Major indices close near session highs 5 (1)

The major US stock indices closed sharply higher and near session highs. The major indices for the week still closed lower, but cut into those declines with the sharp gains today. Retail sales came in better-than-expected which helped. Industrial production was lower and Michigan consumer sentiment came in a little better than expectations and showed a lower inflation expectations for one and 5 years which was a relief to market traders.

All 11 sectors of the S&P index closed higher led by financials which rose 3.51%. Healthcare rose by 2.44% and communication services rose 2.14%.

The laggards in the S&P were utilities which rose 0.21%, consumer staples which rose 0.4%, and industrials which rose 1.58%.

The final numbers are showing:

  • Dow industrial average rose 655.85 points or 2.14% at 31286.101
  • S&P index rose 72.51 points or 1.91% at 3862.80
  • NASDAQ index rose 201.25 points or 1.79% 11452.43
  • Russell 2000 rose 36.86 points or 2.16% at 1744.37

For the trading week:

  • Dow industrial average fell -0.17%
  • S&P index fell -0.99%
  • NASDAQ index fell -1.56%

This article was written by Greg Michalowski at www.forexlive.com.

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Biden: Had a good series of meetings and Saudi Arabia 0 (0)

  • Had a good series of meetings and Saudi Arabia
  • opening airspace is a big deal
  • we have accomplished has some significant business with Saudi’s
  • hopes it will lead to a broader normalization of relations
  • hopes opening of airspace 2 flights to and from Israel will lead to a broader normalization and relations
  • agreed to work to deepen and extend the Yemen cease-fire
  • discussed Saudi defensive needs
  • Saudi will partner with US on clean energy initiative
  • had good discussion on ensuring global energy security and adequate oil supplies
  • I’m doing all I can to increase oil supply for the United States
  • the race murder of journalists Khashoggi in meeting made my view crystal-clear
  • we discuss human rights and the need for political reform
  • have finalize the agreement to connect Iraq’s electric grid to the GCC grid through Kuwait and Saudi Arabia
  • we are not going to leave a vacuum in the Middle East for Russia or China to fill
  • Crown Prince said he was not personally responsible for Khashoggi’s murder
  • gas prices have been coming down every single day
  • we’ll see more declines when gas stations start to lower their price consistently
  • I’ll use every power I have is present to fulfill pledge on global warming

Meanwhile a Saudi Arabia and official said:

  • they are corroborating with OPEC+ to ensure enough supply of oil
  • If they see evidence of oil scarcity, they will produce more

/Inflation

This article was written by Greg Michalowski at www.forexlive.com.

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Crude oil settles at $97.59 up $1.81 or 1.89% 5 (1)

The price of WTI crude oil futures are settling at $97.59 that’s up $1.91 or 1.89%

The high price today reached $99.01. The low prices at $94.59.

WTI crude oil is closing near its 100 hour moving average

For the trading week, the contract close last week came in at $104.78. The high price early on Monday reached a high of $104.86. The low price was reached on Thursday at $90.54 before rallying yesterday and again today. The midpoint of the week’s trading range comes in at $97.64. The price closed just below that midpoint level.

Looking at the hourly chart above, the high price today stalled near a topside trend line. The price today did extend back above the 100 hour moving average (blue line in the chart above), but is still well short of the 200 hour moving average currently at $99.74.

Going into next week, those moving averages will be in play and help define the bullish bearish bias. Stay below is more bearish. Move above is more bullish. stay below is more bearish. The price has not traded above its 200 hour moving average since July 5th.

Pres. Biden is in Saudi Arabia. However expectations are not for any material impact on supply. Nevertheless, since the announcement of the President’s trip to Saudi Arabia back in June, the price has move down from around $119.

This article was written by Greg Michalowski at www.forexlive.com.

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How to beat inflation by investing? 0 (0)

Inflation is the rate
at which the cost of goods and services in each economy rises. Inflation can
have a detrimental influence on society if it means higher prices for
fundamental necessities like food. Inflation can affect almost every commodity
or service, including necessities like housing, food, medical services, and
utilities, as well as luxuries like cosmetics, automobiles, and jewellery. Once
inflation has spread across an economy, people and companies alike are
concerned about the possibility of inflationary pressures.

As a result of
inflation, money saved today loses some of its value. Inflation reduces a
person’s buying power and can even make it difficult to retire. For example, if
an investor gained 5% on stock and bond investments, but the inflation rate was
3%, the investor only gained 2% in real terms.

The Consumer Price
Index (CPI) is a widely used index for measuring inflation, as it tracks
changes in the prices paid by consumers for a set of goods and services over
time. Food and beverage, housing, clothes, transportation, medical care,
recreation, education, and communication are the eight main categories of goods
and services.

Inflation is more
likely to have a profound negative impact on a currency’s value and foreign
exchange rate than it is to have a significant positive impact. A low rate of
inflation does not ensure a good exchange rate for a country, but a high rate
is very likely to adversely impact the country’s exchange rates with other
countries.

