominoes have started falling, but the market is too ignorant to realize due to a central bank distorted reality.

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Morning Note June 6, 2016

Education

Wed, July 6, 16

Global equities are under pressure in the pre-US cash session retracing advancements seen immediately post-Brexit. Flight to safety is certainty the theme as global treasury yields continue to plummet.  UST10Y Yields touches 1.33 level in the overnight session as DXY bids up mid-96 handle. If DXY maintains above 96 handle, we believe an upside breakout could form for FY’16 time frame of 102 price target. In return, WTI breaches tags the 45 handle with concerns of overcapacity weigh on prices. Our view is the WTI market is focused on FX, China Petro Reserves, and Rig Counts. FX was certainly a hot topic in the Asian session has USDJPY slams to the low 100 handle. AUDJPY continues to print at 4 year lows in the 74 handle as regional health is ailing. PBOC reignites the devaluation of CNYUSD now printing .1494 level as US markets have ignored. Over to EU, where banks and property management companies are under immense pressure. Latest round of fear is Monte Paschi bank being halted, along with a shorting ban. On top of this, Deutche Bank and Credit Suisse plummet to new lows. GBPUSD tagged the 1.27 handle as our targets for the year is 1.20 handle. EURUSD dropped from the 1.11 handle to the low 1.10.

 

Overnight analyst quotes, the euphoria is certainly gone by now: “Everyone is trying to react to a situation we’ve never been in before,” said Stewart Richardson, chief investment officer at RMG Wealth Management in London. “We’ve had shocks to the system before, but we haven’t had one like this. And we won’t know the answers for a long time.”

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Morning Note June 5, 2016

Education

Tues, July 5, 16

Global equities are under pressure in the Pre-US-Cash session after a post-Brexit week of Euphoria. Markets are coming back to reality as global treasury yields on the 10s continue to decline.  Commodities are under pressure as well with WTI in the mid-47 handle. Energy market is focused on rig counts flat lining as well as concerns of China’s strategic reserves nearing completion. The US Dollar maintains mid-95 handle as PBOC continues to devaluations of the CNYUSD. Health in the region is measured with USDJPY and AUDJPY which appears bleak at the moment. Over the weekend, the market bid up BTCUSD to 680 handle which is mostly in a response to PBOC devaluations.  Over to the EU, GBPUSD prints at the 1.31 handle, along with EURUSD stabilizing in the 1.11 handle. Precious metals such as Silver /SI tagged the 21 handle on US Holiday session as Gold /GC flirts with the 1360 handle. Overall, our descriptive model of global equities signals weakness for the US cash session.

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Morning Note July 1, 2016
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Morning Note June 30, 2016

Education

Thur, June 30, 16

In the overnight session, /ES caught a bid at the beloved 3am hour to only round trip at the 8am. Global equities have enjoyed a 3 session panic buying straight linear fashion now under pressure due to WTI be knocked off the 49 handle. Gold/Silver along with the USD have seen a bid in tandem as of recently adding to the diminishing credibility of the central banks. We note, the global rally in the last 3 sessions was a loss in correlation with yield curves long/short dated. EURUSD, GBPUSD ,USDJPY, and AUDJPY as of 6-27-16 print in a bearish flag. Critical support will be watched in the US Cash Session. Stealth devaluations by the PBOC continue with CNYUSD ramping up in the post-Brexit era. VIX sits at the low 16 handle in pre-US cash session as a weekly lead 1 cloud rejected 26-27 range unleashed overhead supply. We continue to state the VIX will be in a new trading range going forward of the 17.50-30 until a resolution spike above 30 resolves the market’s cognitive dissonance.

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Morning Note June 29, 2016

Education

Wed, June 29, 16

In the overnight session, Global Futures are in the second session of ignoring decreasing T10Y Yields. The disconnect stems from a disorder called buy the dip a narrative concentrated by groupthink. Such thinking is dangerous to market stabilization as we saw in last Friday’s events crashing global markets in a matter of hours on a Brexit vote. Risk currencies continue to catch a bid in the overnight and US pre-cash morning session such as USDJPY, GBPUSD, AUDJPY, and CADUSD, but on a relative strength index of 60min time frame are near the overbought region. WTI is in the 15hr of a 48.50 ceiling on the 60min as the market is using moving averages of high time frame as overhead resistance. Interesting to note, Gold/Silver along with DXY have been bidding together as of recent that is a real time credibility watch of the FED. DXY is backing off the 96 handle today at 95.83 pre US cash session, we believe a healthy retracement to the 95.43 region, then to only start the next leg up unless a central bank doesn’t whack the FX. US SPX on a 120 min scale has had 20 bars of prints with only 1 down candle depicting a market of buying the dip disorder along with market overseers protecting the wave function. Pimco’s Fels prior session says he is getting ready for stagflation as the yield curve 10s less 2s is clearly sending a scare. FACTSETs recent forecasts show a decline in estimated earnings for the SPX in 2Q is -5.2%.  In an interesting twist last week, the FED reported on a stress test of 33 banks pass a VIX of 70. We believe stress in EU Banks <EUFN> could spiral into much stress heading into late summer months pulling in other global financial banks such as US banks.

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Morning Note June 28, 2016

Education

Fri, June 28, 16

US10 Y, DE10 Y, and GB 10 Y have produced a slight V shape bottom in the overnight session as global equity receive a bid. Risk on currencies such as USDJPY, AUDJPY, EURUSD, and GBPUSD have seen slight appreciation in the overnight session. Appears that markets are taking a slight breather or counter function to the selling triggered by Brexit. DXY maintains the 96 handle as we’ve seen steep devaluations in the CNYUSD by the PBOC.

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