Share Tips Stock Market Tips from the Press & Stockbrokers

S&P 1700 within 6 Months

​
This is a new post after some interest in a comment why I believed the S&P is going to 1700.
Update 3: I am going to limit my answers in the comments guys; as the post becomes more popular it is becoming more diluted with snark etc. I don't expect anyone to follow my opinions; I just want to share one aspect of why I am making the trades I am. I maybe wrong. Random walk and all that..
Original Disclaimer: This is based on historical precedence and we are in unprecedented times but, with history as our guide a strong argument can be made for the S&P to decline to a level that is currently inconceivable. I have disclosed all my positions near the bottom.
Update 1: Slightly long; happy to be challenged in the comments, it is late in the UK (2am) so may tidy it up and add more references and charts tomorrow. Update 2: Have expanded the post to answer as many comments and requests for references wherever possible and tagged in the requestors.

Intro: Are we in a recession?

If you believe so, or that we are heading into a recession then there are four things needed to support a genuine rally out of a recession
​
We are missing 2 out of those 4 criteria; the overwhelming monetary and fiscal policy (world-records) are compensating for lack of positive indicators and volatile and bullish pricing.

What do you mean by pricing?

It can be argued that the current price of stocks is not discounting for the acute and likely chronic harm to consumer sentiment and spending power. For example; the UK clothing retailer Next Group closed their bricks and mortar stores (share price increased 4%) then they cancelled all online shopping (share price increased 3%) and finally they cancelled all orders with their supply chain (shares leapt 12.8% during the rally.) There is the massive amount of second, third and fourth order effects that this one company does to the UK economy (and Turkish factories). Suppliers, shipping, design, marketing etc all cancelled and the staff furloughed.
This is one example but the indexes are currently full of similar examples and some analysts are ringing the alarm bells.
​
Lazard Asset Management are concerned that the pandemic “will persist longer than many investors suspect and that the economic damage will be deeper and potentially longer-lasting”.
Reddit is quick to mention that stonks only go up but there is some truth to that sentiment at present since any negative factors are dismissed as being priced in and all positive factors are heralded as a cause for stocks to rally. If priced in was accurate then we would not see record-beating market rallies back to back. 10% volatility swings over 48 hours is the very definition of not priced in.
There is evidence to suggest that, well, the bullish sentiment is wrong and mainly because it is retail investors being taken for a ride whilst funds re-balance and offload.
Retail traders "buying the dips" is normally a contrarian signal, meaning that it's time to sell. This section is for u/lntoIerant in response to a comment.

Edit to answer some comments about this portion thus far.

Do retail investors move the market?
Are retail investors buying in greater volumes?
Are retail investors dumb money?
​

What does this have to do with the S&P dividend and the EPS?

​
Major indexes are comprised of stocks that pay handsome dividends; normally 2% yield a year. The companies have reached their limit of growth (HSBC haven't discovered 5 million new customers and Shell are not finding new fossil fuels) so investors hold the stock for income-seeking reasons.
The FTSE 100 was priced in to generate £89 billion in dividends for 2019 and £90 billion+ in 2020. That has largely collapsed.
The only companies that pay dividends are those taking on debt to do so like Shell. And they have; a 10Bn credit line to maintain dividends. The Bank of Englandhad to slap 5 UK banks from issuing dividends at this time. That means that their primary valuations as income-generating stocks are questionable...
...especially since the dividends are not expected to return to the 2020 levels for another 10 years now. Edit to add: This portion is taken from the market report by BNY Mellon. You can see the chart here. The analyst is John Velis of BNY. Thanks to u/flash_aaaah_ahhhhh for prompting me.
​
“By 2021, the market expects dividends per share for the S&P 500 to be down to under $38 per share (a staggering 41 per cent drop from recent highs of approximately $63 per share) and then to start slowly rising again. Going out 10 years to 2030, the expectation is that dividends will just about recover to pre-Covid-19 levels.”
​

Main body: Onto the S&P

In 2021 the market expects the dividends per share for the S&P to be reduced to $38 per share. That is priced in and common knowledge.
That is a 41% drop from the recent highs of $63 a share and seems alarming for income seeking investors since we are not expected to recover to those prices for 8-10 years. Source.
But DataTrek have noted that we are still currently trading at 21X the trailing 10 year earnings of $122 a share.
Dividends per share normally don't fall as far as earnings per share. But they are inverted at present.
For the S&P to be trading at 2,650 level (or even higher) it means the market does not believe the pandemic or recession will have any long-term damage. That puts us squarely at odds with items 3 and 4 in our list of factors needed to exit a bear market.

