3 Things Under the Radar This Week

Investing.com – Here are three things that flew under the radar this week.

1. Views of the Economy Swing With Partisanship

While overshadowed by the strong U.S. jobs report Friday, the University of Michigan’s posted its highest level since May.

The preliminary measure of sentiment for December came in at 99.2, up from 97 and topping expectations for a dip to 96.8.

One thing definitely not worrying consumers is all the headlines about the impeachment hearings, with “virtually no consumer spontaneously mentioning impeachment in response to any question in early December,” Richard Curtin, surveys of consumers chief economist said.

But politics does come into play in the survey, so much so that party-affiliated respondents act as outliers.

“The average gap between Democrats and Republicans was 18.7 points in the Obama administration and 41.6 points since Trump took office,” Curtin said.

“While the implications of the economic expectations of Democrats and Republicans are clearly exaggerated, the Independents, who represent the largest group and are less susceptible to maintaining partisan views, hold very favorable expectations, indicating the continuation of the expansion based on consumer spending,” he added.

Weak Wages Stymie Experts

The Labor Department’s employment report was applauded enthusiastically by investors, who took the opportunity to add risk.

But while the monster rise of 266,000 in was pretty straightforward, one part of the report left economists with something of a mystery.

Why is wage growth so muted given the strong job market and overall economy?

rose 0.2% in November, according to the report, down from a 0.4% rise in October. The rise was lower than the 0.3% economists predicted, according to forecasts compiled by Investing.com.

Wage inflation ticked up to 3.1%.

“Wage growth continues to remain puzzlingly weak,” Justin Wolfers, economics professor at the University of Michigan, tweeted. “Over the past year, hourly earnings are up only 3.1%. That’s the sort of number that’s unlikely to worry the Fed much (even as it continues to be puzzled by such low wage and price growth at such a low inflation rate).”

From the Federal Reserve’s point of view, and for many in the market, the absence of wage pressures is a boon and keeps the FOMC from hiking rates to combat inflation, which could stall growth and hit asset prices.

But at the same time, workers aren’t enjoying a commensurate rise in pay as the economy keeps chugging along.

“This is where the labor market diverges from 1990s boom, and helps explain why confidence in economy is high, but not as good as was during peak of 1990s boom,” Grant Thornton Chief Economist Diane Swonk tweeted.

“Both consumer sentiment and consumer confidence measures are strong, but well off the euphoric highs of the late 1990s,” Swonk added.

“The good news is that what the expansion has lacked in momentum, it has made up for in stamina,” she added. “We need that to fully regain the mojo lost in the 2000s”

3. Gold to Lose Some Luster Before Resuming Climb

has made the list of fashionable investments over the past year, outperforming the broader U.S. market at a time when stocks have recently notched record highs. But the yellow metal’s next move is likely to be to the downside before resuming a climb higher, ABN AMRO said in a note earlier this week.

Fixed on a diet of global central bank easing and low interest rates, the price of gold has jumped about 16% over the last 12 months, beating returns of about 15%. (Admittedly, the S&P 500 was in the midst of its big fourth-quarter 2018 swoon and wouldn’t bottom until Dec. 26, 2018.)

With expectations running high that global banks will continue to ease, denting the value of their respective currencies, demand for gold will remain intact and push gold prices even higher, but not before correcting.

“Even though the longer-term outlook looks solid, we expect substantial price weakness in the coming weeks and months,” said Georgette Boele, senior FX and precious-metals strategist at ABN AMRO.

The ABN AMRO strategist highlighted the metal’s 200-day moving average, $ 1,400 an ounce, as key level of support to watch.

Much of the rise in gold prices has been supported by central banks ramping up purchases of the yellow metal as they seek to hedge their euro and dollar holdings.

In 2018, central banks bought the most gold in 49 years and, in the first half of this year, their gold purchases have topped that of last year.

The need to hedge against currency debasement amid falling interest rates will likely continue to drive central bank demand.

CPM Group projects central banks will buy 20 million ounces on a net basis this year and anticipates a comparable increase in 2020.

The decline in global government bond yields, which lowers the opportunity cost of owning gold, will also support gold prices, ABN AMRO’s Boele suggested.

