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July 15, 2023 | Trading Desk Notes For July 15, 2023
Weaker-than-expected CPI ignited a risk-on surge across currency, credit and equity markets “A man hears what he wants to hear and disregards the rest.” Paul Simon, The Boxer The US CPI report Wednesday morning was slightly weaker than expected and kicked off a surge of “risk-on” sentiment that accelerated existing short-term trends in currencies and equities: the US […]
July 8, 2023 | Trading Desk Notes For July 8, 2023
Real and nominal interest rates surged higher this week Interest rates across Europe, Canada and the US rose this week, with yields on the long end sharply higher. The yield on the US 10-year T-Note (~4.07%) is at a 15-year high; the 10-year UK bond yield (~4.70%) is also at a 15-year high; the 10-year […]
July 1, 2023 | Trading Desk Notes For July 1, 2023
An Apple a day keeps the bear away AAPL surged to new All-Time Highs on Friday, up ~56% from its January lows. The market cap is now ~$3.05 Trillion. MSFT hit ATH two weeks ago and closed Friday down ~3% from those highs. The MSFT market cap is now ~$2.5 Trillion. Taken together, the market cap […]
June 24, 2023 | Trading Desk Notes For June 24, 2023
Soaring stocks “pause” AAPL closed at new All-Time Highs this week, but many other stocks and the leading indices took a “pause.” Perhaps there was too much talk about “over-bought” or worries that corporate buybacks are going into their quarterly blackout period. Or maybe it was worries about institutional rebalancing next week or mounting “evidence” that […]
June 17, 2023 | Trading Desk Notes For June 17, 2023
Central banks are determined to get inflation down The Fed and the ECB reminded markets again this week that they are determined to slow inflation, echoing recent statements from the BoE, the BoC and the RBA. The “explicit” message is that rates will stay higher for longer. The underlying rationale for current central bank policies is that rising inflation […]
June 10, 2023 | Trading Desk Notes For June 10, 2023
The S&P and the Vanguard Total Stock Market ETF (the VTI) made new highs for the year this week The S&P is up >22% from last October’s low. The VTI is up ~23%. The Nasdaq 100 is up ~40% from October’s lows. The rally in the benchmark indices continues to be driven by big gains in […]
June 3, 2023 | Trading Desk Notes For June 3, 2023
Up, up and away? The Nasdaq 100 futures had their highest weekly close this week since March 2022, up ~32% YTD; the S&P 500 index had its highest weekly close since April 2022, up ~11% YTD, while the DJIA had its highest weekly close since…last month, and is up ~2% YTD (imagine what the DJIA would […]
May 27, 2023 | Trading Desk Notes For May 27, 2023
Nvidia Following a quarterly report described by one analyst as “The greatest beat of all time,” Nvidia’s market cap soared by >$200 Billion on Thursday, the largest one-day value increase of any company in American equity market history. The company’s market cap at the beginning of this year was ~$350B; at Friday’s close, it was ~$960B. The share price at […]
May 20, 2023 | Trading Desk Notes For May 20, 2023
The US Dollar rallied against virtually all currencies over the past two weeks The US Dollar Index hit a 20-year high last September but then trended lower (down ~12%) to support levels ~101. Net speculative positioning was very bullish on the USD leading up to the September 2022 highs. It had turned very bearish at the recent […]
May 13, 2023 | Trading Desk Notes For May 13, 2023
Megacap tech continues to provide nearly all the YTD gains for the broad stock indices While small-cap stocks continue to underperform the broad indices and Megacap tech. Bullish stock factors: the recession has been postponed, and strong labour markets mean buying power for consumers, which means pricing power for corporations. We are at or near peak […]
May 6, 2023 | Trading Desk Notes For May 6, 2023
Wicked bipolar sentiment swings across asset classes this week The DJIA was upbeat early Monday, building on last week’s late rally and hit 12-week highs. But then, more bad news from the banking sector started to spread, and the DJIA closed at the day’s lows. The banking worries intensified as the days passed (KRE fell to two-and-a-half-year […]
April 29, 2023 | Trading Desk Notes For April 29, 2023
Without Megacap tech, stock indices have gone nowhere The broad stock market indices tumbled to new April lows Tuesday and Wednesday, but a strong surge on Thursday and Friday, fuelled by soaring Megacap tech, lifted the indices to new highs for the month. The Nasdaq 100 had its best monthly close since March 2021, with MSFT up ~40% […]
April 22, 2023 | Trading Desk Notes For April 22, 2023