Talk to me about 2008!

Thanks to u/mister_woody for asking for more data.
​
In other recessions, including 2008, the dividend price per share drops approximately 12-15% but the earnings per share drop by considerably more; as much as 85%.
That means that in 2008 financial crisis and subsequent bear market; the dividends per share dropped by a lower percentage amount than the total index value drop.
You can see that in this chart here.
​
Right now, we have the reverse. Dividend share drop in this market is 41% (which is chilling) and market drop was approximately only 30% and rallying heavily back to the mid-20's only. That makes no financial sense unless the assets were being propped up by buyers...
​
If the S&P follows the same playbook at 2008-9, then we would expect to see levels of around 1400 at the bottom but that seems extremely bearish expecting that this crisis is worse than 2008.
If previous indications hold true, then we would expect the S&P to drop by approximately 50-60%ish at the true bottom to reflect the 41% decrease in expected shares plus additional discounts and negative market sentiment.
In reality, we are probably likely to pull back to between 13X and 15X trailing average which puts the S&P between 1600 (low side) and 1800 (high side).
​

You are putting a lot of faith in a re-run of the 2008 crisis

I am. No doubt about it. After October 2008, stocks fell for another four months, piling up 40% of losses before the recently ended bull market began in March 2009.

New market indicators

Since I wrote this post, the DJIA was up over 4% and closed down on the day.
Thank you to theTwitter feed of Jim Bianco for this: Since 1925 (95 yrs!), up more than 4% and closing down on the day has happened only one other time ... Oct 14, 2008 (Tsy Sec Hank Paulson forced the banks to take TARP money). The S&P 500 was up 3.5% at the high and closed down on the day. Since April 1982 (daily H,L,C began) has happened three other times...Oct 3, 08, Oct 14, 08, and Oct 17, 08.
This mkt continues to trade like Oct 08. It was six months and another 25% down before the low.
Bezinga are also playing up the 2008 similarities.

Why is bullish sentiment so wrong?

The negative reports are so wildly negative that the almost defy belief. We are dealing with insane numbers way beyond our traditional frame of reasoning. This is topped only by the insanity of the scale of quantitative easing. Less than a year ago, a small movement in the non-farm payrolls would lead to a 2-3% move in the markets; now we are hitting 700K jobs lost, a truly ugly number and the market rallies hugely. Future economic students will study this to try and understand what was happening.
In the space of weeks the majority of the Western economies have swung to being effectively state-sponsored, centralised economies and no one really knows how to unwind these positions.
It is impossible to reconcile being a bull with a centralised state economy and blue-chip stocks that refuse to pay dividends but the share price remains at the same levels as when they paid a 2% yield.
The UK forecast is for the deepest contraction since 1900. Business surveys have shown activity crashing faster in March than during the financial crisis. The Office for National Statistics has published experimental research on the impact of Covid-19 on the economy.
​
With entire swaths of the economy having shut down “traditional forecasting methods become irrelevant”, warned Chiara Zangarelli, economist at investment bank Nomura.
Michelle Girard, economist at NatWest, said that while there was huge uncertainty about the precise magnitude of the contraction in gross domestic product in the second quarter, “there is little doubt that it will be off the scale”
That is not a bullish sentiment. It means markets are acting irrationally since fundamentals are being dismissed as priced-in. In reality; nothing is priced in.

Disclosure

​
Spreads
Equities
Currency

Edit to add: So, your entire thesis is totally destroyed if companies keep paying dividends?