“The outstanding amount of negative-yielding government bonds will probably grow; while gold has no yield, it is at least not paying negative rates.”

Let’s block ads! (Why?)

Economy News

Good, Bad and Ugly: Decisive Week May Set Course for Currencies

(Bloomberg) — The next week could set the tone for the $ 6.6 trillion-a-day currency market in 2020.

The geopolitical risks that have shaped foreign exchange this year — Brexit and the U.S.-China trade war — are approaching a critical point, according to Credit Agricole (PA:) SA. The U.K. will vote for a government on Thursday to negotiate the next phase of Brexit, while Washington will impose further tariffs on Beijing on Dec. 15 unless a phase-one deal is reached before then.

It’s also looking busy on the central bank front, with the Federal Reserve, Swiss National Bank and the European Central Bank all set to deliver their latest monetary policy decisions. With the ECB expected to signal a more balanced policy outlook, strategists are betting on the euro to rally in 2020. On the other hand, the Fed may acknowledge the persistence of geopolitical risks, weighing on the dollar.

“The ‘good’ outcome would encompass a U.S.-China trade deal that includes a rollback of any planned and, potentially, some existing tariffs,” wrote Credit Agricole strategists including head of Group-of-10 currency strategy Valentin Marinov in a research note. “In addition, we would have a victory and a parliamentary majority for the Conservative party. We see the dollar and pound as well as G-10 risk-correlated and commodity currencies as the biggest winners under this outcome.”

For Investec Asset Management, it’s a good time to bet on riskier assets while buying haven currency the yen. Portfolio manager Russell Silberston is positive on the outlook as the scenario of a Conservative majority and clarity over trade “does not seem that unlikely.”

This year has seen the dollar continue its dominance in global markets by outperforming many of its G-10 peers, flouting calls by major banks for a downtrend in 2019. Meanwhile, the U.K. currency has had a tumultuous ride. The pound fell to an almost three-year low in September before recovering almost 10% after Prime Minister Boris Johnson secured a Brexit deal and called a snap election in the hope of securing a majority and exiting the European Union next month.

The polls into the vote have consistently showed a Conservative majority but investors remain wary of previous polling failures, and the party’s lead has narrowed as the vote draws closer. The market prefers the Conservatives to Jeremy Corbyn’s Labour party, with its pledges to nationalize industries, tax the wealthy and overhaul the economy.

Across the Atlantic, the U.S. President Donald Trump said on Tuesday he was prepared to wait for another year to reach a deal with China.

The uncertainty involved in predicting geopolitics mean “a bad and an ugly outcome are also possible,” according to Credit Agricole. The former would involve a Conservative majority but no U.S.-China trade deal plus fresh tariffs on China, benefiting the pound and funding currencies.

The ugly outcome “would represent the sum of all market fears at present — a hung Parliament in the U.K. and further escalation of the trade war.” In this scenario, the yen, gold and the franc would be the biggest beneficiaries.

For Investec’s Silberston, things could get even more ugly if the U.K. election failed to return a decisive majority and trade tensions flared. He sees the potential for global slowdown fears to return to the market if everything goes badly. Bond markets surged in 2019 on fears of a global recession.

“Tariff imposition and another hung Parliament are the two big worst-case scenarios as these will combine to raise the twin fears that were haunting markets earlier this year,” he said. “More uncertainty spilling over from the manufacturing sector into services, and triggering a recession.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Let’s block ads! (Why?)

Forex News

US stocks close with solid gains. S&P up on the week. Dow and Nasdaq show modest declines

Dow Jones rises by 1.17%

The major indices are closing with solid gains on the day after strong job gains. The Dow industrial average leads the way with a gain of over 1.2%. The S&P index and NASDAQ index rose by about 0.9% to 1.0%.

The final numbers are showing:

  • S&P index rose 28.42 points or 0.91% at 3145.85. The high price reached 3150.60. The low extended to 3134.62
  • NASDAQ index rose 85.826 points or 1.0%. The high price reached 8665.44. The low extended to 8630.57
  • Dow industrial average rose 336.90 points or 1.22% at 28014.69. The high price reached 28035.85. The low price extended to 27839.68

For the week, the S&P index squeaked out a small gain while the NASDAQ and Dow both ended with modest losses. The changes for the week are showing:

  • S&P index, +0.16%
  • NASDAQ index, -0.10%
  • Dow industrial average, -0.13%

ForexLive

Let’s block ads! (Why?)

