Week to Oct 23rd

Earnings/CB speakers disregarded, Uncertainty consolidation with slight downside bias

MY CALL THIS WEEK : SELL GBPJPY

Uncertainty about COVID, stimulus and the election meant another week of consolidation, with a bias to the downside. Nothing changed this week, with equity and Oil markets declining slightly (as we said they would last week, being near the top of the consolidation level). The dollar reversed last week’s move, as it did the week before.

Next week is the last full week before the election, and when any potential bombshell might be thrown in. However, due to COVID, postal voting has been greatly expanded and many Americans have already voted. It seems certain that the stimulus package will be decided after the election, in a zombie Congress that runs until year end.

• Earnings have little effect
• CB speakers also disregarded
• Uncertainty consolidation continues
• Slight downside bias

Mon Oct 19

The continuing rise in COVID cases, lack of progress on stimulus matters, and election uncertainty all led to a sharp fall in equity and Oil markets today. The dollar also fell (although mainly against GBP and EUR only). Yields inched up slightly, despite the equity and dollar moves. Gold was flat on the day. IBM missed on earnings (EPS $1.89 vs $2.58), and fell 4.5% after hours.

Tue Oct 20

Equity markets and Oil recovered slightly today, although without much enthusiasm as the same factors weighted. The dollar fell again, particularly against CAD, which followed the oil trend, again pushing Gold up. Bonds fell in line with the trend. NFLX missed on earnings ($1.74 vs $2.14 EPS) after the bell and fell 5% after hours.

Wednesday October 21

Some slight progress on stimulus talks was not enough for stocks and Oil, which slid further today. The dollar was down again, with Gold up in line. Bonds continued to ignore the rest of the market smoothly sliding all week. TSLA beat on revenue and EPS, and rose 4.55% AH (but lost it all on Thursday).

Thursday October 22

Equities again staged a recovery today, a little bit stronger this time cancelling Wednesday’s drop (but no more). Oil moved up in line, but not to the same extent. The issues moving the market remained the same. The dollar also reversed back up, again to Tuesday night’s level, and notably Gold fell sharply this time, suggesting a more risk-on mood. Yields climbed again, to 0.863%, the highest level since June, helping bank stocks which were up over 3%. KO beat on earnings, and rose 2.36% pre-market, but lost some of that during the day.

Friday October 23 

Thursday’s equity rally continued today, but with little enthusiasm as the indices whipsawed throughout the day, and notably Oil fell a dollar (2.2%). The dollar fell again (except against Brexit-troubled GBP, meaning FTSE was the best performer). Gold was pulled two ways, and ended more or less flat, in an inside week for the metal. Yields (inverse to bond prices) pulled back slightly from Thursday’s high. INTC missed on earnings ($1.02 vs $1.11). There was a severe reaction, the stock opened 10.3% lower on Friday.

WEEKLY PRICE MOVEMENT

DAX was the biggest index faller at 2.04%, probably because EURUSD was the biggest mover up at 1.24%. Crypto moved sharply up with double-digit rises after months in the doldrums, possibly as a risk-off asset. FANGs were much more volatile than the underlying NDX, with a large move up by FB and down by NFLX.

Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on DXY. The equity and index prices are now based on the cash close each day.

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold)

• Eurozone, Japan, Canada rate decisions
• Four FAANG giants report simultaneously
• Aus, Eurozone, Germany, Japan inflation
• Last week before election

Monday October 26

Note European countries Daylight Savings Time ends, but does not change in North America until next week. Hence US markets will open earlier for Europeans, and later vice-versa. A hugely important week, the last full week before the election, but with a quiet start, and probably dominated by election news. Markets are closed in Hong Kong, New Zealand and Austria.

00:30 Aus Imports/Exports/TB

08:00 Germany IFO Sentiment Indicators

12:30 Chicago Fed National Activity Index

14:00 US New Home Sales

23:30 RBA's Bullock speech

Tuesday October 27 

The week’s action starts after the bell with NDX giants MSFT and AMD reporting, in this busy earnings week.

