Markets Morning Newsletters

Nasdaq tags a new high, Beige Book positive – Macro Markets Morning 18th April 2019

on April 18, 2019

Morning folks – Welcome to McKenna Macro’s Market Mornings.

In a rush? Here’s the key takeaway

  • Divergence! The Nasdaq 100 tagged a new record high, the DAX kept rising, but the S&P 500 shows signs of fatigue as we near the second of the two major celebrations on the Christian calendar. Could that be it? 
  • Not sure but the S&P 500 finished down 0.22% at 2900 – still elevated though. US 10’s are at 2.59%, and the USD fought back from the lows of the day. The Beige book painted an okay picture of the US economy which may at some point threaten recessionista pricing.

PLEASE NOTE: I don’t get many holidays and Mrs McKenna is asking that I don’t work over Easter so I can spend it with her and the kids. So I’ll be back next Tuesday which means there will be no weekly this week. 

For those celebrating, Happy Easter. To everyone else I wish you the best for the weekend. 

Now, Let’s dive in to this morning’s newsletter

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Greg MckennaNasdaq tags a new high, Beige Book positive – Macro Markets Morning 18th April 2019

A mildly positive day for sentiment as markets melt up – Macro Markets Morning 17th April 2019

on April 17, 2019

Morning folks – Welcome to McKenna Macro’s Market Mornings.

In a rush? Here’s the key takeaway

  • Bonds yields up again, stocks a little higher across the board, and BlackRock’s Larry Fink warning of the chance of a melt up combined into another day of positive risk sentiment. 
  • That saw the S&P up 0.1% at 2907, the Aussie dollar recover from RBA induced weakness, gold get hammered down to support, and US 10’s at 2.59%.
  • Now for China’s massive data dump to either confirm or deny the positive tone.

Now, Let’s dive in to this morning’s newsletter

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Greg MckennaA mildly positive day for sentiment as markets melt up – Macro Markets Morning 17th April 2019

A quietish day Monday but some interesting moves nonetheless – Macro Markets Morning 16th April 2019

on April 16, 2019

Morning folks – Welcome to McKenna Macro’s Market Mornings.

In a rush? Here’s the key takeaway

  • Positive noises on trade helped risk appetite early Monday but a reversal in China stocks and the fact earnings were a little less exciting than some hoped saw US markets dipped a little while risk proxies like USDJPY and AUDJPY stalled. The S&P 500 ended trade Monday at 2905 down 0.06%.
  • Bonds were quiet with the 10’s at 2.555%, the USD was little moved, gold dipped and was bought, oil may be rolling over.  

Now, Let’s dive in to this morning’s newsletter

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Greg MckennaA quietish day Monday but some interesting moves nonetheless – Macro Markets Morning 16th April 2019

Not stalling at all, the risk rally continues driving bond rate sup and the USD (and Yen) down – Macro Markets Morning 15th April 2019

on April 15, 2019

Morning folks – Welcome to McKenna Macro’s Market Mornings.

In a rush? Here’s the key takeaway

  • We remain in a slow melt up with china exports, JP Morgan results, and M&A activity contributing to a positive end to the week for global stock markets and risk appetite. The bellwether S&P finished at 2907 for a 0.67% gain.
  • The natural corollary to that was a big lift in bond rates with the US 10’s bouncing to 2.56% and the 2 year at 2.40%. The Aussie dollar has benefited as well – if it can just best 72 cents…
  • It’s a holiday shortened week for much of the west and the data flow is lightish being the second half of the month. of most interest will be Wednesday’s China data dump and the “flash” PMI’s Thursday .

Now, Let’s dive in to this morning’s newsletter

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Greg MckennaNot stalling at all, the risk rally continues driving bond rate sup and the USD (and Yen) down – Macro Markets Morning 15th April 2019

Positioning Thoughts and System Signals – April 13 2019

on April 13, 2019

Morning folks, short and sweet this morning as this is something new I want to do each Saturday morning my time, after the close of Business In New York and the week’s end. 

Basically when I sit down to think about what I want to say and what I’m thinking for the weekly I also run a heap of spreadsheets with charts and lots of data. I also run my simple system spreadsheet which generates the signals which I then put into the daily note. .

Folks I’m sure you’ve notice that for all the rhetoric I write on Money and Markets, Geopolitics and Economics each day it’s the charts and system which is often the key decision tool for me.

The reason I spend so much time on the macro rhetorical side is because when the techs and the rhetoric line up it’s usually where i make the big plays.

Anyway this is a long winded way to say that each Saturday you’ll now get a dedicated short note on my Positioning thoughts and the system. This, I hope, will then allow you to have a look at your own charts and protocols and see where maybe my thoughts and system accord with OR CHALLENGE your own.

I hope then this is where I can add real value.

System Signals

There are plenty of moves this week and they speak to a USD under pressure and a continuation of the risk rally. That means my medium/long terms bonds rhetoric is being overpowered by the price action. 

