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Macro

Briefing.com - Holding a Bullish Line


There was no mistaking the stock market's bias on Thursday.  It was bullish at the start and bullish at the close.  The highlight of it all was that the S&P 500 and Dow Jones Industrial Average set new record highs. 

It was an orderly rally on Thursday, which is to say there wasn't panic buying.  There was a steady bid, however, that conveyed confidence in the trend and a tacit feeling of not wanting to miss out on further gains.

The volume was heavier than average at the NYSE and Nasdaq, but it wasn't extremely heavy.  That will likely change today given that it is a quarterly options expiration day.

At the moment, the major indices look poised for a modestly higher start when the opening bell rings.

The S&P futures are up four points and are trading 0.2% above fair value.  The Nasdaq 100 futures are up 15 points and the Dow Jones Industrial Average futures are up 53 points.

The futures had been signalling an even stronger move to the upside, yet they started fading about 4:00 a.m. ET, which is when the eurozone released a disappointing preliminary manufacturing PMI report for September.

That PMI reading checked in at 53.3 versus a prior reading of 54.6.  That disappointing reading didn't derail the equity markets in Europe, though, as it was likely seen as a basis for the ECB to be very deliberate with policy actions that remove accommodation.

The euro is off a bit against the dollar, but the DAX, the CAC 40, and the FTSE 100 are up between 0.4% and 1.0%.  Those gains came on the heels of even better showings from markets in Asia.  The Nikkei added 0.8% while the Hang Seng and Shanghai Composite shot up 1.7% and 2.5%, respectively.

The strength in the Shanghai, which rose 4.3% this week, was attributed to the thinking that the government is going to provide support tools that will help offset any impact from the tariffs.  We'll see, but it was a strikingly good week for the stock market there, which has not acted well in 2018 amid the tariff action and a slowdown in economic activity.

There aren't any major economic releases of note out of the U.S. today, yet there are some corporate stories of note.

Walmart (WMT) has reportedly warned that it might have to raise prices because of the tariffs and Micron (MU), which posted better than expected fourth quarter earnings, issued disappointing guidance for its fiscal first quarter, citing in part gross margin pressures linked to the tariff actions.

Shares of WMT are down 0.5% while shares of MU are down 3.9%.  Conversely, shares of Texas Instruments (TXN) and Dow component McDonald's (MCD) are up 2.1% and 0.6%, respectively, after both blue chip companies announced sizable dividend increases.

There is some curve-flattening action early on in the Treasury market.  The 2-yr yield is up two basis points to 2.82% while the 10-yr yield is unchanged at 3.08%.  That could slow some of the upward momentum driving the financial sector, which is up 2.6% for the week entering today's trading.

The S&P 500 is up "only" 0.9% for the week, bringing its year-to-date gain to 9.6% (before dividends) and conveying a message that trade matters thus far have not derailed trading matters that appear to be rooted in the optimism over strong economic and earnings growth.

--Patrick J. O'Hare, Briefing.com

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Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Briefing.com and is being posted with Briefing.com's permission. The views expressed in this material are solely those of the author and/or Briefing.com and IBKR is not endorsing or recommending any investment or trading discussed in the material. 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 IBKR 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

Interactive Brokers - Webinar - GraniteShares - Breaking Down Commodities: Gold in Today's Market


Will Rhind, CEO and Founder of GraniteShares

Tue, Sep 25, 2018 12:00 PM - 1:00 PM EDT

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The analysis in this material is provided 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 IBKR to buy, sell or hold such investments. 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

Interactive Brokers - Asia-Pacific Calendar: The Week Ahead


Interactive Brokers senior market analyst Steven Levine provides some highlights for what to look for in the Asia-Pacific region in the week beginning September 24.

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The analysis in this material is provided 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 IBKR to buy, sell or hold such investments. 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

Eurex: JPY Crosses Higher Despite BOJ Rinban Adjustment


Morning Briefing September 21st 2018


The calendar starts at 0645GMT, when France's final GDP estimate for the second quarter is published. Quarter-on-quarter growth for Q1 was 0.2% and is anticipated to remain at that rate for the second quarter.

Up next at 0700GMT is Spain's industrial orders for July. June's reading was 5.2% y/y wda. Also at the same time is Spain's services survey y/y for July. June had a reading of 7%.

