And so Trump does it again. He saw that the market was getting more nervous. He saw what happened to stock futures on Wednesday evening/Thursday morning when they collapsed overnight — the Dow was down better than 300 points soon after midnight. So he begins the process of tweeting — taking it all very slowly, teasing the markets, and teasing the South China Morning Post (SCMP), contradicting what was being reported and contradicting the building speculation about "failed meetings" even before there WAS a meeting.

He successfully helped to turn the futures around during the night to find them almost unchanged by 9:30 am yesterday morning. And then we get benign economic data — weaker CPI and weaker average hourly earnings — and that caused futures to rally just a bit more. As the opening bell rang the markets surged and then he "hits the golden buzzer" and BOOM! Algos out of control as they all ran each other over vying for the optimal spot. What was it that caused the commotion? What was it that took the algos to the point of no return?

This tweet! Simple, not difficult to understand and launched at precisely the exact moment to produce the biggest impact...

Notice what went on here. He announces a BIG DAY, he announces that THEY WANT TO MAKE A DEAL (contrary to what they had been saying all night), and then he puts himself in the driver's seat by saying ‘BUT DO I?" He then seals the deal with the fact that he is meeting the Vice Premier TOMORROW AT THE White House.... Did you get that? Tomorrow means FRIDAY – And this is where he ties it up again.

All night long we heard how the Vice Premier was leaving on Thursday, cutting his stay short, not attending the White House dinner, frustrated with the process and this is what had set the markets ablaze overnight. But when Donny conveniently tweeted out his news – the algos didn't know what to do, then blew up and sent the Dow up some 240 pts, the S&P up some 28 pts, Nasdaq up 78 pts and the Russell up 12 pts. I mean, you can't make this up!

Now again, the market is rallying on the idea that the Chinese may consider a "trade lite" deal suggesting that the market and investors WANT something. They realize they are not getting everything, but something would be fine. And again, that is what happened yesterday. The idea that Trump was meeting the Vice Premier on Friday (after he threatened to leave on Thursday) was seen as a positive.

So, after all the excitement, the markets calmed down a bit, backed off those early morning highs as they digested the news, with everyone remaining cautiously optimistic. Rumors that the White House is trying to roll out a currency pact as part of any preliminary deal was seen as positive — and overnight the Chinese announced that they may be willing to back off of state-owned interests in foreign banks (that headline is still unfolding). So the sense is that maybe the White House will suspend the tariff increases set for the 15th. By the end of the day the Dow was ahead by 150 pts or 0.57%, the S&P gained 18 pts or 0.64%, the Nasdaq was up 47 pts or 0.60% and the Russell added 6 pts or 0.40%.

Next up are earnings and this is going to be the new hurdle for the markets and investors. Was Delta (DAL) the canary in the coal mine? Strong 3rd qtr, - missed on top but beat on the bottom line. They returned $468 mil to shareholders thru divys and share buybacks and announced the 26th consecutive qtrly dividend, saw domestic, Atlantic and LATAM revenues surge, while Pacific revenues missed. And while they expect a strong 4th qtr – in the range of $1.20/$1.50 share – the current consensus expectations are for $1.51/share.

So THIS was the canary. Are we going to see CEOs and CFOs offer lower guidance going forward than what the street already expects for the 4th qtr and into 2020? (Of course, we are...) And that did not sit well with the algos. But right now, it's all about trade...Capisce?

Now the official earnings season kicks off on Oct. 15 with the release of the JP Morgan (JPM) results – the first DOW stock to report. Expectations call for $2.46/share. So stay tuned. Behind JPM will be BLK, GS, C, WFC, BAC, MS...

Overnight, the surge continued in Asia and is continuing in Europe... HOPE IS ALIVE and now on two fronts: 1. Trade and 2. BREXIT. Investors and markets are certainly breathing a sigh of relief over trade and look forward to today's meeting at the White House between Trump and He. Expect more trade news later today from the Rose Garden. The announcement today that the Chinese are buying more soybeans and more pork is a positive. But let's be real – THEY NEED THESE ITEMS... their atmosphere is a disaster. Who wants to eat any of the food they produce? Now, any deal or any part of a deal would be a positive as it will certainly delay the imposition of the next round of tariff increases. Japan + 1.15%, Hong Kong + 2.34%, China + 0.96% and ASX +0.91%.

In Europe, markets are also in rally mode with most centers up more than 1%. Irish PM Leo Varadkar (commit this name to memory as he appears to be playing a more high-profile role in this drama) announced that a BREXIT deal ‘could be clinched by the end of October to allow the UK to exit the European Union in an orderly manner'.

