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CIO’S WEEK AHEAD: Can risk assets go lower?
TrackRecord Asia’s CIO, Phan Vee Leung shares his weekly views on the market macro outlook
18 Jul 2022
What happened last week? & What do I think of the Week Ahead?
Summary:
One interesting thing that we made note of in some of our daily commentaries last week was that although US CPI data surprised to the upside shockingly, (with a selloff in risk assets typically expected after), the markets recoup the losses it made on the day itself and since then, it has continued to trade higher. That’s likely a positive sign that liquidation by investors is over and short-term speculative traders are likely to be short of the market now after the number and if there’s no bad news, the market is likely to creep higher and squeeze these guys for a change which is characteristic of bear markets. When things become very obvious that it should go down to the downside, it tends to squeeze people who come late to the party. So, we are kind of seeing that right now, risk assets are trading stronger. Nasdaq is trading quite positively, Bitcoin is trading above 22,000, Ether is almost at 1,500 now. So we’re seeing a lot of short covering after long periods of bearish news and bearish price action. We could be in a phase of the retracement, so keep an eye on this, keep positioning to the size that is commensurate with your capital and do not over leverage as volatility remains high.
Noteworthy Earnings this Week
Monday: International Business Machines (IBM), Bank of America (BAC), Goldman Sachs Group (GS), Charles Schwab (SCHW)
Tuesday: Johnson & Johnson (JNJ), Netflix (NFLX), Interactive Brokers Group (IBKR), Lockheed Martin (LMT), Volvo (VLVLY)
Wednesday: ASML Holding (ASML), Abbott Laboratories (ABT), Nasdaq (NDAQ), United Airlines Holdings (UAL)
Thursday: Alaska Air Group (ALK), American Airlines Group (AAL), AT&T (T), Dow (DOW), Nokia (NOK)
Friday: Twitter (TWTR), American Express (AXP), Verizon Communications (VZ)
Trades in our Portfolio
The following is the list of our current biases on positions.
Currencies Bias
EUR – EUR tested the support at parity and failed to hold below that level. As such, it is recovering from the lows, but the reasons for it to go much lower remains. Stay short and look to add to shorts when momentum on this retracement wanes.
Interest Rates
None.
Equities
Neutral – Stay cautious.
Trade Opportunities of the Week
Ether/USD (ETH/USD) Daily Candle & Ichimoku Cloud Char
Source: tradingview.com
Although there’s hardly any good news in the cryptocurrency sector these days, the ETH has managed to continue its recovery from the lows, and it is now attempting to break above the daily Ichimoku Cloud resistance. The rally of recent days is fueled by news that the Ethereum Merge (where the network will change from the energy-intensive Proof of Work consensus mechanism to a more energy-efficient Proof of Stake system) will take place in September. It is still early days yet, but if ETH/USD should trade above the daily Ichimoku Cloud decisively, a new uptrend is likely to begin.
Events to Watch
| Monday (18 Jul 2022) | Prev | Exp | Remarks | ||
|---|---|---|---|---|---|
| 6:45 AM | NZD | Inflation Rate QoQ Q2 | 1.8% | 1.5% | |
| 5:00 PM | GBP | BoE Saunders Speech | |||
| 8:15 PM | CAD | Housing Starts JUN | 287.3K | 266.6K | |
| 10:00 PM | USD | NAHB Housing Market Index JUL | 67 | 66 | |
| AUD | HIA New Home Sales MoM JUN | ||||
| CNY | FDI (YTD) YoY JUN | 17.3% | |||
| Tuesday (19 Jul 2022) | Prev | Exp | Remarks | ||
| 4:00 AM | USD | Net Long-term TIC Flows MAY | $87.7B | ||
| 9:30 AM | AUD | RBA Meeting Minutes | |||
| 10:00 AM | AUD | RBA Bullock Speech | |||
| 2:00 PM | CHF | Balance of Trade JUN | CHF2.0B | ||
| 2:00 PM | GBP | Unemployment Rate MAY | 3.8% | 3.8% | |
