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Macro

We All Live In A Brave New World


Regarding technology sector earnings, here is the BRAVE new world we all live in.

Implied option volatility for Microsoft’s (MSFT) earnings release is higher than Amazon (AMZN), Facebook (FB), Google (GOOGL) and Apple (AAPL).

Notably, there is nothing uniquely controversial this quarter for Microsoft (MSFT).

Additionally, in the case of AMZN and FB, the options market is saying that their stock price will move half what it normally does.

Here is what AMZN, FB, GOOGL, and AAPL earnings implied volatility being this low means to us.

 

Sight Beyond Sight® is a global macro trading newsletter written daily by Neil Azous. With close to two decades of institutional experience across asset classes, Neil interprets the day-to-day economic, policy and strategy developments and provides actionable trading ideas for investors. We invite clients of Interactive Brokers to sign up for a free trial in Account Management. If you are not a client of IB, you can sign up for a free trial by visiting our website.

This article is from Rareview Macro and is being posted with Rareview Macro’s permission. The views expressed in this article are solely those of the author and/or Rareview Macro 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

Inflection Point - Cocoa Bottoming Out?


Yesterday, a dramatic plunge sent Cocoa futures down as much as 5%. From a trading standpoint, the panic is associated with the making of final lows.

In response, the International Cocoa Council will hold a one-day high-level emergency meeting on April 24th in the Ivory Coast to discuss price post-selloff on West Africa harvest glut. (Source: International Cocoa Organization)

We had to dig deep to find that information out as it is not publicized on any major news outlet outside of Ghana or Côte d'Ivoire, only the actual source so far.

With so many so bearish and the governing bodies set to me you have to ask yourself if Cocoa is about to have the equivalent of an OPEC and crude oil-moment, and no one knows it yet?

Sight Beyond Sight® is a global macro trading newsletter written daily by Neil Azous. With close to two decades of institutional experience across asset classes, Neil interprets the day-to-day economic, policy and strategy developments and provides actionable trading ideas for investors. We invite clients of Interactive Brokers to sign up for a free trial in Account Management. If you are not a client of IB, you can sign up for a free trial by visiting our website.

This article is from Rareview Macro and is being posted with Rareview Macro’s permission. The views expressed in this article are solely those of the author and/or Rareview Macro 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

US Real Money Investors Wake Up To Possibility Fed Is Done Raising Rates


A key investor takeaway from yesterday’s price action is that real money has woken up to the prospect that the Federal Reserve is done raising rates.

The traditional asset allocation benchmark is a weighted blend of 60% S&P 500 and 40% Bloomberg Barclays Aggregate Index.

For those not familiar with the Aggregate Index it consists of the total U.S. investment-grade bond market. This includes Treasuries, government-related and corporate securities, MBS, ABS, and CMBS.

Most institutions replicate this index via a total return swap (TRS). For others, the iShares Core U.S. Aggregate Bond ETF (AGG) will suffice. There are over 4,000 securities in this index.

The normal one-day sigma for the AGG ETF is 0.2145%. Yesterday, the AGG ETF closed +0.40%, or two standard deviations.

The key point here is that when this type of buying (or selling) occurs in the AGG index, it is for a specific reason as it takes a lot of money flow to move it up like this.

Sight Beyond Sight® is a global macro trading newsletter written daily by Neil Azous. With close to two decades of institutional experience across asset classes, Neil interprets the day-to-day economic, policy and strategy developments and provides actionable trading ideas for investors. We invite clients of Interactive Brokers to sign up for a free trial in Account Management. If you are not a client of IB, you can sign up for a free trial by visiting our website.

This article is from Rareview Macro and is being posted with Rareview Macro’s permission. The views expressed in this article are solely those of the author and/or Rareview Macro 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

US Real Money Fixed Income Investors In Spotlight Now


Despite the high degree of emotion, 2017 has largely been a “range trade” for many major assets.

What was unique about last week is that US fixed income, US equity volatility, gold, Japanese yen and Nikkei, all broke out of significant patterns.

The key point here is that there is a difference between being open to a counter-trend trade relative to pre-trading one, and some were open to pre-trading one ahead of the France elections.

Firstly, it shows how many are caught off guard by last Friday’s shockingly weak US data. Put another way, there is no preparation by investors for worse-than-expected economic data. The consensus remains that global synchronization will continue indefinitely. This is important to recognize regarding the global economic surprise index peaked and turned down in March.

Secondly, professionals are not accepting that they are going to have to stop out, especially in fixed income. Put another way, everyone still thinks they are right, and the price is wrong.

Sight Beyond Sight® is a global macro trading newsletter written daily by Neil Azous. With close to two decades of institutional experience across asset classes, Neil interprets the day-to-day economic, policy and strategy developments and provides actionable trading ideas for investors. We invite clients of Interactive Brokers to sign up for a free trial in Account Management. If you are not a client of IB, you can sign up for a free trial by visiting our website.

This article is from Rareview Macro and is being posted with Rareview Macro’s permission. The views expressed in this article are solely those of the author and/or Rareview Macro 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

GBP/NZD A Long?


We could write pages on the fundamentals of why someone would go long on the British pound sterling and short of the New Zealand dollar (GBP/NZD), including how this position benefits from valuation, positioning extremes, economies progressing within very different stages of the economic cycle, portfolio protection for the French election, etc. but we will not.

Instead, we will just tell you that we like the chart, and our trend model was triggered.

From a trend standpoint, the 21- and 40-day moving averages are upward sloping, and the 150-day moving average is starting to flatten out. Additionally, the pair continues to make new successive 5-day highs, a sign of strength and momentum.

Lastly, this week is the first week the currency pair broke the 23.6% Fibonacci level going back to BREXIT.

Sight Beyond Sight® is a global macro trading newsletter written daily by Neil Azous. With close to two decades of institutional experience across asset classes, Neil interprets the day-to-day economic, policy and strategy developments and provides actionable trading ideas for investors. We invite clients of Interactive Brokers to sign up for a free trial in Account Management. If you are not a client of IB, you can sign up for a free trial by visiting our website.

This article is from Rareview Macro and is being posted with Rareview Macro’s permission. The views expressed in this article are solely those of the author and/or Rareview Macro 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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