MARKET REPORT

Review:
– The FOMC Minutes were less dovish than the market (and Powell) suggested and March rate-cut odds faded modestly
– 2024’s rout in stocks and bonds is the biggest global rout to start the year since 1999
– US Debt hits 34Trillion. Fist time ever. Context: 2010 it was 12T
– Bitcoin (and ETH) FLASH CRASH 6.49am 45.5k to 40.8k by 7.10am
– Iran terrorist attack prompts Oil fears (+3%)
– For the 15th month in a row, ISM Manu survey signaled no expansion (print      over 50) for Dec
– Nasdaq extended yesterday’s loses (-1% today)
– Russell 2000 has crashed back to a critical level (its 21DMA), down over 5% from its highs last week.
– 10Y Yield tested above 4.00% but came back
– Gold down on Dollar Strength

Dollar UP :
– AUD down 67.27           -0.5% (67.70 – 67.04) close on bounce off lows
– EUR up 91.55                 +0.22% (91.18 – 91.75) close mid-off highs
– GPB up 126.64               +0.37% (126.21- 126.76) close just off highs
– JPY up 143.26                +0.9% (140.80 – 142.17) close just off highs
Gold down $2050            -1.15%  (2073 – 2040)
DOW/ES/ND:                     37700 -0.8%, 4745 -0.85%, 16535 -1.1%
Crypto: BTC/ETH:             -2100/4.65% 42800, -133/5.65% 2225
Crude :                                +$2.45/3.51% $72.85

Upcoming:
Japanese Manufacturing PMI,
Chinese Caixin Services
German State and Nationwide CPI
US Initial Jobless Claims, Composite & Services PMI (Final)
BoE Monthly Decision Maker Panel
NFP, ISM Services (Fri)

MAJORS:

DX:
A somewhat mixed bag with the minutes with both dovish and hawkish aspects. A number of participants highlighted uncertainty around how long restrictive policy would need to be maintained pointing to downside risks the economy faces with an overly restrictive stance, but also participants noted it was possible that the economy could evolve in a manner that would make further increases in the target range appropriate and several observed that circumstances might warrant keeping the policy rate at the current level for longer than currently anticipated.
So the minutes were largely balanced and participants viewed the policy rate as likely at or near its peak and generally reaffirmed it would be appropriate for policy to remain restrictive until inflation is moving down.
Treasuries traded back and forth over FOMC but the Dollar maintained its overall bid tone moving from highs of 102.40 to 102.20 on close.

No call on direction.

1-

AUD:
We thought few would have a look at the 67 handle today, and we did. Aussie touched 67.04 from highs of 67.70 overnight. We bounced a little to close at 67.30 Cant see us going hugely either way pre end of week NFP/ISM. Might have a look below 67, but not much, might grind up towards overnight highs. Rangey

66.81 – 67.76

EUR:

I had 91 the handle as value yesterday, didn’t quite make it before we saw the turn. Overnight low of 91.18 before we pushed to 91.76 closing 55. I like numbers close to 91 for a buy on turn. Anything sub 91.24 for a look at 92. Id be watching for a turn anywhere 91.40 – 91.24 (like this band for a turn/buy)

91.24 – 92.14

Pound
Pound:
Pound tested 126.20 multiple times throughout session before rallying to close 126.68, off highs of 126.76.

126 – 128  

Yen:
Yen was firmer as called on Dollar strength. We did see the 143 handle going from 142 overnight to hit 143.50 before closing at 143.20.

No call.

Gold and Silver:

Dollar firming finally flowed through to precious metals today with GC down 1.15% to hit 2040 before closing 2050. SI took the worst of it down over 3% at $23.20. GC still hanging in but will be determined if we hold above the $2k handle by whether or not the dollar has finally found a base. Eyes on NFP

Although moving in-line with GC I do think SI is coming to a key $23 level and the risk is to the upside. A weak NFP could see SI soar.

