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Macro

GUOSEN Closing Bell (Jan. 19)


MARKET

Chinese stocks closed low today, with the benchmark Shanghai Composite Index ended at 3101.3 points. The A-share market fluctuated around the flat line while the central bank injected weekly record-high cash into the market. Bank sector is the only sector that gains; while steel and oil sectors led the falls. Combined turnover for both markets was 297.9bn yuan, down 5.91% dod.

 

CLOSE

%CHG

VOL (bn yuan)

%YTD

SH Composite

3101.30

-0.38

139.3

-0.08

SZ Component

9768.57

-0.37

158.6

-4.01

CSI300

3329.29

-0.30

63.9

0.58

ChiNext

1844.14

-0.09

43.0

-6.10

 

Sector

Top 1

Led by

Top 2

Led by

Upward-leading

Bank

600000

 

 

Downward-leading

Steel

600381

Oil

000782

 

NEWS

*Anta Sports Products Ltd, China's biggest athletics apparel company, said it plans to launch its first snow sports product under its own brand this yearas the domestic skiing market and other winter activities are expected to be on track for a major boost. The company said it would expand more in the high-end segment of the market, in line with the general consumer market shift toward premium brands in China. "When a country get more developed economically, their consumers tend to go for high-end activities," said Robert Koepp, director of the consultancy, the Economist Corporate Network. (China daily)

*Chinese conglomerate Sanpower Group is launching a fund with a 3 billion yuan ($435 million) target that will be used to acquire up to 150 domestic cinemas in a bet on rapid growth in the country's movie market, two sources with direct knowledge of the matter said. Sanpower is in talks with several domestic institutional investors, including banks and investment funds, for contributions. The privately-owned conglomerate itself will commit 20 percent to 30 percent of the fund's capital, they said, adding that it is expected to close in the second half of 2017. The Nanjing-based group, founded by its billionaire chairman Yuan Yafei in 1993, shot into international prominence in 2014 after buying Britain's high-street retailer House of Fraser. It has spent about $4.2 billion on domestic and outbound acquisitions over the past two years. (China daily)

 

 FUND FLOW

 

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This article is from Guosen Securities Co., Ltd. and is being posted with Guosen Securities Co., Ltd.’s permission. The views expressed in this article are solely those of the author and/or Guosen Securities Co., Ltd. and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


12057




Macro

European Market Outlook: ECB Day


Morning Briefing January 19th 2017


There is very little European data set for release Thursday, with the ECB Policy decision likely to be the standout feature.

Early European data will see the release of the ECB's EU current account data at 0900GMT.

The ECB monetary policy decision will be published at 1245GMT, to be followed by President Draghi's Frankfurt press conference at 1330GMT.

MNI's latest ECB State of Play says the tone of Thursday's meeting and subsequent presser is likely to be cautious and breaking little new ground.

The US data calendar gets underway at 1330GMT, with the release of the latest jobless claims data, housing starts and the Philadelphia Fed Manufacturing Index.

The level of initial jobless claims is expected to rise by 3,000 to 250,000 in the Jan. 14 employment survey week after a 10,000 increase in the previous week.

Claims were at a level of 275,000 in the Dec. 17 employment survey week, so the forecasted level would represent a sharp improvement. The four-week moving average, which fell by 1,750 to 256,500 in the Jan. 7 week, would post a fourth straight decline, falling by 6,250 in the coming week as that 275,000 level in the Dec. 17 week drops out of the calculation, assuming the MNI forecast is correct and there are no revisions.

The seasonally adjusted pace of housing starts is expected to partially rebound to a 1.190 million annual rate in December after sharp movements in the previous two months. Total starts were down 7.9% year/year before seasonal adjustment in November.

The Philadelphia Fed manufacturing index is expected to slip back to a still-strong reading of 16.0 in January after a sharp gain to a revised 19.7 in December.

Canadian data due for release at the same time includes international securities transactions and the Monthly Survey of Manufacturing.

Back in the US, at 1500GMT, San Francisco Federal Reserve Bank President John C. Williams is keynote speaker at the Solano  Economic Development Corporation Annual Luncheon Meeting in Fairfield, Calif., with audience Q&A.

The US DOE Natural Gas Stocks data will be published at 1530GMT, followed by the weekly crude oil stocks data at 1600GMT.

