Posted on 1st February 2016 by Admin in Stockpair weekly Insights

 

2012816103911716

There are 2 major economic surges that we have been able to follow from Q4 2015 until today and those are the rise of the US economy and the crash of the Chinese economy. One of the major questions is if there is a correlation between these two economic leaders both in getting to this situation and for what is to be expected in the future.

For the US, 2015 was a banner year with a steady rise in NFP numbers and the healthiest economic outlook since the crash of 2008, even leading to the first raise in the interest rate in nearly a decade. In China, however, 2015 was the beginning of a series of market crashes and unsuccessful solutions. China is currently in the process of trying to rebalance its economy from a manufacturing and exports base to a services and private consumption base. The process is not proving to be an easy one, and as such has the world economy on edge and wary of global repercussions.

So what is the correlation, if any, between America’s rise and China’s fall? For one of the possibilities we must go back to the original US crash of 2008 which had a major effect on the global economy. As simply as possible, America’s crash came from people spending too much money they didn’t have. Next we saw countries spending too much leading to debt and the 2009 crisis in Greece which became the European depression. Now, we might just be seeing another chapter in the evolvement which is the current China crisis, largely stemming from too much government spending on “ghost” building. Of course, we can also look at these two matters as completely separate independent occurrences which have yet to show the final influences on each other and the global market.

At the end of the day, despite speculations galore, most analyzers and commentators will have to sum up future predictions by saying we just don’t know what’s going to come, largely because we have not been in such a situation before.  What we can bet on, is that such strong trends in the world’s largest and second largest economies will not leave us unaffected.

 

Posted on 18th January 2016 by Admin in Stockpair weekly Insights

banner31

Today, January 18th 2016, is Martin Luther King Day in the US, meaning the stock market is closed for the holiday. While some may think this day is fruitless, it is in fact an opportunity. This is the best time to invest in commodities such as oil and silver, and in this case, let’s talk about gold.

Gold is what’s known as a “safe haven” commodity. There are several reasons for this. Essentially it means that when the market is highly volatile or filled with uncertainty, gold is considered a safer trading route. It is not an asset where we can expect any major or sharp swings. Another reason for Gold’s haven status is the lack of dividends or interest. Finally, gold’s prices are easier to predict because at the core they work on a basic supply and demand formula. Many might be doubting the shiny metal due to its fairly weak performance in 2015, but predictions and market conditions show us we shouldn’t count it out for 2016.

The global economy is facing an uphill battle at the moment, primarily resulting from China and Europe’s economies being on the verge of collapse. Along with this, the US’s economy is in good health, which means that interest will be rising. All of these factors together mean that many investors will be scared away from stocks for the time being, and in such times will turn to gold.

We talked about supply and demand, which we should pay attention to here. Quite simply, there is more demand for gold at the moment than supply. One of the reasons for this is that a significant percentage of bullion has been bought by several Central Banks in the past few years and they are not selling. In addition, with gold as with everything else, we can turn to our good old adage – trend is our friend, and trends are giving us a few hints. For example, the gold-to-silver ratio is currently at 75. Twice before we’ve seen it hit this level (in 2008 and 2003) and twice before we’ve seen a surge in gold prices a few months after.

While it may be true that not all that glitters is gold, gold has not yet lost its shine, and today is a great day to give this metal some special attention.

 

Posted on 11th January 2016 by Admin in Stockpair weekly Insights

Header

This week starts off the Earnings reports season. These are reports of virtually every major publicly traded company released once a quarter and showing their earnings. Quarters are reviewed against corresponding quarters of previous years. This is because there are seasonal considerations affecting results. For example, numbers seen in Q4 might be expected to be higher in certain companies due to events like Christmas than they would be in summer months. The Earnings reports are a major market factor. The effect on the market largely comes from the correlation between predictions and final results.

