Archives of “finance” tag

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Dovish testimony from Powell, 3 rate cuts on the way, starting with 25bps in July

  
  Analysis
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That’s the expectation from Bank of America / Merrill Lynch for the FOMC after Fed Chair Powell’s testimony on Wednesday

Powell “delivered a dovish testimony“
  • “hinting strongly at an upcoming cut“
BoA ML:
  • expect a 25bp cut in July (31st)
  • and cuts thereafter at each of the following two meetings (September17-18 and October 29-30)
  • cumulative 75bp of easing
More from the note:
  • The Fed seems to be willing to dismiss the better data from the US and instead is focusing on the weaker global data.
  •  Indeed, when Powell was asked if the strong jobs report changed his views on cuts, he stated “no”. 

The Powell prepared text headlines sent:

  
  Analysis
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  • The dollar lower.
  • It reversed pre-market stocks from being down (S&P was down about 8-9 points) to up.
  • It sent yields on US treasuries lower with the short end leading the way (yield curve steepening). The 2 year was at 1.919% at the start of the NY session. It is down at 1.82% now.
  • Gold moved from negative to positive (gold is up over $20 near the end of the trading day)

AUD/USD falls to two-week low amid poor data and firmer US dollar

  
Analysis, Forex
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AUD/USD falls to its lowest level since 24 June

AUD/USD H1 09-07

The pair is hitting a fresh low of 0.6936 on the day now as the aussie is dragged lower by poor business confidence data earlier and some notable strength in the greenback in the past hour of trading during the European morning.
That’s the lowest level the pair has traded since 24 June as sellers continue to stay in near-term control and are looking for a move towards 0.6900 ahead of Fed chair Powell’s testimony tomorrow and on Thursday.

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Six reasons why US stock markets have trounced the rest of the world

  
Analysis, US Market
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The lessons of equity markets don’t apply universally

It’s the US independence day holiday and this chart should give Americans more to cheer about than any other.
The lessons of equity markets don't apply universally
It shows equity returns since 1985 and the S&P 500 absolutely crushes every other major global index. The only one that’s even close is the MSCI World Index and that’s partly because it contains a heavy weighting in US equities.
Corporate America  truly is the champion of the world.

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What has Christine Lagarde said about ECB policies?

  
  Analysis
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Lagarde’s thoughts on ECB policies

Lagarde's thoughts on ECB policies
Bloomberg has a nice recap of all of Lagarde’s comments on ECB policies like QE and negative rates.
“Many of the right decisions have been taken. Most recently, initiatives by major central banks — the European Central Bank’s OMT bond-purchasing program, QE3 by the U.S. Federal Reserve, the Bank of Japan’s expanded Asset Purchase Program — are big policy signals in the right direction.” – Sept 24, 2012.
The entire collection is dovish. The risk is that those comments are part of her job at the IMF.
One thought that’s doing the rounds is that Lagarde’s real job at the ECB will be to push eurobonds forward and eventually the United States of Europe. That’s a compelling argument because closer ties is something she’s always pushed for and it would be part of the mandate implicitly coming from Macron and Merkel.
“Our goal should be clear: Restarting convergence and ensuring the fruits of economic growth are shared broadly across the EU. This will help restore faith in the European project.” – Feb 14, 2019.

Eurozone June final manufacturing PMI 47.6 vs 47.8 prelim

  
Analysis, Economy
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Latest data released by Markit – 1 July 2019

Slight downtick to the final release sees the overall euro area reading fall a little in June compared to the 47.7 print in May. That said, this is more or less within initial estimates so it’s not really giving much new information about the sluggish manufacturing sector in the region seen in Q2 2019.

There are only 3 types of traders.

  
Analysis, Education
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There are only three types of traders, they are defined by how well they execute their trading plan (rules applied to strategy).

A trader that performs worst than their trading plan.  These traders often have a weak understanding and belief in their trading plan.  How they feel is more or as important as making money.  They fail to see past the current trade.

A trader that performs the same as their trading plan.  These traders have a strong understanding and belief in their trading plan.  They get a majority of their satisfaction from making money.  They can see past the current trading day.

Those that perform better than their trading plan.  These traders have spent time in the previous two groups so they not only understand and believe their trading plan, they have 100’s or thousands of experiences that “prove” it to them.  The only satisfaction is following their plan and knowing that the money will follow. They can see past the current trading year.  They find areas and times to be aggressive and times to hold back.

The purpose of trading is to at least perform as well as your trading plan.  Any trader will tell you that he has spent time in all three and is always susceptible to be in any of the categories.  Each category is filled with important lessons, the lesson is often that I do not want to end up back there.

Those that under perform their trading plan are usually not honest with themselves about their level of belief in said trading plan.

Bitcoin tries to restart after the 25% plunge lower today

  
Analysis, BITCOIN
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Bitcoin falls 25% from the high..

The price of Bitcoin moved up by about 22% to the high yesterday. Today from the high the price fell 25%.  Wow!
Bitcoin falls 25% from the high..
Technically, the first low (going into the close yesterday) stalled at the 100 hour MA (blue line in the chart above).  There was a sharp run back higher but the 2nd run lower cracked the 100 hour MA, the 200 hour MA (green line) and finally stalled near a lower trend line at $10300 (the low reached $10330).
What now?
The price is trading above and below the 200 hour MA at $10809.76.  The 50% midpoint from the June 10 low comes in at $10688.61.  If the price can’t stay above those levels, the sellers remain more in control. If the price can get and stay above, a move back above the 100 hour MA at $11636.83 will need to be breached.

Samsung estimates Q1 profit fell 60% on lower memory chip prices

  
  Analysis
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Samsung Electronics on Friday delivered an earnings shock for the first quarter with its quarterly operating profit falling 60 per cent, hit by lower prices of memory chips and display panels.

Operating profit at the South Korean technology giant was estimated at Won6.2tn ($5.5bn) for the first three months of this year, compared with Won15.64tn from a year earlier. Sales fell 14 per cent to Won52tn. 

The company’s projection was far below analyst estimates although Samsung issued a profit warning last week in a rare regulatory disclosure that blamed slow demand for memory chips and an expansion of panel capacity among Chinese competitors. 

The downbeat guidance is the latest sign of woes hitting global electronics makers as chipmakers have been hit by slowing demand and rising stock inventories following a slump in smartphone sales and a sharp fall in demand from cryptocurrency mining. The effects of a broader economic slowdown and worries over the US-China trade dispute have also been felt by the industry. 

Analysts expect Samsung’s earnings to improve in the second half on seasonal demand and lower inventories. Such optimism has driven up the company’s shares by more than 20 per cent since hitting a two-year low in early January.

Avoid the pitfalls of ‘over trading’ and ‘under trading.’

  
  Education
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* There are basically two types of over trading. Trading too often and trading too many shares/contracts.

* Remember that there really is no good reason to trade constantly, since extreme over-trading creates stress, produces high commissions and can often lead to more losses.

* Market forces do not last forever and time has shown various examples of the law of gravity in the trading market- that whatever comes up must go down. – and vice versa.

* Instead of grabbing every opportunity that comes along (or thinking that it is an opportunity) make sure each trade setup meets the criteria of your trading plan, don’t be over confident or scared of making trades.

* Utilizing a risk calculator to determine the appropriate position size before you enter a trade can help you determine how many shares/contracts you initially buy. You can start off with a small position and add as the trade continues in your favor. It relieves stress to know that the amount at risk for each position you hold is well proportioned to the size of your entire account and this is great asset management.

* Whenever you feel that you did not stick to your trading plan and made a mistake, quickly learn from that and let it go.

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