2 min Market Summary: 22 Oct 2018

  • U.S. Existing Home Sales at 5.15M vs expected 5.29M. The 2-yr yield and 10-yr yield each increased two basis points to 2.90% and 3.20%, respectively. USDJPY up 0.32%, $112.55.
  • Euro up 0.54%, $1.1515. U.K. Public Sector Net Borrowing at 3.3B vs expected 4.6B. In Brexit, EU officials now increasingly hope for the Brexit transition period to be extended as the current roadmap is not providing both negotiating sides enough time to sort out the details. EU chief Brexit negotiator Michel Barnier said on Friday that problem over Irish border could lead to failure, voicing no interest in hard Brexit. Sterling up 0.41%, $1.3072.
  • Chinese GDP q/y at 6.5% vs expected 6.6%. Industrial Production y/y at 5.8% vs expected 6.0%.
  • Canadian CPI m/m at -0.4% vs expected 0.1%. Core Retail Sales m/m at -0.4% vs expected 0.1%. USDCAD up 0.10%, $1.3099.
  • S&P 500 down -0.04%, 2,767.78. Nasdaq down -0.12%, 7,107.23. Nikkei down -0.56%, 22,532.08.
  • China’s Shanghai Composite rebounded from a four-year low on Friday, adding 2.9%, despite reporting a lower-than-expected GDP reading (+6.5% actual vs +6.6% consensus). Chinese officials made a collaborative effort to ease investor angst about liquidity risk and China’s economic fundamentals.
  • On the earnings front, Procter & Gamble (PG 87.30, +7.06) and PayPal (PYPL 84.78, +7.30) jumped 8.8% and 9.4%, respectively, after beating earnings estimates. Procter & Gamble wowed investors with quarterly organic sales increasing 4%, its highest increase since Q1 of its fiscal 2014 year. In addition, Dow component American Express (AXP 106.73, +3.89) enjoyed a healthy gain of 3.8% after beating earnings estimates and raising its profit guidance.

Cryptocurrency Updates: 22 Oct 2018

Global AML Watchdog to Release Crypto Regulations By Next June

A global money-laundering watchdog has said it will begin publishing rules for international cryptocurrency regulation by next summer. The Financial Action Task Force (FATF) said that global jurisdictions will have to bring into force licensing schemes or regulations for crypto exchanges and possibly digital wallet providers under the new rules. Companies offering financial services for initial coin offerings will also be included. The news comes after the FATF plenary meeting this week with officials from 204 global jurisdictions to discuss crypto regulations and other matters.

Ethereum Devs Reach Consensus to Delay Constantinople Hard Fork Until January 2019

Ethereum (ETH) core developers have reached a consensus to delay a planned hard fork of the protocol until January 2019. The fork, dubbed “Constantinople,” was first trialed on Ethereum public testnet Ropsten on Oct. 13, and had been slated to be activated on the main Ethereum blockchain by the end of Oct.-Nov. this year. A testnet is essentially a simulated version of the primary network that allows developers to try out smart contracts or upgrades without having to pay “gas” (computation fees) for their execution. The Constantinople hard fork is is a system-wide Ethereum update designed to increase the network’s efficiency, and notably includes plans to reduce block rewards for miners, as well as to introduce changes to the network’s consensus mechanism that would make it more resistant to ASIC miners.

North Korea-Sponsored Hacks Comprise 65 Percent of Total Crypto Stolen

Hacker group “Lazarus,” reportedly funded by North Korea, has stolen a staggering $571 million in cryptocurrencies since early 2017, a study conducted by cybercrime company Group-IB reveals. The report, dedicated to hacks in 2017 and 2018, identifies the allegedly state-sponsored hacker group Lazarus as responsible for $571 million of the $882 million total in crypto that was stolen from online exchanges during the studied time period; almost 65 percent of the total sum. Out of fourteen separate exchange breaches, five have been attributed to the group, among them the industry record-breaking $532 million NEM hack of Japan’s Coincheck this January. The report states that hackers target cryptocurrency exchanges using mostly “traditional” methods, including spear phishing, social engineering, and malware.

