Get started

Community ideas

Where is the Euro Headed?Despite unprecedented rate hikes up to 450 basis points over the last 12 months the Euro has lost ground to the US Dollar for the last nine straight weeks. As a result, the Eurozone interest rates are historical highs. Currencies desire nothing more than higher rates. The Euro should have popped but instead it flopped after the ECB’s rate hiking decision last Thursday. That says something about the underlying economy and the expectations for interest rates ahead. This note puts forth data backed arguments that macroeconomic fundamentals in Europe is visibly weak. In sharp contrast, the robust economic fundamentals in the US provide strong tailwinds to the US dollar. Consequently, the Fed has great monetary manoeuvring space which will impose bearish pressure on the Euro. Having cranked up rates to a peak unseen before, the ECB’s hands are tied with little room for further hikes despite its hawkish tone. This paper posits a short position in CME Micro EUR/USD Futures expiring in Dec 2023. To seize opportunity from a weakening Euro, a short position with an entry at 1.071 combined with a target at 1.035 and hedged by a stop at 1.1025 will deliver an expected reward-to-risk ratio of 1.14x. MONETARY POLICY TRANSMISSION TAKES TIME Over the last year, the ECB has increased interest rates, an unprecedented ten times to combat surging inflation. That is a full 450 basis points. Yet inflation remains sticky and persistent. Why? One obvious reason is monetary policy transmission. Monetary policy transmission is the process through which a Central Bank’s monetary decisions impact the economy and the price levels. The mechanism is characterised by long, variable, and indefinite time lags. As a result, it is difficult to predict the precise timing of monetary policy actions on economy and inflation. DATAPOINTS SIGNAL WEAKENING ECONOMY Selected data from the minutes of the Monetary Policy Meeting of ECB Governing Council held in July points to growing weakness in Europe. 1. Yield Curve Inversion Deepening: Together with negative euro area data, the inversion has reignited recession concerns. For now, the Euro area’s equity & credit markets remain resilient, hoping for a soft landing. 2. Sharp Contraction in Euro Area: Euro Area Composite PMI has been declining since April 2023 and in July it has fallen below 50. The dynamics are consistent with a weak GDP performance for the second and third quarters of the year. Housing and business investments are estimated to have declined. 3. Shrinking Demand for Loans: The latest bank lending survey signals further tightening of credit standards and sharp drop in loan demand in Q2 across businesses and households. The reported demand for loans among corporations had fallen to an all-time low since the start of the survey in 2003 and, for the first time, was lower than at the height of the global financial crisis. 4. Growth could stall due to over correction: Growth could slow far more sharply if effects of monetary policy were more forceful than expected, or if the world economy weakens dampening demand for euro area exports. AFTER UNPRECEDENTED RATE HIKES, WHAT’S NEXT? As evident from weakening signals cited above, the ECBs hands are tied. ECB President Lagarde has little option other than maintaining a hawkish tone to manage expectations. When the ECB regroups again in December, the likelihood of rate hike is thin. Hawkish pause? Maybe. As Katie Martin writes in her weekly opinion piece for the Financial Times, “few truly believe the central bank really would raise rates further, especially while the region’s economy feels the strain from the tighter policy enacted so far and from the impact of weaker Chinese demand on German manufacturing.” ECB’s euro area growth forecasts are on the decline. The central bank expects 0.7% growth for this year (down from 0.9% as previously estimated). For 2024, the ECB now forecasts 1% growth (compared to 1.5% growth projected previously). Forecasting the future is hard. It is evident from a survey of economists (see chart below) conducted by Bloomberg earlier this month. The market expectations are for rates to stay flat at 4% for now with rate reductions from Q2 next year. When these expectations become consensus, Euro weakening will accelerate. DOLLAR CONTINUED STRENGTH AGAINST THE EURO The Euro has shed more than 5% against the greenback since mid-July. Shaky fundamentals and an elevated risk of recession have raised questions on ECB’s ability to continue hiking. Contrast this against the conditions in the US. The US economy has been marvellously resilient and set to have one of its best years yet. This backdrop emboldens the US Fed to take on an aggressive monetary posture. TRADE SET UP Interest rates at record elevated levels combined with weakening economy and feeble prospects, collectively pushes recession risks higher in the eurozone. This will corner the ECB into a pause or even cause it to hint at rate cuts during the December meeting. As a result, the Euro will be pressured lower against the US dollar. To ride on the opportunities from a weakening Euro, this paper posits a hypothetical short position in CME Micro EUR/USD Futures expiring in Dec 2023 (M6EZ2023) with an entry at 1.071 combined with a target at 1.035 and hedged by a stop at 1.1025, delivering an expected reward-to-risk ratio of 1.14x. Each lot of CME Micro Euro Futures contract provides exposure to 12,500 Euros. It is quoted in USD per Euro increment. Each pip i.e., 0.0001 per Euro delivers a P&L of USD 1.25. • Entry: 1.071 • Target: 1.035 • Stop: 1.1025 • Profit at Target (hypothetical): USD 450 ( = 0.036; 360 pips; 360 x 1.25 = 450) • Loss at Stop (hypothetical): USD 393.75 ( = -0.0315; -315 pips; -315 x 1.25 = -393.75) • Reward-to-Risk (hypothetical): 1.14x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
CME_MINI:M6E1!Short
by mintdotfinance
8
Crude Oil versus Stock PricesDrops in crude oil have an impact on stocks in a positive way. The important point to remember is that falling crude oil prices have a lagged effect on the overall equity market. How long is that lag? It changes over time but it is approximately 6 months. When oil prices rise, it too has a lagged effect on the market by a variable amount of time. Of course, it depends on many factors, regulatory and global risks constantly change. I am not covering the risk of rising oil price with this chart, only reinforcing the positive impacts of falling oil prices. Oil prices are the most-watched price since we see them on gas station signs everywhere we drive and yet it doesn't have instant impact on the economy. Look at the history of the price of crude oil and the price of stocks. They are related as you can see when I plot the large drops in crude and the price level of stocks when that drop occurred. Tim 9/18/2023 10:19AM EST
FX:SPX500
by timwest
4
Big Citibank Opportunity Citibank Opportunity - NYSE:C Company Market Cap: $82.2 billion Share Price Today: $42.68 Dividend: 0.53c per quarter (Annual Dividend of c.