Markets Morning Newsletters

Trade Truce for the moment drives stocks and bonds higher, USD down – Macro Markets Morning 14 October 2019

on October 14, 2019

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

In a rush? Here’s the key takeaway

  • President Trump is out on Twitter right now as I finalise this morning’s report talking up his trade deal and the signing of this Phase 1 which will happen soon he says. For mine, while I respect the big pullback in the S&P on Friday from 3000ish to close at 2970 as a warning, my sense is the President and Chinese both will try to change the narrative around trade between now and when Presidents Trump and Xi meet next month.
  • If that is the case then after some sort of retest of the break stocks and risk assets are likely to regain a solid bid tone. That will be good for assets like the Aussie dollar, global stocks, copper, and EM currencies – among others – but not so hot for global bonds which look like they have further to run with the US 10 year treasury on track for a run at 2% it seems.
  • Yes, we’ve been here before and markets are right to be skeptical that the mercurial Donald Trump doesn’t simply change his mind again. But he clearly thinks a strong economy, healthy stock market returns, and positive sentiment to growth will insulate him from the trouble that lies in wait during the impeachment investigation and then Senate trail to follow. So as stupid as I may look in a day or a week I’m betting there will be a narrative change for a while before the reality that it wasn’t just the trade war which hit global growth comes back to blindside the market.    

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

And for non-subscribers, If you want to have a trial 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 MckennaTrade Truce for the moment drives stocks and bonds higher, USD down – Macro Markets Morning 14 October 2019

Maybe, just maybe, some sort of trade deal is near – Macro Markets Morning 11 October 2019

on October 11, 2019

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

In a rush? Here’s the key takeaway

  •  Goodnews we are cursed withliving in interesting times right now. Not only has President Trump intimated that a deal breakthrough might be onteh cards but the prime Minister’s of Britain and Ireland are all pally and might have found a way to fix the Irish backstop problem.
  • That the S&P 500 at 2938 after a 0.65% gain isn’t another 50 or 100 points higher and Sterling is only just through resistance sitting at 1.2450 is both remarkable and testament to the serial disappointments we’ve seen on the Trade War and Brexit these past months and years. But imagine the move if we somehow see not just one but two rabbits pulled out of the hat. Who’d a thunk?
  • In other markets OPEC has had enough and is talking about production cuts in December – so oil is up 2%, the USD is down as forex traders bet a trade deal will release pressure on many economies and markets, and naturally gold and silver are lower – silver really does look bicoiny now. And, and, and Bonds, oh bonds – US 10’s got hosed and are at 1.66% and you know what teh Fed will say if this does – even in part get fixed. Thank goodness my system went short bonds yesterday :S.   

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

And for non-subscribers, If you want to have a trial 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 MckennaMaybe, just maybe, some sort of trade deal is near – Macro Markets Morning 11 October 2019

The see-saw, trade hopes flow, risk lifts – Macro Markets Morning 10 October 2019

on October 10, 2019

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

In a rush? Here’s the key takeaway

  • This is getting really very boring as the latest round of press reports reverse the last round of press reports on trade and short term traders flip and flop. The net from Wednesday though is that we are higher again in stocks as hope, once more, springs eternal. The result is a sea of blue on screen for European and US bourses and the S&P 500 closing up 0.9% at 2919 – what a rollercoaster. 
  • Fed minutes were interesting though as they refelct a committee that thinks market pricing of cuts is ahead of itself and may need to be adjusted. No wonder the new Fed mantra is the US economy is “in a good place” at the moment. But, markets could care less about the FOMC minutes it’s all about trade, trade chatter, and the trade talks. And that means for risk/growth assets like the Aussie dollar, copper, and US 10’s it’s all about stocks. 
  • But, can stocks really have it both ways? Can they be excited about the support of Fed easings at a time when the Fed – through the dot plot and then these minutes – is saying ‘ladies and gentlemen you are getting ahead of yourselves’ ? Implicitly they must be saying the Fed is wrong and they will ease. But is that really good for stocks? More questions than answers today unfortunately. 