Forexlive RSS Breaking news feed

CFTC commitment of traders: EUR shorts increase in the current week. Largest speculative position.

CFTC commitment of traders: EUR shorts increase in the current week. Largest speculative position.

Forex futures positioning data for the CFTC for the week ending November 19, 2019

  • EUR short 63K vs 58K short last week. Shorts increased by 5K
  • GBP short 32K vs 28K short last week. Shorts increased by 4K
  • JPY short 35K vs 35K short last week. Unchanged
  • CHF short 16K vs 15K short last week. Shorts increased by 1K
  • AUD short 47k vs 41K short last week. Shorts increased by 6K
  • NZD short 35K vs 36K short last week. Shorts trimmed by 1K
  • CAD long 29k vs 42K long last week.  Longs trimmed by 13K
  • Prior week

Highlights:

  • EUR shorts remain the largest speculative position The short position is near the middle of the high to low range over the last year. 
  • CAD is the largest and only, net long position (short USD position). However, the position was pared by 13K
  • AUD shorts increased by 6K
The EUR net short position

Let’s block ads! (Why?)

Forexlive RSS Breaking news feed

Key events and releases next week

Key events and releases next week

Key events and releases for the week starting November 18

Monday, November 18

  • US NAHB housing market index, 10 AM ET. Estimate 71 versus 71 last
  • Fed’s Mester speaks at University of Maryland, 2 PM ET/1700 GMT

Tuesday, November 19

  • RBA monetary policy meeting minutes, 7:30 PM ET (Monday)/0030 GMT
  • Canada manufacturing sales, 8:30 AM ET/1330 GMT.  Estimate -0.5 versus +0.8 last month
  • US building permits and housing starts, 8:30 AM ET/1330 GMT. Building permits estimate 1385K.  Housing starts 1320K
  • FOMC member William’s speaks, 9 AM ET/1400 GMT.  Speaking at Capital Market conference
  • New Zealand global dairy trade price index, tentative
  • BOC member Wilkins speaks, 1 PM ET/1800 GMT

Wednesday, November 20

  • Japan trade balance, 6:50 PM ET/2350 GMT (Tuesday). 301.0 billion versus -124.8 billion
  • Canada CPI, 8:30 AM ET/1330 GMT.  YoY estimate 1.9% versus 1.9%
  • FOMC meeting minutes, 2 PM ET/1900 GMT

Thursday, November 21

  • ECB monitor policy meeting report, 7:30 AM ET/1230 GMT
  • US Philly Fed manufacturing index, 8:30 AM ET/1330 GMT. Estimate 6.6 versus 5.6 last month
  • Initial jobless claims, 8:30 AM ET/1330 GMT. Estimate 219K vs 225K last week
  • US existing home sales, 10 AM ET/1500 GMT.  Estimate 5.5M vs 5.38M last

Friday, November 22

  • Australia flash manufacturing/services PMI, 5 PM ET (Thursday)/2200 GMT (Thursday).  Last month manufacturing 50.0.  Services PMI 50.8 last month
  • Japan CPI data, 6:30 PM ET (Thursday)/2330 GMT (Thursday).  YoY 0.3% versus 0.2% last
  • Japan flash manufacturing PMI, 7:30 PM ET/0030 GMT
  • German final GDP 3Q, 2 AM ET/0700 GMT
  • ECB Pres. Lagarde speaks, 3 AM ET/0800 GMT
  • France PMI data, 3:15 AM ET/0815 GMT
  • German PMI data, 3:30 AM ET/0 830 GMT
  • EU PMI data, 4 AM ET/0900 GMT
  • Canada retail sales, 8:30 AM ET/1330 GMT. Estimate -0.1% versus -0.1% last month
  • US Markit manufacturing/services PMI, 9:45 AM ET/1445 GMT.  Services estimate 51.5 versus 51.0 last month. Manufacturing 51.5 versus 51.3 last month
  • University of Michigan consumer sentiment (final), 10 AM ET/1500 GMT. Estimate 95.7 versus 95.7 preliminary

ForexLive

Let’s block ads! (Why?)