Yes.
In a nutshell.
But something else will be destroyed; the western taxpayer and future growth.
​
CEO said 'every pound we receive [in rates relief] will be invested in ensuring Tesco is able to support British shoppers...' That is tax payers paying a subsidy to a free-market company for the ability to shop...and also...
Mr Lewis said that the needs of savers and pension funds also needed to be considered in the debate around dividends. “We’ve thought long and hard about our responsibilities here . . . we are in a strong position to pay out for the benefit of those people
​

Edit to add: What about the FED and stimulus

​
u/tauriel81 and u/aliveintucson325 and u/100PERCENTYOLO_VEQT
OK - to truly test my own assumptions; here is my argument AGAINST my position.
The Fed have not quite printed money as Reddit loves to meme. They have issued liquidity and central banks worldwide have allowed banks to relax their requirement to hold reserves of cash. That injects money into the business world by allowing lending and borrowing to continue. It also reduces theoretical risk since the models are back within tolerance.
When the time comes they will remove the credits gradually without causing hyperinflation. They do this by paying banks not to lend back into the system by holding a % of their assets at the Federal Reserve. So they pay the banks but the banks keep the deposit at the Fed and don't pass on the liquidity to potential borrowers..gradually and sustainably.
https://www.aier.org/article/powells-new-monetary-regime/
That means the borrower of the future (home purchasers, entreprenuers etc) will have very few credit facilities available so RIP to the long-term economic growth.
We also have unprecedented government support for citizens. The largest social security welfare plan since WW2, especially in Europe.
If you believe that the Western economies can weather this storm using the bridging devices by central banks then it pays to dollar cost average into the market and keep buying the dips as a retail investor.
Lots of buoyant news from European nations and China about the slowing pandemic is overwhelming the negative leading and lagging economic indicators about economic data.
If you believe the economy can return to normal within 36 months, then it pay to be bullish and invest.
If you are day-trading, swing-trading or short-term options trading then the overwhelming market moves are likely to crush people as the system flexes under lots of volatility. You are also likely prioritising the negative news and technical analysis in your filter bubble and de-prioritising the positive news particularly when that news is fiscal or monetary policy since those things are dry, boring and incomprehensible half the time.
So you miss Fed backstops critical bankingi and instead hear UK Prime Minister in intensive care.
If you want to know what is going on...
​
Decide where you making a prediction. Plan your trade, trade your plan.
How do the FED take money back out of the economy?
They FED purchase the security initially to then sell it back to the asset-holder later. So the balance of credit-deficit merely swaps but by paying a small premium on the excesses that they hold, they can cushion the inflation or deflation of the currency.
So, they effectively give the bank liquidity and then remove that liquidity later by passing the asset back...but also provide a small premium to cushion the blow; 50% of the premium is then held on Federal Reserve books so that the market is not flooded with new money.
The FED previously reduced their balance sheet from $4.4 trillion to $3.7 trillion but it remains to be seen if they can unwind a position of this size.
​

TL:DR

​
​
submitted by DongusMcLongus to StockMarket [link] [comments]

Everything Is Soaring As Trump Makes Buying Stuff Great Again

Who would have thought - as recently as two days ago - that a Trump presidency is the best thing for global risk? Certainly not Wall Street experts, all of whom warned of drops as big as 5% should Trump be elected.
And yet, the global repricing of inflation expectations continues at a feverish pace in the aftermath of the Trump victory, leading to another surge in US equity futures, up 15 points or 0.7% to 2175 at last check, with Asian and European stock market all jumping (Nikkei was up a whopping 6.7% after losing 4.6% the day before) after the initial shock of Donald Trump’s election victory gave way to optimism that his plans for fiscal stimulus will provide a boost to the global economy. Commodity metals soared with copper surging 4.5% to $5,658.50 a metric ton, the biggest gain since May 2013, while zinc advanced 2.1% and nickel added 2%. Gold climbed on speculation whether the Federal Reserve will raise interest rates in December.
The euphoria is largely due to the market's hopes of a burst in fiscal stimulus, aka much more debt, which while self-defeating in the long run, is providing a major boost to risk assets for the short-run, as it puts QE potentially back in the picture: after all _someone will be needed to monetize the US budget deficit_which is expected to once again soar under president Trump.
As Citi strategists note today, "The outcome of the U.S. election leaves the policy and macroeconomic outlook in the U.S. and globally with major uncertainties. Acknowledging these major uncertainties, we expect the new administration to pursue some deregulation, fiscal expansion, and reassess the costs and benefits of free trade. The combination of policies could be inflationary, quicken the path of Fed hikes and strengthen the dollar."
Indeed, as Bloomberg puts it, Donald Trump’s unlikely rise to power is providing a shot in the arm for global financial markets, with stocks and commodities rallying on optimism that his fiscal-stimulus plans will boost the global economy. European equities joined a global rally as they headed for their biggest four-day jump since July. Banks surged on prospects of lighter regulation for their U.S. operations and higher lending rates, and miners gained on increased metals prices. Copper rose the most in more than three years on Trump’s intention to expand infrastructure spending. Currencies of most commodity-producing nations advanced, while Bloomberg’s dollar index reversed losses. Government bonds in Europe and Asia slid as the inflation outlook lifted, while corporate-debt sales resumed in Europe as markets stabilized.

