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Macro

Changes In Fed Chair Contenders Led The Way - It's No Longer a One Horse Race


Morning Briefing October 17th 2017


The economic docket kicks off on Tuesday with EU ACEA Car Registrations at 0600GMT.

At 0815GMT BoE Governor Mark Carney will appear in front of the Treasury Select Committee alongside new appointees Sir David Ramsden and Silvana Tenreyro to discuss the new additions to the MPC and the work of the BoE.

ECB Executive Board member Vitor Constancio will deliver the keynote speech at Conference on Financial Stability organised by Bank of Portugal, in Lisbon at 0820GMT.

A slew of UK releases at 0830GMT, inflation data and the ONS House Price Index due to hit the wires. A number of factors are expected to exert upside pressure on inflation including a 12.5% rise in electricity prices by British Gas and a large rise in petrol prices during the month and the ongoing base effects of weaker sterling.

At 0840GMT Bundesbank board member Andreas Dombret will participate in discussion at the 18th World Knowledge Forum, in Seoul.

The latest instalment of the German ZEW is due at 0900GMT, alongside Eurozone HICP figures. The ZEW survey is expected to show another gain after a brief dip during the summer months. The Sentix index, which is closely correlated with ZEW, saw a rise in October and paints an optimistic picture for the German economic outlook.

Across the Atlantic the first release of the day is the US Import/Export Price Index at 1230GMT, alongside which the New York Fed Business Leaders Survey will be published.

At 1255GMT the US Redbook Retail Sales Index will hit the wires.

US Industrial Production data is on the docket at 1400GMT. Industrial production is expected to rise 0.2% in September after a 0.9% hurricane-related plunge in the previous month. The effects of Hurricane Irma in Florida should be seen with this month's data, providing some downside risk and accounting for the wide range of forecasts. Factory payrolls fell by 1,000 in September, while auto production jobs fell by 3,000 and the factory workweek was unchanged at 40.7 hours. The ISM production index rose to 62.2 in September from 61.0 in the previous month. Utilities production is expected to rise modestly in the month after a 5.5% August drop, while mining production is forecast to recover after posting a 0.8% decline due to Harvey. Capacity utilization is forecast to tick up to 76.2% from 76.1% in August.

The second Bundesbank speech of the day comes from Claudia Buch speech at ZEW, in Mannheim, Germany at 1600GMT.

At 1930GMT the Bank of Canada Senior Deputy Governor Carolyn Wilkins participates in a panel discussion at the Sibos conference organized by SWIFT in Toronto.

Finishing off the day at 2000GMT are the US Treasury International Capital (TIC) data.

Global Economic Trading Calendar


Technical Analysis


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MNI subscribers make critical decisions with deeper insight and greater confidence. Pinpoint information and market-moving interviews let them react instantly to market changes and more importantly, anticipate future market moves. MNI reporters are market professionals in the news business. They work like journalists but think like traders. When interviewing Fed officials, our reporters ask the same questions you would ask. They cover the angles you would cover. Write the way you read.

MNI’s news services are now available via the IB Trader platform. Please click here to view our provider page or contact MNI directly on sales@mni-news.com or +1 212 669 6400 for our Americas sales team and +44 207 862 7408 for our EMEA sales team.

This article is from Eurex Exchange and is being posted with Eurex Exchange’s permission. The views expressed in this article are solely those of the author and/or Eurex Exchange and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

 


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Technical Analysis

EURUSD Head & Shoulders Potentially Forming on Daily Chart


The EURUSD edged lower yesterday, as the bounce in the first half of last week continues unraveling after being rejected at prior upchannel support (on the weekly chart).  Significantly, the EURUSD is potentially forming a Head & Shoulders on the daily chart, with the right shoulder consisting of the price action over the last week.  Weekly, daily and 4hr RSI, Stochastics and MACD are turning/sliding down, or consolidating recent losses.  I am looking to enter short today in the red zone (of the daily chart), targeting the green zone for Thursday.  The amber/yellow zone is where I might place a stop if I was a swing trader (although in my personal account with which I seldom hold overnight I set my stops tighter).