Stock indices stuck in a narrow range For most of April, the premiere American stock indices have been stuck in a narrow range as economic data and Fed speakers deliver mixed signals. Volatility metrics are at or below one-year lows, and some folks view 5%+ money market yields as a better investment than stocks. While American indices drift quietly sideways, European, Japanese […]
April 15, 2023 | Trading Desk Notes For April 15, 2023
Who’s going to be right, and who’s going to be wrong? Federal Reserve speakers continue to deliver “mixed messages” about future Fed activities/policies. Some speakers have been calling for a “pause,” while others (most recently, FOMC Governor Chris Waller) believe monetary policy needs to be tightened further. On Friday, Waller said, ” Because financial conditions have not […]
April 8, 2023 | Trading Desk Notes For April 8, 2023
Will the Fed choose financial stability over fighting inflation? Markets have been trying to guess when the Fed will stop raising rates for months. There are several “reasons” why the Fed might change policy, including “something important breaks,” the economy goes into recession, and/or inflation falls. But it seemed that every time investors expected the Fed to […]
April 1, 2023 | Trading Desk Notes For April 1, 2023
Supercap tech stocks soar, leaving the rest of the stock market behind The Nasdaq 100 is up ~24% from its early January lows to a 7-month high; the S&P is up ~8%, the DJIA is up ~1.5%, and the TSE is up ~3.5%. AAPL and MSFT are up >30% from January lows; TSLA and NDVA are […]
March 25, 2023 | Trading Desk Notes For March 25, 2023
Classic signs of stress across financial markets The banking sector has been the epicentre of the “stress” which started over a month ago in the USA and then spread to the Eurozone. A couple hundred billion dollars worth of deposits have apparently left the banks in search of “safe havens,” and bank share prices have fallen. Canadian […]
March 18, 2023 | Trading Desk Notes For March 18, 2023
Things break when interest rates have been near zero for more than a decade and then rise ~5% in less than a year! Today’s blog will focus on price action across markets; I’ll avoid commenting on “what’s wrong with banks;” thousands of new social media experts have already exhausted that subject. Interest rates declined in […]
March 11, 2023 | Trading Desk Notes For March 11, 2023
Break something? The Fed has been raising interest rates for the past year to bring inflation down to its target range of ~2%. For the past several months, the market has been trying to guess “what would have to happen” for the Fed to either slow their pace of raising rates, stop, or start cutting rates. […]
March 4, 2023 | Trading Desk Notes For March 4, 2023
The DJIA hit a 4-month low on Wednesday but then bounced – as fears of “higher for longer”interest rates diminished The 2-year Treasury yield hit a low of ~1/10th of 1% in August 2020 as the Fed slashed interest rates to counter the Covid Crisis. Some commentators suggest those were the lowest rates in 5,000 years. […]
February 25, 2023 | Trading Desk Notes For February 25, 2023
Interest rates keep rising Incoming inflation data has been hotter than expected; forward markets are now pricing another 75bps increase from the Fed (25 bps at each of the March, May and June FOMC meetings), taking the terminal rate to ~5.4% by August, with modest declines from there into year-end. Short rates in June are […]
February 18, 2023 | Trading Desk Notes For February 18, 2023
Interest rates rose again this week; stocks, bonds and gold fell while the US Dollar rallied I began last week’s Notes by pointing out that markets had been “fighting the Fed” for the past couple of months by expecting the Fed to “pivot” – to start cutting interest rates – by mid-2023 despite repeated warnings from Chairman Powell that the Fed […]
February 11, 2023 | Trading Desk Notes For February 11, 2023
Key Turn Date – February 2, 2023 – The Fed Will Be Higher For Longer The market was “Fighting the Fed” for the past couple of months – the forward short-term interest rate market was pricing the Fed to stop raising rates in Q2 and to cut rates by ~50bps by December 2023 (and by ~200bps by […]
January 28, 2023 | Trading Desk Notes For January 28, 2023
FOMO Alert! The Nasdaq had its highest weekly close yesterday since September, up ~13% from the 27-month lows made last October. This week’s close was 28% below the All-Time High made in November 2021. Inflation is falling and is expected to keep falling, so the Fed is expected to increase short rates (only) 25 bps this […]
January 21, 2023 | Trading Desk Notes For January 21, 2023
The Anti-dollar trade Last week I wrote: Gold bugs have believed for years that gold is the original Anti-dollar, but lately, the Euro currency has become known as the Anti-dollar…If a currency trader has a negative view of the USD, buying EURUSD is the go-to trade. But if a trader/investor had a negative view of […]