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Confessions of a Day Trader: Inflation’s coming. Get yourself a nice, safe bank job

Each Monday, Stockhead’s resident day trader gives us a peek at the highs and lows of his trading diary and … Read More
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Each Monday, Stockhead’s resident day trader gives us a peek at the highs and lows of his trading diary and hints at what might be coming this week.

Platform used: Marketech
Round Trip: $10 (previously $40 on alternative platform)
Rules of engagement: Never hold any positions overnight (unless forced) and try to avoid any suspensions (if possible). No shorting.
 

Monday November 8

Manage to lose $360 in VUL and $110 in MIN and make $260 in CBA and $125 in Z1P, but today’s star was APT.

Buy 1000 at $115.54 and sell them at $116.17 (+$630) bringing in a nice Monday start at +$545 for the day.

Had to rush around today and time is against me, so see charts for full details. Thanks.

Image: Marketech

Image: Marketech
Image: Marketech
Image: Marketech
Image: Marketech

 

Tuesday November 9

It’s all about the banks today, plus a late go at RIOs just to balance out things a bit.

Buy 2000 NAB at $28.34, 3000 WBC at $22.74 and 1000 CBA at $109.24.

CBA behave themselves okay, so manage to sell the 1000 at $109.54 (+$350) and the NAB do so as well. Sell the 1000 at $28.51 (+$340) but WBC going the other way.

Cut the WBC at $22.69 (-$150) and then go for a late trade in RIOs. Buy 1000 at $88.94 and sell them quickly at $89.28 (+$345)

Leaves me up $885 for the day.

Image: Marketech

Image: Marketech
Image: Marketech

Image: Marketech

 

Wednesday November 10

Fancy CHN for a run at $10.00 today. Buy 2000 at $9.28, 2000 at $9.18, 2000 at $9.12 and just to prove myself completely wrong, top up with 6000 at $9.02. Manage to sell them all at $9.13 (+$280) which is a result, but not how I expected it to be.

In between banging the buy button on CHN, I sneak in an in ‘n out in CBA. In for 1000 at $108.88 and out at $109.03 (+$225) and put in a charge at MIN. Buy 3000 (as late in day, so gear up) at $37.02 and sell them at $37.05 (+$90). Not much of a profit after commission but I will take it.

Plus $595 for today.

Image: Marketech

Image: Marketech
Image: Marketech

 

Thursday November 11

Inflation news sends up bond yields overnight and leads us into a volatile day. Deciding to leave everything alone today, as trying to be a hero on a day like this, normally ends in tears for me.

Also had a second jab, so I want to rest myself.

Have added a few charts.

Look at the range in CBA. I think it’s some kind of record – $2.75 in a day is outrageous. CHN reach the $10.00 today, so only a day out on 12,000! Oh well. One more day to go.

Image: Marketech

Image: Marketech

Image: Marketech

 

TGIF November 12

All eyes on RIO and BHP today, as RIOs were up 6% in NY trading. Both open up at their day’s high, or just near them, and then both get sold down.

RIOs quickly came back over $100 and fell below $93 and started trading in the $92s.

Was only really meant to be watching but just seemed too tempting. Buy 1000 at $92.80 and sell them into a post-11.00am rally at $93.40 (+$600).

They are moving around very fast and then fall again below $93. Buy 1000 at $92.83 this time and sell them at $93.11 (+280).

Happy to leave everything alone and chill but can’t help myself after lunch and take a peek. Well, RIO heading to almost touching $92 and BHP were getting dragged down with them. Buy 1000 RIO at $92.15 and 2500 BHP at $37.58.

Sell the RIOs at $92.43 (+$280) and sell the BHP at $37.65 (+$175).

So, Tuesday was all about the banks and today was all about iron ore producers.

Maybe Monday will be all about APT and Z1P? Anyway, up $$1,335 today and $4,668 (+$4,103 net) for the week and that includes taking a break on Thursday.

The post Confessions of a Day Trader: Inflation’s coming. Get yourself a nice, safe bank job appeared first on Stockhead.


Author: Bottom Picker

Economics

Watch Live: Powell, Yellen Weigh In On Omicron, Debt Ceiling During Senate CARES Act Testimony

Watch Live: Powell, Yellen Weigh In On Omicron, Debt Ceiling During Senate CARES Act Testimony

With the new year just weeks away, Treasury…

Watch Live: Powell, Yellen Weigh In On Omicron, Debt Ceiling During Senate CARES Act Testimony

With the new year just weeks away, Treasury Secretary Janet Yellen and Fed Chairman Jerome Powell will testify before the Senate Banking Committee on Tuesday, part of routine testimony required by the CARES act.