The first report scheduled to be released will be from JP Morgan on Jan 14th, 2016. This promises to be an especially interesting release due to recent legal problems they have been experiencing. In 2008 the company was accused of mishandling foreclosure processes. A settlement was reached in 2013 for JP Morgan and other accused US servicers, however the OCC found not all conditions were met by JP Morgan, leading to a final fine of $48 million.

Granted, it is not unusual for major corporations to experience litigation, no big hoorah there. However, when it comes to the market, what we will be waiting to see is the monetary effects of these legal issues on the quarter’s earnings and whether it will knock predictions and results out of sync. As for now, the consensus seems to be an expectation that earnings will prevail over litigation losses.

jp morgan

— A symmetrical triangle in this month’s chart encouraging for a bullish trend

Posted on 5th January 2016 by Admin in Stockpair weekly Insights

Header

January 5, 2016

We all know the NFP (Non Farm Payroll) is coming this week. The NFP is a report put out by the US Department of Labor indicating how many jobs were lost and gained within the last month either through employment or changes in wages and work hours. The NFP besides being the oldest report, has well established itself as the most significant report released each month and a golden opportunity for traders to capitalize as the market moves in its wake. This week however, promises to be the most exciting release yet.

In December of 2015 the FED raised interest rates for the first time in a decade. All eyes are now turned to see what will happen in 2016 with this major development and the kick off to finding out what is coming our way this year is by far the NFP. This report historically delivers a window into the status of the economy as well as having a very real effect on the direction the economy will turn in the coming weeks and months. The results of the report, being released this Friday, January 8th will no doubt send the market into major fluctuations and help decide the rate by which the FED will continue to raise the interest rates. The market is most affected in gold, equities, and the US dollar, making it an ideal environment for Binary and Pair option trading with numbers spiking more extremely than on any other day.

With a new year in sight and developments in 2015 leaving everyone on the edge of their seats, predictions for what will happen with the FED and the interest rates are flying. At the end of the day however much of the decision will be based on unemployment numbers, thus making the coming NFP a serious factor and giving traders a chance to get in on one of the most crucial events to shape our fiscal 2016.

 

2016 markets forexwords

Posted on 4th January 2016 by Admin in Stockpair Daily Insight

stockpair-dailytips (2)

Gold & Oil Uncertainties

January 4, 2016

Gold’s status as a safe haven has taken a battering with the metal capping its longest slump in more than 30 years as investors sold from bullion-backed funds. Gold fell for a sixth-straight quarter, the longest slump since 1984, and lost 10 per cent in 2015. Prices, which were little changed on Thursday, plunged about 45 per cent since reaching a record high in 2011.

The metal booked its third annual loss, the longest run since 1998, as the dollar surged on the back of tighter monetary policy in the United States, joining a collapse in prices of commodities from iron ore to oil. Holdings in gold exchange-traded products have declined 10 times in the last 13 sessions to 1,466.4 metric tons, near the lowest in more than six years.

Gold gained less than 0.1 per cent to settle at $1,060.20 an ounce on the Comex in New York. The metal reached a five-year low earlier this month. Prices may approach $1,000 in 2016, before recovering toward $1,200 by the end of the year as the dollar and bond yields retreat, Hansen said.

The US Federal Reserve raised borrowing costs for the first time in almost a decade this month, and traders are now focusing on the pace of further rate increases. While HSBC Holdings predicts just two moves next year, Goldman Sachs is among banks that see four. Bullion will drop to $950 by the end of next year, according to Barnabas Gan, an economist at Oversea-Chinese Banking who’s the top-ranked precious-metals forecaster.

gold

Money managers have been betting on more price declines since November, US Commodity Futures Trading Commission data show. Earlier this month, they held the biggest net-short position since at least 2006.

Oil prices headed for a second year of steep losses in their last trading hours of 2015 as record OPEC supply created an unprecedented global glut that may take another year to clear. WTI traded 32 cents lower at $36.28 a barrel by afternoon yesterday and Brent crude was 19 cents lower at $36.27 a barrel.

