Market Commentary 12 November 2019

HIGHLIGHTS

All three Indices DOW, S&P, and Nasdaq broke record highs last Friday due to trade optimism that China and the US will soon have the “Phase one” deal signed. Adding to this factor, stellar earnings from companies such as Disney also helped push the market higher. But the sad casualty last week among the asset classes was the gold with the price hitting a 3-month low.

On Friday’s economic data, U. Of Michigan Consumer Sentiment came out at 95.7 which was better than the expected 95.0.

Dow Jones ETF Chart

DOW -        up 18.7 % YTD

S&P –          up 23.4 %   YTD

NASDAQ – up 27.7 % YTD

HEADS UP

• CNY New Yuan Loans (OCT)
• GBP Gross Dom Product (3Q)
• EUR Euro-Zone ZEW Survey
• NZD RBNZ Official Cash Rate
• GBP Consumer Price Index
• USD Consumer Price Index
• JPY Gross Dom Product (3Q)
• AUD Unemployment Rate (OCT)
• EUR Gross Dom Product (3Q)
• USD Retail Sales (OCT)

DAILY FEEDS

GOLD:

Gold had a disaster week with prices hovering at 3-month lows. A lot of investors who built up long positions in gold as a safe-haven trade came unstuck with the easing cycle in the US on hold and other Central Banks all left benchmark rates unchanged. Improving relations between China and the US added to the riskier appetite sentiment of traders to dump gold positions.

At the same time, the US dollar (98.37) became more attractive after bondholders aggressively sold their book while driving yields higher.

Gold Chart

EUR:

The same sentiment hit the Euro with the EU forecasting that the economy is expected to grow slowly over the next few months while the rising US treasury yields make the USD a more attractive investment.

YEN:

With the widening spread between the US Government and Japanese bonds making the USD more attractive, USD/JPY finished the week sharply higher. Likewise, BOJ announced that they will reduce borrowing cost further if necessary.

AUD:

AUD had a double whammy with US treasury yields rising and Australian inflation expected not to hit lower band of 2% until end 2021. Currently, a double bottom 0.6850 and next support will be at 06800.

BITCOIN:

After a rally in Bitcoin prices in late October, the cryptocurrency fell below the $9000 mark which was almost 5% last Friday. This also filled the gap made after strong October rally. With the Fed on hold over the next few months, bitcoin is no longer attractive as a hedge vs inflation.