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

And for non-subscribers, If you want to have a trial 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 MckennaThe see-saw, trade hopes flow, risk lifts – Macro Markets Morning 10 October 2019

It could have been worse – Macro Markets Morning 8 October 2019

on October 9, 2019

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

In a rush? Here’s the key takeaway

  • Nothing like the US doubling down in support of the Uighers (by issuing Visa Bans) to derail market thinking about the chances of a trade deal and turn this trade war into a genuine Thucydies Trap.  That’s exactly what happened around 3pm New York time Tuesday as the news hit the wires driving stocks down while gold and silver were bid up.
  • The result was a sea of red for US stocks to follow the equally red prints across European bourses where the CAC, DAX, and FTSEMIB were all down more than 1%. In the end the S&P was down 1.55% to 2893 around 65 points off the high Monday and looking increasingly like it’s going back to last week’s lows, probably lower.
  • The corrollary of this move naturally is copper and oil are both a little lower, the Aussie dollar went yesteray and bonds didn’t really need to fall too far because they weren’t buying what stocks were selling Monday or Friday. The 10’s are at 1.53% while the 2’s are at 1.42% after Fed Chair Powell said the US central bank will soon announce how it is increasing its balance sheet permanently in response to recent Repo shenanigans. 

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

And for non-subscribers, If you want to have a trial 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 MckennaIt could have been worse – Macro Markets Morning 8 October 2019

Hopes of a trade truce prove ephemeral onoce more – Macro Markets Morning 8 October 2019

on October 8, 2019

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

In a rush? Here’s the key takeaway

  • The markets pavlovian reactions to trade news continues – up and down of course – with Larry Kudlow’s efforts seemingly being reinforced by reports on Fox that China is ready to do a limited trade deal and leave all the hard stuff till later. But then clarification took it all back and of course US slapping sanctions on CHinese firms over the Uighers when the full delegation is arriving can’t have been missed. 
  • So stocks in the US opened down, then rallied, then fell from the highs then close dwith the S&P 500 at 2939 off 0.45%. Europe was higher, playing catch up to Friday’s US rally and will give that back when they open today most likely. On rates markets push back on easings is growing and 2’s are rising a little with teh US 2 year bonds rose 6 points to 1.45% while the 10’s are at 1.544%.
  • Gold is at $1493, silver $17.43, and oil gave up its nice gains toward the end of the day as trade truce hopesfaded. The washup was the USD is a little stronger, only a little, the Euro a little weaker, the Yen trapped in a 106.50/107.50 range, and the Aussie dollar a little weaker as folks worry that this trade war really is intractable – at least on the big bits, the ones the parties are happy to say they don’t agree on and China says are off the table. Now, where is that tin hat again. 

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

And for non-subscribers, If you want to have a trial 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 a trade truce prove ephemeral onoce more – Macro Markets Morning 8 October 2019

Goldilocks jobs and hopes of trade buoy risk and stocks, but not bonds – Macro Markets Morning 7 October 2019

on October 7, 2019

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

In a rush? Here’s the key takeaway

  • While ever there is the prospect of a trade deal stocks will keep coming back on the hope equally fluid of more Fed cuts. That’s the message of last week’s trade where the reality of a slowing economy saw stocks and risk asset come under pressure only to be rescued by the there might be a deal and the data is bad enough for more Fed cuts crowd.
  • That’s the rhetorical attempt to explain last week’s amazing recovery in risk assets even as signs of a slowing global and US economy grow. Technically though you simply can’t dismiss the power of that weekly reversal and the candle that we are left with after the bulls chased the bears back and the S&P 500 ended the week all the way back at 2952 – around 98 points off Thursday’s low.
  • Of course Friday’s non-farms missed with a print in the mid 130 thousand region but the unemployment rate fell to a 50 year low of 3.5% – kind of goldilocksy really, neither too hot not as cold as some clearly feared. Elsewhere Fed Chair Jay Powell repeated what’s become a clear Fed mantra repeating what he and others have been saying recently – that the US economy is “in a good place. 
  • Now, it’s a public holiday where I live and Mrs McKenna has plans for me in the yard, so just a short one today. Back to normal tomorrow.     

