Intraday Market Thoughts Archives

Displaying results for week of Mar 29, 2020

Quarter-End Flows Unwind

Apr 2, 2020 13:09 | by Adam Button

The only real change in fundamentals Tuesday was the turn of the calendar, but that was sufficient to spark further risk-off trades. The yen was the top performer while the Canadian dollar lagged. Today, gold, silver and GBP are at the lead. US weekly jobless claims numbers are up next (more below). The Premium Insights' short in #DOW30 opened on Tuesday was closed yesterday at 21360 for 1070-pt gain, with suggestions on what/where to keep position posted & sent.

Quarter-End Flows Unwind - Tweei Gold Silver Ft (Chart 1)

Talk of month-end rebalancing and quarter-end flows completely captivated markets in the waning days of March and the turn in the calendar was the signal to sell. It was a classic and much more orderly risk-off day as USD/JPY fell to a three-week low, yield fell and stocks declined.

It's a signal we're entering the second-phase of coronavirus. The Fed stopped it from being a financial crisis and that was some reason for temporary cheer but we're now in the heart of the biological crisis with the economic crisis still to come.

Even in Italy where the crisis has clearly hit some kind of plateau, there's no visibility towards a return to 'normal' and reopening of the economy. In China, a region of 600,000 people was locked down on a sign of the virus' return.

Back in the US, the Fed announced it will allow US banks to use more leverage in order to contain the sharp drop in Treasuries liquidity and escalating deposits amid the coronavirus pandemic.

Looking ahead, the market will once again focus on weekly US initial jobless claims. The consensus is 3.5m up from 3.28m last week but estimates are extremely wide from 1.5m to 6.5m. At this point, the survey is probably overrated and won't be a lasting market mover. We would love to know true measures of job losses but this survey is more of a test of the processing ability of US employment claims than a true measure.

For reference, Canada now says it has processed 2.1m jobless claims benefits in the past two weeks. That's a full 10% of the workforce and would correspond to 21 million job losses in the US in the same period. Is that magnitude priced into US assets? It should be but probably isn't. Frequently during this crisis we see markets reluctant to fully accept the dark reality of this crisis until it's delivered by official sources. With non-farm payrolls also surveyed before March 12, we may have to continue to wait.

More Swap Lines?

Apr 1, 2020 15:16 | by Adam Button

The Fed took further steps to relieve the US dollar crunch on Tuesday and we look at what is happening and why. USD strength is resurfacing today, but gold, silver and GBP remain higher against the greenback. The US ADP employment survey for March dropped to -27K, the lowest since 2017, but economists indicate the worst from Coronavirus hit was far from captured in the report.  Meanwhile, the US March ISM manufacturing index fell to 49.1 vs 45.0 expected, from 50.1. Tuesday's Premium short in the DOW30 is currently +1000 pts in the green. Below is today's weekly Premium video for English speakers, focusing on indices, sectors and gold.

The Fed added to its USD-swap program on Tuesday, adding swaps for every country that has holdings at the New York Fed. Dollar liquidity is less severe than two weeks about but continued whippy moves in FX suggest that trouble-spots remain.

It's important to remember that the US is a major net debtor with inbound investment exceeding outbound. Lately, foreign firms, governments and central banks need to dollars. Normally they can borrow in USD but those markets have closed so their next option is to sell USD-denominated assets, like Treasuries.

The emerging thinking suggests that any renewed decline in indices may not trigger the same level of USD buying/Gold selling as was seen 2-3 weeks ago due to the highly targeted Fed effors to relieve stress in USD funding.

The Fed doesn't want that so they're stepping up to lend against those assets via swap lines in the hopes that markets will calm and assets won't need to be sold. It appears to be working but it's important to remember that it's not a long-term fix. Unless foreign economies find a footing in the weeks ahead, that selling pressure will resume. Of course, the Fed is buying what they're selling but many of those dollars will be converted to domestic currencies and that will put downward pressure on USD.

Initial jobless claims remains the best real-time look at employment but there are widespread reports of people unable to file because of the huge backlog, especially in hard-hit states.

إستعمال خدمة أشرف العايدي للتوصيات والفيديوهات

Apr 1, 2020 11:46 | by Ashraf Laidi

فيديو إرشادي جديد حول إستعمال خدمة توصياتنا في تداول العملات و المؤشرات و الذهب و النفط. الفيديو الكامل

إستعمال خدمة أشرف العايدي للتوصيات والفيديوهات - Video Snapshot Arabic Guide Apr 1 2020 Imt (Chart 1)

Oil Spill Shrugs the Rest

Mar 30, 2020 23:50 | by Adam Button

Each of equities indices, bonds and the US dollar rallied to start the week, save for oil prices which continued their battering. Is it a sign of a bottom, or quarter-end rebalancing? The Australian dollar was the top performer while the Canadian dollar lagged. China's official PMIs are due up next. In the Premium  Insights, Wednesday's USDJPY short at 111.20 hits final target 108.00 on Friday, while the DOW30 short and EURUSD long were closed on Friday for 990 pt & 215-pip gain respectively.  Below is Ashraf's video for subscribers on Gold/Silver/Indices open to all.

We're hesitant to take a signal from Monday's trading because of uarter-end flows that drove an unusually strong bid in everything USD-denominated.

On the fundamental side, we highlighted the Dallas Fed yesterday and it was far worse than anticipated at -70.0 vs +1.2 previously. Comments in the report highlighted strains on cashflow and worries about solvency. The area is being hit particularly hard because of low oil prices.

On that front, Brent hit at 17-year low of $21.65 and WTI fell below $20 once again. In Canada, oil is trading at less than $4 and that showed in the loonie. However it's clear that quarter-end flows were a factor in trading on the day as Canadian oil company shares rallied strongly despite falling prices.

Flow-driven trading may continue into Tuesday as the new month gets underway but should be less of a factor beyond that.

From Ashraf's Tweets

A few tweets from Ashraf on seeking bottom signs On sector-driven rally On why Lombardia Ashraf's Gold Poll

Increasingly the market will turn to data as March numbers begin to roll in. One coming up at 0100 GMT is the China PMI for March. The manufacturing number is forecast to rebound to 44.8 from 35.7 and services to 42.0 from 29.6. Real-time numbers like car sales and vehicle traffic show a spotty rebound in China but these numbers might offer a better idea.

Opening Video Access هدية يوم الإثنين

Mar 30, 2020 15:22 | by Ashraf Laidi

This video was created last week for Premium members. I'm opening access to everyone to benefit (here). فتح فيديو المشتركين من الاسبوع الماضي للكل يبدأ الجزء العربي في النصف الثاني من الفيديو 

ندوة أشرف العايدي مع أوربكس مساء الثلاثاء

Mar 30, 2020 12:12 | by Ashraf Laidi

تذكير: توقيت الندوة غدا ٩ مساء بتوقيت مكة و ليس ١٠ .هل تداولت من قبل في سوق الدببة؟ انضم لهذه الندوة الالكترونية المجانية لتتعرّف على أفضل الأسهم المناسبة لمرحلة الركود الاقتصادي. موعدنا يوم الثلاثاء 31 مارس في الساعة 9 مساءً بتوقيت مكة للتسجيل من السعودية  للتسجيل من باقي دول العالم