Those who saw S&P futures trade limit down on Wednesday morning will likely be stunned by the amazing U-turn in global markets since the shock win for Trump triggered a knee-jerk selloff in equities and rush into haven assets. European shares Wednesday staged their biggest turnaround since March as investors took comfort in his acceptance speech. They are starting to look beyond Trump’s campaign rhetoric, focusing instead on his promises to cut taxes and at least double Hilary Clinton’s estimated $275 billion, five-year plan for roads, airports and bridges.
The only asset conspicuously not participating in the global ramp was oil, which was little changed after three days of gains. The IEA said prices may retreat amid “relentless global supply growth” unless the OPEC enacts significant output cuts. West Texas Intermediate fell less than 0.1 percent to $45.25 a barrel and Brent was 0.8 percent higher at $46.71.
“It’s a relief rally of the certainty of the outcome of the election and after the conciliatory tone that Trump took,” said Nick Skiming, a fund manager at Jersey, Channel Islands-based Ashburton Ltd. His firm oversees $10 billion. “We know from Trump’s policies that he wants to reduce taxes and embark on fiscal spending and if he gets those approved, that will be expansionary for the U.S. economy in the short term.”
Europe's Stoxx 600 Index gained 1% as of 10:55 a.m. London time, with lenders reaching their highest levels since March. UBS Group AG soared 7.6%, set for its biggest surge since 2012. Among Trump’s policies were a pledge to repeal the Dodd-Frank Act’s strict capital requirements on banks and a proposed temporary moratorium on new financial regulations. Gains in commodities helped send a gauge of miners to its highest since June. French media company Vivendi SA jumped 10 percent, and Germany’s Siemens AG rose 4.7 percent after they posted profit that beat projections.
S&P 500 Index futures climbed 0.7 percent, indicating U.S. equities will extend their advance into a fourth day. Billionaire Carl Icahn said he left President-elect Trump’s victory party to bet about $1 billion on U.S. equities. The investor said that the economy still faces challenges but Trump will be “a positive, not a negative” for the country.
The MSCI Asia Pacific Index climbed 2.7 percent, the most since March. Japan’s Topix index jumped 5.8 percent, after sinking 4.6 percent in the last session, and Australia’s benchmark rallied by the most in five years. In Hong Kong, Jiangxi Copper Co., China’s second-largest producer by output, rose 14 percent. Russian aluminum maker United Co. Rusal Plc jumped by the most on record.
While the focus will remain on the unfolding political landscape, investors may also look to data on initial jobless claims and earnings from companies including Macy’s Inc. and Ralph Lauren Corp. for indications of the health of the world’s biggest economy.
But while stocks soared, it was a different story in bond markets: European debt fell after about $337 billion was wiped off bond markets on Wednesday as Trump’s election sparked concern that his plan to boost economic growth will lead to a surge in inflation. The yield on German 10-year bonds climbed seven basis points to to 0.27 percent, while that on similar-maturity U.K. gilts added seven basis points to 1.33 percent. Ten-year U.S. Treasury yields rose two basis points to 2.07 percent. The U.S. is selling $15 billion of 30-year Treasuries at an auction on Thursday. Bonds of that maturity led Wednesday’s selloff, with yields climbing 23 basis points.
“Trumpeconomics implies a likely faster pace of Fed rate hikes next year,” said Robert Rennie, head of financial markets strategy at Westpac Banking Corp. in Sydney. “It is clear that this wave of populist vote has reflected, in part, dislike of tight fiscal, easy monetary policy. If we are now seeing a shift in the U.S., then that means markets will have to reprice this.”
Odds for a Fed interest-rate hike in December climbed to 88 percent, based on U.S. overnight indexed swaps that trade 24 hours a day, after plunging below 50 percent while the outcome of the election unfolded. San Francisco Fed President John Williams said Wednesday that the argument for gradual interest-rate increases “still makes sense to me.”
Bulletin Headline Summary from RanSquawk
Market Snapshot
Global Headline News
Looking at regional markets, we start in Asia where the fallout from the 2016 Presidential Election results is still dictating the state of play in markets. Asian indices traded higher across the board benefiting from the bullish close on wall Street with the three majors closing the session at highs and in the Dow's case ATH's. The Nikkei 225 (+6.7%) lead the way higher, with financials outperforming as Donald Trump is seen as more friendly to the banking sector, given his previous commentary and his record of amassing a large property portfolio through debt. The Republican 'clean sweep' of House, Senate and President has also reassured global stock markets. Japanese Finance Minister Aso said he wants to avoid FX intervention and the government will not intervene in FX except in exceptional cases. PBoC set the CNY reference at 6.7885 (Prey. 6.7832) — the weakest setting since 2010 and injected CNY 80bIn in 7y and 14y reverse repos.