The first flash reading for September PMI is France at 0700GMT. The manufacturing PMI was previously 53.5 and is anticipated by analysts to drop a touch to 53.3. The services PMI in France is also expected to drop from 55.4 to 55.3.

Next up is Germany at 0730GMT, with services expected to remain at 55.0 whereas manufacturing is expected to drop from 55.9 to 55.5.

Ending the flash readings at 0800GMT is the Euro Area. The manufacturing PMI mirrors drops from France and Germany with the prior reading of 54.6 expected to drop to 54.2. The services PMI however is expected to tick up to 54.5 from 54.4 previously. Putting this together means a composite PMI which is expected to drop to 54.3 from 54.5.

Public sector finances in the UK for August are due at 0830GMT and after a great start to the 2018/2019 fiscal year, analysts anticipated borrowing to move away from negative territory rising from stg-2.9 bn to stg 2.2 bn for public sector net borrowing and rising from stg -2 to stg 3.5 bn for the central government net cash requirement.

The UK ends their data week with the CBI industrial trends survey for August at 1000GMT. The previous order book balance was 7.

Into the afternoon and the only real piece of data at 1230GMT is Canada with their consumer price index and retail trade combined for August and July respectively. The July inflation rate was 3% and is expected to drop to 2.8%. Retail sales growth in June was -0.2% m/m and is expected to rebound to 0.3%.

Global Economic Trading Calendar


Markets


US TSYS: The weight on JGBs stemming from the BOJ's latest adjustment to its Rinban operation began to weigh on Tsys, although T-Notes stuck to a tight range. - Activity was very limited elsewhere, after T-Notes tested Thursday's high in early Asia trade.

JGBS: JGB futures hit the lowest level seen since August 08, closing near worst levels at the end of the morning session, on the back of the latest adjustment to the BOJ's Rinban operations (trimming Y10bn from the 25+ Year purchases) with the cash curve steepening as a result, as 40-Year yields moved above 1.00%, and long end swap rates follow suit. - The move came as a surprise to participants. - The offer to cover ratios of the latest round of operations can be found below. - 1-3 Year 2.69 (prev. 3.10), 3-5 Year 2.43 (prev. 3.92), 10-25 Year 3.16 (prev. 3.23), 25+ Year 4.40 (prev. 4.08).

AUSSIE BONDS: Aussie Bonds have outperformed Tsys on the leg back from the recent highs in U.S. yields, with the AU/U.S. 10-Year yield spread last trading at -~37.0bp. - The latest adjustment to the BOJ's Rinban operations eventually spread to AU Bonds & Tsys, adding some pressure, although the move has been somewhat limited outside of JGBs. - Focus continues to fall on the funding space. 3-Month BBSW fixed 0.5bp higher today, however, it still remains overshadowed by the recent jump in repo rates ahead of quarter end. - The Bill strip trades 1 tick lower to 2 ticks higher last, as the front contracts underperform.

STOCKS: The risk on theme continued through the Asia-Pacific session on Friday as the major regional indices moved higher, aided by a positive lead from Wall St. - The Nikkei 225 garnered extra demand on the back of a softer JPY, allowing exporter related names to drive the index higher, as the benchmark added 1.0%. - China's CSI 300 added over 1.0% allowing it to consolidate above its 21-DMA, while the Hang Seng added 0.9%. - Australia's ASX 200 added 0.4% as the heavily weighted sectors leant support. - U.S. index futures also ticked higher overnight.

OIL: WTI & Brent operated around settlement levels struggling for direction after Thursday's Trump-inspired sell off. Trump took to Twitter on Thursday, stating that the "OPEC monopoly must get prices down now!" - This comes ahead of the OPEC+ summit in Algiers, which the Iranian Oil Minister Zageneh will not attend. Zangeneh has threatened to veto any production alteration that harms the interests of his country and also stated that he is encouraged by oil prices reaching $80. - As a reminder Saudi & Russia are already moving beyond the 2016 deal, as they hold the majority of the spare capacity within the OPEC+ agreement.

GOLD: The Yellow metal continues to struggle around the 55-DMA, which is capping prices at present after gold drew support from a softer dollar. Although spot prices have remained above $1200/oz overnight.