No call pre NFP

Equities:
– SPX -0.80%        4,704
– NDX -1.06%      16,368
– DJIA -0.76%      37,430

– DAX -1.38% 16,479.92
– FTSE 100 -0.51% 7,650.30
– CAC 40 -1.58% 7,380.06
– Euro Stoxx 50 -1.43% 4,432.75

US Sectors:
Energy +1.52%, Utilities +0.39%, Communication Services +0.1%, Health -0.14%, Consumer Staples -0.71%, Financials -0.81%, Technology -1.02%, Materials -1.11%, Industrials -1.51%, Consumer Discretionary -1.88%, Real Estate -2.35%.

– Charles Schwab -3%: Downgraded at Goldman Sachs; said lower rate outlook could hurt Schwab’s earnings.
– Barrick Gold -3%: Spoken with some of First Quantum’s major investors to gauge their support for a possible takeover, according to Bloomberg.
– Ford -3.6%: 2024 F-150 Lightning Pro and F-150 Lightning XLT 311A prices raised by USD 5,000 and 10,000, respectively, to USD 54,995 and USD 64,995. F-150 Lightning Platinum prices decreased by USD 7,000 to USD 84,995.

Oil
:
Oil prices ripped higher on Wednesday on the threat of a widening Israel conflict and on supply troubles in Libya. The upside occurred out of the European session and through the NY morning, seeing WTI and Brent peak at USD 72.90/bbl and 78.41/bbl, respectively. That coincided with Iran declaring it is to give a swift and severe response to the “terrorist attack” which killed over 100 people in Kerman, Iran. Meanwhile, Reuters reports there has been a full shutdown of production at Libya’s 300k BPD Sharara oilfield on the back of protests. Whether it made an impact in the rally is hard to tell, but it is worth noting that OPEC+ released a brief statement saying the group reaffirms its commitment to unity, full cohesion and market stability. Later on, the monthly Bloomberg OPEC survey saw the group’s December production little changed at 28.05mln BPD ahead of the new production cuts. Traders now look to the weekly US energy inventory data with the private release due later Wednesday ahead of the EIA figures on Thursday. Current expectations (bbls): Crude -3.7mln, Distillate +0.6mln, Gasoline -0.2mln.
Oil report courtesy of zerohedge.com

Bond Yields:

1 Mo: 5.378 -0.016 6Mo 5.277 +0.018 1yr 4.827 +0.022 5yr 3.905 -0.019 10yr 3.92 -0.024 and the 30yr 4.07 -0.014
2’s/10’s -0.41

Crytpo:
The dangers of Crypto. A 21 minute flash crash at 6.49am US EST saw BTC MONSTERED from 45.5k to 41.1k a nearly 8% move on its lows. It has since ‘recovered’ to 42.9k (-5%). People throwing out rumors of “SEC banning ETF’s!” blah blah, “price correction of 20% anticipated upon denial!” etc. etc. BUT THE SAME account which tweeted this LITERALLY 24 HOURS EARLIER calling for a surge to $50k CITING ETF …… APPROVAL!
Your humble servant’s guess would be the original tweet got everybody long from 43 to 45 and before everyone wakes up, engineer a long squeeze, stops snowball. Everybody long and expecting 50k, wait until 6am. Cue the stops.
The golden range of 40.5 to 42k has held on MULTIPLE retracements and although it may take a little up and down work to squeeze out the last of the nervous longs, I think a base is in place and barring major news on the SEC front or idiot rumors and staged flash pushes, it wont take much for upward momentum to follow. 50k still my call n Jan. I cant see a sub 40 handle unless news.

ETH mirrored BTC crash hitting 2115 ish. I like a buy anything around 2150 (above/below watch for change direction/turn). Cant see a 2000 handle unless news. Buy dip, go with flow up.

Best of luck out there. Let the market come to you.

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As ALWAYS, any advice given is general in nature and is not suited to each traders individual: situation/time-frame/goals/financial circumstance/risk profile/loss mechanics etc
We offer ideas for trades from time to time, we accept no liability for results, they are to be traded on your discretion and responsibility.

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