2 min Market Summary: 19 Oct 2018

  • U.S. Philly Fed Manufacturing Index at 22.2 vs expected 19.7. Manufacturers remain optimistic about the outlook, as 48% of respondents expect business activity to increase over the next six months versus only 14% that expect declines. 2-yr yield and 10-yr yield settling unchanged at 2.88% and 3.18%, respectively. Risk-aversion overhangs as global markets tumbled on Thursday. USDJPY down -0.40%, $112.20.
  • Sentiment in the E.U. deteriorated as Italian debt crumbled on the ongoing budget dispute with the EU. Italian 10-year yields were up 14 bps to 3.69%. Euro down -0.41%. $1.14541. U.K. Retail Sales m/m at -0.8% vs expected -0.4%. Sterling plunged after a crucial Brexit summit ended withUK’s PM May offering nothing new and EU leaders canceling plans for a special summit next November. Negotiations, however, continue and EU leaders are willing to reconsider a summit next month, should a breakthrough is reached. Sterling down -0.74%, $1.3018.
  • WTI crude extended Wednesday’s slide, settling -1.4% lower at $68.71/bbl, marking a one-month low. USDCAD up 0.47%, $1.3079. Aussie Employment Change at 5.6K vs expected 15.2K. Unemployment Rate at 5.0% vs expected 5.3%. Aussie down -0.18%, $0.7096.
  • S&P 500 down -1.40%, 2768.02. Nasdaq down -2.23%, 7,116.09. Nikkei down -0.80%, 22,658.16.
  • The benchmark index opened just modestly lower, but started extending losses soon thereafter.U.S. Treasury Secretary Steven Mnuchin added to the uncertainty when he announced that he would be pulling out of next week’s Future Investment Initiative conference in Saudi Arabia. The decision comes as investigators seek answers over the disappearance and alleged murder of dissident Saudi journalist and Washington Post columnist Jamal Khashoggi.
  • In other corporate news, Dow component Travelers (TRV 125.14, -1.30) fell -1.0% despite reporting better-than-expected profits for the third quarter; Netflix (NFLX 346.71, -17.99) tumbled-4.9% after an NBC News report showed that the WSJ is investigating the company’s corporate culture.

Cryptocurrency News: 19 Oct 2018

Global Security Firm G4S Announces High-Security ‘Vault Storage’ for Holding CryptoGlobal Security Firm G4S Announces High-Security ‘Vault Storage’ for Holding Crypto

U.K.-based multinational security services company G4S has developed a new service for protecting cryptocurrency assets. G4S, formerly Group 4 Securicor runs both prisons and detention centers, as well as stores cash for “large companies,” and has released an solution for holding crypto assets in a form of high-security offline storage protecting customers from hacks. G4S is based on a foundation of “vault storage” that is inaccessible for cyber criminals and hackers, as well as “armed robbers alike.” The new security solution distrubutes crypto assets into independent components placed securely in the system’s security vaults. In June 2018, cybersecurity company Carbon Black estimated that criminals stole around $1.1 billion worth of cryptocurrencies in the first half of 2018, with 12,000 marketplaces and 34,000 offerings associated with cryptocurrency theft that hackers can take advantage of. On Oct. 10, anonymous attackers hacked the adult entertainment platform SpankChain, stole around $38,000 worth of major cryptocurrency Ethereum (ETH), as well as $4,000 worth of the platform’s native crypto token.

