Tesla Knocks on S&P 500’s Door
Archives of “July 22, 2020” day
rssHu Xijin of China Financial Times lobs some warnings to the US way
US closes China’s Houston consulate
The US announced today the closing of China’s Houston consulate. Now China Global Times is lobbing some warning the US way.
The warm and fuzzy feelings between US and China are not all that warm and fuzzy needless to say. It is hard to see things getting better.
Silver continues its surge and tests November 2013 highs
Moved above the $23 level for the 1st time since 2013.
The price of silver is trading up around $1.16 or 5.42% at $22.46. That is off the days high of $23.02. At the high the price was testing the November 1, 2013 high price of $23.08 (see weekly chart below). Since the week of June 19. The price of silver has moved from a low of $16.95 to the high today of $23.08. That equates to a 35.8% gain. For the year the price has moved up from the closing level of $17.85. The year to date gain. The gain to the high today is equal to 29.2%.
Drilling to the hourly chart, the last 4 days has seen the price move up 21.7% from the low to high with the last 2 days really extending quickly to the upside. However with the high price testing that 2013 swing high, there may be some rotation back to the downside as traders ring the cash register.
European indices end the session lower on the day
German DAX, -0.54%, UK’s FTSE 100 -0.96%
The major European indices are ending the day lower. The provisional closes are showing:
- German DAX, -0.54%
- France’s CAC, -1.28%
- UK’s FTSE 100, -0.96%
- Spain’s Ibex, -1.42%
- Italy’s FTSE MIB, -0.74%
The 10 year yields showed meaningful moves to the downside. Italian yields fell the most at -5.7 basis points. German yields declined by -3.3 basis points
In other markets as London/European traders look to exit:- spot gold continues its move to the upside with a gain of $19.60 or 1.07% at $1861.50. Sobers doing even better with a $1.09 gain or 5.13% to $22.39.
- WTI crude oil futures for September delivery are down $0.57 or -1.36% at $41.35. Inventory data confirmed the private data with a build of 4.892M barrels. The expectations was for a -2.2M draw.
In the US stock market the major indices are mixed:
- S&P index is up 4.9 points or 0.15% at 3262.69
- NASDAQ index is down -1 point or -0.1% at 10679.30
- Dow industrial average is up 82 points or 0.31% at 26923.
In the forex market, the EUR is the strongest while the JPY is the weakest of the majors. The US dollar is down vs. all the major currencies with the exception of the JPY. It is near unchanged vs. the GBP and has recovered losses of around 90 basis points at the London morning session lows.
US crude oil inventories +4.892M vs -2.200M estimate
DOE oil inventory data for the week of July 17, 2020
- Crude oil inventory showed a build of 4.892M vs. a draw of -2.2M estimate
- Gasoline inventory showed a draw of -1.802M vs expectations of -1.5M
- Distillates inventory build of 1.074M vs expectations of 0.5M
- Cushing OK crude inventory build of 1.375M vs last week’s build of 0.949M
- Crude oil implied demand 16342 vs. 17673 last week
- Gasoline implied demand 9029.7 vs. 9248.4 last week
- Distillates implied demand 4661.6 vs. 5023.7 last week
NOTE….the private data last night surprised with a 7.544 million barrels build in inventories. That helped to push the price of crude oil lower on the day.
The price of the September contract just prior to the release was trading at $41.38. The price is currently trading at $41.47
He’s back. This time in Au and Ag.
Turkey Gold Reserves
#BREAKING : China confirms to close its Houston consulate on US demand, warns of retaliation
Comments by the Chinese foreign ministry
- US has abruptly informed China to close its consulate in Houston
- China strongly condemns this “outrageous” move
- Urges the US to correct its wrong decisions or there will be retaliation
This builds from the news from Global Times editor, Hu Xijin, earlier:
Silver offers a bargain
Silver vs gold
The precious metals silver and gold continue to have a strong fundamental bias. Low interest rates, extra stimulus expected, and risk positive markets on vaccine hopes are all keeping gold and silver supported.
Silver has more obvious upside than gold
If you look at silver you can see that the current price is less than half of what the record high has been (at around $50). This means that silver has plenty of more room to go higher. Goldman Sachs see’s a ‘near perfect environment for silver’ and Citi is ‘very positive’ noting the steady investment demand.
Silver benefits from both safe haven bids and its demand as an industrial metal being used for mobile phones and solar panels. Furthermore, Bloomberg notes that inflows in silver backed ETF’s are now running at well over 1000 tons a month
Where will buyers re-enter?
Firstly, look at the 4 hour chart and the breakout of the ascending weekly trend line. Any return to $19.20 should find buyers.
Secondly look for a Monthly close above the trend line marked. Some longer term buyers will enter at market or a slight pullback to $19.20 if we get a close above $19.20 at the end of the month. Definitely one area to watch. I took profit at 20.30 yesterday on my longs from the same trend line break and I am looking at potential re-entry levels.
Daily thread to exchange ideas and to share your thoughts
Major currency movement has been a little more subdued to start the day but the action should pick up soon enough and more so as we look towards North American trading later, following the moves that we saw in overnight trading.
Dollar pairs are the heavy focus as the risk mood remains more positive for the most part, despite the Nasdaq seeing a bit of a setback yesterday.
EUR/USD broke above 1.1500 for the first time since January 2019, GBP/USD moved above 1.2700 and its 200-day MA, USD/CAD fell below 1.3500 and its 200-day MA, AUD/USD aiming for 0.7200 on a break to fresh highs since April 2019, and NZD/USD firmly broke above 0.6600 to its highest levels since January.
As such, the focus remains on risk sentiment as we look towards the sessions ahead. European trading may be more quiet today but US trading should offer more once again, with the moves in Wall Street a key factor driving trading sentiment.
Elsewhere, gold and silver are continuing to break higher as well and are showing little signs of slowing down amid the dollar rout. The silver move is particularly impressive but I’d be mindful of any “too far, too fast” moves in commodities.
The pullback can be brutal at times. So, remember to manage risk levels accordingly.