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Macro

European Market Outlook: Will Trump deliver?


Morning Briefing February 28th 2017


Tuesday sees a busy data session across the board, with a host of European data due.

The European schedule kicks off at 0700GMT, with the release of the German retail sales data.

There is plenty of French data expected at 0745GMT, including the latest housing starts and permits, consumer inflation, producer inflation, consumer spending an preliminary Q4 GDP.

At 0800GMT, the KOF Economic Barometer will be published, with Italian preliminary February HICP expected at 1000GMT.

In the UK, Bank of England CEO Charlotte Hogg will appear before the Treasury Select Committee, answering questions at her confirmation hearing. Hogg has been named as the next Deputy Governor, replacing Minouche Shafik.

At 1130GMT, Chancellor Philip Hammond and his Treasury team will answer questions in the Commons.

The main US data release is expected at the same time, as the revised Q4 GDP data crosses the wires. Advance trade and advance business inventories are expected at the same time.

Fourth quarter GDP is expected to be revised up to a 2.1% pace from the 1.9% advance estimate, with upward revisions expected across the consumption and investment components. The chain price index is expected to be unrevised at a
2.1% rate.

At 1355GMT, the Redbook Retail Sales Index is released, followed by the Milwaukee Manufacturing ISM index and the S&P Case-Shiller Home Price Index at 1400GMT.

The MNI Chicago PMI will be published at 1500GMT, alongside the Conference Board Consumer Confidence survey.

The MNI Chicago PMI is expected to rise to a reading of 53.0 in February from 50.3 in January.

Other regional data already released have suggested that conditions improved dramatically in the month.

The index of consumer confidence is expected to hold steady at 111.8 in February. The Michigan Sentiment Index fell to 96.3 in February from 98.5 in January.

At 1530GMT, the Dallas Fed Services Survey will be published.

1745/1245  US  Kansas City Federal Reserve Bank President Esther George gives Akeynote speech about the U.S. Economy and Monetary Policy at Banking and the Economy: A Forum for Women in Banking in Midwest City, Okla., with audience Q&A,starting at 1745GMT.

Late US data will see the latest farm prices data published at 2000GMT.

Late Fed speakers see San Francisco Federal Reserve Bank President John Williams speak at 2030GMT.

Overnight, US President Donald Trump will address a Joint Session of Congress in Washington, starting at 0200GMT.

 

Global Economic Trading Calendar


 

Markets


FOREX: Sterling grabbed the Oscar for being the worst performing currency during the Asian session. An article in The UK Times suggested the UK is preparing for a new Scottish Independence vote, the pound was clobbered across the board, against the dollar the pound sank from around $1.2470 to $1.2392 and was last at $1.2424. Aussie-dollar rose from $0.7663 to $0.7694, supported by much better than forecast Q4 Company Operating Profits, the data showed a rise of 20.1%, from 8.0% expected. Meanwhile, euro-dollar currently trades at $1.0565 and dollar-yen at Y112.16 after trading in respective ranges of $1.0552 to $1.0575 and Y111.92 to Y112.32

US INDEX FUTURES: US stock index futures are trading slightly higher despite Japanese stocks trading weaker, with the Dow posting its 11-session of consecutive record high closes in a row. US stocks staged a last-minute rally on Friday, with major indexes turning positive ahead of the closing bell and the Dow extended its record-setting streak as market participants shrugged off concerns that the rally was overdone. Both the S&P 500 and the Nasdaq Composite rose for a fifth straight week, while the Dow Jones, up for the 11th session in a row on the day, brought its string of weekly gains to three. The Dow Jones rose11.44pts (0.05%) to end at 20,821.76, up for an 11th straight day for the first time since 1992, as well as its 11th straight record closing high - the longest such streak since 1987. The Dow Jones had traded in negative territory for essentially the entire session, only breaking into the green with seconds to spare. Currently the Mar'17 e-mini S&P futures are trading up 2.25 points at 2,367.25, the Mar'17 e-mini Nasdaq futures are trading up 4.00 points at 4,347.25, while the Mar'17 e-mini Dow futures are trading up 20 points at 20,807.

US TSYS: Cash treasuries have opened slightly lower despite news that Scotland is preparing for a new independence vote as reported by the UK times, with the news currently seeing Gbp/Usd some 0.40% lower. Currently cash 10's are some 0.9bp higher, with the curve slightly steeper. On Tuesday's Trump speech to both houses of Congress Nat West's Brian Daingerfield believes "he President's Joint Session of Congress speech on Feb 28th will likely act as the State of the Union speech".

JAPAN STOCKS: Japanese stock's have closed the morning session sharply lower as the market anticipates further Yen strength in upcoming sessions ahead of Donald trump's speech to a joint session of Congress on Tuesday. Also there has been algo and technical based selling after the Nikkei failed to decisively break the 19,600 level. The Nikkie has closed for lunch down 1.16% or 223.35 points at 19,060.19, while the Topix is last down 1.17% or 18.12 points at 1,532.02.