Asian Top News - Asian Shares Jump With Metals as Trump Reassessed; Kiwi Weakens: Stock gains led by raw-materials producers as copper jumps - McDermott Says RBNZ Worried About Kiwi, Will Cut Rates If Needed: “We have not reached the floor” on rates, assistant governor says - Mr. Yen Says Trump Victory Doesn’t Change Currency-Market Trend: Yen may strengthen to 90 per dollar within six months of Donald Trump’s election, Eisuke Sakakibara says - Tata Consultancy Says Ishaat Hussain Nominated As Chairman: Hussain shall hold office until new chairman is appointed - Modi May Reap $45 Billion Budget Boost With Anti-Graft Cash Ban: Edelweiss Securities predicts crack down on high-value currency notes will uncover 3t rupees in black money - Singapore Names Jho Low Person of Interest in 1MDB-Linked Probe: Country’s investigation into Low started in 2015 - Hyundai Merchant, Korea Line Submit Final Hanjin Asset Bids: preferred bidder to be picked on Nov. 14, court says
Likewise in Europe, Donald Trump continues to dictate price action across asset classes, with equities continuing to strengthen, as was seen in the second half of yesterday's trade. European bourses all trade higher this morning by over 1%, with material and financials leading the way higher benefitting from speculation regarding what a Trump presidency could entail, while utilities underperform in the wake of earnings reports from Engie and National Grid. Elsewhere, fixed income markets have seen European paper follow their US counterparts, with Bunds retaking the 161.00 handle to the upside as markets calm in the wake of yesterday's volatility. Analysts at Informa note that Spanish/Italian 10 year yields have climbed 3-4bps as the Renzi/EU row continues to escalate, amidst more animosity vs EC in campaigning ahead of the Dec 4 referendum.
Top European News
In commodities, industrial metals rose as Goldman Sachs Group Inc. said Trump’s promise to revive American infrastructure means commodities used to build everything from airports to bridges will benefit under his presidency. Copper surged 4.5 percent to $5,658.50 a metric ton, the biggest gain since May 2013, while zinc advanced 2.1 percent and nickel added 2 percent. Gold climbed as traders speculated on whether the Federal Reserve will raise interest rates when policy makers meet next month. Bullion rose 0.2 percent to $1,279.85 an ounce and silver gained 1.4 percent. Oil was little changed after three days of gains. The International Energy Agency said prices may retreat amid “relentless global supply growth” unless the Organization of Petroleum Exporting Countries enacts significant output cuts. West Texas Intermediate fell less than 0.1 percent to $45.25 a barrel and Brent was 0.8 percent higher at $46.71.
In currencies, the Bloomberg Dollar Spot Index reversed losses to advance 0.3 percent, after rallying 1.4 percent on Wednesday. Currencies of commodity-producing nations were the best performers in foreign-exchange markets, with Australia’s dollar surging 1.3 percent and Norway’s krone appreciating 0.6 percent. Russia’s ruble strengthened 0.5 percent, leading gains among currencies in developing economies as investors speculated Trump will mend ties with Moscow. That could improve the outlook for loosening sanctions imposed after Russia’s annexation of Crimea in 2014. “A Trump presidency is dollar bullish because Trump’s economic policies are inflationary and will force the Fed to raise the Funds rate at a faster pace than otherwise,” said Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia. Mexico’s peso was 0.1 percent weaker after sinking 7.7 percent on Wednesday. Trump has pledged to renegotiate the North American Free Trade Agreement and curb illegal immigration by building a wall along the U.S.’s southern border. The yuan slipped to a six-year low amid concern Chinese exports will also suffer. Trump has called China a “grand master” at currency manipulation and has threatened tariffs of up to 45 percent on imports from the Asian nation, a step that Commonwealth Bank of Australia estimated would cut Chinese shipments to the the U.S. by 25 percent in the first year.
On today's calendar, one event worth highlighting though and which could be interesting now is the scheduled 30y Treasury auction this evening. In the midst of the hugely volatile moves yesterday, the 10y auction was reported as the weakest, based on the bid to cover ratio of 2.22, since March 2009. So it’ll be interesting to see how much demand there is for longer dated debt today. Away from that, the data docket today contains France wage data and IP this morning followed by initial jobless claims and the October Monthly Budget Statement across the pond this afternoon. The Fed’s Bullard and Lacker will also speak today.
US Event Calendar
DB's Jim Reid concludes the overnight wrap
