Posted on 30th October 2014 by barry norman in Stockpair Daily Insight

stockpair-dailytips (2)Stockpair traders should keep an eye on these events today:

Cur. Event
  JPY Household Spending
  JPY National Core CPI (YoY)
  JPY Tokyo Core CPI (YoY)
  AUD PPI (QoQ) (Q3)
  JPY BoJ Press Conference
  EUR German Retail Sales
  EUR French Consumer
  EUR Italian CPI (MoM)
  EUR CPI (YoY) (Oct)
  EUR Unemployment Rate
  CAD GDP (MoM) (Aug)
  USD Chicago PMI (Oct)
  USD Michigan Consumer

 

United States GDP Beats Expectations

October 31, 2014

Barry Norman

U.S. Federal Reserve Chair Janet Yellen testifies before the House of Representatives Financial Services Committee on Capitol Hill in WashingtonMuch to the markets surprise Janet Yellen bypassed mention of monetary policy or economic outlook in her speech today. Traders were expecting her to mention yesterday’s FOMC statement. More importantly was the surprise print of GDP which came in at 3.5% against expectations of 3.0% which supports the FOMC statement yesterday and the possibility of an interest rate increase in mid-2015. The United States GDP grew at a 3.5 percent annualized rate between July and September; the government said Thursday morning, providing fresh hope that a stubbornly slow-footed recovery could be gaining some momentum.

The latest gross domestic product figure, released by the Commerce Department, slightly exceeded analyst predictions and caps America’s strongest six-month period of expansion since 2003.

 

 

Quarter-to-Quarter-Changes-In-Real-GDP-Quarter-to-Quarter-Changes-In-Real-GDP_chartbuilder-1

U.S. officials emphasized that the latest GDP figure, a measure of all goods and services produced, outpaced those of other advanced countries and reflected the country’s improving labor market and growing oil and gas supply.

The second quarter’s 4.6 percent GDP jump was a rebound from a 2.1 percent slump in the first quarter that partly reflected a harsh winter. Consumer spending, which accounts for almost 70 percent of the economy, climbed at a 1.8 percent pace last quarter after growing at a 2.5 percent rate in the previous three months, today’s report showed. The gain compared with a 1.9 percent median forecast in the Bloomberg survey. Purchases added 1.2 percentage points to GDP.

The growth in real GDP beat consensus expectations of 3% gains and was due to positive contributions from personal consumption expenditure, exports, nonresidential fixed investment, and government spending at all levels. Imports, which negatively impact GDP, increased. Gains were also partially offset but a decrease in private inventory investments. The slowdown in growth compared to the second quarter was due to deceleration in most measures other than federal government spending which surged to 4.6% due to a large increase in defense spending.

 

Posted on 29th October 2014 by barry norman in Stockpair Daily Insight

stockpair-dailytips (2)

Stockpair traders should keep an eye on these events today:

Cur. Event
  AUD HIA New Home Sales (MoM)
  GBP Nationwide HPI (MoM) (Oct)
  EUR Spanish GDP (QoQ) (Q3)
  EUR German Unemployment
  EUR German Unemployment Rate
  USD GDP (QoQ) (Q3)
  USD Initial Jobless Claims
  USD Fed Chair Yellen Speaks

 

The FOMC Statement A Bit Up Beat Keeps Interest Rate Increases On The Table

October 30, 2014

Barry Norman

The FOMC voted to end the last leg of its bond-buying stimulus program, cutting purchases of Treasury’s and mortgage-back securities to zero from $15 billion starting on Nov. 1. The Fed also sounded more upbeat about the labor market and said it doesn’t expect falling energy prices to hold inflation down in the long run. The Fed left unchanged its promise that rates would remain near zero for a “considerable time.”

MW-CX771_fed_qe_20141029141003_NS

But it qualified the statement, saying that if the economy improves faster than expected, than the first rate hike could come sooner than anticipated. The US dollar soared heading towards the 86.00 price level, while gold tumbled to 1217.00

us dollar

The statement also made a major change to the Fed’s view on labor markets. Instead of seeing “significant underutilization” in the labor market, which was in the September statement, the Fed now said that underutilization in labor resources “is gradually diminishing.”

