Late morning 2-24

  Hong Kong for the first time since 1993 decided to increase the tax on financial transactions, stock trades. Hang Seng -2.99%, CSI 300 in china -2.55% NKY –1.6% the reason is to pay for all of the Lost revenue Public welfare from COVID-19 response. European stocks in the green 13-20 Stoxx 600 sectors higher led by basic resource and travel and leisure and industrial goods. Spoos and Nasdaq higher yesterday’s highs in Spoos Nas Russ all should be monitored as a momentum indicator a break above could lead to higher gains.

  US Yields 30s and 10s touching 1-year highs not good for stocks   but okay for the dollar as it is creeping higher a bit, Euro and JPY down on the day GBP had some type of Fat finger trade overnight Spiking 100 ticks   generating an outside normal range, GBP little changed as I type. Higher Long end yields and a firm dollar not good combination for precious metals as All are trading a bit heavy this morning. This combination not having a negative impact on oil as prices are firm Brent 100 call options for December seeing a 10-fold jump in open interest   more FYI than market moving news, A whisper of $100 Oil Says BBG

  More worries about South America Weather and possibility of Brazilian farmers not delivering Soybeans that were sold at much lower prices (BBG) pushing up Soy prices worries about drought in US pushing up Wheat, but remember it is a weed and can grow anywhere.

 Inflation warnings everywhere per WSj Supermarkets threatening higher prices to pay for hazard pay, Visa and Mastercard threatening to raise swipe fees and hiccups in the Supply chains   ahh.

Powell at 9:00   opening statement will be unchanged Q&A where some excitement might arrive.

Morning 2-22

Lots of Red on Quote board as Higher rates weighing a bit on Stocks.

 A bit of news…

 The Shanghai Composite fell 53.72 points or 1.45% to 3642.44 on Monday as China’s bank regulator tightened requirements on the internet loan business of commercial banks. Banks reportedly must contribute funds to issue internet loans with a partner, and the proportion of capital from the partner in a loan should not be less than 30%. Meantime concerns about bubble risk in domestic markets emerged after reports that China will study the feasibility of allowing individuals to invest in securities and insurance products abroad, with the amount will be within an annual quota of $50,000 per person-Trading economics.

 Can’t stop Copper … traded above 9K on LME for first time in 10 years, comex traded in a 16-handle range overnight! Sitting right n the middle in range as I type +3 handles +1% now I went n looked at cftc data and Speculators are not net short, End users on the other hand are.  Nickel 6.5-year highs and tin Continues to squeeze higher traded to 10-year highs earlier this morning. Both Tin and copper have doubled over the last 12 months

 Stocks in china heavy CSi 300 -3.1% as the largest company in China Kweichow Moutai -6.99% Sector rotation evident as Energy sector +3% while Consumer staples -5.96% tech -2.5%, hang Seng -1% TOPIX +.49% European bourse lower to start week Dax -.6% Stoxx 50 -.7% all but 2 of 20 Stoxx sectors lower on day Travel and Leisure +1.6%

 Nor can you stop rates 10-year +3.6 bps ,7 year +4 ,30s +2.8 long end rates 1-year highs can’t stop the uptrend in yields, but will Powell try as he speaks this week? Australia seeing some heavy selling in her treasury Complex 10-year yields =16 bps,30 years +16 bps !! oomph as markets price in aggressive rate hikes that central bank is not even talking about. Bund yields +.4%, Italy +3.5%, JGBs 10 year +1.3% higher rates and lower stocks worldwide id the theme for today.

 Big range bitcoin over weekend, CME futures 5,000 range down 2K ~5% as I type, Dollar down a bit Aussie higher, grains sideways, Nat Gas heavy, oil higher.

News:

  • Positive vaccine news JnJ  to get review of their of vaccine on Thursday, PFE  vaccine more effective than first thought the Pfizer Inc. and BioNTech SE Covid-19 vaccine appeared to stop the vast majority of recipients becoming infected-BBG ,Biden making some adjustments to PPE land and Biden stimulus plan to get first votes this week. All weighing on bonds
  • In Texas Nat gas production increasing daily but still below pre storm levels, Weather forecast warmer Nat gas -4%
  • Boeing down 3.5% as an Engine fall off one of the plans over the weekend.
  • Powell testifies in front of Congress twice this week.

