Morning 10-30

How is Big tech doing after yesterday’s earnings release?

Apple -4%, AMZN -1%, FB -1%, Alphabet +.5%, twitter -14%

   Nasdaq  -1.1% following a weekly pattern of one day down  then next day up Mon, Wed and now Friday lower Tues .and Thur. Higher  Dollar sideways  European stocks steady Dax has 1 positive close this week a gain of .3% registered yesterday. tech Sector in Europe little changed so far today Better than Expected GDP in Italy, Germany, France and Spain did little for markets as data is backwards looking. Remember ECB yesterday all but guaranteed more stimulus to come in December. Gold Small bid Bond yields a touch lower Bunds unchanged. Waiting game continues A note WSJ “Many investors expect Joe Biden to win the White House. But the prospects for many key policy shifts—such as greater economic stimulus or Mr. Biden’s health-care policies—hang on who controls the Senate. That is harder to predict. Polls show a good chance that the Democrats could win unified control of Congress, but also that Republicans could hold the Senate majority even if they lose the presidency”   Virus worries still present yesterday new cases in U.S. topped 89K a new daily high .All eyes on Tuesday ,Month end today  maty cause a bit of movement. Any takers on this bet   Bloomberg reports that quant trading firm Susquehanna International Group is willing to take the other side of wagers on the presidential race for up to $100 million per bet, says a person familiar with the firm, speaking on the condition of anonymity because the plans are not public

 Nat gas Steady, Daily LNG exports touch an all time high yesterday, crude oil steady so far today been a rough week for oil down 12% from Mondays highs to today’s lows

Credit spreads

Credit spreads Supposed to be canary in the Coal Mine ,Give traders a heads up on either bad or goods times ahead for stocks. I see more of a flat line in Credit spreads then any early indication of bad times to come benchmark cdx ig 5 year CDS on 125 companies

Single A-10 year spread no panic here

Spot LNG and Gas

Spot Gas at the AECO hub For Canada and also for northern US states

WaHa hub Texas Spot Prices been known to Go negative nice spike here and according to Platts may be Impacted by Strong LNG export demand seems like something up over last few trading days

Dutch Day head Spot LNG prices bear with me I am trying to get a grasp of these prices I believe one of the Global benchmark prices for LNG(TTF spot day ahead)

Now UK Day ahead Spot Nat Gas

Another global LNG benchmark the japan/’Korea swap Future,JKM

And now to my point all these graphs are in an uptrend I think we can agree on that, Below Henry Hub Spot prices rallying hard as well.Per Platts 16% of Nat Gas demand comes from LNG ,not a small portion so if Global LNG prices ,benchmarks, are rallying then makes sense that Henry hub Spot would rally as well as it takes it place as one of the Global benchmark Just a few thoughts and or Ideas as i do more research into this topic.

Morning 10-29

  Crude And brent 3-month lows demand destruction front and center due to new lockdowns. Per Bloomberg “recovery in Road fuel demand in Europe has gone into revers”. Dax cannot find any footing in positive territory this week looking at a 4th consecutive decline identical to Stoxx 50, bears in control. This is a disturbing a headline. Dollar index trading above yesterday’s Highs, a close above 93.91 is could indicate a short-term bottom has been made. Trade, accordingly, mizuho pointing out that with yields so low the dollar may be the New safe haven instrument. ECB meeting at 7:45 Dovish lean is expected a big surprise would be ECB announcing an increase in Bond Buying, thus likely to occur in December.

“Covid is mutating, and a newer version now accounts for the majority of cases in several European countries. The FT reports today that a coronavirus variant that originated in Spanish farm workers has spread rapidly through much of Europe since the summer, and now accounts for the majority of new Covid-19 cases in several countries — and more than 80 per cent in the UK.
An international team of scientists that has been tracking the virus through its genetic mutations has described the extraordinary spread of the variant, called 20A.EU1, in a research to be published on Thursday. The scientific teams in Switzerland and Spain are now rushing to examine the behavior of the variant to establish whether it may be more deadly or more infectious than other strains.”

 Gold lower for second day I’m watching 1851 a break of that could spell bad news for Bulls currently trading 1880.Silver-1.8%, palladium -2.25%Spoos unchanged, Nasdaq up a bit European Stocks   lower.

News:

  • China new 5-year plan promises to build the nation into a technological powerhouse as it emphasized quality over speed BBG
  • Today after close Apple, FB, Amazon and google report earnings. So far this morning 71 Companies have reported earnings
  • A terrorist Knife attack in France has that country on edge once again as racial tensions flare BBG
  • – Berlin Mayor: Measures are tough but if we give ourselves 4 weeks, we have good chance of getting through this ITC markets
  •  

SPX

No place to hide

Covid proxies Airlines and Hotels -4% but off worst levels of day. peculiar item for day is that 10 year and 30 year yields little changed to a touch lower, Bunds as well

5s30 Yield spread still trending higher no concerns just yet if spread is indicating end to Big Stimulus speculation or to reflation trade.i will be watching to see how this reacts Election night and this week as odds change for Control of senate

new monthly Lows Nasdaq and spoos,both show volume above 5 day Average with 3+ hours left in the trade. Every bounce is sold in Spoos a bit of volatility this close to the election,which according to bespoke investment is something rare.

