The Financial Times reports that today China’s central bank has dropped the rate on its one-year medium-term lending facility by 5 basis point so that it now stands at 3.25 per cent. This is the first time they’ve tinkered with this particular rate in 3 years, tending to favour nudging monetary policy via cuts in the reserve requirements commercial banks must hold. Published this morning, October’s Caixin services PMI dipped to 51.1 from 51.3 in September, and among the lowest readings in its 3-year history.
Also reported by the Financial Times this morning, and based on data from the IMF, in 2018 global vehicle production fell for the first time in a decade. Because of the auto-industry’s long supply chains, the sector may be responsible for around a quarter of the slowdown in the world’s economies. It also is to blame for one third of the slowdown in global trade growth. IMF forecasts for a pick-up in global GDP depends on increased vehicle production. Against a backdrop of climate protests and Britain’s Labour party threatening to ban all private jets…
DAX 30
Stupidly overbought on a daily basis as the index shoots up to its highest level since June last year, though still below the record high in early 2018 at 13600.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
FTSE 100
If you were fed up with Brexit you’d best prepare for another gruelling round as that’s all UK political parties are talking about.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
S&P 500
Yesterday the Dow Jones Industrial Average rallied to settle at a new record high, joining the S&P 500 and Nasdaq which had done so last week. This has prompted City AM to splash ‘US MARKETS RACK UP RECORD HIGHS’ across its front page. Watch for more of this as contrarians believe screaming headlines and hints of one-way bets are excellent measures of overconfidence.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Consolidating in a pennant formation but unfortunately all bullish momentum has dissipated while inside the triangle part.
SHORT TERM TRADER: Long at 1.2950; stop below 1.2800. Target 1.3150.
POSITION TAKER: Long at 1.2950; stop below 1.2750. Target 1.3350.
EURO/US DOLLAR
The MACD is barely there as the euro struggles under 1.1200. As his parting shot yesterday ex-EU Commission President Jean-Claude Juncker told German magazine Der Spiegel ‘’So many lies were told, including by current Prime Minister Boris Johnson, that there needed to be a voice to counter them’’ [at the Brexit referendum].
SHORT TERM TRADER: Small long at 1.1150; stop below 1.1065. First target 1.1250.
POSITION TAKER: Square.
GOLD
The commodity channel index is threatening to turn down while the market hovers around the psychological 1500.
SHORT TERM TRADER: Short at 1520; stop above 1535. Target 1440.
POSITION TAKER: Short at 1507; stop above 1560. Target 1440.