$2.06) Annual Dividend Yield: 4.82% Next Earnings Report: Friday 13th October 2023 Citibank (Citigroup) is the 20th largest bank in the world & a member of Global Systemically Important Financial Institutions (G-SIFIs) meaning it has stricter prudential regulation such as higher capital requirements and extra surcharges and more stringent stress tests. under the scheme deposits can be 100% guaranteed in the event of a crisis, which is not the case for smaller banks that are not considered systemically important. This additional security can add weight to a longer term hold for Citibank combined with a good 4.82% dividend yield. Citibank has recently been in the headlines with negative news for completing a management re-org with substantial lay-offs. Whilst the news is interpreted as negative, the chart appears to reaching a point of exhaustion after 31 months of downward price pressure and a roughly 50% reduction in price from $81 down to $42. We may be forming a 3rd higher price cluster or price launch pad here at $42. Earnings release is in a 4 and half weeks on 13thOctober and after 13 quarters of positive earnings the trend is green. Its worth noting that upon earnings release, the price can capitulate or ascend aggressively (historically this has been the way), this is why it is important to be placing bids or positions well in advance of the release (now) and on the day of the release we should be nimble and on our toes to capitalize or reduce risk with stop losses. Obviously for long term position players this is not all that important, we have our long term target and stop loss on the chart. There is a long term trade opportunity with a stop loss at BASE 2 at $34.37. As you can see the trade has a Risk/Reward of 4:1. People who want to play it even safer could wait for a bounce off BASE 2 but for me a retracement this low could mean lower price momentum and a break of the RSI resistance. This is why I am inclined to take a position now off this base well in advance of the earnings release. This is not my typical style of trade however I could not pass up the chart given the mid-term 31 month 50% reduction and exhaustion in price combined with the higher bases on the longer term trajectory, and to be honest the negative news really got me the contrarian in me rustled. If you look hard enough you can see a potential long term ascending triangle forming out into the 5 year time horizon. As a cherry to the trade, the dividend yield is considerably high at 4.82% for a systemically important institution – to big to fail. In Summary - Citigroup is one of the top 20 banks in the world and is considered systemically important. - Citigroup share price has been declining 31 months with an approx. 50% reduction in price. - Three Price Bases establishing higher lows are reinforced by a rising RSI support line. - To fully take advantage of the earnings release on 13th October 2023 positions need to be placed now as the stock is extremely volatile on the day of release. - If the RSI support line fails to hold this could be a warning signal of a break down into STRONG SUPPORT ZONE (Red). - The dividend yield is considerably high at 4.82% for a systemically important institution offering a little incentive for a longer term hold.
NYSE:CLong
by PukaCharts
21
Oil Reserves Plummet to 40-year LowThe Biden Administration is treading on dangerous ground as it continues to deplete the Strategic Petroleum Reserve (SPR) to levels not seen in decades, as geopolitical tensions flare and as global crude prices remain high. The chart above shows that the Strategic Petroleum Reserve has declined to levels not seen since the early 1980s. The SPR is a tool used to alleviate the market impacts of both domestic and international disruptions, caused by among other things: weather, natural disasters, labor strikes, technical failures/accidents, or geopolitical conflicts. Source: U.S. Department of Energy. Office of Cybersecurity, Energy Security, and Emergency Response. This image is in the public domain. Since the start of 2023, the SPR has drained by another 6.5% or 24 million barrels. Source: U.S. Department of Energy. Office of Cybersecurity, Energy Security, and Emergency Response. This image is in the public domain. The SPR is comprised of 60 caverns, each one of which can fit the Willis Tower, one of the world's tallest skyscrapers. Source: U.S. Department of Energy. Office of Cybersecurity, Energy Security, and Emergency Response. This image is in the public domain. The decision to withdraw crude oil from the SPR in the event of an energy emergency is made by the President under the authority of the Energy Policy and Conservation Act (EPCA) and done through competitive sale. Perhaps what is so remarkable is that over the past 2 years, the Biden Administration has released nearly 300 million barrels of crude oil from the SPR, concurrent with the Federal Reserve undertaking the most extreme pace of monetary tightening on record in its attempt to maintain price stability, and yet crude oil prices have barely subsided. In fact, in recent months, crude oil prices have surged, as shown in the chart below. The global crude benchmark, TVC:UKOIL has been on an upward trajectory in recent months, soaring nearly 30% since June. On the higher timeframe chart, we can see that crude oil prices show strong upward momentum. As soon as the Federal Reserve pivots back to monetary easing crude oil prices will likely resurge. A log-linear regression channel is applied to the quarterly (3-month) chart of NYSE:OXY Petroleum, showing the current bull rally could just be the first leg of a multi-year upward trend. The red line in the middle represents the mean price and each gray line represents one standard deviation from the mean. Perhaps the tendency of crude oil to rise in price over the coming years is why the Oracle of Omaha , Warren Buffet, began purchasing a large number of NYSE:OXY Petroleum shares in 2022, accumulating more than a 25% ownership stake in the company by mid-2023. Some financial experts are sounding the alarm about the SPR depletion. The founder of The Bear Traps Report , Larry McDonald, has indicated that the drastic decline in U.S. oil stockpiles, a critical asset in times of conflict, undermines America's energy security. McDonald is warning that diminishing domestic oil reserves heighten America's dependence on imports, potentially exposing the nation to severe supply disruptions and extreme price volatility in the international oil market. Each time the price of crude oil subsides, petroleum exporting countries, including Saudi Arabia and Russia, cut production to keep prices higher for longer. To some, it may seem that these production cuts are a gray zone tactic meant to deplete an adversary of its strategic oil reserves before engaging them in a conflict. There is also collateral damage occurring to the U.S. dollar. The petrodollar system, which emerged in the 1970s when the U.S. abandoned the last vestiges of its gold standard, was a series of agreements between the U.S. and petroleum exporting countries to use the U.S. dollar for cross-border oil transactions. Since almost every country needed to import or export some amount of petroleum, the petrodollar system was a means of ensuring a perpetual global demand for U.S. dollars despite the currency not being redeemable at the Federal Reserve for anything of value. As crude oil prices continue to surge, despite the Federal Reserve tightening monetary conditions at the fastest pace on record, a crisis is unfolding for developing countries that lack access to dollars. These countries are on the precipice of hyperinflation. In essence, by tightening the supply of dollars the Federal Reserve is exporting inflation abroad, especially to those that lack easy access to dollars. Consequently, countries at the periphery of the dollar access hierarchy are being incentivized, now more than ever, to turn to alternative currencies, thereby accelerating de-dollarization. As oil prices continue their relentless march upward, the scenario continues to exacerbate inflationary pressures in the U.S., and even more so, abroad. Higher prices could compel the Federal Reserve to maintain higher interest rates for much longer than anticipated, even in the face of deteriorating economic conditions and rising unemployment, resulting in stagflation. Exacerbating the situation further are global climate change policy objectives, which act as a disincentive for countries to increase domestic oil production. If a major geopolitical conflict occurs when petroleum reserves are depleted and production is constrained, the outcome could result in severe stagflation, as prices spiral higher even though economic growth stagnates in the face of a fragmenting world. * * * Important Disclaimer Nothing in this post should be considered financial advice. Trading and investing always involve risks and one should carefully review all such risks before making a trade or investment decision. Do not buy or sell any security based on anything in this post. Please consult with a financial advisor before making any financial decisions. This post is for educational purposes only.