Just two weeks ago, investors could be forgiven for writing off Tuesday’s testimony as a likely snoozefest now that Powell has been nominated for his second term as Fed chairman. But over the last week, the emergence of the omicron variant has (according to some) thrown the recovery timeline out of whack. After the release of Powell’s prepared remarks last night, markets eagerly priced in a more dovish outlook at the Fed.

But hours later, warnings from Moderna CEO Stephane Bancel sent markets back into turmoil, as investors struggled to decide who to trust more: the “science” (ie trial data which haven’t yet been gathered or released), or the authoritative executives who have been talking their book this entire time (whether the market realizes that or not is unclear).

In yet another indication of just how confused Wall Street has become, Deutsche Bank described Powell’s prepared testimony as “hawkish”, an assessment that we (and plenty of investors, judging by the market reaction) would strongly disagree with. Although DB specifies that the only hawkish aspects of Powell’s statement pertained to inflation.

We would agree with DB that nobody cares much about the pair’s prepared remarks. The “real fireworks” – as DB put it – will likely land during the Q&A, where Powell and Yellen will be grilled by Senators of both parties.

Fed Chair Powell set to appear before the Senate Banking Committee at 15:00 London time, where he may well be asked about whether the Fed plans to accelerate the tapering of their asset purchases although it’s hard to believe he’ll go too far with any guidance with the Omicron uncertainty. The Chair’s brief planned testimony was published on the Fed’s website last night. It struck a slightly more hawkish tone on inflation, noting that the Fed’s forecast was for elevated inflation to persist well into next year and recognition that high inflation imposes burdens on those least able to handle them. On omicron, the testimony predictably stated it posed risks that could slow the economy’s progress, but tellingly on the inflation front, it could intensify supply chain disruptions. The real fireworks will almost certainly come in the question and answer portion of the testimony.

Keep in mind: regardless of what Moderna CEO Bancel says, only a tiny minority on Wall Street actually expect omicron to be a major issue a few weeks from now.

But that still presents some difficulties for the central bank as it weighs whether to continue tapering asset purchases, as well as what it should signal regarding the pace of rate hikes.

Read Yellen’s prepared remarks, released Tuesday morning:

Chairman Brown, Ranking Member Toomey, members of the Committee: It is a pleasure to testify today. November has been a very significant month for our economy, and Congress is a large part of the reason why. Our economy has needed updated roads, ports, and broadband networks for many years now, and I am very grateful that on the night of November 5, members of both parties came together to pass the largest infrastructure package in American history.

November 5th, it turned out, was a particularly consequential day because earlier that morning we received a very favorable jobs report– 531,000 jobs added. It’s never wise to make too much of one piece of economic data, but in this case, it was an addition to a mounting body of evidence that points to a clear conclusion: Our economic recovery is on track. We’re averaging half a million new jobs per month since January.

GDP now exceeds its pre-pandemic levels. Our unemployment rate is at its lowest level since the start of the pandemic, and our economy is on pace to reach full employment two years faster than the Congressional Budget Office had estimated. Of course, the progress of our economic recovery can’t be separated from our progress against the pandemic, and I know that we’re all following the news about the Omicron variant.

As the President said yesterday, we’re still waiting for more data, but what remains true is that our best protection against the virus is the vaccine. People should get vaccinated and boosted. At this point, I am confident that our recovery remains strong and is even quite remarkable when put it in context. We should not forget that last winter, there was a risk that our economy was going to slip into a prolonged recession, and there is an alternate reality where, right now, millions more people cannot find a job or are losing the roofs over their heads.

It’s clear that what has separated us from that counterfactual are the bold relief measures Congress has enacted during the crisis: the CARES Act, the Consolidated Appropriations Act, and the American Rescue Plan Act. And it is not just the passage of these laws that has made the difference, but their effective implementation. Treasury, as you know, was tasked with administering a large portion of the relief funds provided by Congress under those bills. During our last quarterly hearing, I spoke extensively about the state and local relief program, but I wanted to update you on some other measures. First, the American Rescue Plan’s expanded Child Tax Credit has been sent out every month since July, putting about $77 billion in the pockets of families of more than 61 million children.

Families are using these funds for essential needs like food, and in fact, according to the Census Bureau, food insecurity among families with children dropped 24 percent after the July payments, which is a profound economic and moral victory for the country. Meanwhile, the Emergency Rental Assistance Program has significantly expanded, providing muchneeded assistance to over 2 million households. This assistance has helped keep eviction rates below prepandemic levels.

