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High Impact Events Trading... Gold & Copper

  • #221
  • Aug 26, 2019 8:59pm Aug 26, 2019 8:59pm
CB Consumer Confidence/Richmond Manufacturing - August Preview

  1. CB Consumer Confidence
  2. Richmond Manufacturing Index

Notes

  1. If The Conference Board's consumer confidence figure comes in lower than expected at the same time Richmond Fed misses, we could see sentiment change and trigger buying in gold.
  2. Individually, I would not spend the time to preview either of these releases, However, being released together there might be some opportunity.
  3. CB consumer confidence has been released lower than expected twice in the past five releases (March and June).
  4. Richmond manufacturing data has come in lower than expected every month since March (five straight releases).

Forecasts

  1. Consumer Confidence is expected to tick lower to around 129. On a miss, I'd also expect downward revisions to the prior which beat forecasts (135.7 vs 125).
  2. Richmond Manufacturing is the wildcard here. Market consensus is currently at -2. This data hasn't missed forecasts six times in a row since 2009. This is the first negative forecast since Jan 2019.

Overview
The risk is in gold moving higher on weaker than expected data. Both CB Consumer Confidence (with downward revision) and Richmond Manufacturing would have to show weaker than expected data. If so, it could trigger significant buying in gold as investments move to safer assets in fear of a US recession.

As always, caution is advised. Good luck out there!

We must learn who is gold, and who is gold plated
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  • #222
  • Aug 29, 2019 6:33am Aug 29, 2019 6:33am
US Prelim GDP q/q - August Preview

  1. Prelim GDP q/q

Notes

  1. Important to know that the Prelim follows the Advance GDP figure. Since Advance data is released first it has more impact. The Final GDP data is last and has the least amount of impact of the three.
  2. Prelim GDP is a quarterly figure. Recent impacts aren't relevant due to the change in landscape since last two releases.
  3. Today's release could carry higher than usual significance because the Fed is looking for data that can support an easing policy. Data they haven't really have gotten yet. If GDP disappoints they may use it as a way to merit further rate reductions.
  4. Stronger than expected data could also be a big deal. If the US economy shows continued strength, we might see rate expectations shift for the Oct meeting. By shift, I mean the markets will start to expect a lower chance of two consecutive rate cuts. Sept is a done deal. October isn't. The CME has a 60% probability of an Oct rate cut, while about a 40% chance rates remain unchanged after the Sept rate cut.
  5. Many Fed officials including Powell have reiterated that they are not beginning an easing cycle. So the market doesn't have a very good reason for expecting three consecutive rate cuts.
  6. The July rate cut was intended to prolong the current expansion, not stem any affects of a slowdown. That makes sense because the data hasn't supported a new easing cycle, at all.
  7. It's important to consider that this GDP figure has gotten significantly less press attention. That's usually a sign to expect lower than normal impact. Media coverage usually correlates with market significance. Of course, any wide deviations from forecasts throw all that out the window.
  8. Most important though, US GDP data always has the potential to trigger shifts risk sentiment, which can impact markets across asset classes.

Forecasts

  1. While the median forecast of 65 estimates is right at 2.0%, the average is a little lower than that, at 1.97%.
  2. The low estimate is 1.7% and the high estimate is 2.2%.
  3. Most recent predictions are closer to 2.0%.
  4. The prior listed (2.1%) is the Advance GDP data from July. Any change from 2.1% can be viewed as a revision to GDP leading up to the final number on Sep 26th
  5. It will be important to look into the data to see stats on household spending and government spending. As long as those remain relatively health, the headline number may not be important as a drop in exports may already be priced in due to the US-China trade disputes.

Recent Impact Overview
Posting recent impacts would be displaying market reactions during a time where the global landscape was much different than it is now. Recent impacts don't matter as much this time around. What matters is whether the data comes in stronger or weaker than expected.

Overview
Any weaker than expected data will support gold prices and likely send precious metals higher, as the USD drops. If interest rate expectations come into play, we could see a prolonged move with significant follow through. This scenario would benefit gold the most.

As I've reiterated recently in a number of posts, gold prices are supported by a number of fundamental drivers related to global uncertainties. While gold will naturally move lower on any appreciation in the USD, downside risk in gold is somewhat limited. Therefore, the risk in today's event is in a weaker than expected GDP figure, if it's weak enough to trigger fears of a US slowdown.