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

And for non-subscribers, If you want to have a trial 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 MckennaGoldilocks jobs and hopes of trade buoy risk and stocks, but not bonds – Macro Markets Morning 7 October 2019

Bad news is good news again as US stocks recover on October Fed cut pricing – Macro Markets Morning 4 October 2019

on October 4, 2019

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

In a rush? Here’s the key takeaway

  • The prospect of a Fed cut rose in the wake of the ISM services release in the US which hit a three year low. Initally that hurt stocks but it seems the chance of a cut is still a bit of a cure all and the S&P 500 reversed the best part of 55 points to close at 2910 up 0.8%. But bonds didn’t react and the US 10 is back in the low 1.50% and looking increasingly like it wants to retest the recent lows areound 1.42%.
  • Of course in 14 hours that might all be turned on its head because we get the latest non-farm payrolls release with the market expecting 145k. There is not a lot of dispersion around that average so there is room for a bit of a shock if it is an outlier etiher way.
  • And that is going to be huge for braod markets. It’s clear that stocks are the fulcrum against which other markets are levering. So we saw gold trade up to $1519 but its back at $1505 now, likewise WTI fell to $50.97 but its back at $52.45 this morning. Likewise forex will be watching closely too as the Euro’s slow but nascent rally will either falter or accelerate by the week’s end. And other pairs will flow with it.   

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

And for non-subscribers, If you want to have a trial 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 MckennaBad news is good news again as US stocks recover on October Fed cut pricing – Macro Markets Morning 4 October 2019

Ugly stocks drop hard on threat of US EU Trade War – Macro Markets Morning 3 October 2019

on October 3, 2019

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

In a rush? Here’s the key takeaway

  • The escalation of the escalation would have been amazing if not for the technical set up which presaged the carnage on global stock markets Wednesday. We’ve seen some big falls withthe FTSE, CAC, DAX, and FTSEMIB down by amounts either side of 3%. The US wasn’t quite as bad with the S&P 500, Dow and Nasdaq down between 1.75% and 1.85%. The S&P finished at 2887. OUCH! Glad I’m short.
  • The catalyst for all this is the worst possible world for uncertainty. Not only are we faced with an enduring US CHina trade war but the reality the WTO ruling has opened up a new front with Europe. That’s got to hit business planning, economic activity, and profits.
  • Naturally with stocks falling out of bed bonds rallied and the US 10 is at 1.59% and the Fed will likely ease again at the end of the month I’d say. Gold is up as a result at $1500 and the Yen is bid too with USDJPY at 107.17.
  • Big falls come after small falls more often than not – so markets are at an extremely delicate juncture.  

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

And for non-subscribers, If you want to have a trial 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 MckennaUgly stocks drop hard on threat of US EU Trade War – Macro Markets Morning 3 October 2019

Stocks slip as global manufacturing looks sick – Macro Markets Morning 2 October 2019

on October 2, 2019

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

In a rush? Here’s the key takeaway

  • Well that escalated quickly. Only yesterday I noted the dichotomy between stocks bonds and risk assets suggests this is going to be one heck of a month and already we’ve seen stocks sell off sharply, bonds rally, and growth assets looking a little green.
  • Of course besides suggesting Monday’s end or month and quarter rally in stocks was just that – end of quarter window dressing – the raft of appalling global manufacturing PMI prints has heightened fears that manufacturing is even more deeply in crisis.
  • That’s not good beause despite many developed nations being service driven these days the linkage with manufacturing and employment generally still seems solid and fears of spillover persist.
  • So, I have one simple question, with the Fed meeting at the end of the month and chances of a trade deal in a week or so, where will the circuit breaker come from if markets get funky?  

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

And for non-subscribers, If you want to have a trial 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 MckennaStocks slip as global manufacturing looks sick – Macro Markets Morning 2 October 2019

US stocks and the dollar end the quarter stronger – Macro Markets Morning 1 October 2019

on October 1, 2019

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

In a rush? Here’s the key takeaway

  • The End of quarter and end of month went off without too much of a hitch though repo did open up significantly higher in the initial instance in the US before dropping back into the Fed’s range.
  • That little detour didn’t impact stocks though with the “it’s fake news” from Peter Navarro – about the restrictions on investment in and from China – providing a level of support to risk assets at month end that sawthe S&P 500 close at 2976. 10 year Treasuries closed around 1.67%, gold, silver, oil and to a lesser extent copper were all hammered lower while the Euro, Aussie, Kiwi, and Yuan took a beating from the USD.
  • Did we learn much? Perhaps, stronger dollar looks on track, 2843/55 is the support region to watchfor the S&P 500 and the dichotomy between stocks bonds and risk assets suggests this is going to be one heck of a month.  

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

And for non-subscribers, If you want to have a trial 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 MckennaUS stocks and the dollar end the quarter stronger – Macro Markets Morning 1 October 2019