Its amazing how quickly Tuesday seems to come around every week.
Its the usual drill again this week with a v1 issue and updates to follow. Here a trio of technical reports from the “swiss team”, ML and of course the excellent GS report. Much more to come tomorrow.
First up by way of an intro lets comment on volatility. Equity market volatility has narrowed this week. We are looking for direction it seems.
FX markets continue to see extreme volatility of between half to, in some cases, 2% a day moves. This is very unusual and when you consider its against a back ground of zirp (zero interest rate policy) its frankly unbelievable. You could lend the Swiss government capital and receive -.01% every year for the next ten years or earn 2% in a day in the fx markets, if you are on the right side of that trade. Policy makers are forcing everyone eventually into playing in the asset market casinos.
From a professional trader perspective this is a very good thing. The more non professional and even professional but slow moving capital that is flushed into asset markets attempting to trade them the great your profits will be. Any pro trader that the easy meat are not the GS algo bots but the slow moving pension funds and pis (private investors). Its also worth noting that generally these two “easy meat” speculators usually are seen to enter asset markets at the end of a bull market.
Staying on currencies for a moment its worth picking up here which countries are the most exposed to the appreciation in the US$. The US$ is the global funding currency in spite of the ECB and BOJ’s recent efforts. So as the US$ bull marches onward again we should be looking carefully at the following list for the weakest link. We are paid to find weakest links whether we morally like this or not.
Many non US equity markets now, like the European equity markets and the Hang Seng, as the Swiss team point out below, are becoming buys. Global equity market still have some legs to extend in spite of the obvious potential short term and certainly medium term issues in US markets. This earning season in the US is likely to be extremely weak.
This report will be updated tomorrow as a V2 so please watch out for the update.
Here, without delay is the Swiss team’s outstanding, award winning, latest technical update.
Fitzpatrick at CB is on a deserved holiday so in his place i bring you this excellent monster tech report from ML:
And here is GS:
Note eurostoxx 50 remains a conviction 3 rating.
Look out for the v2 tomorrow guys.
As a pre V2 interim here Citi’s tech guru. Apologies to him, he was not on holiday after all.
And here CS with their latest, hot off the wires, FX strategy and tech.
All the best for now
Rich