Vee’s Segment on Money FM 13 Mar 2020

Listen to Vee as he speaks with MoneyFM 89.3 Ryan Huang on his views on the impact of Covid-19 on the financial markets and global economies.

In this segment, Vee talks about how the monetary measures by central banks are insufficient in the face of the unprecedented supply and demand shock caused by the virus. Also, he discusses the effects of these easing measures on currencies and how the macro economic picture will be like in the long run.

2 Min Market Update : 20th Nov 2019


As of Wed Nov 20th, Singapore Time zone UTC+8

U.S. Dollar Index, +0.03%, 97.82
USDJPY, -0.18%, $108.47
EURUSD, +0.05%, $1.1078
GBPUSD, -0.20%, $1.2929
USDCAD, +0.49%, $1.3271
AUDUSD, +0.18%, $0.6823
NZDUSD, +0.54%, $0.6432

U.S. Total housing starts increased 3.8% m/m to a seasonally adjusted annual rate of 1.314 million (consensus 1.300 million) while total building permits increased 5.0% m/m to a seasonally adjusted annual rate of 1.461 million (consensus 1.365 million).

The U.S. Treasury market was relatively quiet, but demand for longer-dated bonds contributed to some curve-flattening activity. The 2-yr yield was unchanged at 1.59%, and the 10-yr yield declined two basis points to 1.79%. The U.S. Dollar Index increased 0.03% to 97.82.

Release of the RBA minutes caused an initial dip in Aussie with monetary authorities agreeing that a ‘case could be made’ for a rate cut at the November meeting. However, the RBA is also clearly concerned with the limits of lower bound and some analysts do not think the central bank will ease until February, preferring to keep its policy options flexible to maintain maximum impact.


S&P500, -0.06%, 3,120.18
Nasdaq, +0.24%, 8,570.66
Nikkei Futures, -0.97%, 23,173.0

S&P 500 declined 0.06% on Tuesday in a mixed session. The retail industry was under pressure following disappointing quarterly results and guidance from Home Depot (HD 225.86, -12.99, -5.4%) and Kohl’s (KSS 47.02, -11.38, -19.5%).

Gains were mainly found in the heavily-weighted S&P 500 health care (+0.7%), information technology (+0.2%), and financials (+0.2%) sectors. The real estate sector (+0.2%) also finished in positive territory.

TJX Companies (TJX 60.64, +1.09, +1.8%) was a bright spot among the retailers after it beat top and bottom-line estimates and raised its full-year guidance. TJX likely tempered some concerns about U.S. consumer spending for the holiday shopping season that may have been engendered by Home Depot and Kohl’s.

Separately, shares of AT&T (T 38.00, -1.63, -4.1%) pulled back 4% after the stock was downgraded to Sell from Neutral at MoffettNathanson. Shares of Slack (WORK 21.18, -1.93, -8.4%) sold off on news that Microsoft’s (MSFT 150.39, +0.05, unch) competitive product, Teams, increased daily active users by nearly 50% since July.


2 Min Market Update : 14th Nov 2019


As of Thu Nov 14th, Singapore Time zone UTC+8

U.S. Dollar Index, -0.01%, 98.31
USDJPY, -0.20%, $108.81
EURUSD, -0.02%, $1.1010
GBPUSD, +0.07%, $1.2854
USDCAD, +0.15%, $1.3253
AUDUSD, -0.04%, $0.6840
NZDUSD, +1.33%, $0.6415

U.S. Total CPI was up 0.4% m/m in October (consensus +0.3%), driven largely by higher energy costs, while core CPI, which excludes food and energy, increased 0.2%, as expected. The monthly changes left the yr/yr changes at 1.8% for total CPI (up from 1.7% previously) and 2.3% for core CPI (down from 2.4% previously).

The Wall Street Journal published two separate reports on trade. The first one stated the U.S. remains hesitant on removing existing tariffs on imported goods from China. The second report outlined China’s unwillingness to commit to purchasing a specific amount of farm goods and its resistance to agree to enforcement mechanisms.

Many of the cyclical sectors within the S&P 500 subsequently underperformed, but the broader market remained resilient to any sort of pullback. This might have been due to the market still expecting a “Phase One” deal to get signed and Powell upholding the market’s positive view on monetary policy in the first part of his two-day congressional testimony

U.S. Treasuries finished the session higher as part of the defensive trade today. The 2-yr yield declined two basis points to 1.63%, and the 10-yr yield declined four basis points to 1.87%. The U.S. Dollar Index finished little changed at 98.31. WTI crude increased 0.4% (+$0.23) to $57.08/bbl.