Natwest Bank Launches R3 Corda Blockchain-Based Syndicated Lending Platform

U.K.-based bank Natwest will integrate a new blockchain platform based on R3 Corda technology for use in the syndicated loans market. The new platform, dubbed “Fusion LenderComm,” was developed by blockchain consortium R3 and fintech enterprise Finastra, and aims to streamline the global market for syndicated loans. The platform works by enabling “financial institutions acting as agents to publish loan data to the ledger and extend self-service capabilities to lenders. Through their own portal, agents can define and then publish lender-specific deal position data to the platform, allowing individual lenders to consult the data themselves and not resort to extra phone or online communication to query positions.

Dubai – the Blockchain Oasis of the UAE: From Public to Private Sector

The first proposal for an official Dubai cryptocurrency called emCash came about in October 2017. The cryptocurrency is pluged to be used for payments for governmental and nongovernmental services – and is pegged to the UAE Dirham. The partnership was announced on October 9, which includes emCredit, a subsidiary of the Dubai Department of Economic Development, blockchain payment provider Pundi X and its partner Ebooc Fintech & Loyalty Labs LLC. Ebooc will be responsible for providing point of sale terminals in retail outlets, while Pundi X is expected to create 100,000 point of sale units over the next three years. The Central Bank of the UAE began working on legislation at the beginning of 2017 to address the use of cryptocurrencies in the country. The UAE Securities and Commodities Authority (SCA) warned the local investors about the inherent risks associated with ICOs. Given that they are not regulated in the country, investors had no means of legal protection against fraud. As Dubai and the UAE continue to explore and develop technology with the use of blockchain technology, as well as provide a guideline for the use of ICOs and cryptocurrencies, the outlook in the region seems positive.

2 min Market Summary: 18 Oct 2018

  • U.S. Building Permits at 1.24M vs expected 1.27M. Housing Starts at 1.20M vs expected 1.22M. Treasury yields ticked slightly higher following the minutes with the Fed-sensitive 2-yr yield and benchmark 10-yr yield each advancing two basis points to 2.88% and 3.18%, respectively. Following the minutes, the probability of a December rate hike ticked up to 83.0% from 79.5%on Tuesday, according to the CME FedWatch Tool. USDJPY up 0.34%.
  • Euro down -0.64%, $1.1501. U.K. CPI y/y at 2.4% vs expected 2.6%. PPI Input m/m at 1.3% vs expected 0.9%. RPI y/y at 3.3% vs expected 3.5%. Meanwhile, UK PM May is in Brussels trying to convince her European Union counterparts of her Chequers’ plan. Speaking before addressing the summit members, PM May said that a deal can be sealed “over the next days and weeks,” with a work from both parts, although hopes for a breakthrough in negotiations faded after weekend failed talks. Sterling down -0.64%, $1.3102.
  • Canadian Manufacturing Sales m/m at -0.4% vs expected -0.6%. WTI crude dropped -3.1% to $69.65/bbl, hitting a one-month low, after EIA petroleum data showed a build of 6.5 million barrels in crude oil inventories for the week ended October 12. USDCAD up 0.71%, $1.3026.
  • S&P 500 down -0.03%, 2,809.21. Nasdaq up 0.03%, 7,278.63. Nikkei up 1.29%, 22,841.12.
  • late morning surge (EST) in the financials sector (+0.9%) lifted the benchmark index from its early depths, the S&P 500 was down as much as -1.0% and the release of the September FOMC minutes prompted another small bout of volatility in the afternoon (EST). The softer-than-expected data hit the consumer discretionary sector (-0.7%) in particular, with home improvement retailers Home Depot (HD 185.17, -8.41) and Lowe’s (LOW 102.44, -3.54) dropping -4.3% and -3.3%, respectively. The two companies were also downgraded to ‘Neutral’ from ‘Outperform’ at Credit Suisse. Investors initially had a muted reaction to U.S. Bancorp’s (USB 52.90, +1.93) better-than-expected earnings, but shares eventually started taking off, ending the day with a gain of 3.8%. Goldman Sachs (GS 228.28, +6.58, +3.0%) and Morgan Stanley (MS 47.19 , +1.25, +2.7%) also had strong performances, extending yesterday’s post-earnings gains.
  • In other earnings news, Netflix (NFLX 364.70, +18.30) climbed 5.3% after reporting higher-than-expected subscriber growth. The company added nearly seven million new subscribers last quarter, with six of the seven million coming from overseas. In addition, Netflix expects to add nine million more in the fourth quarter.