A few things…

From Superforecasts.com

betting odds on who will control Senate,very important for stimulus
Vix Above 40

Bank of Canada raised 2020 GDP forecast but lowered 2021,they said output gap won’t close till 2023 thus Inflation to stay below 2 % through 2022. CAD -.9%

Spot Lumber priced moving lower

Gold-bitcoin spread indicating Bitcoin is your winner over last few weeks

Confimed now after rumored this morning

German leaders agree to shut Restaurants BBG

Morning 10-28

 Virus /lockdown Worries driving European Stocks Lower and taking Risk with it.

  • Merkel proposing to shut all bars and restaurants for Month of November
  • Macron also hinting at another nationwide light Lockdown
  • UK Johnson Under pressure from Scientific Advisors to for new lockdown measures-BBC
  • Poland Record increase in cases and deaths
  • Belgian Hospital admissions top first wave peak -BBG
  • Czech Republic new record number of daily cases
  • Mainland china most new cases in a month-Mizuho
  • Odds of Republican to hold senate touched 1-month highs=Less chance of a large stimulus package
  • Junk Bond yields highest in 3 weeks (Mizuho) $900 Million withdrawn from HYG yesterday=Canary in the coal mine Junk bonds sell off Stocks normally not to far behind

    Dollar +.5%, Dax, Stoxx, Cac and Mib all down>3% Stoxx 50 Worst levels since Mid-May Bund yields lowest since Early March. Spoos not as bad -1.8%, Nasdaq -1.3% Microsoft earnings beat but forward guidance disappointed Stock -2% preopen. Stronger dollar=weaker Gold -1.3%, Silver -2.8% Platinum -2% Copper -1% CL -4.6% Brent -4% demand destruction part two, the last thing oil bulls want to hear is more lockdown thus less traveling =less demand.Weekly API data bearish for oil as well. Not pretty. Corn -2.3% Soybeans -1.7% all commodities on the offer. Earnings continue to be released by markets attention is elsewhere for the time being. EURJPY -.65% yesterday -.52%, EURUSD -.6% no one likes Euro today

 Hurricane Zeta surprisingly registered a cat 2 now from pro Farmer “Zeta is expected to hit the southeast coast of Louisiana this evening as a Category 2 hurricane, producing a notable storm surge, heavy rain and strong wind as it moves inland. Gulf of Mexico operators have shut roughly half of all oil and gas production in the basin ahead of the storm. “The system will move into southeastern Mississippi this evening and will then race across Alabama to Virginia Thursday and be back over ocean water off the Middle Atlantic U.S. Coast by Friday morning,” reports World Weather Inc. The weather watcher says the storm’s fast movement should limit its impact, though heavy rain is expected from “southeastern Louisiana through southeastern Mississippi and across most of Alabama to the western Carolinas and a part of Virginia.”

Morning 10-27

Calendar

  On Thursday ECB meeting expected to be Dovish Unlikely The announce an increase in Bond buys, but still a small chance they do

Also, On Thursday After close Apple, Facebook and Alphabet al release earnings

News:

Chip makers in Focus this morning AMD agrees to Buy Rival Xilinx for $35B in stock

25 SPX companies reported earnings this morning 24 beat, the only loser is Eli Lilly as it set aside $400M for Covid related R&D. Microsoft reports after the close today 3 rd largest weighting in SPX. Caterpillar beat but did say that machine sales on a 3-month rolling basis are down 20% (BBG)

Hurricane Zeta Cat 1 hurricane is a fast-moving storm expected to make landfall Early Thursday morning, the path Continues to move north east away from most of the Energy infrastructure in the Gulf

German M3 money supply multiyear high and Still not a whiff of Inflation to be found

From Mizuho “Markets are paying particular attention to control of the US Senate. Continued Republican control of the Senate would likely result in a smaller fiscal stimulus package than House Speaker Pelosi is seeking. Victory for Joe Biden and a flip of the Senate to the Democrats would clear the way for a bigger-scale stimulus. The implied probability of a Blue Wave. US PredictIt 2020 Will Democrats win the White House and Senate and House (PRITUSDS Index GO) up 4% to 57% (https://www.predictit.org/). One factor behind the selloff in stocks yesterday was the precipitous drop in these odds from October 7th (62%) to October 24th (51%)”

The 10 day Moving average of Put/call ratio hit highest level in 14 years, playing volatility by buying Puts instead Vix?

Senate is adjourned till Nov 9th No deal till after election

France is considering a full 3-week lockdown of 3 cities poss from Friday; the areas are Paris/Lyon / Marseille, measures would inc a 19.00 curfew/closing public transport/ closing non-essential retail; a decision is expected in next few days

Markets:

 Remember that markets more to Surprises then known Events this second, third surge in Virus cases was not unexpected thus the limited reaction in Risk due to spike in cases

 Stocks in Europe sideways to lower 14 -20 Stoxx 600 sectors lower today, Spoos and Nasdaq trading higher as are treasuries. Dollar a bit soft, market waiting for next Week’s election.

VDAX

the Vix on the Dax highest since July as SAP (-21%) weighs Dax -3.7%

VDAX

Vix above 31

SAP daily chart take note of the Huge Volume. SAP said that it will cut its forecast for the full year ,new wave of Covid lock downs to hurt demand through first half of 2021,Stock on pace for biggest daily drop since 1999! U.S. Tech Stocks take notice