This month, we also released guidelines for the $10 billion State Small Business Credit Initiative program, which will provide targeted lending and investments that will help small businesses grow and create well-paying jobs. As consequential as November was, December promises to be more so. There are two decisions facing Congress that could send our economy in very different directions. The first is the debt limit. I cannot overstate how critical it is that Congress address this issue. America must pay its bills on time and in full. If we do not, we will eviscerate our current recovery. In a matter of days, the majority of Americans would suffer financial pain as critical payments, like Social Security checks and military paychecks, would not reach their bank accounts, and that would likely be followed by a deep recession. The second action involves the Build Back Better legislation.

I applaud the House for passing the bill and am hopeful that the Senate will soon follow. Build Back Better is the right economic decision for many reasons. It will, for example, end the childcare crisis in this country, letting parents return to work. These investments, we expect, will lead to a GDP increase over the long-term without increasing the national debt or deficit by a dollar. In fact, the offsets in these bills mean they actually reduce annual deficits over time. Thanks to your work, we’ve ensured that America will recover from this pandemic. Now, with this bill, we have the chance to ensure America thrives in a post-pandemic world. With that, I’m happy to take your questions.

And readers can find Powell’s prepared remarks, first released last night, below:

Chairman Brown, Ranking Member Toomey, and other members of the Committee, thank you for the opportunity to testify today.

The economy has continued to strengthen. The rise in Delta variant cases temporarily slowed progress this past summer, restraining previously rapid growth in household and business spending, intensifying supply chain disruptions, and, in some cases, keeping people from returning to work or looking for a job. Fiscal and monetary policy and the healthy financial positions of households and businesses continue to support aggregate demand. Recent data suggest that the post-September decline in cases corresponded to a pickup in economic growth. Gross domestic product appears on track to grow about 5 percent in 2021, the fastest pace in many years.

As with overall economic activity, conditions in the labor market have continued to improve. The Delta variant contributed to slower job growth this summer, as factors related to the pandemic, such as caregiving needs and fears of the virus, kept some people out of the labor force despite strong demand for workers.

Nonetheless, October saw job growth of 531,000, and the unemployment rate fell to 4.6 percent, indicating a rebound in the pace of labor market improvement.

There is still ground to cover to reach maximum employment for both employment and labor force participation, and we expect progress to continue.

The economic downturn has not fallen equally, and those least able to shoulder the burden have been the hardest hit. In particular, despite progress, joblessness continues to fall disproportionately on African Americans and Hispanics.

Pandemic-related supply and demand imbalances have contributed to notable price increases in some areas. Supply chain problems have made it difficult for producers to meet strong demand, particularly for goods. Increases in energy prices and rents are also pushing inflation upward. As a result, overall inflation is running well above our 2 percent longer-run goal, with the price index for personal consumption expenditures up 5 percent over the 12 months ending in October.

Most forecasters, including at the Fed, continue to expect that inflation will move down significantly over the next year as supply and demand imbalances abate. It is difficult to predict the persistence and effects of supply constraints, but it now appears that factors pushing inflation upward will linger well into next year. In addition, with the rapid improvement in the labor market, slack is diminishing, and wages are rising at a brisk pace.

We understand that high inflation imposes significant burdens, especially on those less able to meet the higher costs of essentials like food, housing, and transportation. We are committed to our price-stability goal. We will use our tools both to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched.

The recent rise in COVID-19 cases and the emergence of the Omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation. Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions.

To conclude, we understand that our actions affect communities, families, and businesses across the country. Everything we do is in service to our public mission.

We at the Fed will do everything we can to support a full recovery in employment and achieve our price-stability goal.

Thank you. I look forward to your questions.

The big question now: will Powell sound dovish, or hawkish, under questioning? What’s more, investors should be on the lookout for Yellen’s comments on the debt ceiling – particularly anything she says about the timing for when the Treasury might run out of funds.

Tyler Durden
Tue, 11/30/2021 – 09:56







Author: Tyler Durden

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Economics

Whipsaw price action continues

There’s no shortage of volatility in the markets this week and today we’re seeing the negative side of that, with Europe down around 1% and US futures…

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There’s no shortage of volatility in the markets this week and today we’re seeing the negative side of that, with Europe down around 1% and US futures not far behind.

The old adage that markets hate uncertainty couldn’t be more true and it’s going toe to toe with another well-known force, investors’ love of dips. It’s been so beneficial over the years, backed by endless central bank cash, so you can’t blame them. But on this occasion, they may be swimming against the tide as the downside risks are potentially severe.

