Demand Destruction and Excessive Negative Sentiment | Morning Express | 4/25/22
Posted: April 25, 2022, 8:47 a.m.
S&P trading into a large area of support as negative sentiment becomes excessive.
A massive week of earnings ahead, with big tech leadership front and center.
Gold weekly back to 2011 highlighting the December 2013 bottom.
USD/CNH strengthens and pressures commodities. Resistance overhead?
- Do not miss our Special Report drawing parallels today to the post-GFC action, 2013-2014 taper, and the Chinese Yuan being the straw that broke the camel’s back in 2015.
Get out your 2015 playbook; equity benchmarks are right in the thick of an August 2015 type selloff. In Friday’s Morning Express, we noted the U.S. Dollar had its strongest week against the Chinese Yuan (or Renminbi) since the week of August 10, 2015. Of course, this was not a one-week event, but the Yuan’s demise during that week in 2015 was merely one domino amid a chain years in the making. First and foremost, we believe that market themes that once took years to play out can now unfold in half the time or less. For instance, the S&P topped in October 2007 due to the Great Financial Crisis and did not set a new record high until April 2013, five and a half years. In 2020, the S&P topped in February and did not set a new record high until August, only six months. Continue reading here, chart deck included.
- The Federal Reserve is in blackout period ahead of next Wednesday’s policy meeting.
- Huge week of earnings, the biggest. Coca-Cola beat this morning. UPS, Microsoft, Apple, and more tomorrow. (calendar above)
- China leads global risk-assets lower. Shanghai enters fourth week of lockdowns and fear mounts Beijing will follow after mass testing begins. Panic buying at stores to prepare. Shanghai Composite -5.13% and Hang Seng -3.73%.
- U.S. Dollar gains 1% versus Chinese Yuan today, highest since November 2020
- Energies and Metals lead commodities on China demand fears. We will reiterate our belief that China is manufacturing and exporting deflation with the plan to advantageously buy lower prices.
- Economic calendar quiet, German Ifo Business Climate and sentiment data beats. Business Expectations (6 months out) stabilizes.
- U.S. Secretary of State Blinken and Defense Secretary Austin in Ukraine for highest-level visit since Russia invaded. U.S. promises $713 million in aid for Ukraine in allied countries.
- Developing: Twitter plans to accept Elon Musk’s bid at $54.20.
- French President Macron muscles out far-right Le Pen, 59-41, to win reelection.
E-mini S&P (June) / NQ (June)
S&P, yesterday’s close: Settled at 4267.25, down 123.25 on Friday and 120.25 on the week
NQ, yesterday’s close: Settled at 13,353.50, down 374.75 on Friday and 540.25 on the week
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NQ (June)
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Crude Oil (June)
Yesterday’s close: Settled at 102.07, down 1.72 on Friday and 4.31 on the week
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Gold (June) / Silver (May)
Gold, yesterday’s close: Settled at 1934, down 13.9 on Friday and 40.6 on the week
Silver, yesterday’s close: Settled at 24.259, down 0.362 on Friday and 1.441 on the week
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Silver (May)
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