Weekly: Markets More Worried About Fed hikes Than Ukraine
Weekly: Markets More Worried About Fed hikes Than Ukraine
War in Europe is bullish for US stocks. But Things Are Far From O.K.
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SECTIONS
Market Summary: weekly recap
Technicals: active trading levels
Podcasts: GoldFix and Bitcoin
Calendar: next week
Charts: related markets
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Analysis
Research
1. Market Summary
The world changed this week. No-one told markets however. They had a panic moment or two, but it was mostly while US investors slept. US equities ripped back into the green on the week in the last two days. Section 6 discusses stock behavior and Fed policy in Ukraine crisis context.
But by the end of this week , stocks were again higher, Fed rate-hike trajectory had shifted hawkishly, oil was unchanged, gold was flat, safe-haven Treasuries were sold, cryptos were lower, and Government approval ratings were higher.
Nasdaq was up over 8% from the week’s lows
The Dow ended barely red.
Friday was the Dow's best day of the year
Small Caps outperformed.
Sectors
Consumer Discretionary1 stocks were the week's biggest laggards
Healthcare #1 and Utilities #2 outperformed
Defensives #3 dominated Cyclicals #4
Commodities
see chart section for graphics
Dollar was safe-haven bid as Putin invaded and didn't give it all back
Ruble was routed on the week, but even that staged a comeback in the last 36 hours
Cryptos all ended lower on the week but well off the Putin plunge lows
Oil, crude, and precious metals were practically unchanged on the week despite volatility
Gold ended the week back below $1900.
Backwardation in WTI's term structure is at a record high
Bonds
Bonds are telling us that things are unchanged. However odds of a full 7 rate hikes by December are higher while odds of a 50 basis point hike in March dropped. Consider future rate hikes being slowly pushed further into the future.
Unchanged Bonds combined with lower March rate hike chances implies less inflation containment now due to the Ukraine conflict. This is consistent with stocks rebounding on the week by the way.
Real Rates Confirm It.
We are not alone in this opinion: Nomura notes that real rates are now more negative on the week. So while nominal yields are not as high as they were, the spread between those yields and real yields (w/ inflation backed out) are now bigger.
Real Yields moving sharply more negative…
Inflation fears are growing even if Bond yields are not. It means: what the Fed doesn’t do now, it will have more to do later. Bonds are not dishonest here in our opinion.
GoldFix Friday WatchList:
Complete Watchlist Here
2. Technical Analysis
Report Excerpts Courtesy MoorAnalytics.com
GoldFix Note: Do not attempt to use price levels without symbol explanations or context. Moor sends 2 reports daily on each commodity they cover. The attached are non-actionable summaries.
Gold
TECHNICALLY BASED MARKET ANALYSIS AND ACTIONABLE TRADING SUGGESTIONS Moor Analytics produces technically based market analysis and actionable trading suggestions. These are sent to clients twice daily, pre-open and post close, and range from intra-day to multi-week trading suggestions. www.mooranalytics.com
Bitcoin
Energy
Go to MoorAnalytics.com for 2 weeks Gold, Oil, and Bitcoin reports free
3. GoldFix and Bitcoin Podcasts
Right before the spike and subsequent reversal
Bitcoin and the rationale for Russia to Start Buying it.
4. Calendar
Some upcoming key data releases and market events.
MONDAY, FEB. 28
8:30 am Trade in goods, advance report Jan. -- -$101.0 billion
9:45 am Chicago PMI Feb. 63.4 65.2
10:30 am Atlanta Fed President Raphael Bostic speaks
TUESDAY, MARCH 1
9:45 am Markit manufacturing PMI (final) Feb. 57.6 57.5
10 am ISM manufacturing index Feb. 58.0% 57.6%
10 am Construction spending Jan. 0.0% 0.2%
2 pm Atlanta Fed President Raphael Bostic speaks
WEDNESDAY, MARCH 2
8:15 am ADP employment report Feb. 400,000 -301,000
9 am Chicago Fed President Charles Evans speaks
9:30 am St. Louis Fed President James Bullard speaks
10 am Fed Chair Jerome Powell testifies at House committee
2 pm Beige Book
THURSDAY, MARCH 3
8:30 am Initial jobless claims Feb. 26 227.0000 232,000
8:30 am Continuing jobless claims Feb. 19 -- 1.48 million
8:30 am Productivity revision (SAAR) Q4 6.7% 6.6%
8:30 am Unit labor costs revision (SAAR) Q4 0.3% 0.3%
9:45 am Markit services PMI (final) Feb. 56.7 56.7
10 am ISM services index Feb. 60.7% 59.9%
10 am Factory orders Jan. 0.6% -0.4%
10 am Core capital equipment orders (revision) Jan. -- 0.9%
10 am Fed Chair Jerome Powell testifies at Senate committee
6 pm New York Fed President John Williams speaks
FRIDAY, MARCH 4
8:30 am Nonfarm payrolls Feb. 415,000 467,000
8:30 am Unemployment rate Feb. 3.9% 4.0%
8:30 am Average hourly earnings Feb. 0.5% 0.7%
8:30 am Labor force participation rate, prime working age Feb. -- 82.0%
8:45 am Chicago Fed President Charles Evans speaks
Main Source: MarketWatch
5. Charts
Rectangles reflect behavior during Ukraine headline dominance
Russian Ruble
Dollar Index
Gold
Silver
Crude Oil
Charts by GoldFix using TradingView.com
Zen Moments:
Disclaimer:
Nobody is telling you to do anything here. Anybody who tells you to do something without first intimately knowing your personal situation is irresponsible at best and manipulative at worst. Anyone who acts on other people’s opinions without first doing an inventory of their own situation shouldn’t be surprised if they lose money.
6. Premium: Research and Analysis
EXCERPT: Why Did Stocks Rally Thursday and Friday? Our feeling is stocks dropped hard on the very real risks in Europe. They didn’t rally at all on hopes of solution yet
7. Premium: Reports
Gold: We expect portfolio diversifiers to offer material shelter – think Gold and US-30yr bonds. We also see catch-up potential in the CHF after the outperformance of Gold
Oil: Russia has always been a reliable supplier of oil, and even at the height of the Cold War, the Soviet Union did not shut off oil exports. Things might be different now
EU Equities: Following the developments in Russia & Ukraine we detail below our sector analysts’ views on company exposures to the regions, implications of higher commodity prices, and other potential ramifications from the heightened geopolitical tensions