The euro fell against the dollar for the first time this week to trade at 1.264. With the Fed bond buying official over, markets will now focus on when the Fed will raise interest rates. There are sharp divisions among Fed officials on the timing of the first rate hike. Before the statement was released, the market was expecting the first rate hike in October 2015, a few months later than the “mid-2015” guidance from key allies of Fed Chairwoman Janet Yellen. Thursday’s speech by Fed Leader Yellen will have a significant effect on the market. Yellen has repeatedly stressed that the decision to hike rates will be data driven.

stockpair crude oil

Posted on 28th October 2014 by barry norman in Stockpair Daily Insight

stockpair-dailytips (2)

Stockpair traders should keep an eye on these events today:

Cur. Event
  JPY Industrial Production (MoM)
  NZD ANZ Business Confidence
  CAD RMPI (MoM) (Sep)
  USD FOMC Statement
  USD Fed Funds Target Rate

Backwardation & Contango Strange Terms

October 29, 2014

Barry Norman

oil_1697040bTwo terms have been popping up often lately, they are backwardation and contango, as the oil market tanks and the global glut continues to grow. There are many reasons for the growing stocks of oil. The world continues to use oil at record rates, while OPEC pumps at record rates, along with the Russians and the United States. With the development of shale fracking technology the amount of oil produced by the US has hit record levels. The US has become a net exporter of oil. Natural gas production around the globe has also increase and the use of natural gas has expanded reducing the need for crude oil. All this affects the price that crude oil and Brent oil bring in the spot market but also the futures markets. Today, crude oil is selling for December delivery at 81.08 and Brent is trading for 85.86 both well below their average trading range and their expected trading range. The drop in prices is having international effects on budgets of oil producing countries as well as oil importing countries.  There is an oil glut in the United States which is causing storage problems as producers now have to locate and pay higher fees for storage.

These problems create unique situation in the commodities markets.  At present crude oil is a state best describe by the term backwardation, while Brent oil is described by an effect known as cantango.

Backwardation says that as the contract approaches expiration, the futures contract will trade at a higher price compared to when the contract was further away from expiration.  As we approach contract maturity, the futures price must converge toward the spot price. Backwardation is the opposite of contango. Contango is when the futures price is above the expected future spot price. Because the futures price must converge on the expected future spot price, contango implies that futures prices are falling over time as new information brings them into line with the expected future spot price.

It all sounds pretty confusing but so is the state of the energy markets at present.

stockpair crude oil

 

 

 

Posted on 27th October 2014 by barry norman in Stockpair Daily Insight

stockpair-dailytips (2)

Stockpair traders should keep an eye on these events today:

Cur. Event
  JPY Retail Sales (YoY) (Sep)
  USD Core Durable Goods Orders
  USD Durable Goods Orders
  USD S&P/CS HPI Composite – 20

Countdown To The FOMC Decision

October 28, 2014

Barry Norman

 

AboutTheFedHeadingAll eyes will focus on the FOMC meeting starting today with the decision and statement on Wednesday afternoon. Traders are not expecting a surprise from the Fed but there are many possible scenarios. With US data a bit on the negative side as of late there is the possibility that the Fed will slow down their pace of easing monetary policy and delay the conclusion of the program or they might even take a hawkish stance in their statement. The US dollar eased on Monday to trade at 85.57 after pending home sales missed expectations a sign that the US housing market was not recovering as fast as possible. The euro gained 41 points to trade over 1.27 after Sundays ECB stress test held no secrets. German Ifo data missed forecast casting a shadow on the eurozone and the possibility of recession as the ECB begins to open its toolbox as many think the ECB waited too long to help the eurozone recover.  In Germany, the business sentiment index fell to its lowest in almost two years. It was the sixth straight decline for the index, which is based on a monthly survey of some 7,000 German companies. The euro zone’s biggest economy had steamed ahead in the first quarter. But it suffered a 0.2 percent contraction in the second quarter and concern is growing that Germany will slide into a recession.

The Japanese yen rebounded to trade near 107 against the weak US dollar ahead of this week’s Bank of Japan decision.  There is a strong possibility that the bank might add additional stimulus and comment on the sale tax increase due soon.

us dollar

 

Posted on 25th October 2014 by barry norman in Stockpair Daily Insight

 

stockpair-dailytips (2)

Stockpair traders should keep an eye on these events today:

Cur. Event
  EUR German Ifo Business Climate
  USD Pending Home Sales (MoM)

 

Traders Turn Focus To The FOMC

October 27, 2014

Barry Norman

 

janet_yellen_federalreserve_mgnThis month’s most anticipated event has finally arrived. The 2nd to last meeting of the year is expected to cause some volatility. The meeting will take place on Tuesday and Wednesday, the Federal Reserve policymaking committee (the Federal Reserve Open Market Committee) meets to decide policy settings. The FOMC is widely expected to announce the end of the money printing program or Quantitative Easing. But surprises can happen. The FOMC will further debate when it believes that interest rates should start rising and also debate how this is reflected in the wording of the statement. Overall, there is a clear risk that decisions could induce more financial market volatility.

