Markets Morning Newsletters

Caution enters, risk appetite takes a break – Macro Markets Morning 15 November 2019

on November 15, 2019

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

In a rush? Here’s the key takeaway

  • Just a week ago when I wrote the morning note it seemed there was a genuine de-escalation in the trade war with both sides appearing to agree there would be a rollback of tariffs as part of the Phase 1 trade deal. But enter Peter Navarro and President Trump and things have gone a little awry. That hasn’t stopped China again asserting Thursday rollback is a necessary requirement of a deal…so I wonder are we slipping toward a May style disappointment or will something get done regardless. 
  • Copper, gold, the Aussie dollar, Japanese yen, European stocks, and global bonds seem to be wondering too with them all reacting to a more cautious tone on markets about the outlook to the promised trade deal. US stocks though are still elevated as the economic resiliency the economy is showing (you heard it here first more than a year ago) plays out and is highlighted by the Fed. Money flows could be helping too.
  • So as it stands outside the US where the S&P 500 and Dow are sitting at 3096.6 and 27781 respectively not far from their record highs there seems to be a surfeit of caution once more. That might be just what risk appetite needs to recharge and push stocks to new records yet…as long as we don’t slip back to a May disappointment that is. Both sides need a deal I reckon, so maybe that’s the feeling but not the reality. Time will tell.      

Now,  let’s dive into 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 MckennaCaution enters, risk appetite takes a break – Macro Markets Morning 15 November 2019

US stocks holding up but other markets signal caution – Macro Markets Morning 14 November 2019

on November 14, 2019

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

In a rush? Here’s the key takeaway

  • Copper (.045%, $2.63) and 10 year bond yields (UST 1.89%) are lower again this morning, Gold is up (0.4%, $1263). This vague uplift in risk aversion these 3 moves speak to is something I’ve been commenting in this week and that little group of moves suggests to me that even though stocks in the U.S. are making new highs there remains a level of residual disquiet about the Phase 1 trade deal actually getting done. 
  • That seemed to be the story today as well with the WSJ posting a yarn seating China is baulking at signing up to a fixed amount of agricultural purchases as part of the trade deal. There is renewed chat about IP too, suggesting phase 1 is morphing back toward the failed May negotiations – Danger Wil Robinson
  • So caution seems warranted, simmering as it may be in stocks – though not in the abundance of copper traders. At the close then the S&P 500 was up 2 points to 3094, the Dow hit a new record at 27783, but the Nasdaq 100 and Russell 2000 were down as was Europe’s bourses. The USD and foreign exchange markets are fairly stable save for the Kiwi which is up more than 1% and back above 64 cents on a bit of shock and ORR as the RBNZ unexpectedly left rates on hold. Oh and Fed Chair Powell was pretty upbeat Wednesday in the US. 

Now,  let’s dive into 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 holding up but other markets signal caution – Macro Markets Morning 14 November 2019

Trump’s belligerence belies his need for a deal – Macro Markets Morning 13 November 2019

on November 13, 2019

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

In a rush? Here’s the key takeaway

  • President Trump’s speech Tuesday was anticipated by many to be a precursor to a signing deal on Phase 1 of the trade deal. Instead, however, it was a partisan, Fed bashing, China baiting, example of the kind of belligerence we’ve all become used to you. That he said if a deal isn’t done he can increase tariffs belies the fact that if he does want to be reelected President he probably needs – and this is his best chance – some sort of deal in the next few months. 
  • The anticipation of a more positive tone to the speech saw the S&P 500 trade up to a high 3102.61, but it closed back at 3092 for a gain of ~5 points or 0.15%. The DAX was up 0.65% to 13283, and US bonds seemed to notice the belligerence a little more than stocks – so the 10’s dipped to 1.90% but they’d unwound that by the close and are at 1.94% in what’s otherwise a continued shift higher in global bond rates. 
  • Copper and oil were a little lower, the Aussie too, the Kiwi took it in the neck and has lost half a per cent, while the Euro is mkaing a new low for this run and at risk of a drop to the lows of the year once again. Gold recovered a smidge and is at $1457 while silver is at $16.89 as the ‘bitcoiny’ precious unwinds.     

