MARKET REPORT
Review:
– Morgan Stanely go Dollar neutral (from Bullish). Call for EUR down and YEN up (Short Eur/Yen)
– Strong EZ PMI revisions
– BTC/ETH bounce 4% (shock)
– ADP National Employment report saw the headline beat at 164k (exp. 115k) ALTHOUGH wages components saw the median change in annual pay for job ‘stayers’ ease from 5.6% to 5.4% while for job ‘changers’ it eased to 8.0% from 8.3% (IE wages off)
– Jobless claims strengthen to 200k
– US Equities flat.
– Crude puked on open, recovers (somewhat)
– Precious metals up smalls.
DOLLAR up vs Asia, down vs Eur:
– AUD down 67.04 -0.4% (67.60 – 67.00) close on lows
– EUR up 91.35 -0.25% (91.55 – 91.13) close mid rge
– GPB up 126.80 +0.12% (127.30 – 126.66) close just off lows
– JPY up 144.64 +1.06% (143.25 – 144.82) close just off highs
GOLD $2050 +0.4% (2057 – 2044) close mid rgr
DOW/ES/ND: 37750 +0.15%, 4732 -0.3%, 16450 -0.5%
CRYPTO: BTC/ETH: +1500/+3.5% 44350, +51/2.5% 2275
CRUDE: -$0.35/0.45% $72.35
Upcoming:
US:
– NFP!!
Headline NFP expected +170k, down from the prior 199k (which was buoyed by the return of striking auto workers).
Analyst expectations are wide, varying between 80k and 225k.
The unemployment rate is seen rising to 3.8% from 3.7% (with ranges between 3.6-3.9%).
On earnings, the M/M is seen rising 0.3%. (easing from the 0.4% prior), expectations between 0.1 to 0.4% while the Y/Y is expected to ease to 3.9% from 4.0%, with analyst forecasts between 3.8% to 4.2%
– ISM (Services)
– Durable Goods
JAP: Composite & Services PMI (Final)
EUR: Construction PMI, CPI, Producer Prices
Speakers: US Fed’s Barkin
MAJORS:
DX:
A mixed bag with the majors as Morgan Stanley has turned neutral on the USD after previously being bullish; pivots short EUR/USD trade recommendation to short EUR/JPY.
“We turn neutral on the USD as our conviction about USD strength has waned meaningfully. Investors appear to be adopting an ‘early cycle’ mentality where peak Fed hawkishness is sufficient to ‘paper over’ other risks”. “JPY should continue to gain as long as US rates are falling, regardless of the risk outlook”.
So MS calling to sell EUR and buy YEN essentially. Short EUR/(long)YEN.
This, coupled with EZ PMI revisions obviously saw EUR off, and a surging YEN. Dollar also lost smalls vs the Pound. The Buck made small ground against the AUD (Yen off-flow), and in aggregate we saw a flow OUT of Asia and INTO Europe.
No call on direction. NFP in the morn.
1-
AUD:
USD strength (re above) in the Yen followed through to the Battler with the AUD heading back to hit 67 the handle on flow out of Asia.
All eyes no NFP in the morn. Expect tight range pre. No call.
6-
EUR:
Morgan calling for a pivot out from long Euro to long Yen saw…. The EUR go down, and the YEN rise! Do we think they had a house bet before the release? Sigh.
Its only a rort if youre not involved.
We touched 91.13 from 91.55 close yest before retracing to 91.35. The EUR held its ground well all things considered.
I don’t think the market wants to get TOO short USD pre payrolls. Despite Biden jimmying the numbers (Serious point, pay attention to last months ‘corrections’)
No call pre NFP. Tight Range expected.
9-
POUND:
Early correlated strength on the back of the EUR couldn’t hold as the Pound went from a morning high of 127.30 to 126.70. Same story with traders not wanting to bet TOO firmly against the Greenback with NFP in the morn.
No call pre-NFP. Tight range expected.
1-
YEN:
Yen was firmer on Morgan Stanley (See above) and closed almost +150 pips/+1% as the Yen returns to almost a 145 handle after having a 140 handle (albeit briefly) barely just days ago on NYE! (3.5 cents to be fair). I wonder if Morgan were long Yen last night? I wonder…..
