2022/08/16 (056) Column

WallStreet Bulls/Vear Unwilling,
To Make Decisions At The Opening Bell
– Alhough WMT & HD Had Exceeded Exceptations.
Meanwhile DXY Hits 3-Week-High This Early Morning!


Walmart Earnings Above Expectations At 1.77 USD

Walmart (WMT) released earnings per share at 1.77 USD, compared to market expectations of 1.63 USD.

Home Depot Earnings Above Expectations At 5.05 USD

Home Depot (HD) released earnings per share at 5.05 USD, compared to market expectations of 4.94 USD.

Wall Street Muted

All three major US stock indexes were trading around the flatline on Tuesday as investors digested a slew of earnings releases from big retailers. ZipRecruiter tumbled over 7% after the company issued third-quarter revenue guidance that surprised investors on the downside. On the flip side, Walmart jumped almost 5% after the discount retail titan reported fiscal second-quarter profit and revenue that beat Wall Street’s expectations while raising its full-year earnings outlook. Home Depot also posted quarterly earnings that beat analysts’ estimates. Meanwhile, the US housing market weakened in July, with both building permits and housing starts falling by more than expected.

Dollar Hits Three-Week High

The dollar index strengthened towards the 107 mark, a level not seen in three weeks as dismal economic data in leading economies stoked fresh concerns about a global recession and drove safe-haven demand for the greenback. On top of that, the Federal Reserve has been reassuring markets that a dovish pivot is unlikely despite signs that inflation could be peaking. More speeches this week and the FOMC minutes release due on Wednesday are now highly expected for clues about the central bank’s rate path. The dollar strengthened across the board, with the most pronounced buying activity again seen against currencies associated with higher risk appetite, such as the Australian and New Zealand dollars.

Sterling Depreciates On Grim Economic Outlook

The British pound weakened to $1.2, moving closer to a 2-year low of $1.18 hit on July 14th on mounting worries over the UK’s economic outlook with the BoE seeing inflation peaking at 13.3% in October and projecting the country to enter a recession in Q4 and lasting for five quarters. The latest data showed the labour market is cooling, particularly as the number of job vacancies fell for the first time since August 2020 and wages excluding bonuses fell by 3% when adjusted for inflation, the most since records began in 2001. Investors now await inflation and retail sales figures later in the week. Money markets currently price in around an 83% chance of a half-point rate hike at the central bank’s September meeting and a total of almost 125 bps of tightening by year end. Meanwhile, the Telegraph reported the BoE Governor Andrew Bailey is ‘open to review’ the central bank mandate after Liz Truss, the front-runner to become the next prime minister, criticized its approach to inflation.

Russian Stocks Reach 2-Week High

The ruble-based MOEX Russia Index was sharply higher to hover at the 2,185 level on Tuesday, extending yesterday’s gains to the highest in over two weeks with strong support from the heavyweight energy sector and consumer staples. Tatneft shares surged nearly 6% after its board of directors recommended dividend payments of RUB 32.71 per share. The move follows a wave of Russian companies cancelling dividendpayments due to the downturn in the economy caused by Western sanctions, most notably Gazprom.

Geman Dax 40 Remains Positive Early Morning,
Despite Worst Economic Outlook Since Oktober 2008

Mainly because of the high inflation in our so-called West, the economic expectations of German financial experts clouded over again. The mood barometer of the Mannheim-based research institute ZEW fell in August to its lowest level since October 2008. The prospects for the German economy are bleak, commented the chief economist at Liechtenstein-based VP Bank, Thomas Gitzel, on the data. “The danger of a serious energy crisis has not been averted and the high inflation rates are taking away purchasing power from consumers.” That´s right. But the financial markets price action usually anticipate the future. And meanwhile, it seems like, that the market, the so called maas of (non) participating financial market actors, are betting on, that the inflation peak is behind of us, at least. If i am not wrong.

However, there are also sceptial voices, in the market – which i also not ignore. I.e. Analyst Craig Erlam from the trading house Oanda does not really trust the recent rally: “I wonder how long this will last even if inflation comes back a little from its highs. The recessions around the world will come and inflation will fall not fast enough”.

The slight easing of inflationary pressure in the USA recently fueled hopes that the US Federal Reserve could be more cautious about raising interest rates after the recent major steps. This scheme shaped the recovery rally on the world stock exchanges, as discussed several times in the previous DEVISE 2 DAY Financial market Online Newspaper Edition. But while there are signs that inflation is likely to have peaked in some regions of the world, it`s misplaced to think that the monetary tightening cycle is about to end, writes investment strategist Seema Shah, An Asset Manager of the Principal Global Investors. “Prospectively, inflation in the US remains uncomfortably high, China’s inflation problem could get worse, while in Europe it is extraordinarily acute. The need for inflation moderation remains.” Which I have no words more to add.DEVISE 2 DAY Another 48 Hours – Where I Was Wrong, Where I Was Right

Long in the USDX (since 02/14/2002) around 96 points and/or also long MSFT (since 03/07/2022) around 285 USD are meanwhile our only two open long trading capabilities. In addition to our last long in the Dow Future at 31.140 (since 07/11/2022). After we realized our lost long FB trading capability (from 02/17/2022) end of june`22 with painfully 48 USD. Fortunately, MSFT stock had turned above our stop at 240USD. And we now have a small booking gain again. Although our long trading capability in the Dow Future is even bigger, it has already left our target of 33,500 points last week. So that we in this trading capability let our position continue also. And tighten our stop to 33.500 points. So that we can definitely book 2,360 points. Without to praise myself, I would like to expressly write here: “Let run all our open positions continue, this week as well!” And that’s despite the economic data out of China all being worse year-on-year than last month. And that’s despite the economic data out of China all being worse year-on-year than last month. CNY House Price Index came out with -0.9% (-0.5% previous), CNY Industrial Production with 3.8% (3.9%). And/or CNY Retail Sales with 2.7% (3.1%). What, to put it bluntly, does not exactly describe a strong economic growth in China. Even though CNY Unemplyoment Rate falls to 5.4% (5.5%). But all this reads much more worse tha it is – which you can read in the following 4XSetUps.This week I want to focus on the price of UKOIL again.
After joining the movement earlier this year during the outbreak of war in eastern Ukraine (entry 83 USD with a target by 120 USD). And or also had to post a loss (entry 112 USD with an exit by 100 USD) in our second trading capability. I formula a new trading capability in UKOIL because I no longer assume that Russia’s war of aggression in eastern Ukraine will escalate any price action further. But don’t assume an unexpected quick peace treaty between the two states, which I naturally wanted. That’s why I’m assuming that we won’t see prices over 100 USD again anytime soon. And accordingly I have formulated a short trading capability, at least for this week, for this and/or next week, in the UKOIL.Further rising US interest rates, but not as steeply and quickly as feared by most on US Wall Street in June 2022, are weighing on bulls on the US stock market. And the weak US economic growth of just 1.6% yoy is fueling fears of a US recession. Even if the recent somewhat better inflation data provided some relief, the recession fear is still there. And now this weak economic data from China at the start of this week. That`s why I can very well imagine an even lower UKOIL price, at least for this week and/or next week. Because the fear that there is also an economic slump in China could also dampen demand for oil.