Carney strengthened the GBP after stating UK indebtedness not a threat

Market Review

The markets initiated some decent volatility during yesterday’s session as the final US GDP reading was released a lot worse than expected. With this being the third and last reading of the Q1 number there were no expectations of huge revisions, and with -2.9% vs -1.8% traders were caught out, most notably because the Durable Goods numbers also was posted worse than expected which meant there was expectations of a continued sell off. At Amplify we managed to remain slightly bullish as the GDP number ultimately is backward looking and says very little about the current conditions. As the data on Monday showed, parts of the economy is currently doing better than before the crisis hit in 2008. The strategy entry in the EURUSD was obtained, and we assume some traders would have been caught out on it, though it was scaled in and ultimately we adversely managed to scrape together a few ticks of green, whilst the US10Y strategy was stopped by a couple of ticks.

Today's Fundamental View

We woke up this morning to read the US state attorney general Eric Schneiderman, who graduated from Harvard the same year as JP Morgan CEO Jamie Dimon, had issued a lawsuit on the British investment bank Barclays for favouring high speed traders through its “dark pool” trading venue. Basically what this means is that the state attorney believes Barclays has done something wrong by letting HFT’s take large and quick positions without actually moving the market and not disclosing its actual exposure to other traders and providing them with anonymity, giving them an unfair advantage. Barclays has said they take the allegations very serious, though thinking that the bank that is most famous for having sponsored Premier League and only ranks 8 th in the world to be the only one guilty in doing this falls on its own bad reasoning. This morning Mark Carney has strengthened Sterling as the BoE does not believe the indebtedness of the country is not an immediate threat to the economy. This afternoon should have some decent movement for a couple of hours after the release of jobless claims and personal spending, though we do not believe it will be to any of the same extent we witnessed yesterday. The S&P has been relentless and is keeping its recent gains, regardless of data. Currently our stance is that the EURUSD will not be able to breach the upside and look at the recent upside as a breath before dipping back under. The high of June and 1.37 handle will hold for now and to stick our neck out we predict there is a good possibility the high this summer has already been set. On its annual conference yesterday we cannot say we are notably impressed by what Google provided for spectators. Though we are not disappointed by any means; connecting your TV to a box (read: PC) is something many of us has done since the mid 2000’s, and the recent moves by the large companies is just a way of catching up with and capitalize on what have been done with a $5 cable for years. May we suggest for the next conference the release of a keyboard with a build in PC which can wirelessly connect to the TV? Google Fit, smart-watches and Android for cars is hardly news for anyone with imagination, but we are pleased to see corporate catching up. Today’s strategy will be long equities, crude and the dollar, while we will continue to sell treasuries.

Alternative View

Hawkish monetary comment speakers from the Eurozone may adversely affect our strategies.