Morning 2-19

 Eurozone PMI data great for manufacturing but a touch disappointment for Services, the Composite PMI 3 year highs for EZ and Germany. Stocks did rally a bit. Chip maker AMT reported “outstanding results” and this pulling all Chip makers Higher worldwide. The tech sector in Europe +1.2% also travel and leisure sector +1.2%, European Bourse Higher on day Spoos =15 handles, Nasdaq +.5% but Russ+1% Rotation back? Aussie dollar having a day +1% as West bank forecasting Aussie 10 year yields to increase by end of year, GBP 3-year highs above 1.40 handle. I’m watching Dollar Index level of 90 ish    Long term trend is still down but short term is choppy sideways a break of 90 a confident break may re assert short term down trend. Dovish yellen yesterday not surprise all adding up to a bit of risk on so far today. A warning watch Yields they are kryptonite to further Stock gains.

 Copper on the Bid as a Goldman calling for higher prices due to More scarcity in Supply then initially thought, Copper +11% MTD higher by 2.5% today tin +2%  ish  as squeeze continues. Yields a touch higher   here and Germany.

 In Texas Ercot says Grid coming out of Emergency conditions today and saying sufficient power to serve load over Morning peak”-BBG also weather starting to return to Seasonal temps so hopefully worst behind for Texans. Nat gas LNG exports still hampered and oil production still not back to pre-black out levels, this is key point moving forward when will production be back too normal?

News:

  • Deere boosted Earnings outlook.
  • Roku beat but warned on Slow outlook.
  • BidenG-7 virtual meeting today where he will pull back on America first policy.

Morning 2-18

Asian markets back online and Stocks Finished lower on session, CSi 300 -.68%, Kospi -1.5%, hang Seng -1.58%, Shenzhen -.41%   Nasdaq a touch heavy down 100 handles, Spoos decent overnight range of 32 handles, Spoos and Russ -.3% Stoxx Little changed as is dax. Copper 12 handle range + 3 % on day Squeeze in tin continues +3% as I type, Aluminum +2% Dollar sideways to lower GBP stones throw from 1.40 handle some positive virus news helping with sentiment. As A note

 Texas hmm Governor Abbot trying to restrict Sales of Nat Gas to other states, many believe this violates Constitution, we shall see. Nat Gas production bounced yesterday .4% after declining for 8 straight days. Oil production down some 40%, brent Calendar spreads Well bid as the World scrambles for Additional oil as U.S. Exports likely to be Zero for foreseeable future. Very impressive move in brent Cal especially with April as Front month   9 days of higher closes April -May spread. I would have imagined Energy would have been a bit more volatile outside of Cash markets.

Markets pausing a bit today   watching treasury Yields for direction remember Higher yields likely to have the biggest impact on Nasdaq. Treasury Yields steady, dollar sideways to lower. Robin hood game stop saga hearing in front of House panel today

Higher rates being priced

Market implied rates today vs start of February shows higher rates being priced in for the 2 and 3 year time frame. We saw yesterday the move higher in treasury rates so markets taking notice of better Econ data, vaccines and overall optimism of better days ahead.

Eurodollar Z3-Z4 spared moving higher as Z24 trading lower compared to Z-23 as higher rates starting to get priced in a bit, especially since start of February

U.S. Vaccinations

Daily change in vaccinations per Bloomberg doesn’t look promising as last week avg of 1.67 million doses per day unlikely to be matched this week(BBG)

Biden in Milwaukee yesterday holding a town hall meeting touting Stimulus deal and talking vaccine distribution. Even though Fauci said that  there was less the  expected doses of JnJ vaccine , “would be smaller than originally thought, which could delay access to vaccination for some Americans”-WSJ  Biden yesterday said that  both Moderna and Pfizer agreed to sell more Vaccines to US, so a wash possibly??

Virus:

  • U.S. Vaccination Drive: President Joe Biden says the U.S. will have enough supply of the vaccine by the end of the summer to inoculate 300 million Americans. Biden toured the Viral Pathogenesis Laboratory at the sprawling National Institutes of Health complex just outside Washington that created the COVID-19 shots now manufactured by Moderna. Biden says the U.S. had secured contractual commitments from Moderna and Pfizer to deliver the 600 million doses of vaccine by the end of July — more than a month earlier than initially anticipated, Zeke Miller and Jonathan Lemire report.  AP
  • CDC said severe vaccine reactions are rare -BBG
  • Australia coronavirus – A five-day lockdown for state of Victoria has been confirmed.

.

Markets:

Dovish Fed speak continues. Patrick Harker, President Philadelphia Fed (nonvoter): “I don’t see, right now, inflation running out of control. We will see a little bit of a spike as some months roll off, in terms of the calculation, and other dynamics in the economy.”

House committees have approved $1400 direct checks to families, $15b in airline payroll $66B for testing and vaccination.

