First, they blamed Brexit and its uncertainty, then they pointed a finger at the Sino-US trade spat and the slowdown in international trade for lousy earnings at their firms. The new go-to excuse for disappointing quarterly earnings are negative yields. Today UBS announced a 16 per cent drop in Q3 profits, including a 59 per cent slump in its investment banking division. ‘’Low and persistent negative interest rates and expectations of further monetary easing will adversely affect net interest income’’ – not forgetting they had earlier announced interest will be charged on cash savings over 500,000. Over at JP Morgan Jamie Dimon admitted that negative rates have ‘’adverse consequences which we do not fully understand’’.
Also on banking, City AM reports on a study carried out by McKinsey on 1,000 banks globally. They found that 35 per cent of them earned an average 1.6 per cent return on tangible equity and should therefore be classified as ‘challenged banks’. ‘’Given where many in the banking industry are today, a serious downturn would be catastrophic for many’’; they must restructure, slash costs and merge.
DAX 30
Overbought as we inch up towards last week’s spike high.
SHORT TERM TRADER: Small short at 12625; stop well above 12825. Target 11880.
POSITION TAKER: Square.
FTSE 100
Marginally top-heavy despite zero momentum as EUR/GBP dips below 86 pence this morning.
SHORT TERM TRADER: Small short at 7140; stop above 7280. Target 7025.
POSITION TAKER: Square.
S&P 500
The commodity channel index is still flashing a warning as the market moves towards the record high – amid cheers in some sectors that yesterday it managed a close above the psychological 3000 level.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Holding up better than one might have thought as bullish momentum increases and Boris attempts to blast his Brexit bill through parliament this week.
SHORT TERM TRADER: Long at 1.2950; stop below 1.2600. Target 1.3150.
POSITION TAKER: Long at 1.2950; stop below 1.2535. Target 1.3350.
EURO/US DOLLAR
Bullish momentum has been maintained as we trade close to August’s higher levels. Note that Thursday is Mario Draghi’s last ECB rate-setting meeting.
SHORT TERM TRADER: Small long at 1.1150; stop below 1.0990. First target 1.1250.
POSITION TAKER: Square.
GOLD
Momentum is marginally bearish and still this market clings to horizontal support.
SHORT TERM TRADER: Short at 1520; stop above 1535. Target 1440.
POSITION TAKER: Short at 1507; stop above 1560. Target 1440.