No call pre-NFP. Tight range expected.
1-
GOLD & SILVER:
Dollar mixed across the board with losses in 3 majors offset by the substantial gain in the YEN helped firm Gold, closing mid range in a $12 range session. Nothing to remark on here worth note.
They tried a squeeze in SI on the open testing the $23 mark with a few stops kicking it to a paltry $22.90 before immediately bouncing back to $23.20 by 11am where it stayed until close (remember I think $23 is significant). SI will go HARD if NFP plays ball. “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.” Your humble servants opine yest. Mkt. report.
No call pre NFP
EQUITIES:
– SPX -0.3% 4,689
– NDX -0.5% 16,282
– DJI +0.03% 37,440
– DAX +0.48% 16,617.29
– FTSE 100 +0.53% 7,723.07
– CAC 40 +0.52% 7,450.63
– Euro Stoxx 50 +0.57% 4,473.55
US by Sector (B to W):
Health +0.46%, Financials +0.24%, Industrials +0.1%, Consumer Staples -0.15%, Real Estate -0.27%, Utilities -0.33%, Materials -0.33%, Technology -0.64%, Communication Services -0.69%, Consumer Discretionary -0.97%, Energy -1.63%.
– Apple: -1.3%: Downgraded at Piper Sandler; cited valuation concerns, broader handset and macro weakness in H1 ’24.
– General Motors: +0.8%: Upgraded at Wolfe Research; the firm noted investors are underestimating GM’s earnings and cash flow power
OIL:
Oil prices were lower on Thursday as inventory data took the spotlight from geopolitical risk. WTI and Brent futures had extended their Wednesday rally into the Thursday session to see peaks of USD 74.00/bbl and 79.41/bbl in the European morning. However, downside picked up in the NY morning with the Dollar edging higher with yields on the strong US labour market data, accelerating after the 5mln bbl EIA-reported crude stock draw was overshadowed by the 21mln bbl net draw in the products – it remains possible that year-end factors could be at play. The product builds leave gasoline and distillate stocks at their highest level since Q1 2022. WTI and Brent futures troughed at USD 71.06/bbl and 76.50/bbl, respectively, not long after the EIA data, but prices failed to extend lower from there and partially recovered into settlement. The partial recovery also found some support amid reports of missiles fired from Yemen’s Taiz towards Bab Al Mandab, highlighting the precarious state in the Red Sea. Elsewhere, EOG Resources President spoke at a conference, saying US oil and gas production is not going to be able to continue to grow at the pace that it did last year – note US production fell to 13.2mln BPD from 13.3mln BPD in the EIA data, just off record highs.
Oil report courtesy of zerohedge.com
BOND YIELDS:
1 Mo: 5.372 -0.009 6Mo 5.277 UNCH 1yr 4.856 +0.04 5yr 3.98 +0.088 10yr 4.003 +0.096 and the 30yr 4.152 +0.095
2’s/10’s -0.38
CRYPTO
“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.”
Yest Mkt report, from your humble, servant.
The most obvious plays on the board are often the correct ones. A Bull***t crash isn’t likely to hold. And it didn’t. I HOPE many jumped on the upward move as there was no picking bottom, only a turn, in the 8% carnage yesterday. That 40.8k – 42k level is FIRM. And again, barring news (or bull***t tweets, or bull***t flash crash long squeezes) upward momentum should begin anew.
I would say back to 45 to retest highs, squeeze on some shorts (my summer) for a move to ‘new’ highs (long since seen, would be better worded).
BUT, (isn’t there always one, insert joke here)… NFP in the morn, if its carnage, this could flow through to Crypto. Who knows. The markets are about MOVEMENTS OF MONEY. Where does the money go? Withdraw here… park it here. And Crypto ‘is’ a financial market (Im sure they scoffed at financial futures in the late 80’s) so ‘contagion’ or perhaps money flow (better term) means crypto is interconnected and is not immune.
But Id rather be long than short.
Best of luck out there. Let the market come to you.
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