Cryptocurrency Updates: 18 Oct 2018

CME: Average Daily Volume for Bitcoin Futures Grew 41% in Q3

Average daily volumes for bitcoin futures trading saw a significant jump in the third quarter compared to the last period. Average daily volume hit 5,053 contracts in the third quarter, representing a 41 percent increase from 3,577 contracts in the second quarter. CME provided data on open interest, which represents the total number of unsettled contracts held by those trading in the market. According to CME, rising from 1,523 contracts in the first quarter to 2,873 contracts in the third quarter represents growth from the second quarter’s 2,405.

US CFTC Official Tackles Accountability in an Era of Smart Contracts

The U.S. Commodity Futures Trading Commission (CFTC)’s Brian Quintenz as addressed the question of accountability in an era of disintermediated finance and smart contracts. He proposed that when it comes enforcement actions, not only users, but the coders themselves may be held to account. Quintenz framed his discussion by noting the complications that arise when applying traditional legal paradigms to “the disintermediated world of blockchain,” emphasizing the challenges that the emerging sector poses to the CFTC’s particular role, which is intermediary-focused and centers on preserving market integrity through oversight. He focused in particular on smart contracts, which function on a blockchain and are programmed to interact according to binding, pre-specified rules. He noted that in the past, the CFTC has generally prohibited prediction markets as contrary to the public interest, only permitting them in limited circumstances when it has found that they operate on a small-scale, non-profit basis, and serve academic purposes.

Cryptocurrencies ‘May Not Qualify as Securities’

Cryptocurrency falls into a legislative gray area in many jurisdictions, which is why governments should take a particularly nuanced approach to developing regulatory frameworks for crypto trading. Carlson Tong Ka-Shing, the current chairman of the Hong Kong Securities and Futures Commission (SFC) rejected the notion of prohibiting cryptocurrency trading platforms as a viable regulatory strategy. Such moves would prove fruitless in the current world, where trading can be freely conducted without concern for national borders, he argued. Angela Kwan, the recently hired chief operating officer of Hong Kong-based cryptocurrency derivatives trading platform Bitmex, said the SFC should follow the lead of the U.S. and other leading markets with regard to international crypto regulations. She claimed that the futures products that are now being traded in the U.S., for example, illustrate how regulators can help to support the growth of the crypto industry.

