(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
YUAN AND YEN PUSHING HIGHER, ZERO INFLATION IN EUROZONE
Overnight Bank of Japan held its fire contrary to the expectations. The result is yen is pushing higher. Also overnight, Chinese yuan rose most since 2005. This was prompted by PBOC indicating that it may ease capital controls. In our analysis, these moves by China are designed to impress IMF to make yuan a reserve currency.
In Eurozone CPI came at 0.0% year over year vs. 0.1% consensus. This indicates no inflation.
Eurozone unemployment rate ticked down to 10.8% vs. 11% consensus. This indicates European economy is improving.
Selling continues in gold.
Bonds are giving up some of yesterday’s gains.
Oil is still in the middle of a short squeeze.
Our very, very short-term early stock market indicator is neutral but can turn down quickly.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider adding new positions per new posts.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1143, silver futures are at $15.56, and oil futures are $45.95.
S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2063, 2038, and 2017.
DJIA futures are up 24 points.
MARKET TO THE FED, “WE DON’T BELIEVE YOU”; CHINA ABANDONS ONE BABY POLICY
Yesterday the Fed issued a significantly more hawkish statement than the consensus. The Fed also left open a high probability of a rate increase in December. The stock market immediately tanked. Then the chatter started that the Fed is just saying this to establish their credibility but they do not mean what they say.
As the chatter gained momentum, the market took off. When the market did not break, shorts were forced to cover adding fuel to the rally.
Now futures are indicating a 48% probability of a rate rise in December, this is after yesterday’s stock market rally.
China has abandoned one baby policy. We have been predicting this. Now one plank of our bearish thesis on China based on demographics is likely to go away for the very long-term. It is going to take years for new babies to be born and enter the work force. The problem China faces is as the population ages there are not enough young workers.
Baby food stocks are flying. We will do a post in ZYX Buy Change Alert on baby food stocks later.
Unlike the stock market, gold and silver are believing the Fed and continue to tank since the Fed’s announcement yesterday.
Oil is in the middle of another short squeeze.
Interest rates are rising and the dollar is screaming higher.
Our very, very short-term early stock market indicator is negative.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider adding new positions per new posts.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1154, silver futures are at $15.77, and oil futures are $46.27.
S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2063, 2038, and 2017.
DJIA futures are down 60 points.
PROFESSIONALS IN WAIT AND SEE MODE AHEAD OF THE FED BUT MOMO CROWD AGGRESSIVELY BUYS GOLD
Professionals are in a wait and see mode ahead of the Fed statement this afternoon. However the momo crowd is aggressively buying gold and silver.
According to sources, Iran is getting ready to pump more than 500K bpd after sanctions are lifted. This is part of the reason that oil continues to slump.
Interest rates are steady.
Our very, very short-term early stock market indicator is neutral.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider adding new positions per new posts.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1174, silver futures are at $16.06, and oil futures are $43.53.
S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2038, 2017, and 2000.
DJIA futures are up 14 points.
FOMC MEETING STARTS, OIL BREAKS DOWN
FOMC starts its two-day meeting today. We will know the results tomorrow afternoon.
September Durable Goods Ex-Trans came at -0.4% vs. +0.2% consensus.
Case-Shiller House Pricing Index came at 5.1% vs. 5.0% consensus.
In Poland the right-wing party won the elections. This poses a risk for EU.
In U. K. growth is slowing.
It appears that the Chinese government again bought stocks at the end of last night’s session.
Oil has now broken $43 support.
Natural gas crashed yesterday on prospects of warm weather.
Gold, silver, and interest rates are drifting down.
Our very, very short-term early stock market indicator is negative.
What To Do Now?
It is important for investors to look ahead and not in the rear view mirror.
Consider adding new positions per new posts.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1162, silver futures are at $15.82, and oil futures are $42.84.
S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2038, 2017, and 2000.
DJIA futures are down 43 points.
A TRILLION DOLLARS MAY MOVE TO CHINESE YUAN IN THE COMING WEEKS
According to our sources, there is a high probability that IMF will accept Chinese yuan as a reserve currency in a matter of weeks. Here are the implications:
- This is not even on the radar of most investors. Therefore it has the potential to cause a major upheaval.
- As about $1 trillion moves into yuan, it will have negative implications for dollar, euro, and yen.
- Chinese are not likely to accept a rising yuan as it will crimp their exports. China may respond by launching massive monetary stimulus.
- Going forward, even investors who have no interest in investing in China will have to pay attention to China as China will have even a larger influence on U. S., European, and Japanese markets.
Oil has decisively broken the $45 support.
The momo crowd continues to aggressively buy gold and silver motivated by last week’s easing in China.
Interest rates are ticking down.
Our very, very short-term early stock market indicator is neutral but can quickly turn negative.
What To Do Now?
Since there is a high probability of a $1 trillion of assets moving to yuan in the near future, it is important to hold enough cash so that investors are able to capture any opportunities from the upheaval.
It is important for investors to look ahead and not in the rear view mirror.
Consider adding new positions per new posts.
Consider continuing to hold existing positions. Based on individual risk preference, continue to hold 30-50% cash or hedges.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.
Gold futures are at $1165, silver futures are at $15.89, and oil futures are $44.39.
S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2063, 2038, and 2017.
DJIA futures are up 13 points.
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