It’s was encouraging over the weekend to hear that cases appear more modest, which drew dip buyers in on Monday. But huge uncertainty still remains and we’re seeing that in action today, as Moderna Chief Executive Stéphane Bancel warned current vaccines will be far less effective against Omicron.

This whipsaw price action could become a regular feature over the next couple of weeks as information on the variant trickles out and we get a much better understanding of what we’re dealing with. For now, markets will remain very sensitive to indications that vaccines may not protect us this winter as much as we hoped.

This brings us to central banks and what they intend to do if countries are forced to impose tight restrictions and lockdowns. It’s always assumed that they’ll just turn the taps on, drown the market in liquidity and save the day. But throughout the experiment of the last decade or so, they’ve never had to contend with high inflation, rather the theoretical risk of it.

Are they really going to be so keen to flood us with QE this time around? Or is the best we can hope for that they don’t raise rates for a few months and pause the tightening cycle before it’s really begun. And at what cost given that lockdowns may exacerbate the supply-driven inflationary pressures and give central banks a worse headache. That could be a drag for equity markets in the near term.

Of course, this is all hypothetical at this point and a bit of good news on the vaccine front would quickly get investors back on board and allow central banks to proceed with cautious tightening. But the early signs from the actual experts suggest there is something to worry about with Omicron, which may be a shock to the system this winter.

Euro buoyed by higher inflation data but shouldn’t get carried away

The euro is rallying strongly after eurozone inflation soared to 4.9% in November – a record high – led by higher energy prices, while the core reading also blew past expectations rising to 2.6%. The single currency had been on the rise all morning after the French data surpassed expectations, as did Germany and Spain on Monday. Ultimately though, I don’t think it changes much as far as the ECB is concerned. Euro area inflation will ease after the turn of the year and as a result the central bank is not among those that will be feeling the pressure at this stage.

Lira hit again as economy grows slower than expected

The lira is getting hit once again after reports that the CBRT Executive Director for Markets has left their post. The dollar broke back above 13 against the lira after the reports and remains above there despite paring some of those gains, which also came after the country reported growth of 7.4% in the third quarter, a little shy of expectations.

The currency remains extremely vulnerable to further losses as President Erdogan continues to fiercely oppose higher rates and the central bank shows no sign of changing its approach, rather its staff.

Bitcoin seeing strong support despite market risk aversion

Bitcoin bounced back strongly on Monday, along with other risk assets, but failed to break back above USD 60,000 and has come under pressure once again today. What’s interesting though is it appears to have found support around USD 56,000 again, ahead of last week’s lows which may suggest we’re seeing a flurry of bargain hunters hoping to capitalise on the recent 20%+ dip.

It seems premature given the wild swings we’re seeing in sentiment at the moment and risks to the downside that Omicron poses. But bitcoin has performed well since the start of the pandemic and perhaps there’s a view that should central banks be forced to step in, bitcoin could benefit once more. I guess we’ll see if that turns out to be the case.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/





Author: Craig Erlam

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Economics

Oil drifting, gold steady

Oil drifts lower as prospect of OPEC+ cut fades Oil prices are unsurprisingly taking another hit as risk sentiment turns negative once again. While OPEC+…

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Oil drifts lower as prospect of OPEC+ cut fades

Oil prices are unsurprisingly taking another hit as risk sentiment turns negative once again. While OPEC+ pushing back their meeting to later in the week to analyse the Omicron data may have appeared to be a bullish signal for the markets, as it increased the likelihood of a pause or reduction in the output increases, I still don’t think that will turn out to be the case.

There’s being vigilant and there’s being hasty and I don’t think the group wants to be the latter. Even later in the week, there’s unlikely to be sufficient data to warrant such an important shift in their output when, by their own admission, they’d already factored Covid into their calculations before. And comments from Russia and Saudi Arabia this week appear to back that up.

Brent crude is closing in on USD 70 now – which looks a big support level – as traders continue to fret about the efficacy of the current vaccines and what it means for the global economy in the coming months. WTI has slipped below but could see some support around USD 67 after such a severe drop.

Gold edges higher but remains broadly stable

Gold has been remarkably stable this past week. Even Friday’s spike was quickly pared back and it hasn’t really moved since. It seems very unresponsive to shifts in risk appetite in the markets and even a softer dollar and lower yields are doing little to lift the yellow metal.

I can understand why it may not be soaring higher as I’m not convinced central banks can do much in the face of higher inflation, even if we see more lockdowns. But current price action seems to conflict with what we’re seeing elsewhere which is interesting, to say the least. It’s not a particularly bullish signal, nor is its struggle to get back above USD 1,800.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/




Author: Craig Erlam

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