Japan is heading for a recession.
Q419 QoQ annualised GDP coming in at -6% BEFORE the impacts of the coronavirus outbreak had been flagged. Subsequent to Japan's 2 percentage point October consumption tax hike, there was an expected decline in expenditure which in our view will carry on into Q120 growth numbers.
What we see happening
- Macro risk off themes...
The Euro has sunk and moved in line with our last market update however our models are now signalling signs of greater downside risk than a short/medium risk reversal.
- A bearish shift in market sentiment with put options (bearish bets) now claiming the highest premium in nearly four months
- One-month risk reversals (EUR1MRR) (higher...
Traders & Investors,
Our January call for a bull leg in the US Dollar has played out as anticipated.
Our current view
- Bids continue to remain supported amidst risk aversion as flow shifts to safe haven markets. We see this theme well played out and now...
Eyes on SEK bottoming out in a larger Head & Shoulders pattern. Keeping an eye on this market closely where we will add directional exposure to the downside on a break and confirmation of the pattern.
We are currently net short NOK against a basket of currencies.
We're calling it.
Australian Equities have now recovered losses stemming from the 2008 Subprime Crisis sell off and are now at ATHs supported by large corporate buybacks amidst moderate earnings growth.
- Weaker relative EPS on the back of domestic bushfires, lowered Chinese demand and corporate buyback continuity.
- Lowe & Co running out of...
The Brazilian Real remains under fire due to a weakening commodity outlook, continued coronavirus concerns and impacts on LATAM/emerging market assets, revisions in inflationary outlook (down to 3.25% for 2020) and subsequent shifts in future monetary stimulus, high gross debt to GDP (~80%) and continued capital outflow from asset markets.
All within a risk-off...
Global growth outlook concerns continue to be the topic of discussion at the RBNZ as to the level of impact on NZ exports despite positive underlying fundamentals.
- Solid underlying fundamentals including, GDP/Inflation ticking higher, exports steadily increasing over the financial year and trade balance surplus
- Households remain optimistic as...
Traders & Investors,
We anticipate emerging markets to be vulnerable to a macro slowdown following the virus outbreak in China. Emerging Markets have a high dependency on Chinese demand and consumption which often creates a very strong correlation between domestic activity/trade and the performance of these markets.
The effects of the virus are prominent with...
Traders & Investors!
Brexit is here and the slowdown begins. Our trade of the year can be expressed via GBPUSD.
- Macro slowdown via Brexit impetus on UK economy will force BoE into dovish future monetary policy
- Broader global contraction will keep the dollar bid supported
- Technicals favouring broader sellside swing toward 1.25xx and 1.20xx buyside...
Hedge funds continue to load into EUR shorts (+11k contracts nt. change) and remain net short across the board (-58k contracts).
We see a continued risk off/aversion theme with Dollar, Yen & Gold bugs as largely the beneficiaries in the current state of play. We remain constructively bullish on the EUR with improving underlying fundamentals albeit a short term...
CTFC data showing Non Commercials remaining heavily long Peso with technicals supporting a bid in the MXN.
While we remain positioned long USD toward our $100 macro swing target, we have placed directional short plays from here toward our buyside target in the MXN.
Chinese equity markets opened back up today with a huge gap down pushing our shorts close to our buyside liquidity targets. Our shorts remain comfortably in profit ~ +3.50%. We expect a fade and continuation lower. We have taken some partial profits here and will begin scaling in on a correction and more favourable price.
The Bitcoin bull leg has begun with price pushing higher as indicated in our last update. Our buys are now sitting up a healthy +1.75%.
We will continue to provide commentary as price develops further toward our $20k buyside target.
Note: Monthly timeframe is looking promising for a strong leg higher. We continue to buy strategic levels on pullbacks during...
We see opportunity for sellside opportunities across the S&P 500, however remain cautiously optimistic for a correction to push higher. We remain net short on ES however will look to load into call options on the way down, initially as a hedge however may build on a buyside bias on technical confirmation.
We'd like to thank all of the support received so far...
Traders & Investors!
The Norwegian krone currently offers the prospect of serious value as markets fail to price solid economic performance against the backdrop of hawkish monetary stimulus. Reasons currently include discounts in exportation pricing due to selloff's in Oil, Natural Gas & Salmon prices. We remain optimistic on a rebound in these markets and as...