GOLD: Spot gold last up $1.00 at $1,258.25 per ounce, in a $1,259.15 to $1,255.05 range so far this morning in Asia, with the market trading slightly higher on US Dollar, while a the prospects of another Scottish independence referendum is also lending Gold support. Gold gained significantly on Friday afternoon and climbed above the corridor in which it has been trading for the past two and a half weeks. Friday morning saw Gold rise further to reach a 3.5-month high of around $1,260.25 per troy ounce, and as such is nearing the technically important 200-day moving average, which arrives at $1,262.

OIL: WTI crude oil futures for Apr'17 delivery last up $0.05 at $54.04 per barrel, after a $54.07 to $53.94 range in Asia today, with the market trying to stabilize after last Friday's modest losses which saw WTI crude ease some 0.85%. The latest CFTC data released Friday, showed that hedge funds lifted their net long position by some 6% in the week ending Feb'21st - the most since 2006, with overall longs rising 4.6% to an all-time high while shorts fell 7.5% to their lowest levels since Jul'14, according to Bloomberg data. NYMEX April light sweet crude oil futures settled down $0.46 at $53.99 per barrel on Friday, after trading in a $53.76 to $54.51 range.

 


Technical Analysis


BUND: (H17) Hesitating Around Bull Channel Tops

*RES 4: 166.84 High Oct 24
*RES 3: 166.55 Daily Bull channel top
*RES 2: 166.40 2017 High Feb 24
*RES 1: 166.19 Hourly resistance Feb 27

*PREVIOUS CLOSE: 165.92

*SUP 1: 165.82 Hourly support Feb 24
*SUP 2: 165.31 Hourly support Feb 23
*SUP 3: 164.75 Hourly support Feb 22
*SUP 4: 164.09 Low Feb 21    

*COMMENTARY: The contract took a backward step to start the new week and confirmed the significance of the bull channel tops coming in around 166.55 today. The Bollinger band top is noted at 166.39 and remains a concern for bulls. Initial support remains at 165.82 with bears needing a close below to ease immediate bullish pressure and below 165.31 to shift focus back to layers of support beginning at 164.75.

 

EUROSTOXX50: 3264.84 Support Key

*RES 4: 3394.83 High Dec 7 2015
*RES 3: 3357.68 Bollinger band top
*RES 2: 3355.40 2017 High Feb 22
*RES 1: 3326.29 Hourly resistance Feb 24

*PREVIOUS CLOSE: 3309.30

*SUP 1: 3295.32 Hourly support Feb 24
*SUP 2: 3283.30 Rising daily trend line
*SUP 3: 3280.36 Low Feb 24
*SUP 4: 3264.84 Low Feb 10

*COMMENTARY: The sell-off Friday resulted in dips below 21 (3287.42) & 55 (3286.23) DMAs before finding support ahead of the rising daily trend line. Bears need a close below the key 3264.84 support to confirm breaks of 21 & 55-DMAs and shift focus back to 3200.25-3214.31 where the 100-WMA is noted. Bulls take comfort in the recovery from below the 21 & 55-DMAs Friday but still need a close above 3326.29 to return pressure to 2017 highs.

 

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MNI subscribers make critical decisions with deeper insight and greater confidence. Pinpoint information and market-moving interviews let them react instantly to market changes and more importantly, anticipate future market moves. MNI reporters are market professionals in the news business. They work like journalists but think like traders. When interviewing Fed officials, our reporters ask the same questions you would ask. They cover the angles you would cover. Write the way you read.

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This article is from Eurex Exchange and is being posted with Eurex Exchange’s permission. The views expressed in this article are solely those of the author and/or Eurex Exchange and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Options

Volatility 411


CBOETV - Jamie Tyrrell, Group One Trading, discusses traders buying large amounts front month calls.

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. Copies are available from your broker, or at www.theocc.com. The information in this program is provided solely for general education and information purposes. No statement within the program should be construed as a recommendation to buy or sell a security or to provide investment advice. The opinions expressed in this program are solely the opinions of the participants, and do not necessarily reflect the opinions of CBOE or any of its subsidiaries or affiliates. You agree that under no circumstances will CBOE or its affiliates, or their respective directors, officers, trading permit holders, employees, and agents, be liable for any loss or damage caused by your reliance on information obtained from the program.

Copyright © 2016 Chicago Board Options Exchange, Incorporated.   All rights reserved.

This video is from CBOE and is being posted with CBOE’s permission. The views expressed in this article are solely those of the author and/or CBOE and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Technical Analysis

Tracking Financials Into 2017 - Technical Breakdown


Financials have become more favorable as there is talks of new legislation that will reduce the regulations implemented during the financial crisis back in 2008, which will give banks more opportunity for growth and higher stock prices.

Looking at the daily chart of the $XLF (SPDR Financial ETF) you will notice that shares have been strong as prices made a huge jump into the end of 2016 where prices haven’t traded at since 2008. Shares consolidated into a nice flattop wedge that was broken a couple of weeks ago, on decent buying volume.