ECONOMICS:USCOSPRE
by SpyMasterTrades
49
The Cash BubbleHistory repeats itself, and we should learn from it, however sometimes history is so far away that it spans generations before we're able to grasp the experience first hand. We hear about 1929, but we can't imagine what it was to survive the struggle, we hear about the pandemics during the 20's, same deal, we have heard about recessions, and those who went through the big recession of 2008 triggered by the immobiliary crisis know better, some veterans from the dot com bubble, others from the Black monday in 87, and probably very few from earlier crisis. But I don't think anybody has gone through a halt in the economy due to a pandemic at the level we witnessed in 2020. Let's put it in context, 2020 was an election year, the incumbent government was losing the battle against the pandemic and the halt in the economy. He had the support of the congress and the wallet at his will, the former President Trump flooded the market with freshly printed dollars in an attempt to reignite the economy as soon as possible, and let's say, it worked for the purpose of reactivating the economy and not having to wait for a painful period of a lengthy recovery, however this created an unprecedented scenario, a huge flood of dollars to the market. The biggest cash inflow ever in the history of the world. The M1 metric went to $7.2T, to put it in perspective, since the 60's this has been oscillating in the $480B to $580B in the 70's when Nixon cancelled the convertibility of the Gold and Paul Volcker had to apply unprecedented meassures to fight the stagflation that followed after the dollar became fiat currency. The M1 increased 120% from its 60's level, the increase after the housing bubble burst went from $668B to $1.5T, approximately 225%. After the COVID halt it went from $1.5T to $7.25 T, an increase of 485%, inedit scenario in the history of the United States. The crisis sent the price of oil in the market of futures to a negative value, something that has never been seen, the unemployment reached record levels, the SP500 index fell to a range close to that when Trump became president, wiping off the rally that started shortly after that event, the inflation didn't react immediately, since this is a lagging indicator that reacts to the economy growth, and the access to currency. The amount of printed fiat currency flooding the market created the immediate wanted effect, the economy jumpstart that put everybody to work and reignited the economic machinery, the unemployment started to go down, the inflation ticked up, still within range, the price of gold ticked up, the price of oil started to recover, also within range. However we witnessed shortly after that the inflation was not stabilizing, we witnessed the traffic jam at the ports of entry to the United States, lines and lines of cargo ships waiting to unload at the ports of entry, stuck there just idling. The news blamed the Evergreen ship that blocked the Suez Canal, and affected the distribution lines, but the truth was an excessive demand of products from the Pacific producers that overwhelmed the existing port infrastructure. This was the root reason that affected the production lines in the US and contributed to a galloping inflation. Also, during the recovery cycle, let's remember that one commodity in high demand is oil, since the world moves on it. We saw unprecedented gas prices at the pump. Presidents don't have the power to increase or decrease the prices of gas, that is pure supply/demand, but they can be blamed for increases or take the credit for decreases. In a high demand environment, oil goes along the demand cycle, that is why in a recovery environment the oil prices go higher. Let's remember in the 70's during the stagflation period oil was a highly valued commodity and people were making large lines to load gas. The prices were upticking fast and the media blamed the arab world for it, but it was mere propaganda, what really happened it was just an economy running freely on cash and jacking up the prices. The Trump administration was at the peak of the economic cycle that started in 2009, with low inflation, full employment, low gas prices. After the pandemic the variables changed, the economy went to a sudden halt world wide, and in a desperate attempt to keep the presidency the administration authorized the humongous cash flow in an attempt to prevent the negative effects of the economy to affect the election. At the end Trump lost the election. The economy continued its extremely fast paced recovery path and it overshoot. The Fed chairman was purposely in "Denial" regarding inflation, neglecting it and calling it "transitory", which was more of a Greenspan "laissez faire" economic policy, let the wild animals in their "irrational exuberance" take over and later on we'll pick up the pieces and start the recovery process. This is how we got here now. Where do we go from here?, that is an interesting question, the flood of cash should have been made in a way that there was a recovery but not a rampant inflation, however this would have taken longer and the previous administration was not willing to wait. We have an amount of cash that the economy hasn't been able to absorb. Money is supported basically by the productivity, the working force, the commercial transactions, but there must be a correspondence so the economic variables are kept in check. The GDP vs the M1 is still at an outstanding level. The inflation is heading to the 2-2.5% goal, we're still at full employment, which basically puts us in what the fed have been calling a "soft landing". Will it be?? I suppose initially it will, but we risk facing the same scenario that happened during the stagflation in the 70's, Paul Volcker had a big dilemma, he increased the interest rates, but the inflation was completely out of control, people noticed they could buy an asset and basically turn around and sell it at a higher price, and they still found a buyer. Houses were on the rise, the agriculture also participated of the inflation benefits, farmers could buy a tractor, use it and resell it at a higher price. People in New York City were waiting in line before the jewelries opened so they could buy gold, and sell it later at a higher price. When Volcker decreased the interest rates after the message he sent was of stability and it backfired and inflation was reignited. Taking a look at the CBOE:SPX in the long run, we see there is a negative momentum divergence forming after it reached the All Time High (ATH). The indicators signal a downturn, that could possibly happen after the interest rates reach its pivot, the inflation is at the Fed Goals, unemployment goes beyond the full employment level and the economy shows signs of stalling. Bubbles happen all the time, we enjoy the ride until they burst. We're in a new bubble, the Cash Bubble. The cash should be enough to allow the economy to support it having a healthy inflation level of 2%, as defined by the Fed targets. If there is too much cash and the economy is not able to support it, it will dilute automatically until the economy growth catches up. For decades the ratio of M1 to GDP has been between 9% and 18% as we can see in the chart. After the cash flood it peaked to 85% and currently it is at 68%. I don't think the problem is far from over, even if we reach the 2% inflation target. The challenge for the Fed now is to keep the interest rates low for longer without stalling the economy. It is rumored that the Fed will pause the interest rate hike for their September FOMC meeting. It is expected considering