12:30 US Durable/ND Capital Goods (ND e0.5% p1.9%)

13:00 Housing/Home Price Indices

14:00 US Consumer Confidence

Wednesday October 28 

Dow heavyweights BA (pre-market) and V (after close) report today. The main news in the day is the Canadian rate decision and statement. There is also a rate decision in Brazil.  Markets are closed in Greece, Dubai, Turkey (half day) and Czechia.

00:30 RBA Trimmed Mean CPI (QoQ e0.3% p-0.1%)

14:00 BoC Rate Decision/Statement (e0.25% hold)

15:15 BoC Press Conference

22:00 Fed's Kaplan speech

23:50 Japan Retail Sales

Thursday October 29 

The crescendo of earnings season comes after the bell today, with AAPL, AMZN, FB and GOOGL (35.4% of NDX) all reporting. And this in addition to Japanese and Eurozone rate decisions, and the first reading of US GDP for Q3, which will show the degree of bounce back in the economy. Markets are closed in many Islamic countries for Mawlid (Birthday of the Prophet)

03:00 BoJ Rate Decision/Statement (e-0.1% hold)

06:00 BoJ Press Conference

08:55 Germany Unemployment Rate/Change

10:00 Eurozone Consumer Confidence/Business Climate

12:30 US Jobless Claims(Oct 16)

12:30 US Prelim Q3 GDP (e30.8% p-31.4%)

12:45 ECB Rate Decision/Statement (e0.0% hold)

13:00 Germany CPI (YoY e-0.4% p-0.4%)

13:30 ECB President Lagarde Presser

14:00 US Pending Home Sales

23:30 Tokyo CPI

23:50 Japan Industrial Production

23:50 Japan Jobs/Unemployment

Friday October 30 

All the important news is from Europe today, with Eurozone inflation, GDP and unemployment simultaneously at 1000. This is the last day of the Europe/US time disconnect.

07:00 Germany Retail Sales (YoY e4.2% p3.7%)

07:00 Germany GDP

10:00 Eurozone CPI (Core YoY e0.5% p0.2%)

10:00 Eurozone GDP (e9.0% p-11.8%)

12:30 US PCE (MoM and YoY)

12:30 Canada GDP MoM

13:45 Chicago PMI

14:00 Michigan CSI

Week to Oct 16th

Positive earnings but little reaction, More consolidation, Dollar exactly reverses last week

MY CALL THIS WEEK : SELL EURNZD

Uncertainty about everything, COVID case, COVID stimulus and the election meant that markets continued their pre-election consolidation again this week, despite almost universally positive earnings reports, both on EPS (manipulable) and Revenue (less so). After a strong rally on Monday, SPX and DJIA faded to close flat on the week. The dollar had an inside week, almost exactly reversing last week’s candle, as did Gold. Oil and bonds also had a very flat week.

Next week has more earnings, but we have seen that the market is not reacting to that. It also has like last week, a huge CB speaker roster, but again markets did not react to those last week either. Unless there is a surprise, either in COVID or the election, it seems this consolidation will continue, which means equity/Oil decline and more dollar/yield recovery (and thus Gold decline).

Mon Oct 12

Friday’s rally continued today and NDX outperformed in advance of Amazon Prime day. AMZN and AAPL were both up 5%. The dollar had a fairly flat day, although JPY was down in line with the equities move, as were Bonds. Oil did not follow equities and was down, as was Gold.

Tue Oct 13

JNJ’s earnings beat today was overshadowed by a report from the company that there had been a setback on their vaccine trial. The company’s price fell 2.29%, and DJIA fell 0.58% overall. A warning from the IMF about the long-term effect of COVID on the economy spooked traders, and good earnings and revenue results generally did not help. Bonds rose in line. There was a distinct move into the dollar safe haven around 1230 with Gold, EUR and GBP falling sharply, JPY less so (in line with risk-off). Oil again defied the equity trend and rose. The sterilng fall was exacerbated by a sharp increase in benefit claimants reported, double the level before COVID, as the furlough scheme ends.