As at CoB NYC 12042019

The buy or sell represents the current positioning of the system. Green means change in MACD direction and thus a signal to generate an order.

Orders are based on the break of the relevant level from the previous bar. Simplest is High or Low of the previous day.

But in choppy markets I often suggest that a second bar of confirmation is required to trigger the actual action

Positioning Thoughts – 13 April 2019

These are the core views impacting markets and suggesting positioning. Please note changes on any given day will now be in PINK

CENTRAL BANKS: 

The Fed was pretty dovish and has signalled the hurdle for a rate hike is much higher than that for a cut. For the moment the outlook expressed by various Fed speakers  and the Fed itself is one of patience and data dependence. 

The Fed has been joined in its dovish tilt by major central banks across the globe. The ECB and maybe the RBNZ are the most dovish, but the tilt globally reflects genuine concern not to allow individual countries and the globe to tip into recession. That risk has receded a little because of this central bank dovish tilt. Central banks, no all of us, are watching the data.    

STOCKS:

Using the S&P 500 as the bellwether – The weekly JimmyR trend indicator remains up and price remains above both the 15 and 30 emas reinforcing that uptrend.  I’ve written recently that we might see higher prices if for no other reason than technically support is holding. Earnings season kicked off with a JP Morgan induced bang and was aided by some good news from Disney and a big M&A transaction. So we are above 2,900 on the week’s close of the S&P 500 for the first time since September 2018. We’ll see how it goes, and there may be setbacks – but for the moment the daily and weekly trends remain up. As uncomfortable as that may be. Rhetorically though it still feels like a time to lighten longs, own puts, and drag stops up close me thinks. Maybe own puts for a month. 

Important STOCKS and RISK editorial: This is a most hated rally with my twitter feed polluted by folks who want to be right rather than make money on the swings. So, don’t get too bearish folks, we will if we need to, but don’t be a rusted on bear ( or a bull for that matter). My sense is we need to trade lower eventually to find support. But if it comes in then the outlook will brighten.  Trading is about making money.   

CHINA and GLOBAL GROWTH:

China is stimulating – that is is positive and the market is reacting to the less awful data flow. The China CESI score is back in positive territory at 31 having improved sharply in recent weeks.  

Global growth is slowing, the IMF said in April that whereas a couple of years back 70% of the globe was growing now the reverse is true. This should be a big handbrake for risk assets but is mitigated by the central bankers dovish pivot. But no one cares at the moment.

I believe strongly the Fed’s pivot can extend the expansion beyond where the recessionistas say it will end. As readers know I have a very “RBA” and Australian take on this. 

FOREX

The USD is just in a big old range and has again reversed off the top of that range in DXY terms and the bottom in Euro terms – key levels that need to break for the eventual big USD surge are 97.70/98.00 and 1.1165/85 in DXY and EURUSD terms respectively.

I need to see the USD do better against the SGD, CNY/H, and CAD before I get too excited the break is coming. Indeed the downside for a test of support seems much more likely first. This has allowed Euro and others to lift and the AUDUSD (recall my heretical thoughts) to test very important downtrend resistance. 

Structurally I’m a USD bull, but at the moment it is under a little pressure – still in these ranges though

BONDS:

I am structurally a bond bull at present. But the price action in the 10’s bears watching. I’ve been happy to be long at 2.55% structurally but recognise the weekly close at 2.57% could easily see rates 10/20 points higher before the buyers come back. 

Here’s a response in a conversation I had with a Sub yesterday on Twitter who called me out for cognitive dissonance on not being a recessionista but still liking bonds.

“It’s a question of time frames as usual – Trading or investing??? Today, this week, this month, this year, next? – different answers Stocks dip, bonds rally – we could see that Close above 2.55% and we may see 2.82% again… But lowflation equals value in FI, just about entry”. That last bit is the key, but tactically it might be better to see where stocks and thus bonds go as this reflation trade right no gains traction. 

COMMODITIES:

Gold and silver seem to have a lot of support in the investment community – after the next big collapse that is as Jim Rogers told Anthony Cruedele in his podcast recently. Short term though they do look on the brink of a decent dip. But the levels have to break. Until then we’ll have a rangey period now for a while before the next trend re-emerges. Big old range – $1275/$1330 – or the start of a big fall? Jury is out at present. Watch $14.85/90 for silver.

Copper will like have a deficit market in a couple of years. And having bottom out at a very long term trend line a few years back the overall market looks constructive. Nearer to hand the price action is such that it has climbed back toward resistance. But it needs to break $2.98/3.02 to really kick higher. Otherwise wide sideways range. 

Oil’s uptrend looks set to be tested as the Russians seem to have settled on an increase in production and not wanting prices to push as high as the Saudis seem to want them. That’s seen momentum stall in Crude but with the overall uptrend still intact. Falls of $2-4 a barrel may be in the offing to see if that trend can hold.