Exchange rates can be
impacted by interest rates because they are a direct result of inflation.
Countries try to keep interest rates and inflation under check, but the
interplay between the two is complicated to control.

Low-interest rates
encourage consumer spending and economic growth, and they have a beneficial
impact on currency value in general. If consumer spending increases to the
point that demand outstrips supply, inflation may ensue, albeit this isn’t
always a bad thing. On the other hand, low-interest rates rarely draw outside investment.
Higher interest rates are more likely to garner foreign investment, which
increases demand for a country’s currency.

However, there is no
universal formula that can be followed because the relationship between
inflation and share prices is not simple. An in-depth examination of each
stock’s unique traits is necessary for wise trading or investment plan.

Long-term, ownership of
stock might serve as a hedge against inflation for investors. This means that, despite rising
prices, the “actual” wealth that a stock or share portfolio stores – the
commodities or services it can be swapped for – may increase in value over an inflationary
era.

When inflation is
caused by increasing input costs (sometimes referred to as cost-push
inflation), for instance, revenues may rise, and typical profit rates may
return once firms have had enough time to adapt to the inflationary pressures
and raise their prices.

Analysts contend that
the short-term dynamic is less beneficial and that there is frequently an
inverse correlation between equities, prices, and inflation – meaning that
stock values fall as inflation rises or rise as inflation declines. Numerous
variables could contribute to inflation’s short-term negative impact on stock
values.

During the period of
higher inflation, value equities have outperformed growth and income stocks in the near run. Whether you are
taking a long or short-term perspective, though, will affect how you react to
an increase in inflation.

By allowing your
portfolio to gradually pass on rising prices to consumers, long-term investors
may protect the value of their capital and hedge against inflation. Evidence
suggests that rising inflation also tends to enhance stock market volatility,
which may present short-term traders with opportunities to buy or short-sell
equities.

As we have often
observed, it is not always the case. Despite an increase in the minimum wage,
recent income increases on average have lagged the general increase in the cost
of products.

One’s money management
may benefit from being aware of the rate of price increases over time. Here are
some suggestions for combating inflation.

Investing in some stocks
can be an effective approach to fight inflation, considering the lack of
confidence most people have toward markets. Consider your home as a business. A
business will experience inflation if it is unable to wisely spend its funds in
ventures that will provide greater returns than its costs. The fundamental
tenet of a successful business is that companies will sell their products for
higher prices, which will eventually result in higher revenues, earnings, and
stock prices.

An investment that is
regarded as protecting the diminished purchasing power of a currency as a
result of its value being lost owning to rising prices as a result of inflation
or macroeconomic growth is known as an inflation hedge. Purchasing an asset
with the expectation that it would hold or improve in value over tie is the
norm. An alternative to this is to take a larger position in assets, which may
depreciate less quickly than the value of the currency. Eg; Singapore’s central bank further
tightened monetary settings and raised its inflation forecast, sending the
currency higher. The SGD rallied the most in almost a month after the decision,
before trading up 0.4% at S$1.3564 as of 9:07 a.m. local time.

Real estate is always a
wise investment. Problems arise when a buyer intends to sell the property they
just purchased for a profit. Although skilled real estate investors can uncover
hidden values in houses, the average buyer should concentrate on buying a home
to stay in it for at least a few years. Similar to land, the value of homes
typically rises on an annual basis – offsetting the impacts of inflation.

Consider investing in
inflation-linked bonds if you want to try and guard your funds against
inflation. Simply said, if you invest in an ETF (Exchange-Traded Fund) that
invests in inflation-linked bonds, for instance, you will gain exposure to
bonds whose principal will rise in line with the consumer price index. This
implies that as inflation rises, the value of the instrument increases. Of
course, there is a risk that if inflation declines, the value would as well.
Additionally, rising interest rates will hurt inflation-protected bonds.

Whether it is accurate
or not, gold is frequently used as an inflation hedge, a solid way to guard
against the risk of losing buying power. However, precious metals might not be
the greatest choice in that situation. Some gold investors overlook the metal’s
volatility and potential cost, while others fail to foresee the necessity for
storage and other logistical challenges that come with gold ownership.

Also, use this time to
review your savings plan in addition to developing an investment strategy
appropriate for an inflationary period. You should prioritise cash in your
reevaluations. Although keeping cash on hand may seem like a „secure“
solution, cash is more vulnerable to inflation and buying power risk than
investments with a wider range of securities. It is strongly advised to stop
carrying cash or to make sure that it is maintained in a high-yield savings
account.

Investing in yourself
is by far the finest investment you can
make to be ready for an unpredictable financial future. one that will boost
your potential income in the future.

This investment starts
with high-quality education like seminars, and webinars
and continues with maintaining current skills and picking up new ones that will
correspond to the ones that will be most in-demand in the not-too-distant
future. Being able to adapt to a company’s shifting needs could help you
protect not only your career but also your compensation against inflation and
economic downturns.

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This article was written by ForexLive at www.forexlive.com.