Wednesday October 14

Today TreasSec Mnunchin cast doubt again on whether a stimulus deal would be reached before the election. Stocks fell again, with NDX falling further, despite another day of good earnings reports. Today, the dollar was flat against most currencies, but the yen was up, along with Gold and Bonds to make a complete haven trio. Curiously Oil was up, the third day it has moved in a different direction to stocks.

Thursday October 15

Equity markets and Oil continued to fall today, although a recovery in the US afternoon session meant losses were greater in Europe, whereas the US finished almost flat. The dollar was up, but Gold was up more, as were yields (inverse to bond prices), in line with equities.

Friday October 16

The late Thursday rally continued today and but peaked around the European close. A sharp decline in the last hour, probably due to option expiration meant SPX closed flat on the day, and nearly flat on the week. The dollar was slightly down, mainly due to a surge in CAD. All other currencies were more or less flat. Gold and bonds were down in line with the earlier rally, and Oil closed slightly down (Oil expiration dates are different).

WEEKLY PRICE MOVEMENT

One of the flattest weeks this year, with DAX down 1.09% the biggest mover. The largest forex move was AUDJPY down 2.44%. Cryptos were quiet again, roughly tracking equities, and FANG stocks were similarly lacklustre, with GOOGL, which has trailed the others up 3.79%.

My EURGBP trade lost 0.07%, running profit 7.70%, 18/35 wins. This week I am betting on the landslide of the world’s most popular political Jacinda Ardern carrying through and selling EURNZD.

Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on DXY. The equity and index prices are now based on the cash close each day.

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold)

• Second week of earnings
• Another heavy CB speaker week
• UK and Canadian inflation
• Election debate, three weeks left

Monday October 19 

In addition to the CB presidents (who also speak on Sunday), there are eight other CB speakers on today. The Chinese data is the most important. IBM reports after the bell. Historians may be interested to know that the 1987 crash was 33 years ago today.

23:50 Japan Imports/Exports/TB (Sun)

02:00 China GDP

02:00 China Retail Sales

07:15 ECB De Guindos speech

11:30 ECB Mersch speech

12:00 Fed Chair Powell speech

12:40 ECB President Lagarde speech

12:40 ECB Lane speech

12:45 ECB President Lagarde speech

13:00 Fed Williams speech

14:05 BoE Cunliffe speech

14:30 BoC Business Outlook Survey

15:00 BoE Cunliffe speech

15:45 Fed Clarida speech

16:00 ECB Weidmann speech

23:30 RBA Kent speech

Tuesday October 20 

First of the FANGs, NFLX report after the close, along with SNAP. Dow giant PG reports before the opening bell. There is a rate decision in Hungary.

00:30 RBA Meeting Minutes

01:30 PBoC Interest Rate Decision (e3.85% hold)

06:00 Germany PPI

12:30 US Building Permits/Housing Starts

14:50 Fed Quarles speech

Wednesday October 21 

Market darling TSLA reports after the bell today. Otherwise, another packed day of CB speakers, and inflation from the UK and Canada.

00:30 Aus Retail Sales (p-4.0%)

01:30 BoJ Sakurai speech

06:00 UK CPI (YoY e0.5% p0.2%)

07:30 ECB President Lagarde speech

07:45 ECB Lane speech

10:00 ECB De Guindos speech

12:10 BoE Ramsden speech

12:30 Canada BoC CPI (Core e0.7% p0.8%)

12:30 Canada Retail Sales (p1.1%)

12:50 Fed Brainard speech

16:00 ECB De Guindos speech

18:00 Fed Beige Book

22:30 RBA Debelle speech

Thursday October 22 

Earnings highlights today are DJIA stalwart KO before the open, and NDX giant INTC after the close. There are rate decisions in Turkey (cut expected) and Israel.