FOREX: The JPY continued to struggle in spite of the BOJ cutting the size of its 25+ Year Rinban operations, in a move that caught JGB traders off guard. Nonetheless, a buoyant session for risk appetite (namely Asia-Pacific equities) underpinned the major JPY crosses which extended through their respective recent highs. USD/JPY last trades at Y112.75, with bulls looking to July's best levels (Y113.17). EUR/JPY last trades at Y132.80, with bulls looking to the pair's April highs (Y133.49). - AUD/USD managed to edge away from lows after S&P affirmed Australia's AAA credit rating, and raised its outlook to stable from negative, with the rate last dealing unchanged at ~$0.7290. - Elsewhere it was a fairly limited session with the remaining major USD pairs sticking to tight ranges.

Technical Analysis


 BUND TECHS: (Z18) Stability Ahead Of Aug 1 Low
 

Dec-18 Bund futures clawed back early losses yesterday to close up for only the second time in 10 sessions, giving bulls some hope of a bounce ahead of the Aug 1 lows at 158.37. That said, the bearish trend remains intact and a break below the Aug 1 low would suggest a further medium-term weakness. Bulls need a break above the 100-dma at 159.10 to target the Sep 12 high at 159.79 to return the outlook positive.

EUROSTOXX50: Recovery Builds

Eurex Futures Market Close



 

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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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Macro

Briefing.com - S&P 500 on Course for Record High


Things are looking up for the stock market at the start of today's trading.  The S&P futures are up 12 points and are trading 0.4% above fair value.  The Nasdaq 100 futures are up 46 points and the Dow Jones Industrial Average futures are up 134 points.

There isn't any specific news to account for the bullish disposition, which was entrenched before this morning's economic data were released.

The positive bias is seemingly rooted in the market's resilience, which itself is rooted in the notion that trade concerns are overblown, that rising interest rates are a sign of an improving economy, and that earnings growth is strong.

We're getting the sense, too, that participants are getting a little fearful about missing out on the next leg higher, cognizant that the major indices are all flirting with breaking out to new record highs despite the "trade skirmish," as JPMorgan CEO Jamie Dimon has labeled it, and interest rates moving up.

The ongoing strength in the stock market, meanwhile, is certain to have active fund managers trailing their benchmark feeling a little nervous about matters and trying to catch up, lest they fall further behind.

How they try to do that is up to them, yet it has been apparent this week that there has been a rotation into value stocks.

The financial sector (+1.9%) has been a primary beneficiary of that rotation.  The information technology sector (-0.9%) has presumably been a victim of that rotation.

This morning's economic data could help perpetuate the value trade, because it certainly fit the script of an economy market participants are feeling good about.

Initial jobless claims for the week ending September 15 decreased by 3,000 to 201,000 (Briefing.com consensus 209,000) -- the lowest level since November 15, 1969 -- and continuing claims for the week ending September 8 dropped by 55,000 to 1.645 million -- the lowest level since August 4, 1973.

The key takeaway from the report is that it reflects a reluctance on the part of employers to reduce staff, which goes hand-in-hand with a strong economy and tight labor market.

Separately, the Philadelphia Fed Manufacturing Business Outlook Survey for September increased to 22.9 (Briefing.com consensus 15.3) from 11.9 in August, driven by an uptick in the New Orders Index to 21.4 from 9.9.

A number above zero is indicative of growth, so the key takeaway from the report is that it reflects the idea that manufacturing activity in the Philadelphia Fed region accelerated in September.

This encouraging economic data helped solidify the bullish bias in the futures market, which should give way to a new record high for the S&P 500 when the opening bell rings.

The Existing Home Sales Report for August (Briefing.com consensus 5.37 mln; Prior 5.34 mln) and the Leading Indicators Report for August (Briefing.com consensus 0.5%; Prior 0.6%) will be released at 10:00 a.m. ET.

Those reports will be looked at closely, as will the performance of the pot stocks, which have been a huge beneficiary of speculative trading activity that has produced parabolic moves for stocks like Tilray (TLRY) which many think are setting things up for a major drawback.

Whether those stocks go up in smoke soon remains to be seen, yet it is safe to say that the broader market is poised to go up at the start of trading.

--Patrick J. O'Hare, Briefing.com

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Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Briefing.com and is being posted with Briefing.com's permission. The views expressed in this material are solely those of the author and/or Briefing.com and IBKR is not endorsing or recommending any investment or trading discussed in the material. 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 IBKR 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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