Why Trading is a Mental Game in One Image – The Tightrope Analogy
Archives of “April 2019” month
rssUS High Yield credit spreads end the week at their tightest levels in over 5 months: 368 bps.
US Dollar Super Cycle Revisited
In the big picture, we argue that the dollar’s appreciation is part of the third significant dollar rally since the end of Bretton Woods. The first was the Reagan-Volcker dollar rally, spurred by a policy mix of tight monetary and loose fiscal policies. The rally ended with G7 intervention to knock it down in September 1985. After a ten-year bear market, a second dollar rally took place. It can be linked to the tech bubble and the shift to a strong dollar policy.
The carving out of the internet drew capital into the US and induced Americans to keep their savings here. It may or may not have been sufficient to fuel a multi-year dollar advance. Rubin replaced Bentsen at the helm of Treasury and nearly immediately articulated a shift in policy. No longer would the US use the dollar as a trade weapon as previous administrations and officials did. The US would not engineer a weaker dollar to reduce its debt burden. This is the essence of the strong dollar policy. The US first unilaterally disarmed and then succeeded in convincing the G7 and G20 that de-weaponizing the foreign exchange market was the best practice.
However old habits die hard, during the Clinton dollar rally, the euro was born and immediately depreciated. It fell from around $1.19 to below $0.85. They cried, “Quit picking on our euro,” though the market was really accumulating US assets. In October 2000, after Summers replaced Rubin and at the request of Europe, there was coordinated intervention to buy the euro and sell the dollar. The official action and the popping of the tech bubble marked the end of the Clinton dollar rally.
Citi Panic/Euphoria Model. Getting up there.
Thought For A Day
S&P 500 Total Return hits a new all-time high, up 25% from the December lows.
US pork sales to China surging. Pig flu has reduced Chinese pig population by the size of the entire US stock.
Shale oil players surge on $50bn Chevron-Anadarko deal
It’s a shale party on Wall Street, and everyone’s invited.
A host of American shale oil producers saw their shares spike on Friday after Chevron announced it agreed to buy Anadarko Petroleum in a $50bn deal.
Among the top 10 gainers in the S&P 500, eight were oil companies with sizeable shale operations. Anadarko was the biggest winner in the benchmark index, surging 32.8 per cent. Runner-up Pioneer Natural Resources was up 11.2 per cent, and Concho Resources jumped 10.3 per cent. The duo’s gains added a combined $5bn to their market values.
Other shale-centric oil stocks also posted big gains. Noble Energy, Devon Energy and Diamondback Energy were each up at least 7 per cent, EOG Resources advanced 5.7 per cent and Cimarex Energy rose 5 per cent.
The Anadarko purchase will give Chevron a larger footprint in the fast-growing Permian Basin of Texas and New Mexico, which, according to the US Energy Information Administration, has driven domestic oil production to new record highs this year. Chevron’s offer was worth $65 a share — a premium of nearly 40 per cent based on Thursday’s market close.
CFTC Commitment of traders: EUR short pushes over 100K short
Weekly forex futures non-commercial positioning data from the CFTC
- Prior report
- EUR short 102K vs 99K short last week. Shorts increased by 3K
- GBP short 7K vs 10K short last week. Shorts trimmed by 3K
- JPY short 72K vs 63K short last week. Shorts increased by 9K
- CHF short 28k vs 26k short last week. Shorts increased by 2K
- AUD short 54k vs 56k short last week. Shorts trimmed by 2K
- NZD short 1K vs 0K short last week. Shorts increased by 1K
Key earnings releases next week
JPM got the financials off to a good start today
JPMorgan Chase got financial earnings off to a good start today, easily beating expectations when they announced this morning. Their stock is up $5 or 4.7% at 111.255%. Does their momentum translate for the other financials next week? We will see as a number of Financials including Citi, Goldman Sachs, Bank of America, Morgan Stanley and Amerian express release next week.
Below is a snapshot of the scheduled major earnings releases next week. In addition to a number of financials, Netflix, J&J, United Continental, and IBM will also release.
For your guide, earnings dates for some of the other big names show
- Facebook, April 24
- Alphabet, April 29
- Apple, April 30
- Amazon, April 25
- Microsoft, April 25
- Intel, April 25
- Boeing, April 24
- Twitter, April 23
- Disney May 8