Late US data sees the Fed's Weekly M2 Money Supply Data published at 2130GMT.

Federal Reserve Chair Janet Yellen speaks on "The Economic Outlook and the Conduct of Monetary Policy" at the Stanford Institute for Economic Policy Research in Stanford, Calif., with audience Q&A, starting at 0100GMT.

 

Global Economic Trading Calendar


 

Markets


FOREX: The US Dollar ended NY bid today following comments from Fed Chair Yellen that target 3 rate rises in 2017 instead of 2 and the Fed Funds Rate moving to 3% by the end of next year. Asian trading has been relatively uneventful with the majors giving back a little of the overnight move as is usually the case in Asia as traders await input from London/Europe. Australian employment data for December was released today and although the initial number was better than expected a downward revision to last month’s number (39.1K to 37.1K) and an increase in the unemployment rate initially weighed before the pair returned to trading in line with the retracement in the USD. Earlier in the day Australian MI Inflation expectations gave the Aussie a little boost improving from 3.4% in Dec to 4.3% in Jan. UK RICS House price data showed a fall to 24% from 29% and lower than the expected 32%. The USD remains gently offered in afternoon trading with markets keen to see the reaction of Europe to the late NY comments from Fed Chair Yellen that followed on from Tuesday's comments from San Francisco Fed Reserve President Williams.

US INDEX FUTURES: US stock index futures are trading mixed in quiet trade as market countdown to Donald Trump's inauguration, with the market failing to respond to hawkish comments from Janet Yellen . Currently the Mar'17 e-mini S&P futures are trading flat at 2,266.50, the Mar'17 e-mini Nasdaq futures are trading down 1.25 points at 5,053.25, while the Mar'17 e-mini Dow futures are trading up 1 point at 19,736. Wednesday saw the Dow Jones edged 22.05pts (0.1%) lower yesterday, down for the fourth session in a row, closing at 19,804.72 its lowest close of the year. But the S&P 500 inched 4pts (0.2%) higher, to 2,271.89, the Nasdaq Composite advanced 16.93pts (0.3%) higher, reaching 5,555.65

US TSYS: Despite remaining heavy and pressuring the key 2.267-2.305 support region bears have been unable to manage a break lower with the bounce Wednesday seeing pressure return to 2.443-2.449 where the 21-DMA is located. Correcting O/S daily studies remain a key concern for bears. In saying that, bulls need a close above the 21-DMA to ease bearish pressure and above 2.541 to pressure 2016 highs. Below 2.267 remains needed to target the 100-DMA (2.025). A somewhat active start for treasuries, with sources reporting that fast-money has bought the dip, resulting in CT10 some 1.1bp richer in early dealings, with volumes a reasonable ~$1.3 bln already.

JAPAN STOCKS: Japanese stocks have posted reasonable gains during the morning session, however the market was not fully able to capitalize on ongoing Yen weakness. The Nikkei has closed for lunch up 0.94% or 176.93 points at 19,071.30, while the Topix is last up 0.87% or 13.13 points at 1,526.99.

GOLD: Spot gold last down $3.00 at $1,201.30 per ounce, in a $1,205.30 to $1,197.70 range so far this morning in Asia, with the market remaining under pressure after the late comments from Jane Yellen, who sees 3 hikes this year instead of 2 and sees rates at 3% by the end of next year. The comments have continued to support the US Dollar to the detriment of gold. Wednesday saw Gold close near $1,204.00 per ounce, after trading in a $1,202.48 to $1.217.93. On Tuesday, the precious metal topped out at $1,218.92, the highest level in two months. Hesitation ahead of the $1221.5 resistance is a concern for bulls and combined with daily studies looking to correct from O/B increases the risk of a correction. Layers of support remain with the $1164.8-1187.9 support region remaining key.

OIL: WTI crude oil futures for Mar'17 delivery last down up $0.38 at $52.27 per barrel, after a $52.33 to $52.16 range in Asia today, with the market seeing short-covering after Wednesday's sharp 2.7% drop after EIA data show another drawdown in crude oil inventories. NYMEX February light sweet crude oil futures settled down $1.40 at $51.08 per barrel on Wednesday, after trading in a $50.91 to $52.79 range.