the recent increases have been in the 1/4 of a point followed by a pause. If the pause is prolonged, the inflation reaches its 2-2.5% target and the unemployment is kept within the 4-5% range then the fed can call it a "Soft Landing" up to this point which could be a telegraphed signal to start reducing the interest rates, and the financial market may anticipate this pivot to create a bear market and shake the tree to dislocate and reallocate assets at a discount using all the big cash flood out there. Next year is a presidential election year, and not making it a priority has happened before. During the Volcker's period, he didn't mind pulling the rug on Carter. The Fed does what it has to do. "What has happened before will happen again. What has been done before will be done again. There is nothing new in the whole world." ~ Ecclesiastes 1:9 Patterns repeat because human nature hasn't changed for thousands of years. ~ Jesse Livermore. References Secrets of the Temple: How the Federal Reserve Runs the Country. William Greider. January, 1989 How the economic machinery works. by Ray Dalio. youtu.be Principles for Dealing with the Changing World Order by Ray Dalio. youtu.be
SP:SPX
by Madrid
55
Natural Gas from Pipelines to PortfoliosNatural gas was once considered a byproduct of oil production. It is now becoming increasingly important as one of the cleanest burning fossil fuels and a key piece of the clean energy transition. Today, it forms the backbone of global energy production. This paper delves into the supply and demand factors affecting natural gas prices and proposes a long position in Henry Hub Natural Gas Futures (NG1!) to harness gains from seasonal price trends with an entry of 2.484 with a target of 3.099 and a stop loss at 2.172 delivering risk/reward ratio of 2x. Natural Gas Supply and Demand Supply Largest producers and exporters of Natural Gas are US, Russia, Iran, China, Canada, Qatar, Australia, Norway, and Saudi Arabia. The standout in the list is Russia. Following the conflict in Ukraine, gas exports from Russia plummeted 58% in 2022. This led to price shocks in EU natural gas (TTF). US supply is unable to adequately bridge this deficit as transporting natural gas using ships requires converting it to Liquified Natural Gas (LNG) and using special refrigerated vessels which is not economical for large quantities of natural gas. This is also why the spread between EU and US natural gas is much wider than EU and US oil. Notably, US shale reserves have a high concentration of natural gas. Along with newly developed fracking techniques, this has led to increasing gas production in the US. Moreover, natural gas is also obtained in the process of oil extraction, which means gas production is linked to oil production. This has interesting ramifications when looking at present supply. Despite low natural gas prices over the past few months, production in the US has remained high as a result of high oil production. Similarly, higher prices do not readily translate to higher production. This suggests that Natural Gas price-supply relationship is inelastic. Demand Demand for Natural Gas comes from: • Energy Production – Natural Gas is used in power plants to generate electricity. Natural Gas electricity production has been rising over the last decade as it replaces Coal. Notably, manufacturers using natural gas as an energy source can switch to other energy sources during price spike, which provides some elasticity to demand. • Commercial and Residential Heating – Natural Gas is used for heating homes in winter. This can lead to a seasonal demand during winter months in the Northern Hemisphere. • Industrial Use – Natural Gas is used as a raw material for industrial products such as plastics, ammonia, and methanol. Natural gas demand is heavily affected by weather. Unusually warm summers in the Northern Hemisphere drive higher energy usage from air conditioners while colder winters drive higher demand for heating. Inventories Gas can be injected into storage facilities and stored for later use. These inventory levels play a major role in balancing supply-demand. Summer months (April-October) are referred to as injection periods while winter months (November-March) are withdrawal periods. Inventory levels help even out the surge in winter demand. However, natural gas is much harder to store than oil as it is less dense. This means the inventory effect is not as apparent which explains the larger seasonal variation in natural gas prices as compared to oil prices. Seasonality in Natural Gas Prices Seasonal price action of Natural Gas shows two distinct price rallies. A large rally during winter in the US and EU driven by surge in supply for heating in winters, during this period, prices peak in early-December before declining. The other, smaller spike is during summers in the US and EU when demand for electricity rises, during this period, prices peak in early-June before declining. Further, prices show the highest deviation from the seasonal trend in late-September. Over the past five years, the winter rally has become wider, with prices staying elevated from August to early-December. Additionally, seasonal trend points to a price appreciation of +11% between September and December. However, investors should note that past seasonal trends are not representative of current or future market performance. Henry Hub Futures Henry Hub is the most prominent gas trading hub in the world. It is located at the intersection of major on-shore and off-shore production regions and connected by an extensive pipeline network. This is also where US natural gas exports are dispatched. CME’s benchmark Natural Gas futures (NG) deliver to Henry Hub and is the largest gas futures contract in the world. Other notable Natural Gas futures contracts are TTF (EU) and JKM (Asia). Futures from both regions are also available for trading on CME. Asset Managers are Bullish Commercial traders are heavily net short on Natural Gas futures, short positioning in July was at its highest level since 2021 but has since reduced. Overall, net short commercial positioning points to bullish sentiment. Asset managers have switched positioning in Natural Gas futures from net short to net long since May. Last week net long positioning reached its highest level since May 2022. Options markets OI points to a neutral market view on natural gas with Put/Call ratio close to 1. Options P/C has stayed close to 1 for the past 3 months. At the same time, Implied Volatility on Natural Gas options has been rising in August. A rally last week failed to break past a key support level but vols remain elevated suggesting that price may retest that level again. Henry Hub Gas Dynamics with European Gas Last week, EU Natural Gas futures (TTF1!) spiked by almost 28% due to a strike at Australia’s second largest LNG plant, still the rally soon retraced almost entirely. LNG supply disruption, especially at the key transition to the winter season can lead to volatility spikes. Though, EU gas inventories are 90% full, supply disruptions like this can still have a major effect on gas prices but especially on volatility. Over the past few years, higher flexibility and capacity in the global LNG supply chain has led to the various global natural gas benchmarks tracking each other more closely. This means that Henry Hub natural gas futures are exposed not just to US and Canada Natural Gas production but also to disruptions in global supply. However, the effect is comparatively limited due to ample supply in the US. This can be seen in the price action of Henry Hub natural gas futures which