Markets Morning Newsletters

Stocks rip, USD recovers – Macro Markets Morning 22nd March 2019

on March 22, 2019

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

In a rush? Here’s the key takeaway

  • I’m not going to pretend for a minute I understand why stocks reversed Wednesday but ripped higher from the open in the US Thursday. Maybe low rates forever and some chance of QE4? Maybe we are back to the TINA trade, or at least some folks think so? I’m not sure. But I am sure I’m not going to extrapolate one days trade to infinity. That said though, the S&P 500 is up more than 1% at 2,856.
  • The USD is higher as well, though it looks very much like the pounds woes may have dragged on sentiment and help the DXY lose the Fed announcement losses – Euro is at 1.1360 and GBPUSD is at 1.3084 as Mrs May looks toward the reality of a hard Brexit. 
Now, Let’s dive in to this morning’s newsletter

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Greg MckennaStocks rip, USD recovers – Macro Markets Morning 22nd March 2019

Fed reinforces dovish message, sell the fact? – Macro Markets Morning 21st March 2019

on March 21, 2019

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

In a rush? Here’s the key takeaway

  • maybe a bookend, too early to tell. But after the Fed signalled it is a little more dovish than traders thought possible stocks still ended down. Patience is the word, the balance sheet reduction will be tapered and over by October, and the dot plot has no hike this year and one next. 
  • As a result The USD is weaker as a result with the Euro at 1.1430, the Aussie at 0.7133, and USDJPY is back below 111. 
  • but while stocks liked it initially the S&P 500 finished down 0.3% at 2,824. Gold, copper, silver, and oil are all higher while 10 year bonds have broken through the 2.55% level to close at 2.525% – on the way to 2.28%. 
Now, Let’s dive in to this morning’s newsletter

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Greg MckennaFed reinforces dovish message, sell the fact? – Macro Markets Morning 21st March 2019

It’s Fed day, not much else matters really. Not even trade – Macro Markets Morning 20th March 2019

on March 20, 2019

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

In a rush? Here’s the key takeaway

  • On January 4 Fed chair Powell helped ignite this rally when he said he’d be patient. Since then the the low participation rally has seen the S&P 500 rise from the 2,440 region to close last night in the 2,830’s – a 16% rally. Will the March FOMC meeting bookend that rally by being a little more hawkish than everyone thinks?
  • He probably wants to deliver a boring Greenspanesq statement, dot plot, and press conference. It will be very interesting.   
Now, Let’s dive in to this morning’s newsletter

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Greg MckennaIt’s Fed day, not much else matters really. Not even trade – Macro Markets Morning 20th March 2019

Stocks are breaking higher still – McKenna Markets Morning

on March 19, 2019

Morning folks

Still on the road and still a truncated service due to limited power options…I was at conference from 8 till 8 yesterday so I couldn’t get out to buy a new power source for the laptop. But I got it plugged in for a while and it has bit of power which is drainign fast as Reuters and everything else saps the life out of the battery

Normal service will resume when I am back in the office tomorrow and I do apologise again.

In the meantime:

  • I reckon foreign exchange markets have under reacted to the news that the Speaker of the House of Commons has told British Prime Minister Theresa may she can not bring her deal back again in the current parlimentary sitting. It sounds nuanced I know but according to protocols dating back to the 1600’s. The deal is the Speaker has told Mrs may that the deal can only come back if it is substantively different from the deal that was knocked back “by 149 votes” last week. This is a big blow to the government and Mrs May’s strategy of running down the clock. of course it puts as much pressure on Brussels as Number 10 because the odds of no-deal brexit surely just went up.
  • At 1.3250 Sterling doesn’t seem to have reacted on the back of news the government is negotiating with the DUP again as well as some expectation this means a second referndum is now more likely. For the moment though, with a failure at resistance and this news maybe Sterling needs a rest and a pullback. 1.3176 is roughly last night’s low and the 15ema. Below that and GBPUSD is likely to go for a downside gallop.

GBPUSD Daily

 

  • The stocks rally continued again overnight with the break in the S&P of the range top seeing a small gain of 0.37%. The Nasdaq kicked on again and my system having goine long Nasdaq last week, then the S&P 500 has now issued a buy signal for the Dow Jones as well. As I noted yesterday if the rally continues this will be fought hard which kind of gives it legs. target for the S&P 500 – as a bellwther – is the 2,877 region and 2,894 is the 138.2% projection of the run to the top of the range, reversal to 2,7202ish and then break of that high.