10-year JGB’s after a near historical run lower jumped some 16 ticks today with a big range of 34 ticks, I thought BOJ was going to try and loosen Yield curve controls but now we see chatter about further cutting rates. Long end JGBs 30-40 years show yields unchanged. But 5-year s-2 bps,7s -1.5

20 Day Moving average of Put/call ratio lowest this century (Mizuho) stock inflows for week ending Feb10th totaled $58B a record and fed balance sheet increased +.4% to a record per BBg last 20 days almost 28 mln calls on average trade everyday across US exchanges. Buy Calls and Buy stocks!  Gold ETF

 Some weakness in European Stocks Spain and Portugal weighed down European bourses on the cash open   but Stoxx 50 has rebounded along with Dax, Half Stoxx 600 sectors lower on day. Cruse oil looks toppy after 7 straight up days it is moving lower for the second consecutive day. Some bearish demand comments from IEA and opec may be the catalyst for an adjustment lower.  Good news for Italy?? Draghai will be the next PM as  Italy  5 star party will back him 10 year BTP yields down 20 Bps  since Feb 2nd

 Treasuries sideways ,Bunds and Buxl off a touch

Morning 2-11

Via Forex live

   European stock market traded cautiously higher on Thursday, after the European Commission forecast a slow economic recovery this year and pointed to vaccination campaign as key but raised 2022 growth. The EC lowered its GDP forecasts for 2021 to 3.8% from 4.2% in November while raising 2022 growth to 3.8% from 3%. Meanwhile, traders continue to follow corporate updates, coronavirus figures, restrictions and the vaccination campaign. AstraZeneca reported a 10% increase in product sales for 2020 and Credit Agricole remained profitable in Q4 while Commerzbank revenues declined 6.6% in the last quarter of 2020” Trading Economics.

  US 2 year yields new record low below 10 bps, we could see some short, 4- and 8 week bills auctioned at zero today hmmm BoA calling for a raise in  IOER to pull rates away from Zero . dovish Powell yesterday saying” patiently accommodative monetary policy stance will be an important factor getting economy back to a healthy stance “goldilocks again? Fed want to get close to their definition of Full employment, Powell also said to look past and base effects that will increase in inflation   Plenty of stimulus (fiscal and Fed) bit of growth and No fear of rate hikes anytime soon   buy em up!  Dollar sideways and commodities with a small bid From JPM echoing GS “-JP Morgan said they believe commodities may have just started a new super cycle; in particular an oil up cycle; the tide on yields & inflation is turning.”

 Stocks higher at least ones that are open most of Asia Closed for holidays, Copper and Nickel 6+ year highs   another bubble sign?? Dating app Bumble raised $2.2 billion in its IPO, selling 50 million shares at $43, which was above the previous pricing range of $37 to $39. The company offered 5 million more shares than anticipated.

Morning 2-10

(Bloomberg) — China stocks bid farewell to a tumultuous Year of the Rat with the CSI 300 Index rising 2.1% on Wednesday, the biggest gain before the week-long Lunar New Year holiday
since 2005 and a marked contrast to last year’s record worst. With the gauge at its highest since 2007 and just 1.2% below its record from then, investors are setting the stage for a bullish
start to the Year of the Ox. That might make sense, as the past two ‘ox years’ — 2009 and 1997 — saw the Shanghai Composite Index surge 80% and 30%, respectively.

  • Shanghai Composite +3.9% last 5 days
  • Hang Seng rose for 4th day +1.9% today.
  • Buy China “In China, M2 to nominal GDP is where it was three years ago. So, they have not borrowed anything from their future… Asia is going to be an outperformer, their equity market versus U.S. and especially their currency market.” Stanley Druckenmiller mizuho
  • China Inflation data Cpi lower than expected but PPi which met expectations was highest in a year at +.3   a bit of Commodity inflation starting to appear.
  • MSCI World index hit an all-time high, global stocks now worth record $109tn.
  • Yields on 10-year gilt have tripled this year (from 15bps to 48bps) as vaccinations have risen apace. It took 40 days to vaccinate the first 10% of the U.K. adult populations, but this fell to 13 days for the next 10% and just five days for the last 5%

Cpi data today,I  do not think it will surprise to the upside ,as any positive base effects will not occur till April at earliest. The reason is   the dismal Reports of   march and April will drop out of the Y/Y equation. The number of Articles I have seen or read regarding inflation are bordering on ridiculous let’s talk about it if does in fact show up.  Crazy talk Powell speaks today at the Economic s club of NY, A Q&A will follow topic is the labor market. Earnings continue to trickle in twitter higher, Cisco lower tik Tok sale to oracle canceled, GM earnings better then expected but repeat warning about Chip shortage.

Spoos 17 handle range overnight about average for the week, Bitcoin being sold this morning down a couple percent, grains heavy as yesterday’s bearish corn numbers finally having an impact we will see.