Medium term if we haven’t seen the peak it looks close and a decent pullback may be in the offing. 

Have a great day
Greg 

@gregorymckenna on Twitter

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Greg MckennaPositioning Thoughts and System Signals – April 13 2019

Stalling, now for earnings season… – Macro Markets Morning 12th April 2019

on April 12, 2019

Morning folks – Welcome to McKenna Macro’s Market Mornings.

In a rush? Here’s the key takeaway

  • Short and sharp today as you’ve probably already had a chance to catchup on what’s gone on in US and European markets Wednesday.
  • So stocks mixed offshore but ripping here in Australia, the USD fought back again, oil dipped, and bonds look like they might have a bid again.   

Now, Let’s dive in to this morning’s newsletter

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Greg MckennaStalling, now for earnings season… – Macro Markets Morning 12th April 2019

Fed and ECB on hold but with different biases – Macro Markets Morning 11th April 2019

on April 11, 2019

Morning folks – Welcome to McKenna Macro’s Market Mornings.

In a rush? Here’s the key takeaway

  • The Fed minutes released Wednesday reflected the speeches and statements made by various Fed speakers recently – that is patience, positivity about the outlook, and a mild chance the next move may still be up. The ECB on the other hand waxed relatively dovish, but no more so than expected.
  • The washup is stocks that are a little higher with the AS&P up 0.35% to 2,888 and bonds that have caught a bid with the US 10 year around 2.465%. The US dollar is a little weaker. 
  • On the Brexit front the debate continues over the length of the extension the EU will grant Britain.

Please note Friday’s newsletter and video will be later than usual as I have a presentation to give at a Breakfast function. If anything big happens which needs to be noted though I will drop you a short note. 

Now, Let’s dive in to this morning’s newsletter

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Greg MckennaFed and ECB on hold but with different biases – Macro Markets Morning 11th April 2019

Stocks dip, USD fights back, Trump talks tariffs again – Macro Markets Morning 10th April 2019

on April 10, 2019

Morning folks – Welcome to McKenna Macro’s Market Mornings.

In a rush? Here’s the key takeaway

  • Yesterday’s warning on global stock candles after Monday trade proved prescient, the setups are now there for a big move lower in stocks after US and other stock markets were lower Tuesday with the S&P 500 off around 0.6% to 2,878.  
  • Elsewhere bonds are a little better bid with the 10’s at 2.50%, the USD fought back against the majors but lost ground on gold and silver as precious traders sniff out a possible market funk.
  • And of course we have a huge Wednesday ahead with the ECB meeting, and EU Brexit summit, US CPI, and FOMC minutes the highlights.    

And I know I promised I’d never do it again but I’ve come away without my battery charger again. I even ducked out and bought a new one this morning but its 90 watt and I need a higher wattage apparently. Ugh, anyway I’ll get a s much done as possible but this will be shorter than usual and the video may not come out. So this is chart heavy today.

Now, Let’s dive in to this morning’s newsletter

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Greg MckennaStocks dip, USD fights back, Trump talks tariffs again – Macro Markets Morning 10th April 2019

Oil and bond rates up, USD down, stocks mixed – Macro Markets Morning 9th April 2019

on April 9, 2019

Morning folks – Welcome to McKenna Macro’s Market Mornings.

In a rush? Here’s the key takeaway

  • You just have to check out the daily candles Monday for the Nikkei, DAX, and China A 50 futures they are truly interesting. Sure the US fought back from the dip with the S&P 500 closing up 3 points or 0.1%, but...
  • Elsewhere bonds are a little higher in yield with the 10’s at 2.52%, the USD is a little weaker with the DXY at 97.05 and the Euro at 1.1261. Gold and silver are up as is copper.    
And in case you missed it over the weekend the weekly is out and you can read it here. 
Now, Let’s dive in to this morning’s newsletter

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Greg MckennaOil and bond rates up, USD down, stocks mixed – Macro Markets Morning 9th April 2019

Trump says QE, jobs solid, risk on still – Macro Markets Morning 8th April 2019

on April 8, 2019

Morning folks – Welcome to McKenna Macro’s Market Mornings.

In a rush? Here’s the key takeaway

  • Non farms, the jobs report more broadly reinforced the status quo in markets at present with the paradigm that the Fed is on hold but that the US economy is still doing well enough not to spook investors.
  • That and President Trump making it up by saying the Fed should do QE right now certainly helped keep risk assets bid.
  • At the close we saw rallies in Europe and the S&P 500 was 0.5% higher. Riska ssets did okay and bonds rallied off resistance.   
And in case you missed it over the weekend the weekly is out and you can read it here. 
Now, Let’s dive in to this morning’s newsletter

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Greg MckennaTrump says QE, jobs solid, risk on still – Macro Markets Morning 8th April 2019