 

Technical Analysis


BUND: (H17) Pressure Returns To 55-DMA

*RES 4: 164.94 High Jan 2
*RES 3: 164.52 100-DMA
*RES 2: 163.92 Hourly resistance Jan 17
*RES 1: 163.58 Hourly resistance Jan 18

*PREVIOUS CLOSE: 163.04

*SUP 1: 162.95 55-DMA
*SUP 2: 162.92 Hourly support Jan 10
*SUP 3: 162.47 Low Jan 9
*SUP 4: 162.04 Low Dec 19    

*COMMENTARY: The rejection ahead of the 100-DMA Tuesday has been followed up with a bearish close below the daily bull channel base (163.32) Wednesday that sees pressure having returned to the 55-DMA support. Bears continue to look for a close below the 55-DMA to hint at a move back to 159.91-160.80 with below 162.47 to confirm. The 164.52-165.26 resistance region remains key with bulls needing a close above to shift immediate focus to tests of 166.84.


EUROSTOXX: Bears Need Close Below 3259.27

*RES 4: 3345.20 High Dec 17 2015
*RES 3: 3334.44 2017 High Jan 3 2017
*RES 2: 3326.31 High Jan 9
*RES 1: 3300.50 High Jan 17

*PREVIOUS CLOSE: 3294.00

*SUP 1: 3259.27 Low Dec 22
*SUP 2: 3239.87 Low Dec 16
*SUP 3: 3222.43 100-WMA
*SUP 4: 3206.82 High Dec 12 now support

*COMMENTARY: Bears continue to look for a close below 3259.27 to end bullish hopes and shift focus back to the 55-DMA (3161.76) with follow through so far lacking on dips. Initial resistance is noted at 3300.50 with bulls needing a close above to ease pressure on key support whereas above 3345.20 remains needed to reconfirm a bullish bias and target 3524.04 Dec 2015 monthly highs. Narrowing Bollinger bands are suggestive of a breakout in the near future.

 

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MNI subscribers make critical decisions with deeper insight and greater confidence. Pinpoint information and market-moving interviews let them react instantly to market changes and more importantly, anticipate future market moves. MNI reporters are market professionals in the news business. They work like journalists but think like traders. When interviewing Fed officials, our reporters ask the same questions you would ask. They cover the angles you would cover. Write the way you read.

MNI’s news services are now available via the IB Trader platform. Please click here to view our provider page or contact MNI directly on sales@mni-news.com or +1 212 669 6400 for our Americas sales team and +44 207 862 7408 for our EMEA sales team.

This article is from Eurex Exchange and is being posted with Eurex Exchange’s permission. The views expressed in this article are solely those of the author and/or Eurex Exchange and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


12056




Technical Analysis

Cotton (CT) Testing 50% Fib Retrace of Early Jan Rally


Cotton (CT) edged higher yesterday and has now retraced roughly 50% of the rally during the first week of January.  I expect CT's profittaking to end sometime today or tomorrow, and will watch for CT breaking above descending wedge resistance (on the 4hr chart).  A break above this descending wedge resistance will likely confirm the bearish signal coming from the apparent daily MACD negative cross as being a false one.  The flattish RSI and Stochastics reinforce my view that any negative daily MACD cross will be shallow.  I am long CT intraday as of today's Asian morning at .724 and will target the red zone (on the daily chart) as a target for Friday.

 

Cotton (ICE CT Mar17) Weekly/Daily/4hr/Hourly

 

Click here for today's technical analysis on Cocoa, GBPUSD

 

Tradable Patterns was launched to demonstrate that the patterns recurring in liquid futures and spot FX markets can be traded consistently profitably. Tradable Patterns’ daily newsletter provides technical analysis on a subset of three CME/ICE/Eurex futures (commodities, equity indices, and interest rates), spot FX and US equity markets, which it considers worth monitoring for the day/week for trend reversal or continuation. For less experienced traders, tutorials and workshops are offered online and throughout Southeast Asia.

 

This article is from Tradable Patterns and is being posted with Tradable Patterns’ permission. The views expressed in this article are solely those of the author and/or Tradable Patterns and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

 


12055




Options

Volatility 411


CBOETV - Joe Tigay, Equity Armor Investments, discusses traders anticipating high vol. environment with Trump presidency.