rose by 6% on the same day. Recent Trend in Natural Gas Inventories As per the EIA, Natural Gas supply fell 0.1% WoW last week. At the same time demand rose by 0.3% WoW. Note that working natural gas in underground storage has started to flatten over the past 4 weeks, rising by just 94 billion cubic feet (BCf) compared to the 5Y average increase of 140 BCf during the same period. Still, inventory levels are close to the top of their 5-year maximum, elevated by high US gas production during the summer driven by higher oil production. EIA forecasts that the depletion season will end with inventories 7% higher than their 5-year average. EIA expects production to remain flat for the remainder of the year, so watching weekly consumption reports could point to early indicators of seasonal inventory depletion. However, due to elevated inventory levels, the seasonal effect may not be as strong as prior years. In a longer-term trend, gas rigs in the US have started to decline this year after surging over the past year. This will likely lead to lower production over the next year. Trade Setup With options markets pointing bullish and seasonal trends suggesting price appreciation during this period, a long position in Natural Gas futures expiring in October (NGV) allows investors to benefit from an increase in Natural Gas prices. Each contract of CME Henry Hub Natural Gas Futures provide exposure to 10,000 MMBtu of Natural Gas while the October contract has maintenance margin of USD 5,070 for a long position. A USD 0.001 MMBtu change in quoted price per MMBtu leads to a PnL change of USD 10 in one Henry Hub Natural Gas Futures. Entry: 2.484 Target: 3.099 Stop Loss: 2.172 Profit at Target: USD 6,150 Loss at Stop: USD 3,120 Reward/Risk: 2x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
NYMEX:NG1!Long
by mintdotfinance
17
Are Chips Losing Their Edge to Software Stocks?Semiconductor stocks have surged this year, thanks in large part to NASDAQ:NVDA Nvidia. But they could be losing relative strength to software makers within the technology sector. Today’s main chart focuses on the NASDAQ:SMH VanEck Semiconductor ETF, which closely tracks the NASDAQ:SOX Philadelphia Semiconductor Index. It recently slipped below the 50-day simple moving average (SMA), which may signal weakness over the intermediate term. The lower study shows its relative strength versus the NASDAQ:NDX Nasdaq-100. Notice how it’s mostly lagged the broader index since late June. Next, consider the same chart and studies for the AMEX:IGV iShares Software ETF. It’s shown the opposite patterns. Price is above the 50-day SMA and relative strength against the Nasdaq-100 has recently improved. The last chart compares these two ETFs as a ratio (IGV/SMH). It uses monthly candles to provide a long-term view. Software could be turning up from a 17-year low, which may also suggest relative strength is shifting between these two major groups within the key technology sector. Standardized Performances for ETF mentioned above: VanEck Semiconductor ETF (SMH): 1-year: +45.61% 5-years: +186.80% 10-years: +741.25% iShares Expanded Tech Software ETF (IGV): 1-year: +28% 5-years: +79.25% 10-years: +390.50% (As of August 31, 2023) Performance data shown reflects past performance and is no guarantee of future performance. The information provided is not meant to predict or project the performance of a specific investment or investment strategy and current performance may be lower or higher than the performance data shown. Accordingly, this information should not be relied upon when making an investment decision. Exchange Traded Funds (“ETFs”) are subject to management fees and other expenses. Before making investment decisions, investors should carefully read information found in the prospectus or summary prospectus, if available, including investment objectives, risks, charges, and expenses. Click here to find the prospectus. TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more. Important Information TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means. This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates. Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: www.tradestation.com .
NASDAQ:SMH
by TradeStation
4
Soft Landing?A lot of market participants are falling for the Fed's illusion that a soft landing has been achieved. However, the charts are still warning that a recession is coming. The chart below shows the extreme degree of inversion between the 10-year Treasury bond and the 3-month Treasury bill. The current inversion is the worst in over 40 years. A yield curve inversion reduces bank lending for various reasons, one of which is the removal of the incentive for banks to borrow at lower short-term rates and lend at higher long-term rates. Since bank credit is how most money comes into creation, a yield curve inversion is, therefore, a sign that monetary conditions are deteriorating. Indeed, manipulating the interest rate is how the central bank controls the money supply and induces a recession. The impact of rate hikes always occurs on a lagging basis. The lag can last anywhere from several quarters to several years. As the infographic below shows, an economic recession will likely begin in the U.S. between Q4 2023 and Q4 2024. The warning signs of the coming liquidity crisis are everywhere. In a prior post (shown below), @SquishTrade and I pointed out that a major disparity between the volatility of bond prices and the volatility of equity prices is occurring. This extreme disparity could be a warning that much greater volatility for equity markets has yet to come. Even for stocks that have experienced a strong rally in 2023, the basis of their surge is largely unsupported by dollar liquidity levels. In the chart below, the price of NASDAQ:NVDA is compared against the dollar liquidity index. This is further confirmed by the below chart, which shows how extreme the price of NASDAQ:NVDA as a ratio to the price of a risk-free 10-year Treasury bond has become. Never before have investors been willing to pay so high of a risk premium to hold Nvidia's stock. While anything is possible, the charts suggest that there isn't enough money in the economy to support the payment of debt at current yields. The below chart shows the price of long-term government Treasurys (adjusted for interest payments) as a ratio to the M2 money supply. There is simply not enough money in the M2 money stock for market participants to be able to pay all newly issued debt at the current high rates. When the liquidity issues begin to mount, the Fed will quickly pivot back to new money creation, as it did in March 2023 when it abruptly created the Bank Term Funding Program (BTFP), which is the latest of the many tools that the Fed uses to create new money. However, when the economy begins to slow, this time around central banks will get trapped because of commodity price inflation. Although commodity prices are generally disinflating at the present time, this slow disinflation is merely forming a bull flag on the higher timeframes. With unemployment also bull flagging on the higher timeframes, when commodity prices and unemployment concurrently break out, the result will definitionally be stagflation. Important Disclaimer Nothing in this post should be considered financial advice. Trading and investing always involve risks and one should carefully review all such risks before making a trade or investment decision. Do not buy or sell any security based on anything in this post. Please consult with a financial advisor before making any financial decisions. This post is for educational purposes only.