 

EURUSD Weekly/Daily/4hr

 

Click here for today's technical analysis on USDCAD, Soybean

 

Tradable Patterns was launched to demonstrate that the patterns recurring in liquid futures and spot FX markets can be analyzed to enhance trading performance. Tradable Patterns’ daily newsletter provides technical analysis on a subset of three CME/ICE/Eurex futures (commodities, equity indices, and interest rates), spot FX and cryptocurrency markets, which it considers worth monitoring for the day/week for trend reversal or continuation. For less experienced traders, tutorials and workshops are offered online and throughout Southeast Asia.

 

This article is from Tradable Patterns and is being posted with Tradable Patterns’ permission. The views expressed in this article are solely those of the author and/or Tradable Patterns and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Options

Vol. 411: Low Volatility Sparks Super-Sized Put Trade


CBOETV - Jamie Tyrrell, Group One Trading, discusses continued record lows in VIX and a big put trade. 

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. Copies are available from your broker, or at www.theocc.com. The information in this program is provided solely for general education and information purposes. No statement within the program should be construed as a recommendation to buy or sell a security or to provide investment advice. The opinions expressed in this program are solely the opinions of the participants, and do not necessarily reflect the opinions of CBOE or any of its subsidiaries or affiliates. You agree that under no circumstances will CBOE or its affiliates, or their respective directors, officers, trading permit holders, employees, and agents, be liable for any loss or damage caused by your reliance on information obtained from the program.

Copyright © 2016 Chicago Board Options Exchange, Incorporated.   All rights reserved.

This video is from CBOE and is being posted with CBOE’s permission. The views expressed in this article are solely those of the author and/or CBOE and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Macro

Energy and financials: The value within value


Value stocks have started to show signs of life. Russ discusses why energy and financial stocks are currently the best ways to play the theme.
 

Value stocks are not surging, but they have at least begun to stir. Since the August lows, U.S. large cap value stocks have gained around 5.50%, in line with the overall market and a bit ahead of growth stocks.

Back at the end of August, I suggested that value was unfairly being left for dead, despite the fact that the style was looking cheap, perhaps cheaper than at any time since 2000. What value lacked was a catalyst, something that has recently emerged in the form of firmer data and resurrected tax cut talk. To the extent this continues, the next question is how to play the theme. Within the U.S. market, energy and financial stocks stand out.

On an absolute basis, financials, energy and utility stocks appear the cheapest based on the price-to-book (P/B) ratio. However, utilities, thanks to a steady stream of bond market refugees searching for yield, are not particularly cheap compared to their history. This leaves energy and financials. Energy in particular appears inexpensive relative to the broader market. Since 1995 the S&P 500 energy sector has traded at approximately a 17% discount to the broader market. Today that discount is nearly 40%. See the chart below.

S&P Energy Sector P/B vs. S&P 500

chart-energy-sector

The preponderance of value in these sectors is also evident in their respective weighting within value indexes. Banks and insurance companies make up around 26% of the S&P 500 Value Index, double their weighting in the S&P 500 Index. Similarly, the weighting of oil and gas in value indexes is approximately double the weight in the broader market.

What to watch: Crude oil and long-term rates

While both energy and financials are likely to continue to benefit from a rebound in value, each has its own idiosyncratic drivers. Not surprisingly, for financials, particularly banks, it is interest rates; and energy companies, the price of oil.

Starting with banks, as you might expect, banks benefit when long-term rates rise and the yield curve steepens. During the past two years, weekly changes in 10-year Treasury yields explained approximately 40% of the weekly moves in the Bank Index.

Energy has a similar story. Since late 2015, weekly changes in crude oil have accounted for more than 50% of the variation in weekly returns. This helps explain why these sectors have performed so well of late: Both interest rates and crude oil have risen sharply in recent weeks.