Now,  let’s dive into 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 MckennaTrump’s belligerence belies his need for a deal – Macro Markets Morning 13 November 2019

Markets waiting for the next shoe to drop – Macro Markets Morning 12 November 2019

on November 12, 2019

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

In a rush? Here’s the key takeaway

  • Brexit hit the headlines again with the decision by Nigel Farage to not contest Conservative held seats in the upcoming UK election increasing the chances of Boris Johnson holding what he’s got and fighting toward majority. That helped the Pound which rose 0.65% to 1.2854.
  • Other than that it was really a holding pattern night. Oil and copper were down a little as they reacted to the competing comments on trade and the vague threat that things might go awry once more. But then gold was a little lower too so it’s far from an all-encompassing narrative. On bond markets, US 10’s are largely unchanged at 1.94% but the European periphery was under a little pressure. 
  • Stocks in Europe drifted a bit with the DAX off 0.23% to 13198 while in the US the S&P fell about 0.2% to 3085 for a 7 point loss. we’ll see where we go as the week progresses. Much positivity is priced in now on trade which is a handbrake and a warning. Equally though much cash has flowed out of stocks. So markets are still delicately poised for news and headline reactions.      

Now,  let’s dive into 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 MckennaMarkets waiting for the next shoe to drop – Macro Markets Morning 12 November 2019

Trade deal still driving markets – Macro Markets Morning 11 November 2019

on November 11, 2019

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

In a rush? Here’s the key takeaway

  • President Trump is enjoying himself again in his battle with China it seems. While Larry Kudlow says a deal is almost there and tariffs will be rolled back trade attack dog Peter Navarro was out over the weekend saying that’s not the deal and President Trump is running down the middle saying talks are going well, there might be a deal, but he might decide not to make a deal – but either way China is desperate for a deal.
  • So far the price action on Friday in the US and then today as Asia opens the week has been fairly sanguine insofar as it’s clear sentiment has swung to an expectation that Phase 1 will indeed be signed. That’s risky obviously if things go awry as they often have in this trade battle.
  • That’s the risk I talked about in the weekly on Sunday because if there isn’t tariff rollback China won’t ink the deal. So watch the headlines and watch the price reaction to same. It’s going to be another big week.     

Now,  let’s dive into 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 deal still driving markets – Macro Markets Morning 11 November 2019

Duelling headlines drive markets in an otherwise risk on day – Macro Markets Morning 8 November 2019

on November 8, 2019

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

In a rush? Here’s the key takeaway

  • So, there was more good news coming – at least faster than I thought – with both sides of the trade battle confirming that when Phase 1 comes in there will be a rollback of tariffs. That’s a genuine de-escalation in train there so it is no surprise then that stocks are higher and bonds are getting shellacked. [This was somewhat mitigated by a duelling story saying there is pushback in the Whitehouse to tariff rollback.]
  • So we saw fresh records for US stocks but they closed off their highs with the S&P 500 up 0.27% to 3085 (high 3097.8) which US 10’s are sharply higher at 1.93% from ~1.82% previously. Ouch, but good for those of us who want to buy more. Copper is higher, up 6 cents to $2.72 a pound, oil surged more than 2% at one point before the rebuttal headline and WTI is at $57.07, while the Aussie dollar has been dragged along for the ride and is back around 69 cents – go you good thing.
  • Elsewhere  German 10’s are up 9 points (not a typo) to -0.23%, gold got hosed and is back at $1468 and my little silver is “bitcoiny” analogy came home to roost with the junior precious off more than 3% to $17.12 after trading to my $16.96 target overnight. USDJPY is at 109.30, USDCNH fell to 6.95 and USDSGD is at 1.3570 – back at the bottom of the recent range. What a day.    