Kiwi and wholesale interest rates spiked higher after the Reserve Bank left its official cash rate (OCR) unchanged at 1 per cent. Market expectations were weighted towards a rate cut at the monetary policy statement. The Reserve Bank, in its statement, said further monetary stimulus would be added if needed. It said employment remained around its maximum sustainable level while inflation remained below the 2 per cent target mid-point but within its target range. “Economic developments since the August statement do not warrant a change to the already stimulatory monetary setting at this time,” it said. The statement by the RBNZ came as a surprise to traders who priced in a high probability of a rate cut, the knee-jerk price action was a result of positions unwinding.


S&P500, +0.07%, 3,094.04
Nasdaq, -0.05%, 8,482.10
Nikkei Futures, -0.02%, 23,322.5

S&P 500 (+0.07%) and Dow Jones Industrial Average (+0.3%) closed at record highs on Wednesday, even as trade reports revealed that the U.S. and China continue to waver on familiar issues. Walt Disney (DIS 148.72, +10.14, +7.3%) deserves some credit, with shares rising more than 7% after it said 10 million users have already signed up for Disney+.

Risk sentiment was manifested more conservatively in the defensive-oriented utilities (+1.5%), real estate (+1.1%), and consumer staples (+0.9%) sectors. The financials (-0.6%), energy (-0.5%), materials (-0.5%), industrials (-0.4%), and consumer discretionary (-0.4%) sectors finished in negative territory.

The communication services (+0.4%) and information technology (+0.3%) sectors also finished higher, largely due to the continued outperformance in shares of Apple (AAPL 264.47, +2.51, +1.0%) and Disney. Apple was initiated with an Outperform rating at RBC Capital Mkts with a price target of $295.

Separately, Nike (NKE 91.29, +1.79, +2.0%) said it will stop selling products directly to Amazon (AMZN 1753.11, -24.89, -1.4%). On a related note, Nike was initiated with an Overweight rating at Barclays with a price target of $111.



2 Min Market Update : 7th Nov 2019


As of Wed Nov 7th, Singapore Time zone UTC+8

U.S. Dollar Index, -0.03%, 97.95
USDJPY, -0.22%, $108.92
EURUSD, -0.05%, $1.1070
GBPUSD, -0.23%, $1.2855
USDCAD, +0.21%, $1.3183
AUDUSD, -0.25%, $0.6877
NZDUSD, -0.15%, $0.6366

U.S. Nonfarm business sector labor productivity declined 0.3% in the third quarter (consensus +1.0%), according to the BLS, after increasing an upwardly revised 2.5% (from 2.3%) in the second quarter. Unit labor costs jumped 3.6% (consensus +2.1%) after increasing a downwardly revised 2.4% (from 2.6%) in the second quarter. It points to profit margin pressures for businesses with the decline in productivity and the jump in unit labor costs.

In trade, Reuters reported that a “Phase One” trade agreement may not get signed until December, as both sides continue to discuss terms and a venue. The news took the market to session lows, but it didn’t get the pullback some had been expecting. This might have been due to expectations for a partial deal to still get signed and a view that there is some pent-up demand among under-allocated investors. The S&P 500 energy sector, however, did succumb to a 2.3% pullback following disappointing earnings results and guidance from Diamondback Energy (FANG 77.20, -13.03, -14.4%) and a decline in oil prices ($56.35, -0.89, -1.6%).

U.S. Treasuries finished the session on a higher note, having received increased demand following the latest trade update. The 2-yr yield declined three basis points to 1.60%, and the 10-yr yield declined five basis points to 1.81%. The U.S. Dollar Index remained little changed at 97.95.


S&P500, +0.07%, 3,076.78
Nasdaq, -0.29%, 8,410.63
Nikkei Futures, -0.23%, 23,267.5

The stock market closed little changed on Wednesday, marking its second straight pause near record highs as investors digested a possible pushback in the timeline for a trade deal.

The health care and consumer staples sectors can also credit their relative strength to the gains in CVS Health (CVS 70.93, +3.61, +5.4%), Humana (HUM 304.94, +10.19, +3.5%), and Coty (COTY 13.02, +1.56, +13.6%) following their positive earnings results and encouraging guidance.