Forexlive RSS Breaking news feed

European equities softer at the open to start the week

The risk mood continues to stay on the defensive today

  • Eurostoxx -0.3%
  • Germany DAX -0.3%
  • France CAC 40 -0.3%
  • UK FTSE -0.4%
  • Italy MIB -0.3%

ForexLive

This keeps in tune with US futures, which are down by ~0.4% in trading at the moment. Conflicting signals surrounding US-China trade talks and the civil unrest in Hong Kong is leading to the softer risk tones so far today.

In the currencies space, little has changed since Asia Pacific trading, with the yen still holding slightly firmer – USD/JPY at 108.98 – alongside mild gains in the pound and kiwi.

Let’s block ads! (Why?)

Forexlive RSS Breaking news feed

Forexlive Americas FX news wrap: The USD ends the week as the strongest

Forex news for NA trading on November 8, 2019.

For the week, the dollar moved higher, yields moved higher, gold moved lower.  

The dollar was the strongest of major currencies with solid gains vs all the major currencies. The biggest gain for the dollar was vs the NZD.  The NZD was the weakest of the majors.  

Forex news for NA trading on November 8, 2019.

The market is pricing in at 64% chance that the RBNZ will cut rates by 25 basis points when they announce their latest decision on November 13. The NZDUSD fell to the lowest level since October 17th and closed near the week’s lows.

Menwhile, the US Federal Reserve members this week, repeated that the US economy is in a good place and so are rates after 3 cuts in 2019.  In the new week, the Chair of the Federal Reserve Jay Powell will testify on Capitol Hill starting on Wednesday (and will be grilled more on Thursday).    

Also, helping the greenback this week was the hope that Phase I of the US/China deal would be signed soon.  Having said that, the Pres. said today that he has not yet decided to rollback tariffs with China.  It is an evergreen story that seems to go around and around and around, but it does help the stock market.

Today the major indices all closed at record high levels:

  • The S&P rose 7.9 points or 0.26% to 3093.08
  • The NASDAQ index rose 40.797 points or 0.48% to 8475.31 
  • The Dow rose 6.44 points or 0.02% to 27681.24.

For the week the Dow outperformed the other major indices with a gain of 1.22%. The NASDAQ at of 1.06% and the S&P advanced by 0.85%.  

Although the US stocks were mostly higehr, the European indices closed mostly lower  with Italy and Portugal bucking that trend.  

Despite the declines in the European stocks today, the broad Euro Stoxx index did trade to the highest level since the 2015 in trading this week. Looking at the percentage change leaders for the major global stock indices for the week, Portugal Italy France and Germany all showed gains of over 2% and led the way for the European markets.

The weekly global stock market changes

Below is a look at the changes of the major stock indices today.

The major European indices mostly fell in trading today Another major theme for the markets this week was the move higher in yields.  The benchmark 10 year yields saw strong advances in the US and Europe from last Friday’s close.

  • US yields moved from 1.71% to 1.94%
  • German yields moved from -0.382% to -0.26%
  • France yields moved from -0.108% to +0.023%
  • Italy yields went from 0.993% to 1.193%

Those are pretty good moves to the upside for the benchmark yields. 

Finally, gold fell sharply on hopes for a deal, the higher dollar and higher rates.  The price of the precious metal fell from $ 1514 last Friday to $ 1459 near the close of trading today.  

On the economic front today, the Canadian employment statistics were touch weaker than expectations but given the sharp rise in that job gains of the last 2 months, we can expect. Nevertheless, the Canadian dollar fell versus all the major currencies with the exception of the New Zealand and Australian dollar.  Below is a snapshot of the strongest and weakest currencies today. The JPY and USD were the strongest while the CAD, AUD and NZD were the weakest. 

The JPY and USD were the strongest, while the Cad, AUD and NZD were the weakest in trading today

Let’s block ads! (Why?)