Now,  let’s dive into 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 MckennaDuelling headlines drive markets in an otherwise risk on day – Macro Markets Morning 8 November 2019

Waiting, stocks on hold bonds a little bid on trade – Macro Markets Morning 7 November 2019

on November 7, 2019

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

In a rush? Here’s the key takeaway

  • The notion that the signing of the first phase of the trade deal would be delayed once the APEC meeting in Chile was cancelled was clearly assimilated by markets given the reaction to press reports Wednesday that the delay may now stretch into December. Stocks didn’t do too much with the S&P 500 basically flat at 3076, though the DAX was up about a quarter of a per cent to 13179. 
  • Bonds rallied a little with the US 10 back at 1.81% as it remains clear – via services and composite PMI’s – that European growth is still struggling, copper and oil reversed a little as well losing more than 1% each while the Aussie dollar slipped a little as well. 
  • This is, of course, the risk. While the signing of a deal will no doubt drive positivity about the outlook through markets the reality is that the opportunity for positive shocks to sentiment is now diminished. That’s because even in a low growth environment for earnings and the economy much has been priced in. So, the risk is the pendulum swings back a little while we wait.       

Now,  let’s dive into 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 MckennaWaiting, stocks on hold bonds a little bid on trade – Macro Markets Morning 7 November 2019

US 10’s break 1 year downtrend in yield as copper and oil go bid – Macro Markets Morning 6 November 2019

on November 6, 2019

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

In a rush? Here’s the key takeaway

  • Stocks stalled a little with the S&P 500 down about 4 points (0.11%) to 3074 while the DAX rose just 0.1% to 13148. We have to entertain the notion that in a stocks sense at least all the current good news is priced in and we need to actually see a rollback of the tariffs to kick on. Elsewise its a bit of a dip looming to test support short term.
  • Not dipping thought were bond rates which broke higher with the US 10 at  1.86%. That was part of what looked very much like a catch up move as copper and crude oil caught a bid while gold took a bit of a belting along with the Euro, Yen, and Swissie. The Yuan traded under 7.0 in USDCNH terms as well.
  • So markets more broadly are coming to terms with the trade truce and thus, having assimilated that reality, are now prone to a bit of a pullback as the newshounds spread the stories that China is playing hardball on tariffs…exactly what else did anyone think they were doing :S.       

Now,  let’s dive into 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 10’s break 1 year downtrend in yield as copper and oil go bid – Macro Markets Morning 6 November 2019

Bond yields, risk assets, and stocks higher on trade hope – Macro Markets Morning 5 November 2019

on November 5, 2019

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

In a rush? Here’s the key takeaway

  • Global markets are celebrating the continued thaw in US-China trade relations with stocks across the board higher and new records being set. The S&P 500 is up about 0.4% at 3078 which is incredible when you think about it relative to expectations a month or two ago – mine included. The DAX was up 1.35% to 13136 and not far from the 13300 Fibo target.
  • Naturally bonds and copper are higher with US 10’s at 1.78% and the good doctor at $2.67 a pound. And gold noticed too, it’s off a little at $1508. But the USD is the big winner in forex land. Economic weakness [retail sales] hurt the Aussie which is at 0.6880 down 0.5%, but realistically this is a USD move with Euro down 0.4% at 1.1123 and the Yen and Pound both also 0.4% weaker against the USD at 108.63 and 1.2880. Yes the US economy is doing relatively better, but this move looks technical in nature.   
  • And of course, we’ve had global manufacturing PMI’s which are weak but less bad while today we get the start of the release of global services PMI’s [Europe is tomorrow though] if they hold up we could have another good day.      

Now,  let’s dive into 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 MckennaBond yields, risk assets, and stocks higher on trade hope – Macro Markets Morning 5 November 2019

Macro Markets Morning 4 November 2019

on November 4, 2019

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

In a rush? Here’s the key takeaway

  • There is an air of disquiet over the rally in stocks which drove the S&P 500 to fresh record highs at week’s end. That disquiet stems from concern about the trade truce and US economy – but both seem to doing better than many pundits, traders, and investors figured. That’s all this rally need really to fuel it higher – disbelief
  • Elsewhere bonds aren’t exactly convinced having moved a little higher Friday but still significantly below the highs for the week. Look for this market to confirm or deny the stocks move.
  • Forex markets might be a better lead though – its long been my view that what’s good for the globe – or at least perceptions of improvement – is bad for the USD. That’s what we are seeing right now as the DXY breaks down – we just need to see the Euro take out its 200 day moving average to confirm.        

Now,  let’s dive into 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 MckennaMacro Markets Morning 4 November 2019