In notable M&A activity, Xerox (XRX 37.66, +1.29, +3.6%) is reportedly considering a cash-and-stock bid for HP, Inc. (HPQ 19.57, +1.17, +6.4%). An offer would value HP at a premium at just under $23 per share, according to The Wall Street Journal.



2 Min Market Update : 21st Oct 2019


As of Mon Oct 21st, Singapore Time zone UTC+8

U.S. Dollar Index, -0.34%, 97.28
USDJPY, -0.22%, $108.43
EURUSD, +0.42%, $1.1171
GBPUSD, +0.64%, $1.2973
USDCAD, -0.08%, $1.3126
AUDUSD, +0.47%, $0.6856
NZDUSD, +0.61%, $0.6385

Fed Vice Chair Clarida said monetary policy is not on a preset course and decisions will be made “meeting by meeting.” Data from Friday, and last week, likely boosted expectations for a rate cut at the October FOMC meeting. The probability for a 25-basis points cut rose to 89.3% on Friday versus 67.3% one week ago, according to the CME FedWatch Tool.

U.S. Treasuries ended the session on a higher note. The 2-yr yield declined four basis points to 1.57%, and the 10-yr yield declined one basis point to 1.75%. The U.S. Dollar Index declined 0.34% to 97.28. WTI crude declined 0.2%, or $0.13, to $53.76/bbl.

In trade, the United States and China agreed on Friday (Oct 11) to the first phase of a deal to end a trade war, prompting Trump to suspend a threatened tariff hike, but officials said the agreement had to be put on paper and more work was required to get it finalised. The announcement did not include many details, however, and Trump said it could take up to five weeks to get the deal written.

Chinese Vice Premier Liu He said on Saturday (Oct 19) that China will work with the United States to address each other’s core concerns on the basis of equality and mutual respect, and that stopping the trade war would be good for both sides and the world. “Stopping the escalation of the trade war benefits China, the US and the whole world. It’s what producers and consumers alike are hoping for,” Liu said in a rare public speech about the trade war.

In Brexit, British Prime Minister Boris Johnson reluctantly wrote to Brussels asking for a Brexit extension after MPs voted on Saturday (Oct 19) to force him into seeking a delay beyond Oct 31. But Johnson, who has pinned his premiership on getting Britain out of the European Union on time, refused to sign the letter he sent to European Council President Donald Tusk. A third letter written by Britain’s EU ambassador Tim Barrow explained that the Brexit delay letter was only being sent to comply with the law. There is a chance the deal could pass, and Britain could still leave the EU on October 31, but there remains strong opposition to the agreement among MPs.


S&P500, -0.39%, 2,986.20
Nasdaq, -0.83%, 8,089.54
Nikkei Futures, -0.10%, 22,460.0

The stock market closed lower on options expiration Friday, as investors leaned cautiously following negative corporate headlines and tepid Chinese data. The S&P 500 opened flat, lost as much as 0.7% intraday, and finished lower by 0.39% like the Russell 2000 (-0.4%).

Huge losses in Boeing (BA 344.00, -25.06, -6.8%) and Johnson & Johnson (JNJ 127.70, -8.47, -6.2%) weighed on the Dow Jones Industrial Average (-1.0%), while weakness in technology stocks undercut the Nasdaq Composite (-0.8%).

Boeing was hit by a report from Reuters suggesting that the company may have misled the FAA about the safety of its 737 MAX based on instant messages between two employees in 2016. Johnson & Johnson disappointed investors after trace levels of asbestos found in some samples of baby powder prompted the company to recall 33,000 bottles.

American Express (AXP 116.76, -2.34, -2.0%) lost ground despite beating earnings estimates, but the financials sector (+0.2%) was undeterred. The defensive-oriented real estate (+1.0%), utilities (+0.4%), and consumer staples (+0.2%) sectors also finished higher, with the latter getting a lift from Coca-Cola (KO 54.78, +0.99, +1.8%) following its in-line results.


MoneyFM 89.3 FX Outlook (2 July 2018)

Vee speaks again with MONEY FM 89.3 this morning. He gives his thoughts on the first half of 2018 and what the second half of 2018 holds for FX. Hear what he thinks of the USD and Fed hikes, what’s next for the pound after coming under pressure for the past quarter and whether the weakness in Yuan will continue.