00:30 Aus NAB Business Confidence

06:00 Germany Gfk Consumer Confidence

12:30 US Jobless Claims

14:00 US Existing Home Sales

14:00 Eurozone Consumer Confidence

22:00 Aus Commonwealth Bank PMIs

23:30 Japan National CPI

Friday October 23 

The main focus today will be on the Presidential Debate, held the previous evening after markets closed. There is a rate decision in Russia. Markets are closed in Thailand and Hungary.

06:00 UK Retail Sales

07:30 Germany Markit PMIs (Mfr e55.5 p56.4)

08:00 Eurozone Markit PMIs (Comp e49.5 p50.4) 

08:30 UK Markit PMIs (Services e 54.0 p56.1)

13:45 US Markit PMIs

Week to Oct 9th

Trump recovers from COVID, but worries markets about stimulus. Markets similar to last week

MY CALL THIS WEEK : SELL EURGBP

In a week that saw President Trump appear to recover quickly from COVID-19, claim that the next stimulus package would come ‘after the election’, but then quickly backtrack, even quoting a figure ($1,200 per taxpayer), we saw market conditions quite similar to last week, rising equities (with a 2% spike down on Trump’s initial announcement), falling bonds, and Gold rising on a falling dollar (except for CAD). The only difference really was Oil, which recovered last week’s 7% drop.

October OpEx week sees earnings season open, with, as always the banks (JPM, GS, WFC, and C) along with Dow giants UNH and JNJ setting the tone. The week is also heavy on CB speakers, and there is a further presidential debate on Thursday evening.

Mon Oct 5

On reports that President Trump would return to the White House after only three days in hospital, equity and Oil markets soared, with NDX leading. Oil joined the party advancing 6% on the day, wiping out most of last week’s losses. Very much like last Monday. Bonds and JPY were down in line, despite an otherwise notably weak dollar, which pushed Gold up.

Tue Oct 6

Things were going well on Tuesday when towards the end of the US market day, President Trump announced surprisingly that the next round of COVID stimulus may have to wait until after the election. SPX dropped 2% more or less instantly and other indices followed suit. Bonds and USD shot up, and Gold fell sharply at the same point. Notably only JPY was down against the dollar. The weakest currency was AUD, after a dovish RBA statement.

We saw the correct intermarket haven reaction but allowing for the fact that the downward pressure on Gold on a weaker dollar is a stronger force than the upward pressure of inverse correlation to equities.

Wednesday October 7 

The President tried to repair the damage today, calling (on Twitter of course) for a stand-alone bill and telling the Democrats he is “waiting to sign”. Markets liked this, with SPX climbing smoothly all day to eventually erase Tuesday’s spike. Bonds fell in line. The dollar duly reacted by falling again, except against CAD, possibly reacting to Oil, although the black stuff was flat today, as was Gold.

Thursday October 8

Another good day for equities and Oil, as markets weighed post-election stimulus ideas with polls showing a Democrat win in the White House and both houses of Congress. The dollar was slightly down, although flat against EUR and JPY. Yields were flat, and Gold rose on the weaker dollar.

Friday October 9

The trend continued today, following President Trumps’ increase stimulus offer to the House, meaning US indices posted their best week since July. The dollar fell sharply today, and notably CNY, which had not traded all week due to the National Day holiday, opened 1.45% up, its biggest one-day move since it was depegged in 2005. Gold rose on the weaker dollar, bonds were flat, and Oil was slightly down, taking a breather after a very strong week. 

WEEKLY PRICE MOVEMENT

A strong week and breakout into territory not seen since August. All indices were up, and as you would expect for a risk-on week, NDX was the top performer. The top forex mover was CADJPY up 1.74%. Crypto showed modest rises, similar to indices, and FANGS moved generally in line with NDX.