Brent prices are set for a third year of declines after ending 2013 slightly lower and falling sharply over the past two years.

oil spread

Prices fell 3% on Wednesday as crude inventories in the United States rose 2.6 million barrels last week, the US Energy Information Administration said, echoing high stocks in Europe and Asia.

The immediate outlook for oil prices remains bleak. Goldman Sachs has said prices as low as $20 per barrel might be necessary to push enough production out of business and allow a rebalancing of the market. Morgan Stanley said in its outlook for next year that “headwinds (are) growing for 2016 oil”. The bank cited ongoing increases in available global supplies, despite some cuts by US shale drillers in particular, as well as a slowdown in demand, as the main reasons.

wti oil change

Posted on 31st December 2015 by Admin in Stockpair Daily Insight

stockpair-dailytips (2)

Crude Oil The Only Interest As Traders Look To 2016

December 31, 2015

Brent crude oil retreated toward 11-year lows as Saudi Arabia’s oil minister made it clear the kingdom had no plans to scale back its output. Saudi said today that there are no more production quotas.

Oil futures slid after the report that crude inventories rose by 2.6 million barrels in the last week, surprising analysts who had expected a decrease of 2.5 million barrels. Crude stocks at the Cushing, Okla., delivery hub rose by 892,000 barrels to a record, EIA said.

The data painted a bearish picture across the board, underscoring concerns about falling distillate demand during the warm holiday week while imports and domestic stocks grew.

oil price drops

“It is a tough data set for the bulls to deal with as we end 2015, “said John Kilduff, partner at New York energy hedge fund Again Capital.

“Imports rebounded by over 500,000 barrels to nearly 8 million barrels per day, domestic production actually rose slightly, and the year-end destocking phenomenon has apparently run its course.”

In the immediate aftermath of the data, U.S. crude futures extended losses, falling to an intraday low of $36.40 per barrel before recovering to earlier levels.

What seems to be happening in the crude market is that traders are trying to make money on price movements in either direction. Because the oversupply of oil is taking its sweet time to clear, the price changes quickly on any news or forecast. That probably won’t change soon, but one thing seems pretty clear: a barrel of crude oil has seen its last $100 price tag for a very long time.

U.S. shale production has essentially replaced Saudi Arabian production as the market’s balancing mechanism. That’s not necessarily a good thing. In any event, production costs from shale plays, once believed to be in the range of $80 to $90 a barrel, have fallen to a range of no more than $50 to $60, and even lower. That’s still a long way from the Saudi cost of around $10 a barrel, but it does indicate that if prices do begin to rise, U.S. producers can begin making money again at well below $100 a barrel.

crude oil chart

Posted on 30th December 2015 by Admin in Stockpair Daily Insight

stockpair-dailytips (2)

Crude Oil Talk Of The Markets

December 30, 2015

Crude oil prices firmed but held near recent multi-year lows, dogged by stubborn oversupply and tepid economic data. On Monday, both Nymex and Brent fell more than 3% after weak data out of China and Japan stoked concerns about demand.

Traders will be mostly taking cues from this week’s U.S. official crude stockpiles and production data to be released on Wednesday. On Monday, data provider Genscape Inc. said stockpiles at Cushing, Oklahoma, the delivery point for the WTI contract, rose by more than 1.2 million barrels in the week that ended Friday, according to a person who had reviewed the report.

The expansion of U.S. crude inventories, Iran’s expected full resumption of oil supply to the market, coupled with the Organization of the Petroleum Exporting Countries’ confirmation last week that output by its members will continue to grow next year, all point to a bigger global overhang in the future.

“For 2016, we are once again fairly confident of a first-half supply and demand surplus, with weaker seasonable demand for oil and a likely increase in total OPEC supply to 32 million barrels per day or more as sanctions against Iran are lifted,” said Tim Evans, a Citi Futures analyst, in a note.

oil prices

While demand for crude will likely remain in the doldrums in the coming months, analysts were upbeat about demand for gasoline as auto sales in China got a boost from a new tax-break and drivers in America take advantage of cheaper gasoline prices.