Keep in mind, the Prelim data usually doesn't change too much from the Advance GDP figure, so there's a good possibility this could be a relatively non-event. Also, today's release will be accompanied by Unemployment Claims, and four other lower impact US data releases. If all either beat or miss forecasts, that could play a role in price volatility after the release.

I'd recommend a wait and see approach. There's quite a few risky scenarios that may not be worth taking. Don't be afraid to sit this one out. But if a trend emerges, take advantage, man. Take advantage. As always, caution is advised. Good luck!!

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  • #223
  • Aug 30, 2019 1:30pm Aug 30, 2019 1:30pm
Trump shows little sign that he’s going to back down from new tariffs on more than $110 billion in Chinese imports set to take effect Sunday
  • #224
  • Aug 30, 2019 3:18pm Aug 30, 2019 3:18pm
Quoting Unitedgold
Trump shows little sign that he’s going to back down from new tariffs on more than $110 billion in Chinese imports set to take effect Sunday
Last Friday he waited until the close to tweet. Right after 5pm eastern time, he tweet storm began. I don't think so he'll be doing that this week. If he makes a deal he doesn't hold back to explain how great it is. We can be certain that if a deal is struck, we'd get a tweet about not too long after. I'm not sure the market has fully priced in those tariffs. I think there has been some expectations that either they'd make a deal, or the deadline will get pushed back. Doesn't look like either. Thanks for bringing this up. It'll impact Sunday's open across most asset classes.
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  • #225
  • Aug 30, 2019 5:47pm Aug 30, 2019 5:47pm
Quoting EventsTrader
{quote} Last Friday he waited until the close to tweet. Right after 5pm eastern time, he tweet storm began. I don't think so he'll be doing that this week. If he makes a deal he doesn't hold back to explain how great it is. We can be certain that if a deal is struck, we'd get a tweet about not too long after. I'm not sure the market has fully priced in those tariffs. I think there has been some expectations that either they'd make a deal, or the deadline will get pushed back. Doesn't look like either. Thanks for bringing this up. It'll impact Sunday's...
Trump says new China tariffs set for Sunday are "on"
  • #226
  • Aug 30, 2019 5:48pm Aug 30, 2019 5:48pm
He is crazy
  • #227
  • Edited 11:32pm Aug 30, 2019 8:17pm | Edited 11:32pm
Usually China's manufacturing data is an event to focus on. It normally has impact and can trigger moves in gold and copper. Tonight, after the close, China released the latest manufacturing pmi and non-manufacturing pmi. Not much deviation from forecasts. This shouldn't cause any Sunday open gaps. Other stuff might, not this.

  1. Manufacturing PMI: 49.5 vs 49.7 expected
  2. Non-Manufacturing PMI: 53.8 vs 53.6 expected

Stay safe with Dorian out there.

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We must learn who is gold, and who is gold plated
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  • #228
  • Sep 2, 2019 3:58am Sep 2, 2019 3:58am
Quoting EventsTrader
Usually China's manufacturing data is an event to focus on. It normally has impact and can trigger moves in gold and copper. Tonight, after the close, China released the latest manufacturing pmi and non-manufacturing pmi. Not much deviation from forecasts. This shouldn't cause any Sunday open gaps. Other stuff might, not this. Manufacturing PMI: 49.5 vs 49.7 expected Non-Manufacturing PMI: 53.8 vs 53.6 expected Stay safe with Dorian out there. {image}
Welcome to Monday, Europe. Here’s the latest news and analysis from Bloomberg Economics to help get your day started:
  • #229
  • Sep 2, 2019 4:01am Sep 2, 2019 4:01am
More European Central Bank policy makers are weighing into the debate over whether the economy needs another strong blast of monetary stimulus, adding to signs that President Mario Draghi has some persuading to do if he’s to win a consensus for action
  • #230
  • Sep 2, 2019 2:26pm Sep 2, 2019 2:26pm
ISM Surveys • Tuesday 3.9.2019. & Thursday 5.9.2019.


Deteriorating survey evidence since mid-2018 has made clear that economic growth is set to slow. The ISM manufacturing survey fell first and further, as the factory sector has been hit harder by slowing global growth and intensifying trade war headwinds. It remains just barely in expansion territory, and we expect it to slow further to 50.9 in August.

