Read on the Trading Floor - 27 Nov 2023
Today’s focus… is it time to reduce USD shorts, strong equity momentum post Thanksgiving and more…
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Macro Themes At Play
Theme 1 - Time for the USD to find some support?
Three of @HarksterHQ’s favourite daily reads (ING, Brent Donnelly and Steno Research) are pushing back against the the softer USD trend for tactical reasons through to outright fading its recent weakness
ING FX Daily - Don’t chase the dollar bear trend
Brent Donnelly - Tactical Considerations as Corp t+2 is a risk (or an opportunity) to a short USD short portfolio
Steno Signals #75 - THE 2007/2008 PLAYBOOK IS USEFUL AGAIN. USD is oversold, ECB will cut aggressively more than the Fed in 2024 and relative growth/inflation will support the USD > EUR ...
but then for those with a shorter investment horizon, after an explosive US Equity market outperformance, Asset managers can be expected to have excess USD to share to rebalance portfolios come Thursday.
Theme 2 - 2022 vs 2023 Thanksgiving SPX setup
Another of our favourite reads here @HarksterHQ is Nautilus Research's Substack. Their most recent publication compares the SPX setup today to Thanksgiving in 2022.
It's a powerful chart and setup, with the full piece (Comparing Thanksgiving Set-ups) complete with data rich tables.
Furthermore, WSJ is indicating a wave of cash still sits on the sidelines, DB is calling for 5100 next year (8.5% higher than the 4700 median forecast off 33 strategists polled by Reuters),
latest Substack demonstrates the intrinsic strength of the US household post Covid whilst Black Friday spending once again demonstrated the underlying strength of the US consumer.WSJ - Investors Are Hungry for Risk—and Holding Record Cash Sums
BofA - The Bull Case for US Stocks
Reuters - Deutsche Bank sees 12% upside to S&P 500 through 2024-end
Reuters Poll - S&P 500 to see small gain in 2024 as US economic risks rise
Claudia Sahm - Most Americans are better off financially now than before the pandemic
WSJ - Black Friday Spending Was Strong. How People Pay for Gifts Is Upending Retailers.
Theme 3 - The Fed speaks...
Quiet start to the week, but plenty of Fed speak on the docket ahead of their blackout window. If he wishes, Powell has the chance to change market pricing (for more on the week ahead pls see today's The Morning Hark - Week Ahead Preview).
Elsewhere, Lagarde and Bailey remain on Team H4L!
Econostream - ECB’s Lagarde: Medium-Term Inflation Outlook Remains Uncertain
Bloomberg - UK Interest Rate Cuts Unlikely in ‘Foreseeable Future,’ BOE's Bailey Suggests
Source Bloomberg
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