The takeaway is value still appears cheap. Should economic growth remain firmand investors stay enticed by the possibility of tax cuts, value is likely to continue to perform well. In the U.S., energy and financials appear the best way to play the theme, but with the caveat that each is as much driven by their respective fundamentals as style preferences. The good news is that for now, what is good for value—firmer growth—is also good for rates and oil prices.

Russ Koesterich, CFA, is Portfolio Manager for BlackRock’s Global Allocation team and is a regular contributor to The Blog.

Investing involves risks, including possible loss of principal. Investments that concentrate in specific industries, sectors, markets or asset classes may underperform or be more volatile than other industries, sectors, markets or asset classes and than the general securities market.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of October 2017 and may change as subsequent conditions vary. The information and opinions contained in this post are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this post is at the sole discretion of the reader. Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

©2017 BlackRock, Inc. All rights reserved. BLACKROCK is a registered trademark of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. All other marks are the property of their respective owners.

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This article is from BlackRock and is being posted with BlackRock’s permission. The views expressed in this article are solely those of the author and/or BlackRock and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Technical Analysis

Nasdaq Technical Take: Crude Testing Declining Resistance Line


Crude oil is again testing the declining resistance line in place since May 2015.  This trendline has been tested on numerous occasions over the last two plus years which only affirms its growing importance.  Crude rallied 26% from its June low to September high where it last tested this resistance, but again it failed to break through.  It has since spent the last three weeks working off overbought technicals where the daily RSI has reset from a high of 70 to a recent low of 46.  With momentum readings now at more normalize levels, crude is now in a better position for breakout and potential run.  That said there is likely a formidable amount of resistance from here up to the YTD highs at $55.24 (WTI).  
 
 

Nasdaq's Market Intelligence Desk (MID) Team includes: 

Michael Sokoll, CFA is a Senior Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over 25 years of equity market experience. In this role, he manages a team of professionals responsible for providing NASDAQ-listed companies with real-time trading analysis and objective market information.

Jeffrey LaRocque is a Director on the Market Intelligence Desk (MID) at Nasdaq, covering U.S. equities with over 10 years of experience having learned market structure while working on institutional trading desks and as a stock surveillance analyst. Jeff's diverse professional knowledge includes IPOs, Technical Analysis and Options Trading.

Steven Brown is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over twenty years of experience in equities. With a focus on client retention he currently covers the Financial, Energy and Media sectors.

Christopher Dearborn is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Chris has over two decades of equity market experience including floor and screen based trading, corporate access, IPOs and asset allocation. Chris is responsible for providing timely, accurate and objective market and trading-related information to Nasdaq-listed companies.

Brian Joyce, CMT has 16 years of trading desk experience. Prior to joining Nasdaq Brian executed equity orders and provided trading ideas to institutional clients. He also contributed technical analysis to a fundamental research offering. Brian focuses on helping Nasdaq’s Financial, Healthcare and Airline companies among others understand the trading in their stock. Brian is a Chartered Market Technician.

This article is from Nasdaq and is being posted with Nasdaq’s permission. The views expressed in this article are solely those of the author and/or Nasdaq and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

 

 


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Disclosures

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The material (including articles and commentary) provided on IB Traders' Insight is offered for informational purposes only. The posted material is NOT a recommendation by Interactive Brokers (IB) that you or your clients should contract for the services of or invest with any of the independent advisors or hedge funds or others who may post on IB Traders' Insight or invest with any advisors or hedge funds. The advisors, hedge funds and other analysts who may post on IB Traders' Insight are independent of IB and IB does not make any representations or warranties concerning the past or future performance of these advisors, hedge funds and others or the accuracy of the information they provide. Interactive Brokers does not conduct a "suitability review" to make sure the trading of any advisor or hedge fund or other party is suitable for you.

Securities or other financial instruments mentioned in the material posted are not suitable for all investors. The material posted does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before making any investment or trade, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice. Past performance is no guarantee of future results.

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