Markets Morning Newsletters

Now we wait, but Powells message may not be the one the market wants – Macro Markets Morning 23 August 2019

on August 23, 2019

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

In a rush? Here’s the key takeaway

  • What will Powell say in his speech at jackson Hole? Will he be dovish, hawkish, walk the middle line that satisfies no-one, or promise to do whatever it takes to extend the US economic expansion for as longt as possible? Whatever he says he is going to move markets, perhaps materially.
  • And his message has been further complicated by three Fed speakers, including Robert Kaplan, suggesting there is no desire for another cut right away. The Fed might just be serious about one mid-cycle adjustment. And maybe larry Kudlow has read Powell’s speech cause he’s out there talking up the trade talks, tax cuts, and rate cuts – right now, as I write.
  • To the markets then  and Europe drifted as hopes of german stimulus faded a little, US stocks were cautious with the S&P 500 off just 0.05% to 2922, major forex wasn’t moved much but Aussie, Kiwi, and copper lower suggest caution on the outlook. Gold and silver drifted too and US 10’s are at 1.61%!!  

Now,  let’s dive in to this morning’s newsletter.   

And for non-subscribers, If you want to have a trail of the daily subscriber service to get this and the 3000 odd words I write – and lots and lots of chart – on markets each day you can sign up here for a trial

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Greg MckennaNow we wait, but Powells message may not be the one the market wants – Macro Markets Morning 23 August 2019

Market shrugs the Fed minutes which revealed a less dovish and divided FOMC – Macro Markets Morning 22 August 2019

on August 22, 2019

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

In a rush? Here’s the key takeaway

  • If you had of told me yesterday that the Fed minutes would have reflected a central bank which cut bregrudingly amid calls for more and none I wouln’t have guessed at a 0.8%+ rise in US stocks. But that is where we are this morning as the S&P is back at 2924 and Europe had a universally positive day.
  • That is an interesting dynamic, and sets up a very important speech from Jay Powell on Friday at Jackson Hole, I wonder – but I don’t know – how he is going to satisfy market expectations about further monetary accomoddation while at the same time holding true to the spirit of these minutes.
  • Elsewhere US 10’s are at 1.59%, the USD is a little – but not a lot – stronger with the EURUSD at 1.1080, the Aussie at 0.6780, and gold is at $1502. Oil sits at $55.91 in WTI terms.  

Now,  let’s dive in to this morning’s newsletter.   

And for non-subscribers, If you want to have a trail of the daily subscriber service to get this and the 3000 odd words I write – and lots and lots of chart – on markets each day you can sign up here for a trial

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Greg MckennaMarket shrugs the Fed minutes which revealed a less dovish and divided FOMC – Macro Markets Morning 22 August 2019

Resistance holds stocks, bond yields, and the US dollar dip – Macro Markets Morning 21 August 2019

on August 21, 2019

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

In a rush? Here’s the key takeaway

  • President Trump again went after the Fed on Tuesday telling reporters that while the rate cut wasn’t “actually” needed it was “psychologically” important and would help extend the expansion. He’s right you know and how Jay Powell responds Friday is going to be very important. Particularly because the President said China wants to make a deal but he’s not ready yet. 
  • Elsewhere BoJo and the EU are in a fair dinkum dust up. The British Prime Minister is using very Trumpian language sounding like he wants to make a deal all the while sounding equally happy not to. Of course it’s the Irish backstop that is the issue again – difficult times but GBP is up somehow. Likewise the Aussie, Kiwi, Yen, and Euro as US 10’s at 1.55% and 2’s at 1.51% seem to have underminned the Greenback for the moment.
  • On stocks last week’s green end turned to red as the Italian Prime Minister resigned, as globval growth nd trade worries subtly resurfaced, and as the reality stock indexes can’t yet best resistance weighted. The DAX was 0.55% lower the S&P 0.8% to 2900 which of course meant that gold AND silver ripped again . Copper of course was lower.    

Now,  let’s dive in to this morning’s newsletter.   