| 2:00 PM | GBP | Claimant Count Change JUN | -19.7K | ||
| 2:00 PM | GBP | Average Earnings incl. Bonus (3Mo/Yr) MAY | 6.8% | 6.9% | |
| 2:00 PM | GBP | Employment Change APR | 177K | 170K | |
| 5:00 PM | EA | Construction Output YoY MAY | 3% | ||
| 5:00 PM | EA | Inflation Rate YoY Final JUN | 8.1% | 8.6% | |
| 8:30 PM | USD | Housing Starts JUN | 1.549M | 1.585M | |
| 8:30 PM | USD | Building Permits JUN | 1.695M | 1.65M | |
| 8:30 PM | USD | Housing Starts MoM JUN | -14.4% | ||
| 8:30 PM | USD | Building Permits MoM JUN | -7% | ||
| 11:00 PM | GBP | BoE Gov Bailey Speech | |||
| Wednesday (20 Jul 2022) | Prev | Exp | Remarks | ||
| 2:35 AM | USD | Fed Brainard Speech | |||
| 4:30 AM | USD | API Crude Oil Stock Change 15/JUL | 4.762M | ||
| 7:10 AM | AUD | RBA Gov Lowe Speech | |||
| 9:15 AM | CNY | Loan Prime Rate 1Y | 3.7% | ||
| 9:15 AM | CNY | Loan Prime Rate 5Y JUL | 4.45% | ||
| 2:00 PM | DEM | PPI MoM JUN | 1.6% | 1.1% | |
| 2:00 PM | GBP | Inflation Rate YoY JUN | 9.1% | 9.2% | |
| 2:00 PM | GBP | Inflation Rate MoM JUN | 0.7% | 0.7% | |
| 2:00 PM | GBP | Core Inflation Rate YoY JUN | 5.9% | 5.8% | |
| 8:30 PM | CAD | Inflation Rate YoY JUN | 7.7% | 8.3% | |
| 8:30 PM | CAD | Core Inflation Rate YoY JUN | 6.1% | ||
| 8:30 PM | CAD | Inflation Rate MoM JUN | 1.4% | 0.9% | |
| 10:00 PM | EA | Consumer Confidence Flash JUL | -23.6 | -24.5 | |
| 10:00 PM | USD | Existing Home Sales JUN | 5.41M | 5.38M | |
| 10:30 PM | USD | EIA Gasoline Stocks Change 15/JUL | 5.825M | ||
| 10:30 PM | USD | EIA Crude Oil Stocks Change 15/JUL | 3.254M | ||
| Thursday (21 Jul 2022) | Prev | Exp | Remarks | ||
| 6:45 AM | NZD | Balance of Trade JUN | NZ$263M | ||
| 7:50 AM | JPY | Balance of Trade JUN | ¥-2384.7B | ¥-1509.7B | |
| 7:50 AM | JPY | Exports YoY JUN | 15.8% | 17.5% | |
| 11:00 AM | JPY | BoJ Interest Rate Decision | -0.1% | -0.1% | |
| 11:00 AM | JPY | BoJ Quarterly Outlook Report | |||
| 7:00 PM | TRY | TCMB Interest Rate Decision | 14% | ||
| 8:15 PM | EA | ECB Interest Rate Decision | 0% | 0.25% | |
| 8:15 PM | EA | Deposit Facility Rate | -0.5% | -0.25% | |
| 8:30 PM | USD | Initial Jobless Claims 16/JUL | 244K | 240K | |
| 8:30 PM | USD | Philadelphia Fed Manufacturing Index JUL | -3.3 | 0 | |
| 8:45 PM | EA | ECB Press Conference | |||
| 10:15 PM | EA | ECB President Lagarde Speech | |||
| Friday (22 Jul 2022) | Prev | Exp | Remarks | ||
| 7:00 AM | AUD | S&P Global Manufacturing PMI Flash JUL | 56.2 | ||
| 7:00 AM | AUD | S&P Global Services PMI Flash JUL | 52.6 | ||
| 7:01 AM | GBP | Gfk Consumer Confidence JUL | -41 | -42 | |
| 7:30 AM | JPY | Inflation Rate YoY JUN | 2.5% | ||
| 7:30 AM | JPY | Core Inflation Rate YoY JUN | 2.1% | 2.2% | |
| 8:30 AM | JPY | Jibun Bank Manufacturing PMI Flash JUL | 52.7 | ||
| 8:30 AM | JPY | Jibun Bank Services PMI Flash JUL | 54.2 | ||
| 2:00 PM | GBP | Retail Sales MoM JUN | -0.5% | -0.4% | |
| 2:00 PM | GBP | Retail Sales ex Fuel MoM JUN | -0.7% | -0.4% | |
| 2:00 PM | GBP | Retail Sales YoY JUN | -4.7% | -5.3% | |
| 3:30 PM | DEM | S&P Global Manufacturing PMI Flash JUL | 52 | 51 | |
| 3:30 PM | DEM | S&P Global Services PMI Flash JUL | 52.4 | 51.3 | |
| 4:00 PM | EA | S&P Global Manufacturing PMI Flash JUL | 52.1 | 51 | |
| 4:00 PM | EA | S&P Global Services PMI Flash JUL | 53 | 52 | |
| 4:30 PM | GBP | S&P Global/CIPS Manufacturing PMI Flash JUL | 52.8 | 52 | |
| 4:30 PM | GBP | S&P Global/CIPS UK Services PMI Flash JUL | 54.3 | 53.1 | |
| 8:30 PM | CAD | Retail Sales Ex Autos MoM MAY | 1.3% | ||
| 8:30 PM | CAD | Retail Sales MoM MAY | 0.9% | 1.6% | |
| 9:45 PM | USD | S&P Global Manufacturing PMI Flash JUL | 52.7 | 52 | |
| 9:45 PM | USD | S&P Global Composite PMI Flash JUL | 52.3 | ||
| 9:45 PM | USD | S&P Global Services PMI Flash JUL | 52.7 | 52.6 | |
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.