Yet the United States is still faring better than other more export-oriented countries, where manufacturing PMIs are in outright contraction territory. Moreover, the non-manufacturing index, which measures sentiment across the much larger services sector, has yet to decelerate as much. Last month it did fall to its lowest level in almost three years, but with the U.S. consumer remaining strong—consumer confidence was unfazed this week and GDP revisions indicated real PCE rose at a whopping 4.7% pace in Q2—the more domestically oriented service sector should continue to weather the storm, with the non-man index rising to 54.0.

Previous: 51.2 & 53.7

Personal opinion: 50.9 & 54.0

Consensus: 51.2 (Man.) & 54.0 (Non-Man.)
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  • #231
  • Edited 2:16pm Sep 3, 2019 4:03am | Edited 2:16pm
Quoting Vorenzd
ISM Surveys • Tuesday 3.9.2019. & Thursday 5.9.2019. Deteriorating survey evidence since mid-2018 has made clear that economic growth is set to slow. The ISM manufacturing survey fell first and further, as the factory sector has been hit harder by slowing global growth and intensifying trade war headwinds. It remains just barely in expansion territory, and we expect it to slow further to 50.9 in August. Yet the United States is still faring better than other more export-oriented countries, where manufacturing PMIs are in outright contraction territory. Moreover, the non-manufacturing index, which measures sentiment across the much larger services sector, has yet to decelerate as much. Last month it did fall to its lowest level in almost three years, but with the U.S. consumer remaining strong—consumer confidence was unfazed this week and GDP revisions indicated real PCE rose at a whopping 4.7% pace in Q2—the more domestically oriented service sector should continue to weather the storm, with the non-man index rising to 54.0. Previous: 51.2 & 53.7 Personal opinion: 50.9 & 54.0 Consensus: 51.2 (Man.) & 54.0 (Non-Man.) {image}
August 2018’s ISM Mfg Index was a 14yr high of 60.8, making August 2019's YoY comparison very tough. 51.5 or lower would equate to the sharpest YoY point drop since April 2009. 50.8 or lower would make for a double-digit YoY drop!
  • #232
  • Sep 3, 2019 4:05am Sep 3, 2019 4:05am
August 2018’s ISM Mfg Index was a 14yr high of 60.8, making August 2019's YoY comparison very tough. 51.5 or lower would equate to the sharpest YoY point drop since April 2009. 50.8 or lower would make for a double-digit YoY drop!
  • #233
  • Sep 3, 2019 2:19pm Sep 3, 2019 2:19pm
Quoting Vorenzd
ISM Surveys • Tuesday 3.9.2019. & Thursday 5.9.2019. Deteriorating survey evidence since mid-2018 has made clear that economic growth is set to slow. The ISM manufacturing survey fell first and further, as the factory sector has been hit harder by slowing global growth and intensifying trade war headwinds. It remains just barely in expansion territory, and we expect it to slow further to 50.9 in August. Yet the United States is still faring better than other more export-oriented countries, where manufacturing PMIs are in outright contraction territory....
Quoting Unitedgold
August 2018’s ISM Mfg Index was a 14yr high of 60.8, making August 2019's YoY comparison very tough. 51.5 or lower would equate to the sharpest YoY point drop since April 2009. 50.8 or lower would make for a double-digit YoY drop!
Wow. I did not expect ISM Manufacturing to miss like it did. First time under 50.0 since 2016. Gold spiked on the news. This reading is in line with what we've been seeing from the regional fed manufacturing indexes for a few months now. Not a good sign for the US economy. Lots of focus will be on next month's data. If the contraction is confirmed in the next release, we could see an even bigger reaction. This is how gold popped on the data:
Attached Image (click to enlarge)
Click to Enlarge Name: SNAG-6-3.14.44-PM.png Size: 10 KB
We must learn who is gold, and who is gold plated
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  • #234
  • Sep 3, 2019 2:42pm Sep 3, 2019 2:42pm
Quoting EventsTrader
{quote} {quote} Wow. I did not expect ISM Manufacturing to miss like it did. First time under 50.0 since 2016. Gold spiked on the news. This reading is in line with what we've been seeing from the regional fed manufacturing indexes for a few months now. Not a good sign for the US economy. Lots of focus will be on next month's data. If the contraction is confirmed in the next release, we could see an even bigger reaction. This is how gold popped on the data: {image}
It was indeed surprising.

I don't think the market reacted enough, especially the stock market. This is a big deal not just because it's the first time since 2016, but also because it's the biggest YoY decline since the last crisis. This is very worrying.

