Archives of “May 2020” month

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EURCHF to parity?

  
Analysis, Forex

Via Bloomberg

Via Bloomberg  
The options market is pricing in the possibility of EURCHF below parity in 12 months time. The strength of the CHF is a constant concern for the Swiss National Bank keen to defend its export market.
 SNB, EURCHF floor, 1.200
The options pricing chimes with Thomas Jordan’s recent comments that the SNB are making a ‘substantial commitment regarding FX intervention and that they might cut interest rates further. Furthermore, sight deposits for the period ending May 8 showed a big increase.
Now, Thomas Jordan has said that the SNB is not thinking of imposing a new minimum exchange rate. Remember Jan 2015 and what a disaster that was when the SNB gave up defending the EURCHF peg?  However, don’t rule out a new minimum exchange rate for EURCHF indefinitely.
Here are some things to look out for that could prompt the SNB to act:
  • the pace of currency appreciation in the spot market
  • the franc’s real effective exchange rate
  • the depth of deflation in the nation (-0.3% is already factored in for 2020 in its bulletin)
  • the strength of inflows into the nations assets
One key think to remember, if the SNB do act, or do put in a new minimum level. just don’t over leverage. Remember, there are old traders and there are bold traders. However, there are no old, bold traders.

Nikkei 225 closes lower by 0.12% at 20,366.48

  
Analysis, Global Indices

The Nikkei closes a tad lower, but off earlier lows at least

Nikkei

The same applies to most Asian equities this morning, after softer tones prevailed in the early stages before stocks recouped some losses late in the day. This comes as US futures have also trimmed earlier losses of 0.8% to around 0.4% currently.

Elsewhere, the Hang Seng is down by 1.4% while the Shanghai Composite is down by 0.2% ahead of the closing stages today.
The yen is still leading the major currencies space, with USD/JPY down by 0.2% to 107.43.

Unpublished US data from the White House shows coronavirus infections spiking across the US

  
  Analysis
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US media (NBC news) reporting on data undisclosed by the Trump administration

  • Coronavirus infection rates are spiking to new highs in several metropolitan areas and smaller communities
  • data in a May 7 coronavirus task force report, undisclosed by the adminstration
  • The 10 top areas recorded surges of 72.4 percent or greater over a seven-day period compared to the previous week, according to a set of tables produced for the task force by its data and analytics unit. They include Nashville, Tennessee; Des Moines, Iowa; Amarillo, Texas; and – atop the list, with a 650 percent increase – Central City, Kentucky.
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Trump’s said on Monday that “all throughout the country, the numbers are coming down rapidly.” Even without this disclosure of the secret data hoard that claim is obvious bullshit.
WH death toll projections are rapidly moving toward realisation:
US media (NBC news) reporting on data undisclosed by the Trump administration

Federal Reserve says secondary market facility to start buying ETFs on Tuesday

  
  Analysis

NY Fed says secondary market corporate credit facility (smccf) will begin purchases of exchange-traded funds on May 12

  • says smccf may purchase US-listed TEFs whose investment objective is to provide broad exposure to the market for US corporate bonds
  • says preponderance of ETF holdings will be of ETFs whose primary investment objective is exposure to US investment-grade corporate bonds
  • says remainder ETF holdings will be in ETFs whose primary investment objective is exposure to US high-yield corporate bonds

More from Paul Tudor Jones – bullish gold and bitcoin

  
Analysis, BITCOIN, Gold / Silver
Gold:
  • has a portion of his portfolio invested in gold
  • could go “substantially higher” if inflation spikes
Bitcoin:
  • “When I think of bitcoin, look at it as one tiny part of a portfolio. Itmay end up being the best performer of all of them, I kind of think it might be,” he said. “But I’m very conservative. I’m going to keep a tiny percent of my assets in it and that’s it. It has not stood the test of time, for instance, the way gold has.”
  • has “just over 1% of my assets in bitcoin. Maybe it’s almost 2. That seems like the right number right now.”
  • “Every day that goes by that bitcoin survives, the trust in it will grow”
  • “if you take cash, on the other hand, and you think about it from a purchasing power standpoint, if you own cash in the world today, you know your central bank has an avowed goal of depreciating its value 2% per year,” Jones said. “So you have, in essence, a wasting asset in your hands.” Bitcoin, on the other hand, isn’t subject to the whims of government spending, but is itself risky because it’s only 11 years old
If only there was a way to combine gold with bitcoin … oh, wait … and look where its made!!!!
gold bitcoin wuhan

Here are the 6 risks Goldman Sachs says US equity investors are ignoring

  
  Analysis

Via a GS note from US equity strategists.

Goldman Sachs expects the S&P500 to be higher at year end, around 3,000. GS see the coronavirus scare receding and a rebound for the economy.
But, says the bank, the next 3 months will bring a near 20% decline, targeting around 2,400.
Says the decline could be triggered by a number of concerns and risks:
  1. Infection rates could increase outside worst-hit NY as states reopen their economies
  2. A drawn-out economic rebound
  3. Major US banks losing profits for loan-loss reserves … the labor market is now being hit harder and thus additional reserve will be required … more companies will cancel stock-buybacks (these have been aa major source of demand pushing the stockmarket higher over the past 10 years)
  4. Companies cutting dividend payments and also capex spending (which will slow corporate growth ahead)
  5. November presidential election policies (especially on corporate tax – Dems could reverse Trump’s corporate profit-friendly tax moves)
  6. US-China tensions being stoked further as Trump turns more aggressive in his China approach
Via a GS note from US equity strategists.

Mixed results from the major indices

  
Analysis, US Market
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Dow down. S&P modestly higher. Nasdaq higher

The major indices are ending the day with mixed results
The Dow is ending lower. The S&P is near unchanged and the Nasdaq is up about 0.8% on the day
The final numbers are showing:
  • The Dow fell -109.33 points or -0.45% at 24221.94
  • The S&P rose 0.39 points or 0.01% at 2930.19
  • The Nasdaq rose 71.02 points or 0.78% at 9192.34
The European markets were mostly lower exception of the UK FTSE which eked out a is small 0.06% gain.
Dow down. S&P modestly higher. Nasdaq higher
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