Forexlive RSS Breaking news feed

Microsoft four-day work week ‘boosts productivity’

Microsoft Japan said sales had been boosted by nearly 40% during an experiment in which staff worked a four-day week on full pay.

Offices were closed on every Friday of August 2019 and full-time staff were given “special leave”, which was paid.

Meetings were restricted to a maximum of 30 minutes and online discussions were encouraged as an alternative to face-to-face.

Japan has some of the longest working hours in the world.

‘Rest smartly’

A 2017 survey suggested nearly a quarter of Japanese companies had employees working more than 80 hours overtime a month, often unpaid.

Microsoft’s Work Life Choice Challenge 2019 Summer experiment was popular with 92% of the staff it surveyed after the event.

During the month-long trial, electricity consumption had been reduced by 23% and paper printing by 59% compared with August 2018, Microsoft said.

The technology giant said it was planning to implement a second Work Life Choice Challenge this winter but would not be offering the same “special leave”.

Staff would, however, be encouraged to take time off to “rest smartly”, it said.

Six days

In contrast, Jack Ma, co-founder of Chinese online shopping giant Alibaba, has championed 12-hour working days.

In April 2019, he described the “996” pattern, in which workers do 09:00-21:00 shifts, six days a week, as “a blessing”.

A report commissioned by the Labour Party in the UK suggested a four-day working week would be “unrealistic”.

“Even though some people are compelled to work shorter hours than they want to, most people are compelled to work longer hours than they want to,” the report. released in September, said.

Many workers find going part-time or reducing their days means they end up having to squeeze the same amount of work into the time they do have.

Let’s block ads! (Why?)

BBC News – Technology

California Governor to convene meet of PG&E shareholders, executives next week

© Reuters. FILE PHOTO: PG&E crew work on power lines to repair damage caused by the Camp Fire in Paradise, © Reuters. FILE PHOTO: PG&E crew work on power lines to repair damage caused by the Camp Fire in Paradise,

(Reuters) – California Governor Gavin Newsom said he will convene a meeting of Pacific Gas and Electric Co executives, shareholders, wildfire victims, and PG&E’s other creditors in Sacramento next week to speed up the resolution of the bankruptcy case that creates a new entity.

The new company can only happen “if we first get out of bankruptcy court,” Newsom said in a statement on Friday, without elaborating on his plans.

“If the parties fail to reach an agreement quickly to begin this process of transformation, the state will not hesitate to step in and restructure the utility,” he added.

The San Francisco-based power producer in January filed for Chapter 11 bankruptcy protection anticipating its liabilities from massive wildfires in 2017 and 2018 blamed on its equipment could top $ 30 billion.

Earlier in October, Newsom said PG&E should be held accountable for mismanaging widespread power shutoffs, and urged the company to provide credits or rebates to affected customers.

PG&E, which began shutting off power to 940,000 California customers over the past weekend to guard against the risk of an electrical mishap sparking a blaze, said late on Thursday it had restored electricity to virtually all customers.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Let’s block ads! (Why?)

Stock Market News

Watching volatility: The week ahead playbook

Big moves are priced in for the pound

One thing is clear…there is massive divergence is the vol structures between GBP crosses and all other developed FX pairs. Look at the implied vol rank, which looks at the current IV level relative to its 12-month range. Big moves are expected, and that is key for your position sizing. 

Big moves are priced in for the pound

1-week risk reversals are also interesting, notably again in GBPUSD. Here, despite spot trading at 1.2849, we see traders paying up for put vol over call vol, and consider that last Thursday this stood at +1,8, with traders paying up for call volatility. This is an interesting shift in sentiment, even if spot hasn’t followed lower. 

Implied volThe other talking point Friday was the China data dump, although take a listen (https://www.rba.gov.au/) to RBA gov Lowe’s speech and it is clear we are getting to the lower bounds. The China GDP print will get the headlines though, as it is the lowest annual read since 1992, but the IP print was a big beat, and that is important. Comments today from the Stats Bureau are a big a worry detailing the domestic economy faces complex and ‘serious situation’, rise in external uncertainties. There hasn’t been too great a reaction in markets though. 
Economic calendar schedule

ForexLive

Let’s block ads! (Why?)

Forexlive RSS Breaking news feed