I'm expecting the stock market to fall further (maybe to around 2850 level, if Rosengrend doesn't say anything significantly dovish (which he likely wont)), as for gold, i'm not sure, i do see an upward potential, but i don't know if this will be enough to push it higher considering it's already high price.

I do agree, recession is usually defined by 6 consecutive months of negative GDP data, but i think we can say the same about ISM data, it has fallen now, but we'll have to wait and see... if it keeps falling i believe the reaction will become more severe each time (ofcourse this depends on many factors).
Through the light of enlightenment, darkness unveils the path of truth.
  • #235
  • Sep 3, 2019 3:07pm Sep 3, 2019 3:07pm
Quoting Vorenzd
{quote} It was indeed surprising. I don't think the market reacted enough, especially the stock market. This is a big deal not just because it's the first time since 2016, but also because it's the biggest YoY decline since the last crisis. This is very worrying. I'm expecting the stock market to fall further (maybe to around 2850 level, if Rosengrend doesn't say anything significantly dovish (which he likely wont)), as for gold, i'm not sure, i do see an upward potential, but i don't know if this will be enough to push it higher considering it's...
The reason I don't think it moved markets as much as it did was the market had somewhat been pricing it in via other manufacturing data. Richmond Fed Manufacturing Index, Chicago PMI, Philly Fed Manufacturing Index, and Empire State Manufacturing are all released during the current month, while ISM is released after the month ends. Also, most recently, this Flash Manufacturing PMI release signaled weakness in the manufacturing sector.

I think the writing is on the wall and the data is hard to argue with. Manufacturing has begun to slowdown in the US. Check out these drops in each series:

Flash Manufacturing PMI
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ISM Manufacturing PMI
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Click to Enlarge Name: SNAG-1 4.06.45 PM.png Size: 18 KB


Richmond Fed Manufacturing Index
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Chicago PMI
Attached Image (click to enlarge)
Click to Enlarge Name: SNAG-3 4.07.44 PM.png Size: 19 KB
We must learn who is gold, and who is gold plated
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  • #236
  • Sep 3, 2019 4:47pm Sep 3, 2019 4:47pm
Quoting EventsTrader
{quote} The reason I don't think it moved markets as much as it did was the market had somewhat been pricing it in via other manufacturing data. Richmond Fed Manufacturing Index, Chicago PMI, Philly Fed Manufacturing Index, and Empire State Manufacturing are all released during the current month, while ISM is released after the month ends. Also, most recently, this Flash Manufacturing PMI release signaled weakness in the manufacturing sector. I think the writing is...
Thank you for the very informative and high quality post man, that does make perfect sense, however I still believe the stock market should have reacted more... the data was expected to be worse than the forecast but i don't think anybody expected it to drop this much.
Through the light of enlightenment, darkness unveils the path of truth.
  • #237
  • Sep 3, 2019 5:12pm Sep 3, 2019 5:12pm
Quoting Vorenzd
{quote} Thank you for the very informative and high quality post man, that does make perfect sense, however I still believe the stock market should have reacted more... the data was expected to be worse than the forecast but i don't think anybody expected it to drop this much.
I'd make the argument that the stock market is underestimating most data and the potential implications. It's been this way for a while. I've been bearish on US equities for probably longer than I'd like to admit. When the correction does come it's probably going to hit harder than a lot of people realize.

I've been through two corrections, the one in 2001 and the 2008 crisis. The biggest lesson I've learned is that the data doesn't lie. If you think the stock market should have reacted more, you probably aren't alone. Anybody that's been in the stock market for less than ten years, doesn't even know what a correction is. How are they supposed to prepare for one? I wouldn't be in equities right now that's for sure.
We must learn who is gold, and who is gold plated
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  • #238
  • Sep 3, 2019 5:35pm Sep 3, 2019 5:35pm
Quoting EventsTrader
{quote} I'd make the argument that the stock market is underestimating most data and the potential implications. It's been this way for a while. I've been bearish on US equities for probably longer than I'd like to admit. When the correction does come it's probably going to hit harder than a lot of people realize. I've been through two corrections, the one in 2001 and the 2008 crisis. The biggest lesson I've learned is that the data doesn't lie. If you think the stock market should have reacted more, you probably aren't alone. Anybody that's been...
That is very true. The reason for this are retail investors who choose to keep their longs positions that should have been closed ages ago. They do not understand market fundamentals and believe that the market "must go up", which is just silly... reminds me of bitcoin... it also "must go up".