S&P 500 (futures based CFD) Daily

  • Besides the pound Forex markets are very quiet. It’s pretty clear in the stocks rally the Fed (Wednesday) is expected to be a little dovish and that’s a bit of a hand brake on the US dollar. So too is the IS CESI score which fell below Europe’s for the first time in a very long time over the past week.
  • But we essentially continue to have relatively tight range trading because folks are still waiting for the next macro shoe to drop. The Fed could be it Wednesday if they either are, or are not, as dovish as the market expects. My guess is they won’t be as dovish as folks expect. Sure the median “dot” will move lower, but the economy has hardly fallen in the hole that panicked themselves into thinking the stock market funk of December was pointing to. Pro Tip for the Fed – don’t confuse liquidity/holiday funkiness as an actual signal worth noting. Clearly if they are even handed they’ll be upbeat about the economy now financial conditions have eased somewhat – stocks through the roof, US 10’s at 2.60%. My guess is the Fed is NOT as dovish as folks think.

EURUSD Daily

 

  • Oil is higher this morning with WTI right on the cusp of a break out at $59.28. This is important folks, the break of $59.55, on close, would usher in a run toward the 200 day moving average at $61.80/90. If that broke then we’ll be talking about the $68/69 region I reckon, though the 61.8% retracement level of the big fall is $63.64. Support is the 15 ema at $57.21.
  • Worth noting the Saudis (sorry OPEC) cancelled the April meeting and they’ll next get together to discuss the supply cuts in June. They are continuing to squeeze the market as much as they can.

WTI (CLc futures based) Daily

  • Positioning

As at COB NYC 18032019

Today’s data:

Tuesday we get the Westpac consumer survey in NZ – my heart goes out to all my readers across the Tasman, what that bastard did Friday at prayers is unspeakable. But of course we must speak against it. In Australia we get a speech from RBA assistant governor Chris Kent on Bonds and benchmarks. Sounds a bit dry so shouldn’t move the markets. We do get the house price index and the minutes to this months RBA board meeting are out.

Swiss and French trade are out along with UK employment and unemployment data, the ZEW survey is out in Germany and the EU while in the US it’s factory orders and then the API data at the end of the day’s trade.

Apologies again for the truncated service – I’ll be back with the full newsletter and the video from tomorrow morning.

Have a good day

Greg

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Greg MckennaStocks are breaking higher still – McKenna Markets Morning

McKenna Markets Morning

on March 18, 2019

Morning folks

It is with much regret that I write to you this morning to say I’ve come away to Brisbane for a conference yesterday afternoon and left my laptop power cord at home.

So, it’s flat this morning and I am unable to provide the daily newsletter and video today and tomorrow.

This note is coming via my phone.

It’s been years since I’ve done something that stupid and I do apologise.

Normal service will resume when I am back in the office.

In the meantime:

  • Stocks have broken a little higher and through the range top in the Nasdaq and S&P 500. If the rally continues this will be fought hard which kind of gives it legs. Though I refer you to my weekend comments.

S&P 500 (futures based CFD) Daily

  • The USD remains a little pressured. For the first time in ages the US CESI score is below Europe, EM and pretty much everyone except China. That suggests a dovish slant from the Fed and Powell this week even though markets have recovered in recent months.

EURUSD Daily

  • Brexit hasn’t gone anywhere and Mrs May is doing a job of running down the clock. Will she get her deal through because the alternative is so dire for the EU and Britain? As I argued over the weekend, maybe!

  • Bonds are rallying. Watch the Fed and data. A break below 2.55% in the 10’s might get folks nervous.