And for non-subscribers, If you want to have a trail of the daily subscriber service to get this and the 3000 odd words I write – and lots and lots of chart – on markets each day you can sign up here for a trial

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Greg MckennaResistance holds stocks, bond yields, and the US dollar dip – Macro Markets Morning 21 August 2019

Hopes of fiscal stimulus buoy stocks and the US dollar – Macro Markets Morning 20 August 2019

on August 20, 2019

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

In a rush? Here’s the key takeaway

  • More chat about German stimulus and potential tax cuts in the US buoyed stocks and the USD while helping bond yileds drift a little higher on the day with the US 10 at 1.61% and german 10’s at -0.65%. The S&P was up 1.2% while the DAX popped another 1.3%. 
  • That rally in irsk assets was lost on the commodity bloc though with the Aussie, CAD, and the Kiwi all lower – the battler is at 00.6767 as we await the RBA minutes this morning. Gold is lower too hit by risk and the USD to $1497, sillver went out in sympathy and interestingly copper’s rally didn’t stick and it is still below $2.60.
  • Stimulus hype and hope buying tells us traders still don’t want to give up on this rally but equally that there is no alternative so any sniff of hope brings cash out of the woodwork. It’s not exactly a functional market, but it’s the only one we have.    

Now,  let’s dive in to this morning’s newsletter.   

And for non-subscribers, If you want to have a trail of the daily subscriber service to get this and the 3000 odd words I write – and lots and lots of chart – on markets each day you can sign up here for a trial

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Greg MckennaHopes of fiscal stimulus buoy stocks and the US dollar – Macro Markets Morning 20 August 2019

A new week, a new event – Macro Markets Morning 19 August 2019

on August 19, 2019

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

In a rush? Here’s the key takeaway

  • We need to watch this emerging discussion about german fiscal stimulus. Not only is it needed but it could influence other governments across the globe and might be the cicuit breaker markets are looking for in the absence of a genuine trade war break through.
  • Bonds tentatively thought that Friday with small rises in German, Italian and other 10 year bond rates. Stocks bounced too with the DAX up 1.3% and the S&P 500 was 1.45% higher at 2888.
  • The Euro closed the week under pressure and at the lowest level in more than 2 years – it is at 1.1100 as I write. The Aussie is up a smidge but still under 68 cents, while copper is at $2.59, both are a sign traders are still nervous. So too is gold at $1509 and silver at $1710.   

Now,  let’s dive in to this morning’s newsletter.   

And for non-subscribers, If you want to have a trail of the daily subscriber service to get this and the 3000 odd words I write – and lots and lots of chart – on markets each day you can sign up here for a trial

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Greg MckennaA new week, a new event – Macro Markets Morning 19 August 2019

Bond yields rip lower – Macro Markets Morning 15 August 2019

on August 16, 2019

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

In a rush? Here’s the key takeaway

  • The panic buying in global bonds, for that is what it looks like, continued Thursday with US 10’s falling to 1.5%, German 10’s settled at -0.70%, Italian 10’s are at 1.34% – NOT A TYPO, while Australian 10’s are at 0.88%, and in the Uk 10year gilts attract a yield of 0.4%.
  • That stocks didn’t benefit much from this, S&P 500 up 0.25% to 2847 while European bourses fell, is testamanet to the deterioration in traders and investors expectations about the global economic and thus also earnings outlook. It fairly screams even with aggressive monetary action expected there will be little benefit to the overall growth outlook.
  • So it’s no surprise copper dipped again, that oil came under pressure once more, or that gold and silver remain bid or that even with solid jobs data the AUDUSD is still below 68 cents. The US on the other hand did get a lift from strong retail sales while Euro was belted with promises of massive ECB stimulus from a key policy maker.  

Now,  let’s dive in to this morning’s newsletter.   

And for non-subscribers, If you want to have a trail of the daily subscriber service to get this and the 3000 odd words I write – and lots and lots of chart – on markets each day you can sign up here for a trial

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Greg MckennaBond yields rip lower – Macro Markets Morning 15 August 2019

Inverted yield curve the latest excuse for market funkiness – Macro Markets Morning 15 August 2019

on August 15, 2019

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

In a rush? Here’s the key takeaway

  • Price action in markets across the globe Wednesday show that the situation is getting away from President Trump’s ability to goose things by edict and by Tweet. The emotive catalyst  yesterday was the continued rally in longer bonds which has seen the US 10 make a new low for this run and inverted the 2-10 curve.
  • That allowed every press outlet, man, woman, and dog to scream recession when the day or two before they were more quiet on the topic though still concerned. The result has been a risk asset pummelling with the S&P down 2.9%, US 10’s at 1.58%, German 10 year Bunds at a fresh record low of -0.65%, while gold is back up at $1516, and the Aussie dollar and USDJPY both down at 0.6749 and 105.90 respectively.
  • But it’s more than just the US curve folks – that’s just today’s excuse – German growth, Chinese data yesterday. The globe is slowing and the US made clear the move Tuesday on tariffs was about President Trump’s self interest not a thawing in relations. So the trade war bats on and with it the global slowdown intensifies.  