FRED:T10Y3M
by SpyMasterTrades
89
Yen Rises Sharply after Hawkish Government Announcements USD/JPY Analysis: Yen Rises Sharply after Hawkish Government Announcements Since 2016, the interest rate in Japan has been in the negative zone and has remained unchanged — for more than 7 years it has been -0.10%. This makes Japan fundamentally different from other countries. But over the weekend the Yomiuri newspaper published an interview with Bank of Japan CEO Kazuo Ueda. He said the central bank could end the era of negative interest rates once it becomes clear that the 2% inflation target has been achieved. Suppose these words may not be a declaration of intentions that will become reality, but just a verbal intervention aimed at supporting the yen. One way or another, the USD/JPY chart clearly shows signs of a change in sentiment: → last week, the bulls put pressure on the upper boundary of the ascending channel (shown in blue), increasing the likelihood of reaching the psychological level of 150 yen per US dollar; → last week’s close was near the high, but the current week began with a bearish gap, after which the yen weakened by 0.8% within just a few hours; → level 146.66, which served as support last week, now appears to be offering resistance. A similar action can be expected from the level of 147 yen per US dollar. In the near future, the price may realize a scenario where it reaches important support from the median line of the ascending channel with a subsequent rebound from it. If this rebound does form, but it is no more than 50% of the unfolding decline, then we will have more arguments that bears are taking more control in the USD/JPY market amid government announcements. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
by FXOpen
5
A Traders’ Playbook: The agile trader wins this week Trading Overview We head into the new trading week with the USD index (DXY) closing higher for the 8th straight week, a fate we haven’t seen in some 18 years – it's little surprise that retail traders are countering that move, accruing a solid net short position. EURUSD has closed lower by the same duration, and that makes a fitting backdrop for the two headline catalysts this week: the September ECB meeting, and the US CPI print. Further afield, the CLP (Chilean Peso), PLN (Polish Zloty) and MXN were the weakest currencies in FX markets last week (all offered by Pepperstone). USDMXN has seen increased attention from traders, and we’ve seen exhaustion in the buying in USDMXN after 6 straight days higher. I am a buyer of weakness. AUDUSD fell 1.2% last week and remains a liquid proxy of China, but again, after a strong move to below 0.6400 we see that the sellers are feeling fatigued – consolidation can be a good thing, even for those whose strategies work their edge in more linear moves. China’s CPI/PPI, released on Saturday (coming in at 0.1% and -3% respectively), shouldn’t worry markets to any great degree. US and Brent Crude gets close attention, with OPEC+ determined to tighten supply crude. After the run price is factoring in a lot of positive factors, however, a daily close above $88 (in SpotCrude) would greatly accelerate the prospect of $100 coming into play, with BrentCrude likely to get there first. I’m not sure risk assets will appreciate further upside in energy prices, and I consider a scenario where we see further gains in crude, married with an above consensus US core CPI print. One suspects if that scenario we’re to play out we could see increased angst, and higher vol. While the VIX index has moved below 14% and S&P500 20-day realised vol is turning lower again, it is still a big week for equity – after a small pullback, we question if the US500 is ready to make a tilt at strong support at 4330 or find a more positive tone? This week we manage risk, consider our exposures and positions over key event risk/news and model potential movement against the account balance. Stop placement is key, where understanding the degree of risk taken on will only serve you well. Good luck. The marquee event risks for the week ahead: ECB meeting (Thursday 22:15 AEST) – A hawkish pause? The ECB meeting is a significant risk event for EUR FX / EU equity traders and one that could result in a sizeable bout in cross-asset volatility. EU swaps price 9bp of hikes (a 38% chance of a hike), and 18bp of hikes cumulative to the peak rate (in December) and this could play a key factor in the reaction of the EUR. We see 26/49 economists see the ECB leaving rates unchanged, highlighting just how split the view is out there. Positioning in the EUR is held very short by leveraged insto funds, while retail has positioned exposures for a counter move and a bounce in EURUSD. Given pricing and positioning, we should see a more pronounced rally in the EUR on a 25bp hike, than a fall if we see rates kept unchanged, at least to the initial reaction to the rates call. Rate hike (or not) aside, ECB guidance, new economic projections and debate around PEPP reinvestments could result in vicious intraday reversals playing out, so trading over news – if that is your tipple - will be a challenge and it pays to be nimble. US CPI (Wed 22:30 AEST) – The outcome of the CPI report could significantly shape expectations for the November FOMC meeting, where the market is currently pricing a balanced 12bp of hikes. The market eyes US headline CPI at 0.6% MoM/3.6% YoY and core CPI at 0.2% MoM/4.3% YoY. By way of market pricing, the CPI ‘fixings’ market (market pricing for the CPI print) is pricing headline CPI at 3.64%, while alternatively, the Cleveland Fed inflation Nowcast model sees US headline CPI headline inflation higher at 3.8% and core CPI at 4.46%, offering modest upside risk to the economist’s consensus call. The form guide has favoured short USD positions, where the USD index (DXY) has dropped in the 30 minutes after each of the past 6 CPI reports. This time could be different given USD positioning. I am biased for USDJPY to push above 148, with current underlying momentum favouring longs. US PPI inflation (Thursday 22:30 AEST) – Overshadowed by the US CPI report and the ECB meeting (15 minutes earlier), US PPI is expected to print 0.4% MoM / 1.3% YoY. If the PPI print proves to be a big beat/miss to consensus it could make trading through this period even more problematic. US retail sales (Thursday 22:30 AEST) – The market eyes sales of +0.1% for August, while the ‘control’ group – the sales element that feeds more directly into the GDP calculation – is expected to fall 0.1%. The market picks and chooses when to run with this data point, so I suspect it could be a vol event only should we see a sizeable beat/miss to expectations. UK jobs and wages report (Tuesday 16:00 AEST) – The swaps market prices 19bp of hikes for the 21 Sept BoE meeting, with peak bank rate expectations at 5.56% by Feb 2024. The UK jobs/wages report could influence that pricing, with the consensus expecting the unemployment rate eyed at 4.3% (from 4.2%) and wages unchanged at 7.8%. GBPUSD eyes the 200-day MA (1.2427), and a level for the scalpers. Leveraged funds are now short GBP, while the slower-moving real money is still holding a punchy net long GBP position. BoE speakers – Chief economist Huw Pill speaks (Monday 18:00 AEST) and External member Catherine Mann speaks the day after (Tuesday 09:00 AEST). The market is certainly warming to a one-more-and-done approach from the BoE and GBP has taken notice. China high-frequency data (Friday 12:00 AEST) – We watch for Industrial production (consensus 3.9% vs. 3.7% July), fixed asset investment (3.3% from 3.4%), and retail sales (3% vs. 2.5% July) – so some improvement is expected in this data flow. China equity could be sensitive to this growth data, although on current trends CHINAH is favoured into 6000. USDCNH also pushing to new cycle highs, and I stay bullish this cross. PBOC decision on the Medium-term Lending Facility (MLF - Friday 11:20 AEST) – Only one economist (of 11 surveyed by Bloomberg) is calling for a cut to the MLF facility, with the strong consensus that it is too soon after the recent policy easing to see more. USDCNH is still a favoured long exposure. Australia employment report (Thursday 11:30 AEST) – The consensus calls for 25.5k jobs created in August. The unemployment rate is expected to be unchanged at 3.7%, although that could be influenced by the participation rate, which is expected to remain at 66.7%. I can’t see this data point affecting expectations of RBA policy too intently, with the market staunchly of the view that the RBA are on an extended pause. AUDUSD - Tactically, favour placing limit orders and to fade intraday extremes, as the initial move shouldn’t stick. Apple ‘Wonderlust’ event (Tuesday) – The market is looking more closely at the news flow around China’s proposed iPhone curbs, and how that plays into expected revenue. ‘Wonderlust’ is likely more of an event for the tech heads, with the new iPhone 15 due to be unveiled – I see no statistical pattern, or price trends, through prior product launches to offer any bias on how the tech giant could trade.