 

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. Copies are available from your broker, or at www.theocc.com. The information in this program is provided solely for general education and information purposes. No statement within the program should be construed as a recommendation to buy or sell a security or to provide investment advice. The opinions expressed in this program are solely the opinions of the participants, and do not necessarily reflect the opinions of CBOE or any of its subsidiaries or affiliates. You agree that under no circumstances will CBOE or its affiliates, or their respective directors, officers, trading permit holders, employees, and agents, be liable for any loss or damage caused by your reliance on information obtained from the program.

Copyright © 2016 Chicago Board Options Exchange, Incorporated.   All rights reserved.
 

This video is from CBOE and is being posted with CBOE’s permission. The views expressed in this article are solely those of the author and/or CBOE and IB is not endorsing or recommending any investment or trading discussed in the article. This material is for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IB to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


12054




Stocks

3 telltale signs the Japan rally may not be over


With U.S. stocks rallying, investors may be tempted to stick with a home country bias. Russ discusses why Japan is still worth a look.

Last year, the markets were distinguished by a lack of persistence. In many respects, investor behavior in the second half of the year was the mirror image of the first six months. However, one element remained consistent, at least among U.S. investors: a preference for domestic over international equities.

With U.S. stocks having a strong start to 2017, many are likely to remain committed to a big home country bias. I think this is a mistake. As I discussed last fall, relative performance is starting to shift. Since last summer’s lows, Japanese equites are up roughly 25% in local currency terms. Europe is up over 20% (gains are lower in dollar terms). Going forward, I still believe that Japanese stocks in particular merit a larger allocation.

Japan still the cheapest developed market

While Japanese stocks bottomed in 2012, Japan remains reasonably priced in contrast to the U.S., just about every other developed market and even many of the emerging markets in Asia (see the accompanying chart). Other markets, notably the United States, have seen prices driven primarily by multiple expansion, i.e. paying more for a dollar of earnings, though Japan has benefited from rising earnings.

Supportive monetary policy and rising inflation

Headline inflation (measured by the Consumer Price Index) in Japan is rising at the fastest pace since early 2015. Not only is this good news for a country long mired in deflation, it is particularly important in the context of the Bank of Japan’s commitment to keeping interest rates close to zero. To the extent inflation continues to rise, real interest rates (the interest rate after inflation) move deeper into negative territory, suggesting ultra-accommodative monetary conditions and a weaker yen. The latter is key for an economy geared toward global trade.

An improving corporate sector

Historically, one of the many challenges facing Japan was a relatively unprofitable corporate sector. That is in the process of changing. Improving corporate governance coupled with Japan’s own buyback trend has pushed the notoriously low return-on-equity (ROE) up to around 7%. While still low by U.S. standards—partly a reflection of a multi-decade deleveraging by Japanese corporations—this is well above the 20-year average of 4%.

For U.S. investors, it is instructive to compare the bull market gains in the United States to those in Japan. Here in the U.S., the price-to-earnings (P/E) ratio on the S&P 500 Index has risen by roughly 75% since market bottomed in 2009. In contrast, since bottoming in 2012 Japanese equity valuations are relatively flat. As a result, Japan remains a value play in an increasingly expensive world.

To be sure, there are risks. First and foremost, a thriving Japanese stock market is most likely predicated on a weaker yen. This suggests that dollar-based investors will want to at least partially hedge their foreign currency exposure.

Still, investing outside the U.S. may not seem obvious in the midst of a still strong U.S. bull market; perhaps that is exactly the time when investors should seek more diversification.

Russ Koesterich, CFA, is Portfolio Manager for BlackRock’s Global Allocation team and is a regular contributor to The Blog.

Investing involves risks, including possible loss of principal. Past performance is no guarantee of future results. International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. These risks often are heightened for investments in emerging/developing markets or in concentrations of single countries.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of January 2017 and may change as subsequent conditions vary. The information and opinions contained in this post are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this post is at the sole discretion of the reader. Past performance is no guarantee of future results.

©2017 BlackRock, Inc. All rights reserved. BLACKROCK is a registered trademark of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. All other marks are the property of their respective owners.

USR-11370

This article is from BlackRock and is being posted with BlackRock’s permission. The views expressed in this article are solely those of the author and/or BlackRock and IB is not endorsing or recommending any investment or trading discussed in the article. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.


12053




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