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Macro

US DOLLAR RALLY HOLDING UP POST FOMC; BOJ POLICY


Morning Briefing September 21st 2017


Thursday is a busy data day as traders already prepare to get to grips with the overnight Fed announcement.

The European calendar kicks off at 0545GMT, when the Swiss GDP forecasts are released. At 0630GMT, BOJ Governor Haruhiko Kuroda holds a news conference following the earlier policy decision.

Spanish data expected at 0700GMT includes the latest industrial orders and the services sector survey.

The Norges Bank monetary policy decision is expected at 0800GMT.

UK data due at 0830GMT includes the August public finances and the UK Finance (formerly BBA) mortgage and lending data.

ECB Executive Board member Peter Praet will chair the policy panel at an ECB conference, in Frankfurt, from 0915GMT.

Across the Atlantic, a busy US session kicks off at 1230GMT, with the release of the latest jobless claims data and the Philly Fed Manufacturing Index. Canadian wholesale trade numbers will be released at the same time.

The level of initial jobless claims is expected to rebound by 21,000 to 305,000 in the September 16 employment survey week after a 14,000 decline in the previous week. Initial and continuing filings in hurricane-impact regions will continue to pile up for weeks to come, including any back-logged claims in areas where filing could not occur in previous weeks. Claims were at a level of 232,000 in the August 12 employment survey week, so the comparison is unfavorable even when accounting for special factors. Seasonal factors do expect an unadjusted increase this week, though not likely as much as will actually occur. The four-week moving average would rise by 17,500 in the coming week as the 235,000 level in the August 19 week drops out of the calculation, assuming the MNI forecast is correct and there are no revisions.

The Philadelphia Fed index is forecast to hold steady at a reading of 17.1 in September following the declines in each of the previous three months.  At 1300GMT, the FHFA Home Price Index will be published

ECB President Mario Draghi will deliver the welcome remarks at the ESRB Annual Conference, in Frankfurt, from 1315GMT. The European Commission consumer confidence data will cross the wires at 1400GMT. Also due at 1400GMT is the latest US leading indicators data, with the DOE Natural Gas Stocks release expected at 1430GMT.

The index of leading indicators is forecast to rise by 0.2% in August. Positive contributions are expected from stronger jobless claims, higher stock prices and consumer expectations, and a longer factory workweek.

Late US data will see the Fed Weekly M2 Money Supply Data cross the wires at 2030GMT.

Global Economic Trading Calendar


Markets


SNAPSHOT: Below gives key levels of markets in the second half of the Asia-Pac session: - Nikkei 225 up 90.69 points at 20401.24 - ASX 200 down 64.79 points at 5642.6  - Shanghai Comp. up 6.943 points at 3372.939 - JGB 10-Yr future down 4 ticks at 150.77, JGB 10-Yr yield up 0.4bp at 0.034%  - Aussie 3-Yr future down 4 ticks at 97.74, Aussie 3-Yr yield up 3bp at 2.217%  - Aussie 10-Yr future down 3 ticks at 97.105, Aussie 10-Yr yield up 2.8bp at2.857%  - US 10-Yr future up 1 ticks at 125.21, US 10-Yr yield up 0.4bp at 2.271%

US TSY/RECAP: Treasuries slid after FOMC said they will proceed with balance sheet reduction in Oct, keeping FFR steady at 1%-1.25%, they kept Dec. rate hike on table (11 dots saw one more rate hike in 2017). FOMC voted 9-0. Median FFR projections remained unchanged for 2017/2018 but trimmed for 2019 and the long-run in June SEP. They cited temporary effects on inflation & economy after hurricanes; they kept near-term assessment "roughly balanced." - T-Notes open Asia down up 1 tick at 125-21, 10-Year yield flat-last at 2.268.

US EUDLR FUTURES: Some packs down but mostly quietly unchanged across the strip, the long end seeing the most movement but still pretty much flat with thin trading throughout. The strip saw a large drop yesterday after a hawkish Fed
kept the Federal Funds Rate and the benchmark interest rate unchanged, a December rate hike has now been put firmly on the table with an 11 dot vote and furthermore they stated they will proceed with B/S reduction in the coming month. Sources are hearing EDH8 paid 98.41 on 20k around 02:38 BST)

STOCKS: The Nikkei 225 is back on a recovering rally up 169.42pts at 20479.88, this is the highest level seen in over 2 years. As the FOMC announced it's hawkish strategy and progression for the US economy with rate hikes for December firmly on the table and B/S reduction commencing next month, the dollar rallied and divergently the Yen fell.

OIL: Oil again almost flat in the Asia session, up $0.04 at $50.73, but some interesting moves yesterday, a small blip after crude oil inventories. Headlinecrude rose above estimates, but large draws in gasoline and distillates paints a positive demand picture, especially with refineries reopening after hurricanes in the U.S. This outlook has led WTI to hit its highest levels since May. After hawkish FOMC comments came in, oil dropped again momentarily, perhaps on the dollar move though recovered to take the $50 handle and is currently trading at levels 10% higher than August. - Looking ahead, on Friday there is an OPEC and non-OPEC nations meeting where cuts to production and output are said to be the main focus as the current deal fails to have the desired effect.