PEPPERSTONE:USDXLong
by Pepperstone
7
Bitcoin (BTC) -> Bullish Cycle ComingMy name is Philip, I am a German swing-trader with 4+ years of trading experience and I only trade stocks , crypto , options and indices 🖥️ I only focus on the higher timeframes because this allows me to massively capitalize on the major market swings and cycles without getting caught up in the short term noise. This is how you build real long term wealth! In today's anaylsis I want to take a look at the bigger picture on Bitcoin. Looking at the chart of Bitcoin you can see that just 8 months ago Bitcoin perfectly retested the previous cycle high of 2018 at the $18.000 level and rejected towards the upside. I think that the whole crypto market but especially Bitcoin is ready for a new bullish cycle and after another short term drop on Bitcoin I do expect a longer term bullish continuation. - - - - - - - - - - - - - - - - - - - - I know that this is a quite simple trading approach but over the past 4 years I've realized that simplicity and consistency are much more important than any trading strategy. Keep the long term vision🫡
CRYPTO:BTCUSDLong
by basictradingtv
115
How to tell which way inflation is going?In this video, we are studying the time lag between commodities, inflation data, and central bank decisions. 3 types of crude oil for trading: • Crude Oil Futures 0.01 per barrel = $10.00 Code: CL • E-mini Crude Oil Futures 0.025 per barrel = $12.50 Code QM • Micro WTI Crude Oil 0.01 per barrel = $1.00 Code MCL Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
NYMEX:CL1!
by konhow
23
Crash coming soon I wrote this 18 months ago. I still stand by every word. TLDR: April 2022.. Recession fears, interest rate hikes, high inflation In the first phase of a recession, the market falls due to fear because "everyone knows a recession is coming" In the second phase, companies report excellent profits because "duh it's inflation that's why we raise our prices" when actually they are price gouging swine. Excellent profits = market rises, which traders don't understand because "Wait this is a recession? I seem to be short and caught". Third phase.. No one has any savings left, thanks to the price gouging. Rents and heating bills and food prices are sky-high. The proles can only afford the basics. Companies will only report their drops in profits 3 months later. At first it's just a few poor reports, then a flood. They don't have sufficient reserves because they had pressure to pay fat dividends to the greedy funds that own them, so they start to fail. This happens just as all the shorts in stocks cut their losses and buy it back and those who missed out on the "fools rally" crack and buy in at the top. Fourth phase: Crash. We may get a new ATH or a double top beforehand, but you heard the truth here first. Look at the Commitments of Traders indicator at the bottom.. Big boys selling off. We give this away free. See website.
PEPPERSTONE:US500Short
by Paul_Varcoe
109
Impact of FAA Regulations and Rumors in Aerospace Stock TradingInvesting in aerospace-related stocks can be a lucrative endeavor due to the industry's potential for growth and innovation. You may find a lot of long-term investors holding major airline stocks (especially, positions added during COVID lows) and relatively new aerospace startups. However, it is essential to closely monitor and consider the impact of Federal Aviation Administration (FAA) regulations and even rumors on their investment decisions even if you’re not day trading these stocks. In this article, we explore real-life examples of how FAA regulations have negatively affected the stock prices of companies in the aerospace sector, highlighting the crucial role of monitoring and reacting to regulatory developments. Example #1. FAA Limits on Flight Numbers and the Plunge in US Airline Stocks: The FAA recently imposed restrictions on the number of flights to alleviate pressure on the national airspace. While this regulation aims to enhance safety and efficiency, it has directly impacted US airline stocks, such as American Airlines (AAL). Airlines faced reduced capacity and higher operational costs. This resulted in decreased revenue and profitability, causing a sharp decline in American Airlines' stock price. Investors who were not prepared for this regulatory change suffered losses. However, in reality this has been a topic of conversation since April, so the late June announcement shouldn’t have caught anybody by surprise. If taken proper measures, the positions might have been cashed out at July highs until the FAA inevitable reduces the geography of this regulation. Which it already started as of 3-4 weeks ago, meaning we can expect a retracement soon. Example #2. Minimum Flight Time Requirements and the Struggles of EVTOL Companies: FAA regulations now require small aircraft, including Electric Vertical Takeoff and Landing (EVTOL) vehicles, to have a minimum flight time of 30 minutes. This regulation has posed significant challenges for EVTOL companies like Joby Aviation, as battery technology limitations make meeting this requirement very difficult. For instance, even industry leaders like Joby Aviation, despite its high potential, faced setbacks due to the FAA's minimum flight time regulation. The company's stock price suffered as investors became wary of the challenges presented by battery size limitations amid this new requirement. Some other example of FAA regulations impacting aerospace stocks include: 1. Noise Restrictions: Recent FAA regulations aimed at reducing aircraft noise levels have affected companies specializing in quieter aviation technologies. 2. Safety Mandates: Stricter safety regulations have led to increased research and development costs for aerospace companies, impacting their profitability. 3. Environmental Regulations: Regulations promoting sustainable aviation and reducing carbon emissions have influenced aerospace companies' strategies, causing fluctuations in their stock performance. As you may see FAA regulations have a substantial and immediate impact on the stock prices of companies in the aerospace sector. However, this analogy was just an example because of my personal interest as a PhD in Aerospace Engineering and investor into several aerospace stocks. In reality, when trading/investing you should always stay up to date with regulations imposed by your governing body (food or pharmacy should watch out for FDA and so on). Knowledge is power, dear community members. So stay alert and informed in any comfortable way for you. Some like to watch Bloomberg, some read yahoo finance. In reality, you can substitute that by reading through some of the deep good breakdowns by fellow TradingView writers. Make the most out of it!