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Dollar lightly softer awaiting US retail sales data 5 (1)

Major currencies aren’t doing a whole lot as traders are keeping their focus on the US retail sales data later today. After yesterday’s wild ride, there is a particular importance to today’s report considering that it will provide some outline on a potential 75 bps or 100 bps rate hike by the Fed in less than two weeks‘ time.

The dollar was mostly steady earlier but is seen slightly softer in the last hour or so. That said, the moves aren’t anything too significant.

EUR/USD was lingering around 1.0020-30 before moving up to 1.0050 currently. Of note, price is holding above its 100-hour moving average at 1.0039 but it’s all about what the data release has to offer later today.

Meanwhile, USD/JPY remains down 0.1% to 138.75 and is little changed overall. USD/CHF is down 0.5% to just under 0.9800 though as the franc is the top performer on the day so far.

Elsewhere, USD/CAD is down 0.3% to 1.3075 and that is seeing price start to push back towards the broken resistance region around 1.3076-83 this week:

That will be a crucial level to watch before the close this week.

Looking at other markets, equities are holding slightly higher with European indices playing catch up to the late rebound in Wall Street yesterday. The mood is helped by slight gains in US futures with S&P 500 futures up 13 points, or 0.3%, currently.

This article was written by Justin Low at www.forexlive.com.

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ECB’s Rehn: It is clear that ECB mandate is price stability 0 (0)

  • ECB has to act accordingly based on that
  • Each euro state has its own responsibility for its own economic policy
  • It may be that we will see a very difficult period in Italy amid political turmoil

Nothing too interesting from Rehn but it does highlight the challenges for ECB policymakers when making any decision. In essence, the central bank has to try and backstop Italy amid fragmentation risks as they try to normalise policy in the fight against inflation.

This article was written by Justin Low at www.forexlive.com.

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Bitcoin technical analysis around 20k 5 (1)

  • BTCUSD is stuck in a range for the last 30 days, stopping out swing traders that short it, or go long, unless those traders are exiting at the bottom and top of that range
  • Long terms players of the crypto king can improve their forecasting ability by looking at the price levels mentioned in the below simple technical analysis video for BTCUSD, but they must also look at the close of the daily candles
  • The ones that would like a stronger confirmation, will also wait to see the candle that follows that close. If it is not in the same direction and does not close well, they should wait
  • All this provides bitcoin watchers a tigher range and method to assess where the crypto leader will tend to go, up or down
  • Last but not least, this does not mean that you should not have a stop and take profit, from there onwards

Trade Bitcoin at your own risk. Visit ForexLive for technical analysis.

This article was written by ForexLive at www.forexlive.com.

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JP Morgan CEO Dimon: High inflation to have negative consequences on global economy 0 (0)

It’s not a good look to start earnings season with JP Morgan warning of tough times ahead. On the one hand, rising rates should result in lending activity becoming more profitable but a looming recession does not bode well for the growth outlook and the fact that the bank is building up reserves exemplifies that narrative.

Jamie Dimon’s remarks are often worth watching on earnings day and he is warning that high inflation and waning consumer confidence are going to have a significant toll on the global economy some time down the road. He adds that the bank is also suspending share buybacks temporarily and that is seeing the stock fall by 3% in pre-market at the moment.

This article was written by Justin Low at www.forexlive.com.

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Will Anything Outweigh Inflation this Summer in FX Markets? 5 (1)

Inflation
has been a hot topic for quite some time now and it ultimately led the central
banks like the Federal Reserve to start fighting it aggressively as it turned
out to be more persistent and entrenched than the Fed expected. Without price
stability an economy cannot grow, and this is why controlled inflation is a
central bank’s most important goal.

In fact,
such a high inflation eroded consumers’ purchasing power so much that their
sentiment about the economy is the lowest on record. Consumer spending makes up
for 70% of US GDP and this is why a depressed consumer is bad for the economy
as a whole as they’re going to spend less and less, ultimately leading to
recession.

The market
now is shifting its focus to recession. “History tells us that the Fed has
never accomplished a soft landing when inflation surpassed 5%” as the famous
billionaire investor Stanley Druckenmiller noted recently at a conference.
Besides that, many other indications point to a recession being pretty much
certain. The stock market is in a bear market, the yield curve is inverted, consumers
sentiment is at record low, inflation is still high, we can see big losses in
commodities sensitive to global growth like copper, a very strong US Dollar, an
aggressive tightening by the Fed and leading components in the PMIs in
contractionary territory.

Everything
says that the US may be already in a recession or heading into one soon. To
bring down inflation at this point a recession is welcomed as demand will be
lowered. One thing that the Fed cannot do though is pausing or even start
cutting interest rates until inflation is clearly on a sustained downward path.
The risk is that they will pivot too early and fail to bring inflation to their
2% target settling at a higher rate.

It may sound
good if they settle at a higher rate, say 3%, but that will signal to the
market that they are not serious about achieving 2% anymore and lead to other
worse consequences like loss of credibility. That’s why in my opinion they will
stay the course until the data shows that the disinflation will bring the rate to
2% and they can pause or start cutting interest rates.

This article
was written by Giuseppe Dellamotta.

This article was written by ForexLive at www.forexlive.com.

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