This is a very wrong logic, nothing "must go up". As i've written many times in the past on this forum i'm also short on Equities right now, especially on European equities, i've written about it in this thread a few months back.

But if you ask me, equities are a great instrument to trade right now (for the short term at least), with the trade war developments and our Fighter's tweets (Fight or go home! - Donald Trump) i believe the markets offer an easy chance for a seasoned investor to grab solid profits.

There are so many "daily dips" that can be bought, and honestly August was one of the best months for equities for me, i'm usually not for day trading equities, but i've done that in August and it was a great month, one of the best regarding profits.

So i'd say that equities are pretty bad right now as a long term investment, but for intraday trading i'd say they've never been better for a seasoned investor and never been worse for the average retail trader.

Liquidity is also great so we can sneak in very large positions with virtually no slippage, it's like all these people who are hope driven are one big liquidity farm.

---------------------------------------------------------------------------------------------------

All markets, not just the stock/metal ones are currently very hope driven and going down a road that nobody comes back from - the recession road.

Right now in Europe people are heavily investing in Hotels, restaurants and other tourism related investments. This is just silly, as soon as recession hits most of them will either file for bankrupcy or be sold for pennies.

In my opinion currently i believe that the safest investment are metals and of course land. Real estate prices might fall soon, especially in Europe, then that'll be an even better investment (they're too high in europe right now, i see a well formed bubble ready to be burst).

Another thing at least for in Europe are any ecological projects as they get huge grants (up to 80% project worth). I'm currently an investor on a few just because of those huge grants and profit potential. It's a great risk reward ratio.

I'd love to hear your opinion, what do you currently see as the best investment?
Through the light of enlightenment, darkness unveils the path of truth.
  • #239
  • Sep 3, 2019 6:17pm Sep 3, 2019 6:17pm
Quoting Vorenzd
I'd love to hear your opinion, what do you currently see as the best investment?
Tough question. I'm not sure. Here are some thoughts:

Gold is where the least amount of risk is at a time where uncertainty is really high. It's conservative, but the big money should be there.


Crude probably has some room to the downside. A riskier bet, but it's a risky asset in a period where investors might be seeking safety in lower yields.


US Treasury Bonds would usually be a good investment, but right now yields might be a little too low.


I think Bitcoin offers one of the best risk/reward ratios we've seen in a long time. Lots of risk there, but worth a look.


Then there's the Bank of Canada. I'm not understanding how currency traders aren't noticing the only major central bank that has yet to shift policy (publicly). The BOC will probably signal that a rate cut is coming in this week's rate statement. I'm not sure that's been priced in yet. That along with crude being in backwardation doesn't bode well for the loonie. USD/CAD long is a good speculative play IMO.

We must learn who is gold, and who is gold plated
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  • #240
  • Sep 3, 2019 6:46pm Sep 3, 2019 6:46pm
Quoting EventsTrader
{quote} Tough question. I'm not sure. Here are some thoughts: Gold is where the least amount of risk is at a time where uncertainty is really high. It's conservative, but the big money should be there. Crude probably has some room to the downside. A riskier bet, but it's a risky asset in a period where investors might be seeking safety in lower yields. US Treasury Bonds would usually be a good investment, but right now yields might...
Great list!

I might be old-fashioned but for me Bitcoin has no value and it'll never have any value. I don't know much about it so i'm not really entitled to say anything good or bad about it. I never invested even a minute of my time in trying to see if it has any value, just crossed it off straight of the bat after that spike to 20k. I don't see any realistic scenario where such an asset rises to a much higher price. But yeah, as i've said, i'm pretty "old school"when it comes to investing... always have been. The whole Crypto world is a big no for me. But thanks for the info!

--

Quoting EventsTrader
{quote} there's the Bank of Canada. I'm not understanding how currency traders aren't noticing the only major central bank that has yet to shift policy (publicly). The BOC will probably signal that a rate cut is coming in this week's rate statement. I'm not sure that's been priced in yet. That along with crude being in backwardation doesn't bode well for the loonie. USD/CAD long is a good speculative play IMO.

I agree with you, i've actually been thinking about that for a while, it's really gone under the radar and i'm also of the opinion that it has not been priced in yet. I'm actually going to do an event preview of the BOC meeting and i'll probably get into that a little deeper.
Through the light of enlightenment, darkness unveils the path of truth.
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