2 min Market Summary: 17 Oct 2018

  • U.S. JOLTS Job Openings at 7.14M vs expected 6.90M. Industrial Production m/m at 0.3% vs expected 0.2%. Treasuries barely moved, subduing current fears of rising interest rates for now. The Fed-sensitive 2-yr yield added one basis point to 2.86%, while the benchmark 10-yr yield declined one basis point to 3.16%. Risk-appetite returned on Tuesday as upbeat earnings buoyed sentiment. USDJPY up 0.50%, $112.34.
  • German ZEW Economic Sentiment at -24.7 vs expected -12.3. E.U. ZEW Economic Sentiment at -19.4 vs expected -9.2. Euro down -0.03%, $1.1576.
  • U.K. Average Earnings Index 3m/y at 2.7% vs expected 2.6%. Unemployment Rate inline at 4.0%. In Brexit, Germany’s Europe Minister Roth, said that they are close to a Brexit deal, but added that they shouldn’t rule out the chance of a no-deal. Irish PM Varadkar also made headlines, saying that there will be no withdrawal agreement without a legally binding backstop, while EU’s Chief Negotiator Barnier later said that the Irish border issue remains unsolved and that they may need more time to reach an agreement. Sterling held on to gains despite EU’s Tusk later comments that a no-deal is more likely than ever before. Sterling up 0.27%, $1.3188.
  • Chinese CPI y/y inline at 2.5%. USDCAD down -0.43%, $1.2936. N.Z. CPI q/q at 0.9% vs expected 0.7%. Kiwi up 0.49%, $0.6583.
  • S&P 500 up 2.15%, 2,809.92. Nasdaq up 2.94%, 7,276.43. Nikkei up 1.25%, 22,549.24.
  • Investor sentiment was buoyed after several financial and health care giants reported upbeat earningsGoldman Sachs (GS 221.70, +6.48, +3.0%) and Morgan Stanley (MS 45.94, +2.47, +5.7%) helped boost the financial sector (+1.6%) after reporting better-than-expected top and bottom lines. Asset management firm BlackRock (BLK 408.00, -18.94, -4.4%) weighed on the sector, though, after missing revenue expectations. BlackRock’s pain worsened when CEO Larry Fink said that the company saw more than $30 billion of institutional non-ETF index equity outflows that were driven by client de-risking. Fink added that he thinks clients will continue to de-risk.
  • Health care sector (+2.9%) components Johnson & Johnson (JNJ 136.56, +2.61, +2.0%) and UnitedHealth (UNH 272.57, +12.32, +4.7%) contributed to the group’s strong performance after better-than expected results. The health care sector is the second-best performing group this year with a 2018 gain of 12.5%; tech leads with a gain of 13.9%. Adobe Systems (ADBE 260.67, +22.66, +9.5%) had a very strong performance after it reaffirmed fourth quarter guidance and said it expects FY19 revenues to be up 20%. Likewise, chip stocks outperformed, as the Philadelphia Semiconductor Index climbed 3.3%. Notable gainers included Intel (INTC 45.94, +1.41, +3.2%), Qualcomm (QCOM 66.12, +1.95, +3.0%), and NVIDIA (NVDA 245.83, +10.45, +4.4%).

Cryptocurrency News: 17 Oct 2018

Telegram to Debut ‘Test Version’ of Blockchain Platform TON ‘This Autumn,’ Say Investors

Encrypted messenger service Telegram will release a test version of its blockchain-based TON platform “this autumn”. Investors “confirmed” the authenticity of a circular sent to participants in TON’s Initial Coin Offering (ICO) at the start of September. Once in operation, TON will also make use of its in-house cryptocurrency, Gram, and will form a “new way of exchanging data.” Telegram attracted considerable attention earlier this year when it raised almost $1.8 billion in investments for TON and its current messenger app via two private ICO presales. Following the success of the fundraising, in May executives subsequently cancelled the planned public phase of the ICO.

Kenyan Gov’t to Use Blockchain in New Affordable Housing Project

Kenya’s government plans to deevelop blockchain technology to manage a government housing project of 500,000 units. The government of Kenya aims to build 500,000 units by 2022, and assist contributors earning less than 100,000 Kenyan Shillings ($992) as they cannot afford hypothec. Blockchain technology will be used to ensure the proper distribution of housing to deserving participants in the program and address issues of graft from both legislators and beneficiaries. The project will reportedly be financed by the National Housing Fund under the Finance Act of 2018, to which Kenyans will contribute 1.5 percent of their salary that will be matched by their employers. Kenya will use blockchain technology to ensure the rightful owners live in government funded housing projects.

Fifth Largest Crypto Exchange Huobi Lists Four USD-Backed Stablecoins, Following OKEx

Starting Friday, Oct. 19, crypto exchange Huobi will start accepting deposits of four USD-backed stablecoins – Paxos Standard (PAX), TrueUSD (TUSD), USDCoin (USDC), and Gemini Dollar (GUSD). The stablecoins are already available on Huobi Wallet, while the launch time and other details are set to be announced at a later time. OKEx has already launched deposits in the four stablecoins, with withdrawals available starting from today. Also on Oct. 15, blockchain trust company Paxos announced it had issued about $50 million worth of its stablecoin Paxos Standard Token. The Ethereum (ETH) blockchain-based stablecoin has received regulatory approval from the New York State Department of Financial Services (NYDFS) on September 10, together with another stablecoin Gemini Dollar that was launched by Winklevoss brothers. Yesterday, BitPay also launched stablecoin support, enabling merchants to receive settlements in Gemini Dollar and Circle USD Coin (USDC).