GOLD: Gold is weaker in Asia-Pac trade, after dropping sharply to levels not seen since August after the FOMC announced hawkish statements on the progress of their strategy for monetary policy, the Fed kept the Federal Funds Rate and the benchmark interest rate unchanged but a December rate hike has now been put firmly on the table with an 11 dot vote and furthermore they stated they will proceed with B/S reduction in the coming month. The yellow metal is down $2.77 at $1,298.33.

FOREX: US dollar strength was the main theme during the Asia-Pacific session, following an overall hawkish FOMC statement, where they announced it will start with balance sheet reduction in October and left the door open to a December rate hike. Dollar-yen trekked higher from Y112.20 to Y112.65 before running into supply from the Japanese exporter community. As expected, BoJ left Policy balance rate at minus 0.1pct and maintained 10-Year JGB yield target at 0.0pct. Dollar-yen was last at Y112.44. Aussie-dollar faded from $0.8036 to $0.7994, the pair was further weighed down by declines in copper and ore prices. Aussie was last at $0.8004. Meanwhile, Euro-dollar currently trades at $1.1887 and Cable at $1.3473, after trading in respective ranges of $1.1866 to $1.1897 and $1.3473 to $1.3508.

Technical Analysis


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This article is from Eurex Exchange and is being posted with Eurex Exchange’s permission. The views expressed in this article are solely those of the author and/or Eurex Exchange and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Options

Vol 411: VIX Expiration


 

CBOETV - Joe Tigay, Equity Armor Investments, discusses the VIX near 10, FOMC meeting and SMH

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. Copies are available from your broker, or at www.theocc.com. The information in this program is provided solely for general education and information purposes. No statement within the program should be construed as a recommendation to buy or sell a security or to provide investment advice. The opinions expressed in this program are solely the opinions of the participants, and do not necessarily reflect the opinions of CBOE or any of its subsidiaries or affiliates. You agree that under no circumstances will CBOE or its affiliates, or their respective directors, officers, trading permit holders, employees, and agents, be liable for any loss or damage caused by your reliance on information obtained from the program.

Copyright © 2016 Chicago Board Options Exchange, Incorporated.   All rights reserved.

This video is from CBOE and is being posted with CBOE’s permission. The views expressed in this article are solely those of the author and/or CBOE and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Macro

US Banks: Trump Trade or Fundamentally Strong?


Market Color with Steve Sosnick. Following bank executives’ warnings over resilience in trading volumes, is the rally in banking shares warranted or an extension of the Trump trade? 

The analysis in this video is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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Technical Analysis

Will Dovish FOMC Inspire More Dollar Weakness?


Technical Take:

Later today the Fed is expected to announce a “quantitative tightening” to its balance sheet starting at $10B assets per month.  The greater uncertainty lies with the committee’s economic projections and the likelihood of another rate hike in 2017 which will impact rates and the US dollar, among others.  Both asset classes are just two weeks from making 2017 lows.  The US dollar index (DXY) is currently down 10.2% YTD, its worst decline since 2003.  The YTD low of $91.35 was made on September 8th and was accompanied by a bullish divergence on the daily time period as the daily RSI made its low back in July.  The longer term weekly period, however, does not show this same divergence as both momentum and price each made lower lows in early September.  The pattern over this weekly time frame resembles a bear flag consolidation implying there is more downside ahead.  The location of the flag is important as it occurred along an expected support line representing the 2016 low, $91.90.  While the bear flag consolidation rather than a V-shape rally is concerning, the next direction from here could be dependent on the tone of today’s FOMC statement and ensuing press conference.  If the committee comes across with a dovish bias, supported by declining inflation data, the risk is for a resumption of the downtrend for the dollar.  Conversely a hawkish interpretation could squeeze the greenback sharply higher as seemingly most players are positioned on one side of the boat. 

Place your bets!     

Nasdaq's Market Intelligence Desk (MID) Team includes: 

Michael Sokoll, CFA is a Senior Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over 25 years of equity market experience. In this role, he manages a team of professionals responsible for providing NASDAQ-listed companies with real-time trading analysis and objective market information.

Jeffrey LaRocque is a Director on the Market Intelligence Desk (MID) at Nasdaq, covering U.S. equities with over 10 years of experience having learned market structure while working on institutional trading desks and as a stock surveillance analyst. Jeff's diverse professional knowledge includes IPOs, Technical Analysis and Options Trading.

Steven Brown is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over twenty years of experience in equities. With a focus on client retention he currently covers the Financial, Energy and Media sectors.

Christopher Dearborn is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Chris has over two decades of equity market experience including floor and screen based trading, corporate access, IPOs and asset allocation. Chris is responsible for providing timely, accurate and objective market and trading-related information to Nasdaq-listed companies.