All kinds of meetings taking place – UK BREXIT Secretary Stevey Barclay is in talks with EU Chief BREXIT Negotiator Mikey Barnier right now and JPM chimes in and raises the odds of a deal by Oct. 31 from 5% to 50%. So, it's nothing but GOOD news around the world – (for the most part – see below — OIL). FTSE +0.23%, CAC 40 +1.09%, DAX +1.79%, EUROSTOXX +1.32%, SPAIN +1.80% and ITALY + 0.84%.

US futures are on FIRE... Dow up 248 pts, S&P's up 31, Nasdaq rising by 83 and the Russell is ahead by 20 pts all because Donny and He are lunching at the White House as they try to move the ball down the field and come to a "trade lite" deal — something that at least leaves the door open to further negotiations. It is clearly RISK ON — and the algos are having a party. Sell side liquidity has disappeared leaving a void in inline supply causing the surge...

The S&P has now exploded higher and this morning we can expect it to charge right thru resistance at 2950. Any positive news (more than we already have) will cause the algos to take the mkt right back to the century mark – 3000. So sit tight...

Oil — up by 1.5% as Iran announces that one of their tankers got attacked by a mystery missile off the coast of Saudi Arabia (not sure about you, but something stinks here). The tanker traveling off thru the Red Sea was apparently minding its own business and just cruising along when it suddenly got hit by a missile. The Saudis have nothing to say and the Iranians said this (now the implication WAS that the Saudi's are responsible, but the Iranians have dialed back on that accusation as of 7:20 am):

"Those behind the attack are responsible for the consequences of this dangerous adventure, including the dangerous environmental pollution caused."

And all this does is raise the temperature in an already hot region of the world. The surge in oil today takes it up 90 cts/barrel to $54.44. Again, nothing like it would have been 10 years ago. No one is nervous about supply, but they are anxious about how this could quickly spin out of control.

 

Warm Brownie a La Mode

You know when you've just had it and you need to eat something that makes you feel good? This is it.

Warm Brownies and a big scoop of vanilla Ice Cream - add some warm Hershey's chocolate sauce and crushed walnuts.

General Disclosures

Information and commentary provided by ButcherJoseph Asset Management, LLC (“BJAM”), are opinions and should not be construed as facts. The market commentary is for informational purposes only and should not be deemed as a solicitation to invest or increase investments in BJAM products or the products of BJAM affiliates. The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor. This report is not intended to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon. There can be no guarantee that any of the described objectives can be achieved. BJAM does not undertake to advise you of any change in its opinions or the information contained in this report. Past performance is not a guarantee of future results. Information provided from third parties was obtained from sources believed to be reliable, but no reservation or warranty is made as to its accuracy or completeness.

Different types of investments involve varying degrees of risk and there can be no assurance that any specific investment will be profitable. The price of any investment may rise or fall due to changes in the broad markets or changes in a company’s financial condition and may do so unpredictably. BJAM does not make any representation that any strategy will or is likely to achieve returns similar to those shown in any performance results that may be illustrated in this presentation. There is no assurance that a portfolio will achieve its investment objective.

Definitions and Indices

The S&P 500 Index is a stock market index based on the market capitalization of 500 leading companies publicly traded in the U.S. stock market, as determined by Standard & Poor’s.

UNLESS OTHERWISE NOTED, INDEX RETURNS REFLECT THE REINVESTMENT OF INCOME DIVIDENDS AND CAPITAL GAINS, IF ANY, BUT DO NOT REFLECT FEES, BROKERAGE COMMISSIONS OR OTHER EXPENSES OF INVESTING. INVESTORS CAN NOT MAKE DIRECT INVESTMENTS INTO ANY INDEX.

BJAM is an investment advisor registered in North Carolina and Arizona. Such registration does not imply a certain level of skill or training. BJAM’s advisory fee and risks are fully detailed in Part 2 of its Form ADV, available upon request.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD turns below 1.10 as market mood eases

EUR/USD has dropped below 1.10 as the market mood improves. Earlier, it hit three-week highs as the stock market crash and rush into bonds is raising the chances of the US Fed cutting rates. Further coronavirus headlines are awaited.

EUR/USD News

GBP/USD hits new 2020 low amid Brexit rhetoric, coronavirus headlines

GBP/USD has dipped below 1.2800, hitting a new 2020 low as concerns about a no-trade-deal Brexit are weighing on the pound. Modest recovery seen in USD during the American session keeps the bearish pressure intact.

GBP/USD News

XAU/USD tumbles near two-week’s lows, sub-$1600/oz

Gold has been dropping sharply this Friday while reaching the 200 SMA on the four-hour chart. XAU/USD bulls gave up as sellers took the market down sharply. The bears seem to be in charge and more down could potentially be expected. 

Gold News

WTI remains under pressure around $45.00

Nothing new around crude oil prices, with rising concerns on the Chinese COVID-19 and its potential impact on the economy and the demand for the commodity keeping traders’ sentiment well depressed.

Oil News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex Majors

Cryptocurrencies

Signatures