To expand further on what I was discussing in yesterday's EMR after Trump and the Republican's clean electoral sweep, I must say that this is the most positive I've felt on the medium-term prospects for US growth for perhaps a decade. As a 'secular stagnationist' this is as much a relative and a nominal GDP story as it is an absolute and real GDP view but at least we'll likely to see a change in policy. Policy should now be skewed towards reflation at a fiscal level. However as a caveat the outcome is probably also potentially dangerous for growth as a Trump presidency has more risk of going spectacularly wrong than most others given his inconsistent approach to policy in the lead up to the election and his total lack of political experience. There was a great quote on Bloomberg last night from Sarah Binder - a political science professor at George Washington University - who said that "In every conversation I have about a President Trump there is an asterisk of unpredictability". This certainly rings true.
There are still some doubts as to whether he has his party fully behind him although the clean sweep may mean Republicans are happy to loosen the purse strings now they are in full control (and can get the credit) regardless of any doubts over Trump. The other problem with Trump are his international views (migration, trade) and we stand by our September long-term study view that Globalisation is going to be in full retreat over the years ahead which has longer-term global growth and stability risks. The link to "An Ever Changing World" where we articulated our view of the turn in the super cycle meaning higher yields, higher inflation, more fiscal spending and less globalisation is at the end of today's piece. Back to Trump, he also has non-economic policies that could be divisive if he follows through on his campaign rhetoric. So a leap into the unknown in some respects.
However if your view has been that constant monetary easing without support from fiscal policy was becoming counterproductive at a global level, then you have to take Trump and the Republicans seriously whatever your view(s) on him/them. I would stress that Trump will likely need the Fed over the years ahead though and he's not been their biggest fan. A persistent unfunded fiscal deficit could push yields up to levels that the debt ladened global economy would find overly negative. For expansionary fiscal policy to work in a world of heavy debt I do think you need a central bank willing or forced to buy government bonds. If not what's the incentive for the bond market to buy into an unfunded reflation boost. So we could see a strange situation in 2017 where the US is pursuing big expansionary fiscal policy but with no QE whereas Europe will continue to do big QE but without notable fiscal expansion. So yesterday's 20.2bp sell-off in 10 year Treasuries (a stunning 34.6bps from the Asian session lows) is one to watch and could be something the Republican's need to bare in mind if they go for broke on stimulus. What the Fed looks like in 18 months is also a big question. The Republicans and Trump have been very keen to clip their wings and the spectre of them becoming less independent - perhaps after Yellen's term ends in 2018 - must surely be a possibility.
Anyway we are writing our 2017 outlook at the moment and obviously this result is making us stress test our views for the next year or so. Any thoughts welcome from our readers on what this victory means. We reserve the right to change our mind on things by the time the outlook is out but this certainly shakes things up for 2017!
We discussed yesterday that we thought the result would initially bring risk-off followed by a reversal as the positive fiscal prospects would come into view. I'm not sure we thought such a turnaround would happen in hours rather than days or weeks but the low/high range yesterday was astonishing for a number of assets. Trump's conciliatory acceptance speech was probably the main catalyst. Let’s start with the aforementioned move for Treasuries where the high-to-low move was actually an incredible 37.4bps at the 10y and which took the yield back above 2% (closing at 2.057%) for the first time since January. That daily range is the highest since August 2011 although if we look at the magnitude of the selloff in percentage terms (10.91%) then it is actually the second highest with data going back to 1966. In another eye-watering stat, yesterday’s high to low range in basis points was 20bps more than the daily high-to-low range for the whole of the month of August. Volatility at its finest.
Staying with rates, the Treasury curve steepened aggressively with the 2y30y spread widening 19.5bps to 195bps with that one day move the biggest since 2011. The probability of a December Fed rate hike at one stage plummeted below 50% during Asia time before bouncing back and making an almost complete u-turn to close at 82%. In Europe the moves for sovereign bond markets, while still weaker, were slightly less spectacular. 10y Bund yields hit an intraday low of 0.090% in the early showing before closing at their highs in yield at around 0.200%. That was a 1.5bp move higher on the day, but a high-to-low range of 11bps.