2 min Market Summary: 16 Oct 2018

  • U.S. Core Retail Sales m/m at -0.1% vs expected 0.4%. Retail Sales m/m at 0.1% vs expected 0.7%. The 2-yr note yield ticked one basis point higher to 2.85%, and the 10-yr note yield rose two basis points to 3.16%. Risk-aversion sentiment returns on Monday with markets starting the week soft, USDJPY down -0.38%, $111.78. Euro up 0.28%, $1.1583.
  • In Brexit, May told the House of Commons on Monday that neither Brussels nor London could allow the disagreement to “derail the prospects of a good deal and leave us with a ‘no-deal’ outcome that no one wants”. She insisted she believed a deal was still “achievable” and that the UK and EU were “not far apart”. Sterling up 0.40%, $1.3155.
  • BOC survey showed strong investment intentions and a tight labor market. WTI crude prices were relatively subdued on Monday, settling 0.6% higher at $71.83/bbl. USDCAD down -0.28%, $1.2987.
  • S&P 500 down -0.59%, 2,750.79. Nasdaq down -1.24%, 7,068.67. Nikkei down -1.87%, 22,271.30.
  • Financial sector was unable to impress after an underwhelming response to Bank of America’s (BAC 27.92, -0.54, -1.9%) better-than expected earnings report. Charles Schwab (SCHW 47.64, -1.37, -2.8%) also fell after reporting earnings that were in-line with top and bottom estimates. United States-Saudi Arabia tensions brewed over the weekend following the disappearance and alleged murder of Washington Post columnist Jamal Khashoggi. In response, Trump threatened to impose sanctions on the world’s largest oil producer if it was found to be guilty; however, Trump said today that Saudi King Salman strongly denied to him any involvement in Khashoggi’s disappearance.
  • In other corporate news, L3 Technologies (LLL 220.91, +25.13) rose 12.8% after announcing an all-stock merger of equals with Harris Corp. (HRS 173.25, +18.38, +11.9%). The combined company, L3 Harris Technologies, will be the 6th largest defense company in the U.S. and a top 10 defense company globally. Separately, retailer Sears Holding (SHLD 0.31, -0.10, -23.8%) filed for Chapter 11 bankruptcy.  That was not a surprise to the market, as it had been widely speculated, yet the news itself generated a sentimental story line given the retailer’s storied operating history.

Trade Opportunities: NASDAQ, Bitcoin

Bitcoin (BTC) Daily Candlesticks & Ichimoku Chart  – LONG
Bitcoin (BTC) jumped to hit highs of 7700-7800 within minutes yesterday before falling back to below 7000. A decisive close above the cloud could get very interesting.

 

NASDAQ Index Weekly Candlesticks & Ichimoku Chart
As cautioned in last week’s report, a correction on NASDAQ is on the cards. The support on the weekly chart is at 7100 level.

 

Vee, our Founder/CIO highlights patterns/formations on selected chart(s) every week which may have the potential to turn into trading opportunities. These charts are extracts of our weekly subscription product – “CIO’s Week Ahead Update” which provides analysis for the week ahead, first sent out on Monday of the week.

Let us know what you think in the comments below!

Disclaimer: The views and opinions expressed in this material do not constitute a recommendation by TrackRecord Pte. Ltd. that any particular investment, security, transaction or investment strategy is suitable for any specific person. No part of this material may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of TrackRecord Pte. Ltd