NASDAQ:AAL
by Investroy
21
Disney: Is The Content Gold Rush Over?Over the last 6 months, there's been an interesting trend happening. Stocks in media delivery networks, like Charter and Comcast, have done quite well, while shares of content companies, like Disney, Paramount, and Warner Bros, have deeply underperformed. This performance lies in contrast to the "content is king" narrative that's been popular amongst investors over the last decade or so. What's happening here? There's 3 issues at play. First up; the writer / actor strikes. These strikes have hurt content companies as they've introduced costs into the system. Either these will come in the form of opportunity cost as less profitable content gets made, or direct costs should Paramount, Netflix, or Warner Bros consent to the profit-share demands of labor. Secondly, debt. This applies mostly to WBD, but to a lesser degree it impacts all of the content companies. Debt has reduced FCF across the board at these companies, which has led to a decline in both profits, and earnings multiples. Finally, Business Strategy. Netflix changed the game in the 2010's as it pioneered a DTC video consumer model. As the company boomed, they began producing their own shows to the degree that the company is now a vertically integrated entertainment powerhouse. Other companies, like Paramount, lack the scale to achieve this. Thus, costs of running Paramount+ have skyrocketed, when it may have just been more profitable to license their final content products. This approach allows for less bargaining power (due to the lack of customer relationship ownership), which is why it likely hasn't been pursued. However, things will likely switch back, which should lead to higher profits in the long run for shareholders. Here at PropNotes, we believe that things are set to turn around. The DIS / CHTR spread has hit all time lows: Once media companies realize that they can generate the same leverage in licensing negotiations by creating compelling content, the cash will begin to flow, and companies like DIS will continue to print money. This will take some time, but there's a potential trade here once the heiken ashi candles begin to print green. It's going to be a long, bullish trade once that happens. Cheers! Looking for more high-probability trade ideas? Follow us below. ⬇️⬇️
NYSE:DISLong
by PropNotes
13
What's next for the rate debate?The U.S. interest rate debate changed dramatically in August 2023. The economic debate shifted gears with diminishing concerns about a recession, leading U.S. long-term Treasury yields to rise sharply. And the debate over future Federal Reserve policy transitioned from trying to call the peak in short-term rates to discussing the length of time rates might remain elevated. The net result was a less inverted U.S. yield curve, not because short-term interest rates fell, but because long-term yields rose. With the no recession view becoming the more popular base case, there has also been a shift in the longer-term inflation debate. Without a recession, many economists are coming to the view that core inflation, which the Fed targets, will remain well above the Fed’s 2% target throughout 2024 and possibly longer. We studied extended periods where short-term rates held above the prevailing inflation rate. There appears to be a loose relationship between the growth of nominal GDP and long-term Treasury yields. This makes sense if one thinks about nominal GDP growth as part inflation and part real economic activity, and it helps explain why bond yields have moved higher. Put another way, the period of 1% fed funds rates under the Greenspan Fed in the early 2000s and then the near-zero fed funds rates introduced by the Bernanke Fed after the 2008 Great Recession are historical outliers. These super low rates encouraged a search for yield and popularized the view that the Fed has the market’s back, artificially supporting both equities and bond prices (that is, lower bond yields). The Powell-led Fed is guiding us that those days are in the rearview mirror, and market participants are starting to agree. In his closely watched Jackson Hole speech, Powell highlighted the economic uncertainty ahead and how risk management remains key moving forward. If you have futures in your trading portfolio, you can check out on CME Group data plans available on TradingView that suit your trading needs www.tradingview.com By Bluford Putnam, Managing Director & Chief Economist, CME Group *Various CME Group affiliates are regulated entities with corresponding obligations and rights pursuant to financial services regulations in a number of jurisdictions. Further details of CME Group's regulatory status and full disclaimer of liability in accordance with applicable law are available below. **All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
CBOT:ZB1!
by CME_Group
11
Is EURUSD Ready To Change The Direction Of The Short-Term Trend?Looking at the technical picture of EASYMARKETS:EURUSD on our 4-hour chart, we can see that the pair made its way back to its short-term tentative downside resistance line drawn from the high of 18th of July. This happened after finding support near the 1.0765 territory. Given that the downside line currently remains intact, according to the TA rules, we have to stick to the downside scenario and aim lower. That said, we will most likely go with that plan, if we see strong rejections near that trendline. If that happens, we will then aim for the 1.0842 obstacle, or even the 1.0783 and 1.0765 levels. A break of the latter one would confirm a forthcoming lower low, possibly inviting even more sellers into the game. As we also know, the more tests a trendline experiences, the more chances for a break there is. If the previously mentioned trendline surrenders to the bulls and we also see a push above the current high of this week, at 1.0892, this may spook the bears from the field for a while. FX_IDC:EURUSD could then make its way to the high of last week, at the 1.0930 zone, or the psychological 1.1000 territory. @DariusAnucauskas Disclaimer: easyMarkets Account on TradingView allows you to combine easyMarkets industry leading conditions, regulated trading and tight fixed spreads with TradingView's powerful social network for traders, advanced charting and analytics. Access no slippage on limit orders, tight fixed spreads, negative balance protection, no hidden fees or commission, and seamless integration. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, are intended only to be informative, is not an advice nor a recommendation, nor research, or a record of our trading prices, or an offer of, or solicitation for a transaction in any financial instrument and thus should not be treated as such. The information provided does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it. Please be aware, that past performance is not a reliable indicator of future performance and/or results. Past Performance or Forward-looking scenarios based upon the reasonable beliefs of the third-party provider are not a guarantee of future performance. Actual results may differ materially from those anticipated in forward-looking or past performance statements. easyMarkets makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or any information supplied by any third-party.
by easyMarkets
23