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EUR: The Next Leg Lower Begins


  • Catalonia remains a risk.
  • The Fed is determined to continue hiking and ECB is unlikely to start tapering anytime soon.
  • Technically, EUR/USD has failed at key resistance levels.

Political Risk

The deadline given by the Prime Minister of Spain Rajoy to Catalan President Carles Puigdemont to clarify his declaration of independence has come and gone. The response from Puigdemont remains vague as he calls for more “dialogue”. The central government now gives him till Thursday to change his stance on secession or face the consequences.

Puigdemont has, essentially, painted himself into a corner. Going ahead with the independence declaration will likely lead to the central government invoking Article 155 of the constitution and suspending the authority of the Catalan government. Backing away from the declaration will provoke the ire of his supporters and lead to the unraveling of his pro-independence coalition.

Whichever path he takes, the political situation remains uncertain and will continue to weigh on the EUR.

Monetary Policy Divergence

From what the Federal Reserve Chair, Janet Yellen, has been telling the market all along and as recent as over the weekend, the Fed is going to continue hiking at a gradual pace and there will be one hike before the year ends (most likely in the December policy meeting).

Key in her comments over the weekend was her view on the lower than expected inflation numbers that have been the surprising the market all year – “My best guess is that these soft readings will not persist, and with the ongoing strengthening of labour markets, I expect inflation to move higher next year.”

Although inflation has remained subdued (or possibly, due to this), economic numbers have continued to be good and stocks continue to trade well. S&P 500 continue to make all-time highs on a regular basis. As long as this remain so, the Fed is unlikely to diverge from their much advertised plan.

Contrast this with Draghi’s relatively dovish stance of warning that it will take time for inflation to pick up and as such, the ECB needs to be patient. With EUR/USD trading near the highs of 2017, the policymakers will need to tread carefully in signaling any change in stance for fear of triggering an unwanted strengthening of the currency. Read more here>>>

Is The EUR Retracement Over?

  • Market pricing for one more rate hike before year end is still hovering around 70% probability.
  • Risk of Catalonia declaring independence from Spain is higher after the referendum over the weekend.
  • Technically, EUR/USD has reached short term support.
  • The Dollar Index is also running up against short term resistance on the daily chart.

Reasons for a lower EUR

Having called for a lower EUR and with the short term targets met, what are the reasons that could lead to more weakness in the currency?

Underpriced Fed expectations

The dot plot from the previous Federal Reserve Board meeting on 20 September showed that most of the voters are still expecting one more rate hike before the end of 2017.

Janet Yellen, chair of the Board, last week warned that “It would be imprudent to keep monetary policy on hold until inflation is back to 2 percent” and the Fed “should also be wary of moving too gradually.” This is consistent with what the Fed has been trying to convey all this while i.e. barring drastically weaker than expected economic numbers, there will be one more rate hike in December.

Yet, market continues to underprice the probability of that rate hike (as shown below). Read more>>>

The Euro Is Facing Short-Term Resistance

  • Although Merkel’s party won the most votes in the elections, it is going to take a lot of time and negotiations for her to form a governing coalition
  • Market position is currently quite heavily long EUR (FXE) and short USD (UUP)
  • Technically, the EUR/USD is forming a short term top on the daily charts

Although exit polls show that Angela Merkel’s center-right Christian Democrat-led alliance has secured 33% of the overall votes, she is now faced with a daunting task of forming the next government as she does not have an outright majority and the leader of her coalition partner from the previous government, Martin Schulz of the Social Democrats, has declared that they will be going into opposition after garnering only 22% of the votes – their worst electoral result since 1949.

The rise of the Alternative für Deutschland ((AfD)) is particularly worrying as this is the first time that a far-right party has managed to win seats in the Bundestag since the immediate post-war period. In the previous election in 2013, the AfD could not even manage the minimum 5% required for a party to have any seats in the Bundestag but a surge in voter discontent over Merkel’s refugee policy has led to the party winning 13.5% of the votes this time round.

However the government is formed, the task of reaching a consensus to forge policies is all the more harder given that this is the first time since 1953 that six parties are poised to enter the Bundestag. Until a governing coalition is forged, political uncertainty remains and that is not something that a market likes. Read more here>>>