The DXY weakened Friday, unable to sustain much direction over the course of the week amid uncertainty about the timing of a US interest rate hike. The Federal Reserve may provide some clarity on Wednesday with the release of their latest monetary policy statement. Markets expect the Fed to fully wind down their once-massive quantitative easing program, but opinions are divided about whether policy makers will signal that interest rates will begin to rise before next summer.

 

us dollar stockpair

Recent US economic data has been mixed, and with the nation’s sluggish economic recovery jeopardized by growing problems in Europe and elsewhere, the Fed may be reluctant to tighten in the first half of 2015. In last week’s economic news, US new home sales inched up 0.2% to an annual rate of 467,000 in September from the revised August rate of 466,000. The dollar slipped to 1.27 versus the euro, staying away from a 2-year peak near 1.25 seen earlier in October. The euro gained even after a draft statement reportedly showed more than two dozen banks will fail the European Central Bank’s stress test.

eurusd stockpair

Posted on 25th October 2014 by barry norman in Stockpair weekly Insights

Stockpair Weekly Market Wrap

October 27, 2014

Stockpair traders should keep an eye on these events this week:

Cur. Event
  EUR German Ifo Business Climate
  USD Pending Home Sales (MoM)
  USD Core Durable Goods Orders
  USD CB Consumer Confidence
  NZD Interest Rate Decision
  EUR German Unemployment Change (Oct)
  USD GDP (QoQ) (Q3)

 

Global Exchanges

European equities tumbled Friday trimming strong weekly gains, after a draft statement reportedly showed more than two dozen banks will fail the European Central Bank’s stress test. The results of the ECB’s check-up on banks will be made official on Sunday. 105 banks passed the test, while 25 banks are said to fall short of ECB standards, Bloomberg reports.

Sluggish earnings results from some of Europe’s key companies are also raising fears about the health of the global economy. News of another high-profile Ebola case in the US also had investors on edge today, while relatively upbeat German consumer confidence figures were brushed aside. The German DAX slipped 0.66% and the French CAC 40 fell 0.69%. The FTSE 100 index of the UK eased 0.47%.

US stocks moved notably higher over the course of the trading day on Friday after initially showing a lack of direction. The gains on the day extended the recent upward trend by the markets, with the tech-heavy Nasdaq reaching its best closing level in almost a month.

global markets stockpair

 

Currency Markets

In economic news, German consumer climate for November improved unexpectedly, survey data revealed. The forward-looking consumer confidence index rose slightly to 8.5 in November from 8.4 in October, market research group GfK said. The score was forecast to fall to 8. The euro fell to trade at 1.266.

The UK economy grew at a slower pace in the third quarter, preliminary estimates from the Office for National Statistics Office showed. Gross domestic product climbed 0.7% from the second quarter, when it grew 0.9%. The pound stumbled to trade at the 1.60 level after dipping below. Thursday’s retail sales miss continue to weigh on sterling.

The US dollar continued to surge at the end of the week as the US economy and earning reports were fairly positive. The US dollar ended the week at 85.79 after trading above the 85.95 price.

global currency stockpair

 

Commodity Markets

Gold futures snapped a two-day loss to end higher Friday, on lingering concerns over the health of the eurozone economy, notwithstanding an unexpected improvement in German consumer sentiment in November. Gold prices were also limited with continued speculation about further stimulus from the European Central Bank and an extended run for the low interest regime in the US. Gold ended the week at 1231.00

Crude oil traded near its lowest in a year falling as low as the 80 price range to close the week at 81.30 after the EIA inventory showed an unexpected surge in stocks. US crude oil ended sharply lower on Friday, on demand growth concerns after news of strong supply from the Middle East, with markets discounting reports that Saudi Arabia has cut its crude output.