US 10 year treasury rate

  • Positioning

As at close of business Friday

Apologies again for the truncated service

Have a good day

Greg

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Greg MckennaMcKenna Markets Morning

Calm outside of the Commonwealth bloc currencies – Macro Markets Morning 15th March 2019

on March 15, 2019

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

In a rush? Here’s the key takeaway

  • There was not a lot of excitement in the big markets despite news, confirmation really, that the Xi-Trump summit is receding into April maybe further into the year.
  • Stocks were remarkably resilient with the S&P 500 ending down just 0.1% at 2808. Europe was all green and SPI traders have found 16 points to kick off the day here in Australia. 
  • Forex markets saw the Commonwealth bloc under a little pressure with decent losses for the Pound, Aussie, Kiwi and CAD. Gold too came under pressure. 
  • Now for the Bank of Japan and quadruple witching.
Now, Let’s dive in to this morning’s newsletter

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Greg MckennaCalm outside of the Commonwealth bloc currencies – Macro Markets Morning 15th March 2019

GBP roars, sotcks catch a bid, and the USD is down – Macro Markets Morning 14th March 2019

on March 14, 2019

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

In a rush? Here’s the key takeaway

  • We are back to Brexit positivity as the Commons voted Wednesday not to leave the EU without a deal. Yes, that’s the day after voting down the deal to leave and with the EU saying you need a deal not to leave without a deal. Ahem, anyway Sterling loved it and is up 2%.
  • Stocks too are higher with the S&P back toward the top its range after a physical close at 2,810 – up 0.7%. Stocks in Europe were higher too and the SPI in Australia gained 20 points.
  • On forex markets the USD continues to come under pressure, Euro is above 1.1325 and despite awful data the Aussie is back at 0.7094. Commodities are also higher.
Now, Let’s dive in to this morning’s newsletter

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Greg MckennaGBP roars, sotcks catch a bid, and the USD is down – Macro Markets Morning 14th March 2019

Mrs May’s deal fails, stocks mixed, USD down – Macro Markets Morning 13th March 2019

on March 13, 2019

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

In a rush? Here’s the key takeaway

  • The half life of Brexit euphoria is very short and Mrs may’s deal was voted down in the Commons Tuesday. So now for the House to take control of the process. The mess continues, GBPUSD fell about 0.7% and is at 1.3063. 
  • Stocks in the US rallied though and the US dollar fell after the weakish inflation data suggested the Fed can sit on hold for some time – the S&P 500 is up 0.3% at 2791, the DXY is at 97.00. 
  • Gold, silver, copper, and oil are all higher. So too is oil and commodity bloc currencies – the AUDUSD is at 0.7079. 
Now, Let’s dive in to this morning’s newsletter

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Greg MckennaMrs May’s deal fails, stocks mixed, USD down – Macro Markets Morning 13th March 2019

Stocks rally, the USD wobbles, a Brexit positivity springs eternal – Macro Markets Morning 12th March 2019

on March 12, 2019

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

In a rush? Here’s the key takeaway

  • Folks are making stuff up to explain why stocks rallied last night and it’s another sign we all need to be leery of ex-poste rationalisations. If I have to read another stocks were higher because of retail sales in the US I’m going to puke. 
  • Anyway, stocks did end higher. But the 1.5% rally in the S&P 500 to 2.782, makes little fundamental sense to me unless it was an approach to 2,700 not a move below which dragged real money back into the market. 
  • Elsewhere it was green on screen in Europe, there is Brexit positivity and hope again – so Sterling is up 1% to 1.3136 amid mild weakness for the USD. Oil ripped, gold dipped, and copper was calm. The AUDUSD is at 0.7069. 
Now, Let’s dive in to this morning’s newsletter

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Greg MckennaStocks rally, the USD wobbles, a Brexit positivity springs eternal – Macro Markets Morning 12th March 2019

China push back, Powell on the telly, non-farms awful – Macro Markets Morning 8th March 2019

on March 11, 2019

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

In a rush? Here’s the key takeaway

  • Was Friday’s rebound in stocks anticipatory of a fresh trade announcement over the weekend or just position squaring after a big week of losses? I’m not sure, a little of both perhaps. But China’s push back on so many areas of the trade discussions over the weekend might get a few traders attention. In the end though the S&P 500 closed at 2,743, down just 6 points, 0.2% and well off the 2,722 low 
  • Likewise the big miss in non-farms with a print of just 20,000 but wages growth accelerating to 6.4% might trouble some, but not bond traders with the 10’s at 2.62%. 
  • The USD puled back from its zenith with the DXY at 97.30, and Euro at 1.1234, the Aussie is at 0.7040 and gold is back at $1298. 
The weekly was published over the weekend and discusses the big issues I see in the week ahead plus has a calendar of important events I’m watching this week – YOU CAN FIND IT HERE.
Now, Let’s dive in to this morning’s newsletter

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Greg MckennaChina push back, Powell on the telly, non-farms awful – Macro Markets Morning 8th March 2019