My third week on EURCAD failed, down 0.46%, and the cup-and-handle looks less assured. The running profit is now 7.77%, with 18 wins out of 34, still marginally above half! This week I am selling EURGBP.

Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on DXY. The equity and index prices are now based on the cash close each day.

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold)

• Earnings season opens
• Election four weeks away
• Very heavy CB speaker schedule
• OpEx on Friday

Mon Oct 12

No significant news today, as we move into earnings season for Q3 and also OpEx week. Markets are closed in Canada, Dubai and Brazil.

08:45 ECB Schnabel speech

11:00 ECB President Lagarde speech

14:00 BoE Haskel speech

15:00 ECB De Guindos speech

16:00 BoE Governor Bailey speech

16:45 ECB Panetta speech

Tuesday October 13

Earnings season opens with a bang, with JPM, C and JNJ all reporting before the bell. It is rare to see a non-bank giant report on the first day. There is a rate decision in Indonesia. Markets are closed in Thailand.

02:00 China Imports/Exports/TB

06:00 UK Claimant Change/AHE/Unemployment (UE e4.3% p4.1%)

06:00 Germany CPI (YoY e-0.4% p-0.4%)

09:00 Germany ZEW Economic Sentiment

12:30 US CPI (Core p1.7%)

18:00 US Monthly Budget Statement(Sep)

Wednesday October 14

Earnings continues with more banks BAC and WFC, and the #1 weighted DJIA component UNH all reporting pre-open.

The European Council meets all day today. There is a rate decision in South Korea. Markets are closed in Ukraine.

08:00 ECB President Lagarde speech

09:00 Eurozone Industrial Production

11:00 ECB Mersch speech

12:00 ECB Lane speech

12:30 US PPI

13:00 BoE Haldane speech

21:45 RBA Governor Lowe speech

Thursday October 15

Today’s pre-open earnings are MS, and DJIA component WBA. The European Council meeting continues for a second day. There is a rate decision in Chile.

00:00 Aus Consumer Inflation Expectations

00:30 Aus NFP/UnEmp (NFP e-50k p+111k)

01:30 China CPI (YoY e2.4% p2.4%)

12:30 US Jobless Claims

12:30 Philly Fed Mfr Survey

13:45 BoC Lane speech

15:25 UK Autumn Forecast Statement

Friday October 16

The IMF meets today, as does the European Council for a third day, but the main market mover is likely to be the fallout from the second Trump/Biden debate at 8pm ET the evening before (after markets are closed). Today is option expiration date for October.

09:00 Eurozone CPI

12:30 US Retail Sales (Control Group Sep e0.5% p-0.1%)

13:15 US Industrial Production (MoM)(Sep)

14:00 Michigan Prelim CSI

Week to Oct 2nd

Acrimonious Presidential debate, Trump in hospital with COVID, Sharp drop in oil

MY CALL THIS WEEK : BUY EURCAD

In a gloomy week for markets, which first saw President Trump in debate fail to say he would respect the election result, and then late in the week announce that he has succumbed to COVID-19 himself, we saw a Monday rally fail to break out. DAX and AUD last weeks weakest performers outperformed on Monday, suggest this was only part of a the wider consolidation we have seen for weeks, perhaps driven by month and quarter end window-dressing.

The week also an extremely shallow dollar decline, with DXY and EURUSD both posting inside weeks. In commodities, Gold rose in an inside week, in line with the weaker dollar, but we saw sharp declines in Oil and Copper.

Mon Sep 28
Indices surged today, with European stocks posting their best day since June, and DAX adding 3.2%. Financials led, the sure sign of a risk-on day, and Oil was up in line

The dollar fell sharply, which appreciated Gold. Bonds were down in line with the equity move.