Over in equity markets the incredible turnaround was more evident in the US futures market given Trump fears peaked early in the Asia session. Dow futures swung in a 1,172 point range after initially plummeting 867 points before then swinging to a 305 point gain. That’s the equivalent of a 6.82% high to low range. In the cash market the Dow closed up +1.40% after being down as much as half a percent initially. The high-to-low was 2.18%. The S&P 500 closed +1.11% with a high-to-low of 2.10% but this was -5% and limit down in Asian trading. Sector wise, the prospect of looser regulation meant financials (+4.07%) and healthcare (+3.43%) were the big outperformers. In fact, the Nasdaq Biotech index rallied +8.98% for its biggest once day gain since 2008. There’s going to be huge focus on the healthcare sector now given Trump’s vocal opposition of Obamacare and our US equity strategists are calling for +20% upside for the sector. Meanwhile the VIX tumbled just over 23% and back below 15, with a high-to-low range of 33%. Over in Europe the Stoxx 600 closed +1.46%, again however with a remarkable 3.91% range.
Credit was much the same. In the US CDX IG finished 1.3bps tighter on the day but in a near 6bp range. HY was even more impressive with the CDX HY spread 5bps tighter by the close but the high-to-low a spectacular 28bps. In Europe indices ended little changed with Main swinging in a 5bps range Xover swinging in a 20bp range.
The other markets to highlight were commodities and currencies. Gold, having smashed through $1300/oz and trading as high as +4.73% early on, closed just +0.18% but with a range of 5.45%. WTI Oil finished +0.64% but in Dollar terms swung in a $3/bbl range. Finally in currency markets the standout was the Mexican Peso which at one stage was -13.37% weaker, before paring losses to ‘just’ -8.30%. The Swiss Franc finished -0.67% weaker with a range of a little over 3% while the Yen was -0.48% on the day in a range nearing 5%.
So if that hasn’t caused your eyes to bulge just yet, then this morning we’re seeing a similar rebound across markets in Asia. The Nikkei (+5.86%) has more than recovered Wednesday’s losses while the Hang Seng (+1.92%), Shanghai Comp (+1.14%), Kospi (+1.70%) and ASX (+2.81%) have all surged back. Credit markets have made a similar turnaround while US equity index futures are little changed in the early going. In commodity markets the surge in metals has stood out with Copper, Zinc and Aluminium up between 3% and 5%. Iron ore is also above $70/tn for the first time since April. Needless to say miners have had a very strong morning. The infrastructure story is kicking in. Elsewhere the San Francisco Fed’s Williams opined overnight that a gradual rate of rate increases still makes sense, a view that is unchanged post election.
Meanwhile, away from the market moves, the remaining newsflow has been largely consigned to watching the political response globally. With trade negotiations at the forefront of debate now, Canada Ambassador David MacNaughton said that Canada is willing to entertain reopening the NAFTA agreement to potential changes should the President-elect want to. The Ambassador also suggested that he expects bilateral trade between the two countries to remain strong. Meanwhile Mexico President Enrique Pena Nieto said that ‘this election opens a new chapter in relations between Mexico and the US that will imply a change, a challenge but also a big opportunity’.
Unsurprisingly though it was the global populist movements that rejoiced in Trump’s victory. In France the leader of the right-wing National Front party, Marine Le Pen, said that ‘French people who hold this freedom so dearly will find an extra reason to break with a system that shackles them’. The founder of the populist 5SM in Italy also highlighted similarities between the result and movements in Italy. Austrian Freedom Party leader Heinz-Christian Strache was similarly jubilant while Russia President Putin said that ‘Russia is ready and wants to restore fully fledged relations with the US’ and that ‘this would serve the interests of the Russian and American peoples, as well as positively impacting the general climate in international affairs’.
Wrapping up yesterday, it would be an understatement to say that the data played second fiddle yesterday but for completeness, in the US we learned that wholesale inventories rose a slightly less than expected +0.1% mom (vs.+0.2% expected) in September. Wholesale trade sales also rose less than expected (+0.2% mom vs. +0.5% expected) while the Atlanta Fed held their Q4 GDP forecast at 3.1% following that data. In Europe the Bank of France business sentiment reading for October was unchanged at 99. Finally in the UK the trade balance widened further in September. The European Commission also released their latest economic forecasts, cutting Euro area growth expectations to 1.5% in 2017 from the earlier 1.8% forecast.
So while today’s diary does contain some economic reports, the likelihood is that markets will continue to respond to the Election result. One event worth highlighting though and which could be interesting now is the scheduled 30y Treasury auction this evening. In the midst of the hugely volatile moves yesterday, the 10y auction was reported as the weakest, based on the bid to cover ratio of 2.22, since March 2009. So it’ll be interesting to see how much demand there is for longer dated debt today. Away from that, the data docket today contains France wage data and IP this morning followed by initial jobless claims and the October Monthly Budget Statement across the pond this afternoon. The Fed’s Bullard and Lacker will also speak today.
from http://www.zerohedge.com/news/2016-11-10/everything-soaring-trump-makes-buying-stuff-great-again
via IFTTT
submitted by rotoreuters to zerohedge [link] [comments]