Not a day goes by where oil isn’t mentioned in financial media given one of the most stunning and persistent collapses in history. With every downtick, some pundit comes on air arguing that $20 is the next stop. Of course, on any kind of an uptick from the day before someone will boldly call for the return to $60, but never mind the whims of prognosticators based on small samples and recency bias.

We all know there is both an oversupply and under demand problem when it comes to black gold. There is no new narrative here. To some extent, we should all be hoping for lower energy costs, but only to the extent that those lower energy costs aren’t due to some severe drop in its usage.

If oil potentially falls further, but inflation expectations continue to hold, then it appears there may be a level of cognitive dissonance among the crowd given just how important oil prices are from the standpoint of cost-push inflationary pressure. Of course, that is not to say that inflation expectations couldn’t fall out of bed and a deflationary wave couldn’t grip investor psyche at the very start of 2016.

saudi-arabia-government-budget

Posted on 29th December 2015 by Admin in Stockpair Daily Insight

Gold Slowly Returns To Bears

December 29, 2015

The dollar-dominated precious metal is on its way to represent another bearish year like this one. Gold looks ready to close the year out with close to a 10% loss. Gold costs hiked earlier 2015 with an estimate of $1,305 as safe haven flows enhanced the metal after when Swiss National Bank (SNB) unpegged Swiss franc versus Euro. Gold cost dropped off due to several reasons amid which ones are The Federal Reserve’s recent projection to lift rates, geopolitical events in the past years which liberated it as a whole single entity, the monetary policy aimed to less complicate interest rates at record lows for major central banks, and moreover, a drop down in Energy cost range had put in a lot of negative impact on Gold.

While Gold costs drew support from a big rise in assets of the top gold exchange-traded fund (ETF) late last week, continuation of outflows this week indicated investors remained cautious.

“We see overall bearish gold and look for further downside towards our initial targets in the $1,033-$1,043 an ounce area, a move below the $1000 psychological level would point lower towards greater targets near $946,” – Barclay’s said.

gold 3 year

Goldman Sachs, JP Morgan, Citi, ABN Amro, and Societe Generale all forecast gold prices collapsing below $1,000 in earlier 2016. Even HSBC, which predicts the price will end 2016 higher than it is now, is forecasting the royal yellow metal to be bearish before the rates could retrieve.

The prices have been declining at global as well as domestic markets. India is the largest importer of gold in the world, the demand of which mostly comes from the jewelry industry.

During April-November this fiscal, the imports dropped to $22.65 billion as against $24.49 billion in the same period last year.

Gold is set for the third straight year of downtrend; gold has lost further sheen in 2015 with a fall of over 10% in its prices as investors looked for other asset classes.

holmes122815-1

The silver has been no better with a dip of about 8 per cent in its prices.

Extreme volatility in the dollar value and the uncertainty around the long-pending rate hike in the U.S. added to the roller-coaster ride for gold throughout 2015, while the headwinds from a slowdown in China added to the worries.

Subdued demand along with fears over slowdown in global consumption further dampened the sentiments, while improving outlook for equity markets led to the investors looking for asset classes with better return prospects.

gold tues

Posted on 28th December 2015 by Admin in Stockpair Daily Insight

2016 ahead

Boxing Day Keeps Trading Light

December 28, 2015

Christmas day saw light trading with only Asian markets opened.  Tokyo closed lower, as a strong yen dented exporters, with most Asian markets shut for a public holiday. However, mainland Chinese shares rose on stimulus expectations, though gains were limited by the lack of trading enthusiasm as the year end approached, dealers said.

The benchmark Shanghai Composite Index added 0.43 percent, or 15.42 points, to 3,627.91. It rose 1.37 percent over the week.

The Shenzhen Composite Index, which tracks stocks on China’s second exchange, gained 0.57 percent, or 13.36 points, to 2,359.73. It climbed 1.03 percent during the week. Most other regional financial markets were closed.