Tue Sep 29

Turnaround Tuesday with indices, Oil, Gold and Bonds all reversing Monday’s direction, without any particular new push. In currencies, some clearly reversed (such as GBP) whereas a further fall in EUR meant a flat dollar overall.

Wednesday September 30

Lots of action in the final day of the month and quarter, after an acrimonious Presidential debate, SPX initially plunged, but rallied in the afternoon session, which may well have been end of month and quarter portfolio rebalancing. SPX fell 3.9% on the month, NDX 5%. The dollar runs to a slower trend, and was down again today. Gold and bonds were down and Oil was up, all in line with the equity rally.

Thursday October 1

A flatter, but still upward trend in stocks faded late in the day, although all US indices were still up. The dollar was more or less flat as were bonds, and Gold was only slightly up, although Oil continued down.

Friday October 2

More bad news today on news that President Trump had contracted COVID and was moved to hospital as a precaution. Together with a miss on NFP (even below the ADP figure), stocks fell again, with NDX hit particularly hard down 2.83% to close a mere 0.94% on the week. Oil similarly fell hard, down over 4%. A mixed day in currencies resulted in a slight uptick in DXY (with Gold down in line) and another flat day in bonds.

WEEKLY PRICE MOVEMENT

Another consolidation week in indices, with less volatility saw last weeks loser DAX come out on top, but up only 1.76%. Similarly, the top forex mover up AUDUSD was last weeks biggest loser. Another flat week for crypto, and FANGS were mixed but generally subdued.

Buying EURCAD for a second week worked with a gain of 0.15% (more than covering last week’s 0.08% loss) and at one point I was 1.12% ahead. I still believe in this cup-and-handle, so I will buy EURCAD for a third week running. The running profit total is 8.23% with 18 wins out of 33.

Note we use Google Finance data for daily movements, listing UUP as a proxy for DXY. All references to ‘the dollar’ are based on DXY. The equity and index prices are now based on the cash close each day.

NEXT WEEK (all times are GMT)

(Calendar High volatility items are in bold)

• Election four weeks away
• President’s health concern
• Australian Rate Decision
• FOMC Minutes

Monday October 5 

The main focus this week will be on the President’s condition in hospital, the election campaign and COVID. Markets are closed all week in China for the National Day holiday.

07:55 Germany Markit PMI Composite

08:00 Eurozone Markit PMI Composite

08:30 BoE Haldane speech

09:00 Eurozone Retail Sales (YoY e0.6% p0.4%)

13:45 USD Markit Services/Composite PMI

14:00 ISM Services PMI (e56 p56.9)

Tuesday October 6 

Today Jay Powell gives a webcast speech on the Economic Outlook at the National Association for Business Economics Annual Meeting

00:30 Aus Imports/Exports/TB

03:30 RBA Rate Decision/Statement (e0.25% hold)

06:00 Germany Factory Orders

12:30 US Trade Balance

14:40 Fed Chair Powell speech

Wednesday October 7 

Today’s speech by ECB President Lagarde at the Paris Europlace Online International Financial Forum is pre-recorded, so more attention will be given the the FOMC minutes.

06:00 Germany Industrial Production

12:10 ECB's President Lagarde speech

14:00 Canada Ivey PMI

18:00 FOMC Minutes

19:00 Fed Williams speech

Thursday October 8

Another day heavy on CB speakers and relatively light on news, a pattern we have seen all week.

06:00 Germany Trade Balance

10:15 ECB Mersch speech

11:30 ECB MPC Minutes

12:30 US Jobless Claims

12:30 BoC Gov Macklem speech

Friday October 9 

As often happens when the US NFP is on the 1st or 2nd of the month, the Canadian equivalent is a week later. As well as China, markets are also closed in South Korea today.

01:45 China Caixin Services PMI

06:00 UK Manuf/Industrial Production

06:00 UK GDP

12:30 Canada NFP/AHE/UnEmp (NFP e230k p246k)

15:15 BoE Haldane speech