Day-trading the FTSE 100 using my tramline trading method My tramline trading method for spread betting is very versatile. Here's an example of a trade in the FTSE 100, which was over in a just ... Other FTSE indices include the FSTE 250, FTSE 350, FTSE SmallCap and FTSE All-Share. There is a set of eligibility criteria that a company must meet to be join included on the FTSE 100, including that it must be listed on the LSE, it must be denominated in pounds, and it must meet minimum float and stock liquidity requirements. For example, let’s say you wanted to create a FTSE 100 spread betting strategy and decided to focus on reversal trading. Although FTSE 100 has been in a downtrend for the last week, you believe that following positive earnings announcements for major FTSE constituents, the trend will reverse. FTSE Betting Guide. Indeed ftse betting is increasing in popularity partly due to the diverse products now being offered by the spread betting companies, but also by new markets which are now developing such as in binary betting with binary bets, or in the more established fixed odds with companies such as bet on markets. Whichever method you choose, and I will cover them all in detail, along ... Spread Betting vs Share Trading. ... For example, you’d place an up bet in the UK FTSE 100 or 250 market if you think the FTSE price will rise. You will buy at the ‘ask’ price, which is the higher price of the quoted spread. ... Spread Betting Tips Never Stop Learning.

[index] [43172] [27015] [37417] [54928] [63274] [29760] [7732] [9986] [19891] [65241]

http://gruserecpov.tk