The trickle-down effect, which economists insist will benefit the poor, can be seen in other parts of the global economy. One is the secular trend to lower interest rates, the latest example of which is Brazil which yesterday cut its key Selic interest rate to a new record low at 5 per cent. Behind these moves is the trend to lower wholesale and retail price rises. Today Swiss EU harmonised October CPI dropped by 0.2 per cent (against an expected 0.1 per cent monthly rise), meaning that over the past year prices actually fell by 0.3 per cent, the biggest drop in three years. In Australia, the RBA’s commodity index fell by 4.2 per cent in the year to October, the biggest drop since December 2017’s 6.2 per cent decline.
Rumours have it that Saudi Arabia’s Crown Prince Mohamad bin Salman has been asking the kingdom’s banks to advance loans to Saudi citizens so that they too can take advantage of the Saudi Aramco float which is slated for early November. First reported by Bloomberg yesterday, it follows strenuous encouragement for his nation’s wealthiest to back the privatisation, a key plank of his economic reforms.
DAX 30
The strongest monthly close since January 2018’s record high at 13600, yet the index isn’t overbought. Not what we had expected and wondering where all the buying’s coming from.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
FTSE 100
On a monthly basis, the MACD has been bearish for the best part of 2 years and price action has made no gains since early 2017. Now the pound is stronger, at 86 pence per euro today, that’s not helping this internationally facing index.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
S&P 500
Not overbought despite inching to a new record high last month yet forming another hanging man candle; very unstable. President Trump announced yesterday that he’ll be making Florida his permanent home, so I’m wondering whether he’ll add his gilded Trump Tower triplex to the overhang of trophy properties for sale in New York.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
An 8 cent rally last month, the best since January 2018, has nudged momentum into bullish territory. Cable still has trend line resistance to contend with this month, as well as a general election in December.
SHORT TERM TRADER: Long at 1.2950; stop below 1.2760. Target 1.3150.
POSITION TAKER: Long at 1.2950; stop below 1.2600. Target 1.3350.
EURO/US DOLLAR
October’s rally, and bullish engulfing small candle, has yet to recover a Fibonacci 23.6 per cent of the losses since 2014, let alone turn the commodity channel index positive. At the European Commission the changing of the guard has had to be delayed for a third time. This is because 3 new candidates have been rejected, adding to the unpopular choice for President of Ursula von der Leyen.
SHORT TERM TRADER: Small long at 1.1150; stop below 1.1065. First target 1.1250.
POSITION TAKER: Square.
GOLD
Zero progress last month as prices hover at the 50 per cent retracement level taken from 2011’s record high.
SHORT TERM TRADER: Short at 1520; stop above 1535. Target 1440.
POSITION TAKER: Short at 1507; stop above 1560. Target 1440.