Posted on 23rd October 2014 by barry norman in Stockpair Daily Insight

stockpair-dailytips (2)

Stockpair traders should keep an eye on these events today:

Cur. Event
  NZD Trade Balance (MoM) (Sep)
  NZD Trade Balance (YoY) (Aug)
  EUR GfK German Consumer Climate (Nov)
  GBP GDP (QoQ) (Q3)
  GBP GDP (YoY) (Q3)
  USD New Home Sales (Sep)

Economic Data Sends Currency Markets Bouncing

October 24, 2014

Barry Norman

Slightly stronger eurozone PMI’s economic data supported sentiment on the European equity markets today, with most indices trading slightly higher. In the US, equities opened higher too, trading almost 1% higher. German PMI for manufacturing and services was better than expected while France printed below.

german PMI

The Bank of Spain said today it expected the Spanish economy to have expanded by 0.5% Q/Q in the third quarter, driven by a strong summer tourist season, and added that there were 151 000 jobs created during the quarter.

The Bank of Italy said today it expected the Italian economy to have contracted slightly in the third quarter as international tensions hit the outlook for exports, while household and business confidence dimmed.  As the global focus turns to the eurozone economy and the possibility of a recession the ECB and IMF are closely monitoring European budgets. In a letter to Italian FM Padoan, EC Vice President Katainen asked Italy for answers on how it will comply with the budget rules by Friday. According to Italy’s draft budget, it doesn’t take enough measures to bring down the structural deficit fast enough. In coming weeks, Italy and the EC might clash on this subject. A similar scenario is expected for France. European equities and the euro were sold. EUR/USD dropped to the 1.2615 area but the 1.2606 support was left intact.  Fortunes for the euro changed after the better than expected German manufacturing PMI. One hour later, the UK side of the story accelerated the rebound in EUR/GBP as the UK retail sales were much weaker than expected. Sales dropped 0.3% M/M, while a stabilization was expected US data were OK. Jobless claims were close to expectations. The Chicago Fed national activity index was stronger than expected.

EURUSD(15 minutes)20141023124515

Posted on 22nd October 2014 by barry norman in Stockpair Daily Insight

stockpair-dailytips (2)

Stockpair traders should keep an eye on these events today:

Cur. Event
  AUD RBA Governor Stevens
  NZD CPI (QoQ) (Q2)
  CNY HSBC Manufacturing PMI
  EUR German Manufacturing PMI
  EUR German Services PMI (Oct)
  EUR Manufacturing PMI (Oct)
  EUR Services PMI (Oct)
  GBP BBA Mortgage Approvals
  GBP Retail Sales (MoM) (Sep)
  GBP CBI Industrial Trends Orders
  USD Initial Jobless Claims

 

US Dollar Continues To Gain Momentum

October 23, 2014

Barry Norman

The US dollar gained its dominance today as traders dumped the euro on worries about ECB stimulus and monetary policy changes.  The euro fell close to 60 points on Wednesday to trade at 1.2660. The US is doing better than it has in years. Jobs growth is up, unemployment is down, the manufacturing sector carries the rest of the world on its shoulders and the World Economic Forum named the U.S. the third-most competitive nation, our highest ranking since before the recession. Although our currency has softened recently, it has put pressure on two commodities that we consider our lifeblood at U.S. Global Investors: gold and oil.

us dollar

It’s worth noting that we’ve been here before. In October 2011, a similar correction occurred in energy, commodities and resources stocks based on European and Chinese growth fears. The US dollar gained 0.4% today to forcing dollar denominated commodities to trade in the red. Gold prices pulled back with the yellow metal — often viewed as an inflation hedge — making a leg down after a report showed inflation remains in check.

The metal is pulling back after rising on Tuesday to levels last seen in early September, and some analysts suggest it’s just catching its breath after a solid advance.

gold

A Labor Department report on Wednesday indicated that U.S. consumer prices rose slightly last month owing to higher costs for food and housing, but inflationary pressures continue to be held in check by falling energy expenses. The consumer price index climbed a seasonally-adjusted 0.1% in September, meeting the consensus forecast from economists. At this writing gold is trading at 1243.60 down over $8.00 on the day. Crude oil reversed its up movement earlier today to fall 4 cents to trade at 82.45. On Thursday there is a rash of economic data due throughout the day but German PMI data could send the euro tumbling while retail sales in the UK are pegged to reach expectations but there is a possibility that it might miss sending the pound on a downward spiral.

eurusd

Posted on 21st October 2014 by barry norman in Stockpair Daily Insight

stockpair-dailytips (2)

Stockpair traders should keep an eye on these events today:

Cur. Event
  JPY Adjusted Trade Balance
  AUD CPI (YoY) (Q3)
  AUD CPI (QoQ) (Q3)
  GBP MPC Meeting Minutes
  USD Core CPI (MoM) (Sep)
  USD CPI (MoM) (Sep)
  CAD Retail Sales (MoM)
  CAD BoC Monetary Policy

 

Chinese Data Better Than Expected But Was It Good

October 22, 2014

Barry Norman

 

central-bank-of-china_1388666352Markets reacted positively to the release of better than expected GDP data along with a rebound in Industrial Production.  There’s a couple of ways to look at this data but clearly investors are focusing more on the positives once again. The fact that the economy grew at 7.3% compared to a year earlier, ahead of expectations of 7.2%, obviously means the economy isn’t slowing as much as people thought, but it also leaves the door open to further targeted stimulus from the People’s Bank of China if the country is to achieve its 7.5% growth target. Industrial production increased by 8% in September, bouncing back from the unexpected decline in August. Retail sales and urban investment both fell short of expectations in China for September, but these misses were only small and therefore taking everything into account, investors were more encouraged by the data than disappointed. The fact that it was the perfect balance of being strong enough to ease fears of a major slowdown in China but weak enough to leave the door open to more targeted stimulus is perfect for the markets. A two-day rebound in global shares slowed and the dollar edged lower, as slightly above forecast Chinese growth data failed to erase concerns that the world’s second-biggest economy is losing momentum. However, the growth was the weakest for any quarter since the 2008/09 global financial crisis.

gold stockpair

Gold hit its highest since Sept. 10 at $1,253.70 an ounce in earlier trade U.S. gold futures were up $6.70 an ounce at $1,251.30. The dollar was unchanged versus a basket of leading currencies, undermined by a dip in U.S. government bond yields.

The U.S. currency has lost ground in recent weeks as concerns about slowing global growth prompted investors to trim bets that the U.S. Federal Reserve will raise interest rates soon after an expected end in its stimulus later this month.

us dollar stockpair

Posted on 20th October 2014 by barry norman in Stockpair Daily Insight

stockpair-dailytips (2)

Stockpair traders should keep an eye on these events today:

Cur. Event
  AUD Monetary Meeting Minutes
  CNY Fixed Asset Investment (YoY)
  CNY GDP (YoY) (Q3)
  CNY GDP (QoQ) (Q3)
  CNY Industrial Production (YoY)
  AUD RBA Assist Gov. Lowe
  USD Existing Home Sales (MoM)
  USD Existing Home Sales (Sep)

Slumping Oil Prices Begin To Worry Russia and Iran

October 21, 2014

Barry Norman

Oil SpillCrude oil continues trade on a weak note while Brent oil continues to fall. Iran’s oil ministry was speaking confidently despite the 20% global price decline, insisting that it wouldn’t affect the budget. Deputy Oil Minister Javadi said the decrease would be “short lived,” an oil ministry information service said. But Iranian President Hassan Rouhani, clearly concerned, has directed the oil ministry to seek a meeting of the Organization of Petroleum Exporting Countries cartel next month to discuss propping up the price, Iranian news agencies are reporting. Crude oil has fallen from over $100 a barrel in spring to under $85 a barrel. About 75% Iran’s government revenues come from oil sales, and analysts say the country needs an oil price of around $140 a barrel to sustain its budget.

Oil analysts say it is uncertain how long the decline in prices will last. It has been driven by a slowdown in the economies of China and Europe, coupled with strong supply from the United States and some Middle Eastern countries. But some analysts speculate that it could reflect a longer-term shift away from petroleum usage.

A decline in global oil prices, driven in part by a boom in U.S. shale oil production, is threatening to hit the economy of energy-exporting Russia harder than Western economic sanctions have done. The decline is bringing growing political and economic pressure on Russian President Vladimir Putin. Moscow has been socked this year by U.S. and European Union sanctions over Russia’s annexation of Ukraine’s Crimea region and its operations in eastern Ukraine.

oil prices stockpair chart

Surging U.S. oil production and falling crude oil prices are shaking up world markets, but leading OPEC producer Saudi Arabia and U.S. shale producers have vastly different views of how the markets will react in the coming months. The producers are sort of a bullish, they’re kind of confident that oil prices are going to remain strong. And when you start to broach the subject, Saudi Arabia and OPEC countries would have to cut output to keep prices at $90 but OPEC nations are trying to freeze out shale producers by lowering prices making it less profitable for shale manufacturing which is much more expensive than standard extraction.

oil stockpair