Pre-NFP Analysis (Geo Polisci)
업데이트됨
NFP meets expectations: Dollar’s (DXY) had a nice rebound, clearing the short-term range-high up to it’s current descending trend; channel-top. Also, confluences in 97.5 is a huge key level and also support for the Euro at similar prices respectively. There are a lot of USD based pairs at support and I think today will result in a continued trend to the upside. The ADP figure earlier this week (govt figures) was stronger, and thus leading expectations of a 100 DXY. NFP can lift the dollar here, but by how much is unknown. I don’t think so.
Alternatively: If NFP misses, Dollar is at resistance (growth and monetary policy) I think the path of least resistance with negative numbers is a DXY tanking towards lower support levels.
Risk:
The FED signaled it will continue to fund short term lending towards April, which is a problem, meaning that the lending market is seized up.
The FED needs to by dynamic and stay ready to address negative rates (a growing question) if a new financial problem arises this year.
Looking at U.S. equities, it’s worth repeating that the SPX out performs on short term basis and has done so for over 10 years. U.S. equities are also the benchmark for other developed economies. The backdrop of risk-on sentiment vs risk-off right now isn’t normal. The risk-on isn’t sought now for the yield. Make sure you know that. As investors in an economy are more willing to take risk, with less return to be had, what does this sort of market do? It chances momentum. Capital gains (buy high, sell higher) is what is sought, not the rates of return (the book value). This leads to a very anxious and unsteady sentiment across equity, FX, and commodity markets. An underlying tale that I’m watching is emerging markets not reflecting the new all-time highs seen by U.S. equities. I think the decline in fear and the high level of exposure the markets have NOT in cash, is a troubling sign that market sentiment is hanging over the edge of an ever-falling cliffs edge.
I think the take away is this: it’s easier to knock a market off pace if it’s based significantly on passed conviction. The risk-on right now isn’t robust--it’s simply opportunism at its finest. If the NFP numbers today suggest some sort of a decline in growth, we can see a lower DXY. How comfortable are you from accepting the fact that this market is building with record exposure with no concern that it will fall against fundamental winds? It’s complicated without question.
Risk trends and the pricing of risk through something like the VIX, you can see suppression even taking into account what’s happened in Iran over the last 7 days. The volatility of emerging markets is low as well, with high speculative exposure across the board. This is the perfection of pricing in no worries; however, I think we can all agree to a few things.
Iran vs U.S. is a hot topic. Crude is going to suffer from any fundamental events, regardless of the fact that Iran doesn’t produce a lot of oil, they do have a history of manipulating supply chains. The U.S. hasn’t “reacted” to the air base being mortared—combining the economic sanctions (the reversal of Iran backing out of the nuclear treaty) and new protests, the markets assume that it’s all behind us. This is pretty crazy to me and I think it’s important to watch oil for short, medium, and long-term opportunities regarding this theme.
Alternatively: If NFP misses, Dollar is at resistance (growth and monetary policy) I think the path of least resistance with negative numbers is a DXY tanking towards lower support levels.
Risk:
The FED signaled it will continue to fund short term lending towards April, which is a problem, meaning that the lending market is seized up.
The FED needs to by dynamic and stay ready to address negative rates (a growing question) if a new financial problem arises this year.
Looking at U.S. equities, it’s worth repeating that the SPX out performs on short term basis and has done so for over 10 years. U.S. equities are also the benchmark for other developed economies. The backdrop of risk-on sentiment vs risk-off right now isn’t normal. The risk-on isn’t sought now for the yield. Make sure you know that. As investors in an economy are more willing to take risk, with less return to be had, what does this sort of market do? It chances momentum. Capital gains (buy high, sell higher) is what is sought, not the rates of return (the book value). This leads to a very anxious and unsteady sentiment across equity, FX, and commodity markets. An underlying tale that I’m watching is emerging markets not reflecting the new all-time highs seen by U.S. equities. I think the decline in fear and the high level of exposure the markets have NOT in cash, is a troubling sign that market sentiment is hanging over the edge of an ever-falling cliffs edge.
I think the take away is this: it’s easier to knock a market off pace if it’s based significantly on passed conviction. The risk-on right now isn’t robust--it’s simply opportunism at its finest. If the NFP numbers today suggest some sort of a decline in growth, we can see a lower DXY. How comfortable are you from accepting the fact that this market is building with record exposure with no concern that it will fall against fundamental winds? It’s complicated without question.
Risk trends and the pricing of risk through something like the VIX, you can see suppression even taking into account what’s happened in Iran over the last 7 days. The volatility of emerging markets is low as well, with high speculative exposure across the board. This is the perfection of pricing in no worries; however, I think we can all agree to a few things.
Iran vs U.S. is a hot topic. Crude is going to suffer from any fundamental events, regardless of the fact that Iran doesn’t produce a lot of oil, they do have a history of manipulating supply chains. The U.S. hasn’t “reacted” to the air base being mortared—combining the economic sanctions (the reversal of Iran backing out of the nuclear treaty) and new protests, the markets assume that it’s all behind us. This is pretty crazy to me and I think it’s important to watch oil for short, medium, and long-term opportunities regarding this theme.
노트
**This is not financial advice & I am not a licensed financial advisor.노트
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