Senior Relationship Manager
Summary: Traders complain about dull markets - Options interestingly cheap
Good Morning
The Dow and the S&P could rise on Friday by 0.7 and 0.33%, the Nasdaq fell slightly by 0.06%. Banks were allowed to pay dividends and buy back shares again. Over the weekend there was little movement as rising corona cases in certain areas puts traders on edge and offsets he positive impact that comes from the US Infrastructure package.
The USD Index trades at 91.83. Bitcoin at 34.400 and US 10 year rates at 1.5290. Gold and Silver rose to 1782 and 27.15 and EURUSD fell to 1.1905.
Volatilitiy has fallen to rather low levels, the 1 month Vol in EURUSD trades at 5.07, GBPUSD at 5.72 and Silver has fallen to 25%. Traders are complaining about the lack of movement (compared to the swings last year, it is a little quiet), buying options to be set up for the occasional sharp move like we had in the Fed decision may be worthwhile.
Oil has risen to the highest level since Q3 18 and 75.77 is the next resistance.
Ole Hansens COT Report: The accelerated metal selling that followed the #FOMC meeting drove down #gold longs by 33% to 76k lots, a seven week low and #silver by 36% to 29k while the #platinum (-81%) returned to neutral. #Copper long cut to one-year low. Speculators cut the bullish #grains bets to a 9 month low in week to June 22 with biggest reduction in #soybean (-25%) and bean oil (-22%) followed by #corn. Bucking the trend was #wheat which flipped back to a small net long.
We are approaching a decent number of Futures and CFD expiries this week:
NGN1 will expire 28th June at 15:00 GMT.OJN1 will expire 29th June at 12:15 GMT.
HGN1, KEN1, PLN1, RRN1, SILN1, SIN1, ZCN1, ZLN1, ZMN1, ZSN1, ZWN1 will expire 29th June at 15:00 GMT.
HON1, RBN1, SBN1 will expire 30th June at 15:00
COPPERUSJUL21, CORNJUL21, GASOLINEUSJUL21, HEATINGOILJUL21, PLATINUMJUL21, SILVERJUL21, SOYBEANMEALJUL21, SOYBEANOILJUL21, SOYBEANSJUL21, SUGARNYJUL21, WHEATJUL21 will expire 28th June at 15:00 GMT.
OILUKAUG21 will expire 30th Jun at 15:00 GMT
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AI: The good, the bad, and the bubble
While a deep recession may not be iminent thanks to central bank policy, interest rates will have to stay high for longer, and this will be accompanied by volatility risk from the unwinding of bubbles, especially within AI.
Steen Jakobsen,
Chief Investment Officer
The emergence of advanced AI systems is by far the most surprising event this year, turning everything upside down, while risks and benefits are debated. AI will also become an arms race between the US and China.
Peter Garnry,
Head of Equity Strategy
As China navigates global fragmentation, its cycle of technology application, productivity enhancement, and growth is threatened by US breakthroughs in generative AI, limited computing power, and geopolitical tensions.
Redmond Wong,
Market Strategist
Japan’s expertise in semiconductors and robotic integration could be the foundation of AI dominance. Combining two of this year's themes, Japanese equities and artificial intelligence, brings a wave of opportunities.
Charu Chanana,
Market Strategist
The AI fever has turned the technology into a darling, pushing crypto further into no-man’s-land. There are striking similarities between AI and crypto, and if these are to come full circle, AI won't be spared for bubbles.
Mads Eberhardt,
Cryptocurrency Analyst
Stocks related to artificial intelligence (AI) have appeared on investors' radars. Expectations are high, but it may be necessary to consider how to get exposure to AI in a diversified way.
Hans Oudshoorn,
Trainer Academy
The USD is on its back foot as markets celebrate an eventual Fed rate peak and steady long US yields. The stakes are even higher for the Japanese yen if longer major sovereign yield curves have to price in economic acceleration.
John J. Hardy,
Head of FX Strategy
While commodities, broadly speaking, have faced some tough months, a partial reversal during June could signal that the asset class is getting back on its feet with energy holding up and precious metals with upside potential.
Ole S. Hansen,
Head of Commodity Strategy
As inflation remains high central banks face hard decisions about whether they should keep hiking interest rates or stop. Meanwhile, the rise of AI creates bubble-like conditions that only make the decision harder.
Althea Spinozzi,
Senior Fixed Income Strategist