Wall Street surged this week amid a holiday-shortened week for financial markets and tepid trading volumes, putting the S&P 500 back into the green for the year.

Investors seem to have shrugged off a range of concerns, including the potential fallout from the first interest rate hike in nearly a decade, weakness in the bond market and falling corporate profitability. A rebound in energy prices, driven by a tax-driven decrease in oil inventories heading into the end of the year — has fueled much of the gain in stocks, which has pushed the Dow Jones industrial average up nearly 450 points, or 2.6 percent, in three days.

In Europe, only Russia and Turkey were open for trading. Yields on five-year Russian bonds fell to three-week lows and the ruble trimmed a weekly appreciation.

The greenback edged lower against most major currencies Thursday. Weaker dollar made the dollar-priced crude less expensive and more attractive for buyers holding other currencies.

U.S. crude supplies of last week lost 5.9 million barrels to 484.8 million barrels, 97.6 million barrels more than one year before, according to the U.S. Energy Information Agency (EIA)’s Wednesday weekly report. U.S. crude production added 3,000 to 9.179 million barrels a day last week, according to EIA’s report.

Data from oil service company Baker Hughes released Wednesday showed that the number of active oil rigs in the U.S. fell by three to 538 of this week.

Crude-oil-chart9

Posted on 24th December 2015 by Admin in Stockpair Daily Insight

stockpair-dailytips (2)

Traders Begin To Focus On 2016

December 24, 2015

As we move into the New Year traders will continue to focus on global growth and interest rate increases. Although growth in overall economic output in the world slowed according to the IMF’s October World Economic Outlook, in 2015 growth is expected to diminish from 2014’s 3.4 percent to 3.1 percent, most developed countries managed to maintain or increase last year’s pace. According to the European Commission Economic Forecast, released in November, real GDP in the euro area is projected to grow by 1.6 percent in 2015, entering a period of a “modest” economic growth. Last year growth in the single-currency zone reached 0.9 percent after two years of recession.

China will be a main driver as the government tries to acclimate to the worldwide marketplace as its currency becomes part of the international reserve currencies.

For the last five years, the government has tried to grow the economy at 7 to 8%. Stimulus programs worked for a while. But after problems with overcapacity and a property bubble, China’s leaders recognized the need for change.

“This is so-called new normal, which means China will go from a high growth rate to slower or more sustainable growth rate,” Cheung said. “It at least will take two to three years for the economy to be on the stable growth path. Unfortunately, that’s not good for the market. There will still be a volatile market in 2016.”

Investors say they’re willing to buy stocks again, though a majority believes the market will be flat or down in 2016, Cheung said. Property sales could fall 10% next year; 68% of consumers surveyed by CLSA have no plans to buy real estate in 2016. But the employment market looks resilient.

where does growth come from forexwords

“The economy will be relatively weak in the first part of the year,” he said. “We believe the economy will stabilize at the earliest in 2017, but it could take longer.”

Whether the renminbi will depreciate is the “hottest topic” for global investors, Cheung said. China has a clear road map for the renminbi — in addition to getting the currency included in the International Monetary Fund’s Strategic Drawing Rights basket (which is set to take effect next October), capital account opening and renminbi convertibility are explicit goals between 2016 and 2020.

Currency watchers, however, should keep an eye on the euro. Europe is China’s largest trading partner and Beijing wants to keep its exports attractive. “The euro could fall 6% next year, [and] China would probably be tracking that down” to keep the renminbi competitive, Cheung said.

According to the US Commerce Department, the GDP of the United States is expected to advance in 2015 at about 2.5 percent, similar to that seen last year (2.4 percent).

At the same time, the International Monetary Fund forecasts weaker Chinese economic growth, slipping back from 7.3 percent in 2014 to 6.8 in 2015 and 6.3 percent in 2016, while such developing economies as Russia and Brazil are expected to shrink by 3.8 and 3 percent respectively in 2015 and by 0.6 and 1 percent in 2016.

2016 markets forexwords