Brian Joyce, CMT has 16 years of trading desk experience. Prior to joining Nasdaq Brian executed equity orders and provided trading ideas to institutional clients. He also contributed technical analysis to a fundamental research offering. Brian focuses on helping Nasdaq’s Financial, Healthcare and Airline companies among others understand the trading in their stock. Brian is a Chartered Market Technician.

This article is from Nasdaq and is being posted with Nasdaq’s permission. The views expressed in this article are solely those of the author and/or Nasdaq and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

 


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Stocks

Nasdaq Market Intelligence Desk - Equity Market Insight September 20, 2017


As of 11:20AM est:

NASDAQ Composite -0.04% Dow -0.01% S&P 500 -0.01% Russell 2000 +0.09%

NASDAQ Advancers: 1148 Decliners: 919

Today’s Volume (100 day avg) -5%

US stocks are little changed Wednesday, as a 2 day Fed meeting is concludes and there’s an expectation we’ll get some color on their plan to reduce the balance sheet. Crude Oil futures are attempting to close above $50/ barrel for the first time since late July, while the Caribbean deals with another Category 5 hurricane, which may shift some of the Gulf shipping channels. On the economic front, Existing Home Sales fell to a 1 year low, as Hurricane Harvey put a hamper on demand in the Houston area. Weekly Crude Inventories jumped to 4.59 million barrels, but Gasoline (-2.1m) and Distillate Inventories (-5.69m) dropped, widely missing expectations. Information Technology is the weakest sector this morning (-0.5%), while Industrial (+0.4) and Energy (+0.4%) stocks are the top performers.

·         We're officially in the 2nd-largest bull market since World War II.  Stocks have climbed roughly 270% from their March 2009 low, beating the bull run from June 1949 to August 1956, according to data from LPL Financial

·         Today marks the long-awaited conclusion of the Fed meeting after which the committee will issue its statement on rates (no change expected) and is expected to discuss the timing of an expected slow runoff of maturing bond balances.  The last official statement on timing moved it from “this year” to “relatively soon”.  With less than four months left in the year investors will be watching for a further narrowing of the timeline or even a specific date. 

·         Rate hike expectations have crept up this month with the odds of a December rate increase now at 62% from below 50% just a few weeks ago.

·         Existing Home sales disappointed, falling to a one-year low at 5.35 million vs. a survey expectation of 5.45 million.  Mortgage applications fell 9.7% in in the week ended September 15 after rising 9.9% in the prior week.

·         The OECD releases its latest Interim Economic Outlook, which says the global economy has picked up momentum with investment, employment and trade growing in most countries.  Expansion is projected to be faster this year than in 2016, and better still next year.  However strong sustainable medium-term growth is not yet secured.  Emerging markets are also seen as key for overall global growth.

·         CNBC reported that early reads suggest this year's holiday season might be stronger for retailers due to a rise in personal income climbs and higher consumer confidence.  That may be so but today a number of retail-focused names are trading lower this morning. Bed Bath, Diageo, General Mills and FedEX all fell in pre-opening trading following earnings/guidance releases.

·         Nasdaq began trading four new listing this morning.  Workaday, an application software company, switched from the NYSE today.  ZAI Lab (ZLAB), a bio-pharmaceutical company, priced an upsized IPO of 8 million shares at $18, while Krystal Biotech (KRYS) priced 4 million shares at $10 and cellular analysis company Celcuity (CELC) priced 2.4 million shares at $9.50.  Welcome all!

Nasdaq's Market Intelligence Desk (MID) Team includes: 

Michael Sokoll, CFA is a Senior Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over 25 years of equity market experience. In this role, he manages a team of professionals responsible for providing NASDAQ-listed companies with real-time trading analysis and objective market information.

Jeffrey LaRocque is a Director on the Market Intelligence Desk (MID) at Nasdaq, covering U.S. equities with over 10 years of experience having learned market structure while working on institutional trading desks and as a stock surveillance analyst. Jeff's diverse professional knowledge includes IPOs, Technical Analysis and Options Trading.

Steven Brown is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over twenty years of experience in equities. With a focus on client retention he currently covers the Financial, Energy and Media sectors.

Christopher Dearborn is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Chris has over two decades of equity market experience including floor and screen based trading, corporate access, IPOs and asset allocation. Chris is responsible for providing timely, accurate and objective market and trading-related information to Nasdaq-listed companies.

Brian Joyce, CMT has 16 years of trading desk experience. Prior to joining Nasdaq Brian executed equity orders and provided trading ideas to institutional clients. He also contributed technical analysis to a fundamental research offering. Brian focuses on helping Nasdaq’s Financial, Healthcare and Airline companies among others understand the trading in their stock. Brian is a Chartered Market Technician.

This article is from Nasdaq and is being posted with Nasdaq’s permission. The views expressed in this article are solely those of the author and/or Nasdaq and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


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