Another fairly light day in economic news. No huge move in any one market although treasuries and bunds had a good day as did gold.
Nikkei continues to perform well. Up about +0.8% today (CME futures) offsetting. Dow turned in a modestly positive day. Gold is knocking on $1350. Gold miner ETF up another +1.5% today.
Euro gained another 0.7% against USD nearing 1.40 level.
Another positive news out of Germany : a jump in manufacturing orders in August which sharply exceeded expectations. Although this indicator is very volatile so it’s hard to rely on any one indicator, I am now thinking German outperformance would continue to longer than I thought BUT that wouldn’t hold the rest of Europe from a substantial slowdown to come. We might want to revisit DAX vs Europe later.
Energy saw a decent rally after DOE report showed draws in refined products – continuing the constructive trend from last week – but it sort of fizzled later in the day. Energy and industrial metals continued to perform well today but who knows – maybe it’s all due to dollar weakness and not much more.
Tomorrow is a busier day. Official leading indicator for Japan, UK industrial production for Aug, German industrial production for July, ECB meeting (but no big news expected as usual), and the BIG ONE : weekly US initial jobless claims.
In terms of positions, after further look at data I do like lightening up on gold. I do like smooth trend but vertical line upward is scary. There is a huge investor pile-on into gold and whenever consensus becomes this drastic there is usually a sharp reversal to follow. Of course the question is when and how much.
You all know I am not a big fan of short term trading. But given our good history of tactical trading, I think it’s a decent risk/reward to get more aggressive than say just locking in profit or going to benchmark weight.
Actually, Euro is basically in the same spot as gold – near vertical rise with a clear consensus among investors. The major difference is that the long term fundamentals are behind gold (which is why I am even more reluctant to trade around) while Euro is every bit if not more flawed than USD.
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