Now,  let’s dive in to this morning’s newsletter.   

And for non-subscribers, If you want to have a trail of the daily subscriber service to get this and the 3000 odd words I write – and lots and lots of chart – on markets each day you can sign up here for a trial

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Greg MckennaInverted yield curve the latest excuse for market funkiness – Macro Markets Morning 15 August 2019

Trump Blinks, Risk assets rally – Macro Markets Morning 14 August 2019

on August 14, 2019

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

In a rush? Here’s the key takeaway

  • What do bullies do when they are getting nowhere and their adversary fights back or gives no ground? They usually fold because, well, they are bullies afterall. So it is that President Trump favoured his own self interest and that of the S&P 500 by backing down and delaying some of the recently announced tariff increases.
  • There is no other conclusion to make that he blinked in the face of China’s intransigence. And while the easy answer would be he only cares about the level of the Dow and S&P (both of which rallied 1.6% Tuesday) the harder reality is we really don’t have a roadmap of what he will and will not do – other than that he will always favour his own interests.   
  • For us though the question is whether events are getting away from him, from central banks, and from their ability to restore confidnce. Investors are worried, the global economy is slowing, Europe’s is tanking…uncertainty is high

Now,  let’s dive in to this morning’s newsletter.   

And for non-subscribers, If you want to have a trail of the daily subscriber service to get this and the 3000 odd words I write – and lots and lots of chart – on markets each day you can sign up here for a trial

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Greg MckennaTrump Blinks, Risk assets rally – Macro Markets Morning 14 August 2019

Hong Kong is becoming a bigger risk than the trade War – Macro Markets Morning 13 August 2019

on August 13, 2019

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

In a rush? Here’s the key takeaway

  • Hong Kong is a bigger deal for the globe, for economics, and for markets, than any posturing and bellegerence the US and Chinese sides can throw at each other. That’s because the men and women of Hong Kong in facing off with the totalitarian regime of Xi Jinping are just the natural extension – perhaps a window into the future – of the free world versus the CCP’s desire, nay need, for total control to sustain itself.
  • I have little doubt at some point Xi’s hardliners – of which he is probably the hardest – will act. And in that action we will see the acceleration of the ultimate end game to this trade and hegemonic face off between the worlds two biggest economies and diametrically opposed belief systems.
  • So as Hong Kong airport is closed, as I see videos of China military massing in Shenzen, it is no surprise that risk assets are offered and worries about the global outlook are reintensifying. This battle is about so much more than trade and events are getting beyond President Trump – there is no way he can make a deal with this regime till Hong Kong is settled.  

Now,  let’s dive in to this morning’s newsletter.   

And for non-subscribers, If you want to have a trail of the daily subscriber service to get this and the 3000 odd words I write – and lots and lots of chart – on markets each day you can sign up here for a trial

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Greg MckennaHong Kong is becoming a bigger risk than the trade War – Macro Markets Morning 13 August 2019

Waiting for the next shoe to DROP – Macro Markets Morning 12 August 2019

on August 12, 2019

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

In a rush? Here’s the key takeaway

  • We have to entertain the possibility that Friday’s trade in financial markets didn’t tell us anything. Sure the UK GDP and Sterling’s fall fairly screamed “wake up call” for traders of the Pound and UK assets – if not the British Government – BUT the reversals we saw in stocks, gols, bonds, and forex looked like position squaring after a tumultuous week.
  • That said though, cross asset correlations and money flow continue to tell that this funk in markets is a genuine resut of fear and uncertainty from traders and investors – Ihave the data to prove it. 
  • So as Donald Trump doubles down, as China shows itself ready to fight the start of the new week is going to be similar to the last as we’ll all be watching moves in USDCNY/H, Trade War rhetoric and economics data. Northern hemipshere summer volatility folks – it’s just that time of year.   

Now,  let’s dive in to this morning’s newsletter.   

And for non-subscribers, If you want to have a trail of the daily subscriber service to get this and the 3000 odd words I write – and lots and lots of chart – on markets each day you can sign up here for a trial

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Greg MckennaWaiting for the next shoe to DROP – Macro Markets Morning 12 August 2019