Now that shares are above that $23.87 top on the wedge we would like to see it hold above those prices like it has been before making another move up. That will be a key level to watch over the coming weeks along with current highs at $24.68 and $25. If prices come back down through $23.87 we could see a pullback to the ascending trendline that formed the wedge which is roughly around $23.50. Below that and we have room down to $23 where prices bounced off in late January.

Shares are well above their 200-day moving average currently sitting at $20.72 and their 50-day moving average at $23.65. Moving averages are all beginning to point north indicating buyers are in control and that we could see higher prices in the near future.  We also have oscillators confirming price action with most of them in overbought territory. This could also indicate that we are due for a pullback soon so we will want to keep an eye on it going forward.

Some big names to keep tabs on would be Goldman Sachs, JPMorgan and Bank Of America.
 

Ross Cameron is an active trader and owner of Warrior Trading which he founded in 2012 as a live trading chat room emphasizing education and idea generation. In 2014, he began teaching trading classes, taking a break in 2015 to write a best-selling book How to Day Trade, which can be found at Amazon, Barnes & Noble, and other booksellers. Trading allows Ross to travel and bring his work with him. Today he continues to trade in his chat room and teach trading courses, and lives with his family in Vermont.

This article is from Warrior Trading and is being posted with Warrior Trading’s permission. The views expressed in this article are solely those of the author and/or Warrior Trading and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


12447




Futures

An Initial Look at 2017-18 Crops


Excerpt from The Hightower Report

The USDA’s Agriculture Outlook Forum this past week presented the first full look at the supply/demand outlooks for the 2017/18 marketing year for corn, soybeans, wheat and cotton. Here are the results of the reports and what they suggest for the markets:

USDA Outlook Forum: Corn

Expectations for cheaper supplies from Brazil and Argentina in the near future are starting to get the attention of world buyers. The private Brazilian consultancy Agroconsult has estimated the Brazilian corn crop at 93 million tonnes versus the USDA’s estimate of 86.5 million. They also put Brazil's corn exports at 28 million tonnes, up from 14 million tonnes last year. Agroconsult’s estimate for Argentina’s corn production is 37 million tonnes versus the recent USDA estimate of 36.5 million.

February comes to a close soon, and the February spring crop insurance price for corn is running around $3.86 per bushel, close to $3.85 last year. The soybean crop insurance price has reached $10.21 versus $8.85 last year. This suggests that if there are shifts in acreage from the USDA’s initial Outlook Forum numbers, there would likely be an increase in soybean acreage and a decline in corn.

The demand tone from the supply/demand estimates is bearish for corn. Granted, corn usage for ethanol demand is projected to be up by 50 million bushels from 2016/17 to a record-high 5.4 billion bushels, but feed usage is down 150 million bushels to 5.45 billion, and exports are down 325 million bushels to 1.9 billion. (This 14.6% drop in exports is likely due to expectations of a surge in South American corn production.)

This leaves the forecast for ending stocks at 2.215 billion bushels, a burdensome level. Our demand numbers are a little less bearish, but they still point to the second highest stocks to use ratio since 2005/06.

While the market may build a weather premium during the April-June timeframe, the short-term fundamental news is negative. We suggest position wait to establish bullish strategies when December Corn pulls back to the key support zone from $3.81 to $3.75 ¾. 

For trade recommendations and other research, subscribe to The Hightower Report's Weekly Market Letter and Daily Comments at Interactive Brokers.com.

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For a Free Trial to The Hightower Report, log in to Account Management, then select

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For more information, go to https://www.interactivebrokers.com/en/index.php?f=16948

This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made and we do not guarantee its accuracy or completeness.  Opinions expressed are subject to change without notice.  This report should not be construed as a request to engage in any transaction involving the purchase or sale of a futures contract and/or commodity option thereon.  The risk of loss in trading futures contracts or commodity options can be substantial, and investors should carefully consider the inherent risks of such an investment in light of their financial condition. 


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Macro

Fixed Income Market Questioning Federal Reserve Tightening Pace


Last Friday morning, we said we were particularly taken back when we learned after looking at our proprietary monitors that for the first time this year, in risk-adjusted terms, precious metals have overtaken the performance of ALL other commodities. In the context of the China/Trump reflation trade, specifically relative to industrial metals, that is quite a statement to us.

What was that statement? That a transition to anti-risk from the Trump trade has started.

Later that day, another switchover signal triggered in our Federal Reserve super-forecasting model. The market began to price the next interest rate hike by the Fed as the last - or "one in done." In layman's terms, the market began to see the need for a gradual pace of tightening as diminishing. That is a powerful signal as it would be the first time since the US Presidential Election that we've seen a potential structural shift in the fixed income market.

Sight Beyond Sight® is a global macro trading newsletter written daily by Neil Azous. With close to two decades of institutional experience across asset classes, Neil interprets the day-to-day economic, policy and strategy developments and provides actionable trading ideas for investors. We invite clients of Interactive Brokers to sign up for a free trial in Account Management. If you are not a client of IB, you can sign up for a free trial by visiting our website.

This article is from Rareview Macro and is being posted with Rareview Macro’s permission. The views expressed in this article are solely those of the author and/or Rareview Macro and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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