Indices trading signals

US dollar index (DXY) trading ideaAfter Tuesday's sharp strengthening caused by the rhetoric of Jerome Powell's speech to the U.S. Congress, the DXY slowed its recovery on Thursday, but still remains just below the 106.00 level.Investors are in no hurry to form new positions, preferring to wait for Friday's release of the U.S. labor market report.The Fed chief confirmed the regulator's readiness to continue tightening financial conditions and did not rule out a 50 basis points rate hike in March. Jerome Powell called a rate hike the most effective way to combat high inflation, which, while beginning to slow down, is still well above the central bank's targets.Jerome Powell again urged market participants to refrain from speculations about the premature end of the Fed's tightening policy. Moreover, the head of the regulator said that economic indicators will allow the rate to rise above the initially indicated levels and leave it at its maximum values for longer than planned. Markets have revised up their forecasts for a rate hike from 5.25-5.50% to 5.75-6.0%.Yesterday the dollar was supported by the U.S. labor market report from ADP. According to the data, employment rose by 242,000 in February against a forecast of 200,000.The Non-farm Payrolls will be released tomorrow at 13:30 GMT, which also promises not to disappoint the investors, and hence the dollar index will strengthen its positions against other indexes.We suggest placing a pending order at DXY:Buy-stop 105.60 take-profit 107.00 stop-loss ...

February 21, 2023 dollar index (DXY) trading ideaThe dollar index has again moved into the "green" zone and consolidated above the level of 104.00. Buyers managed to intercept the initiative from the sellers, and DXY is recovering to last Thursday's local high at 104.59.In Forex, after yesterday's holiday, volatility of currency pairs returns. Traders are waiting for business activity indexes today and tomorrow (19:00 GMT) for the Fed meeting minutes publication, from which they will try to understand the regulator's monetary policy course prospects.The "hawkish" comments from FOMC members coupled with strong economic data suggest a continuation of the monetary restriction cycle. It is likely that rates will be raised to 5.5% and remain at that level until the end of 2024.The 10-year Treasury yield is up to 3.85%, which is not bad for the Dollar. If today's statistics match forecasts, the DXY has an additional support factor. Our trading plan:Buy-stop 104.10 Take-profit 106.00 stop-loss ...

The world economy is constantly changing. In December 2022 we were forecasted a terrible recession. But in early 2023, the economic data says otherwise: the markets have taken off and investors are looking positively into the future.What's Happening to the U.S. EconomyLet's start with the US. The U.S. economy is in serious turmoil. Take a look at the S&P 500 Index since the beginning of the year. Do you see this constant up and down movement? That's because investors have stopped believing in the Fed. And they think the Central Bank won't keep monetary policy tight. But let's see:The U.S. interest rate is 4.5-4.75%. In January, the markets expected it not to rise beyond 5%.But in January, inflation was already slowing not as much as experts had expected. That said, demand in the U.S. continues to rise. So the American consumer does not suffer from high prices. Especially since the U.S. has the strongest labor market in 60 years.The latest macro data show that the Fed has no reason to slow down its policy. So a rise in the U.S. market is premature.We predict that the Fed's fight against inflation will drag on, because price increases are steady. So the Fed rate will get to 5.25-5.5% and stop there. And at the same time, the regulator will drive the U.S. economy into recession. Otherwise, inflation in the U.S. will not be stopped. Most likely in March at the Fed meeting, officials will be tough. And then the markets will come to their senses.What will happen to the dollar in 2023.The dollar itself will be strong. Tough Fed action will keep the DXY near 100 points. It will be difficult to rise above the highs of September, as the policies of other central banks are getting tougher than those of the United States. Just look at the changes in Japan, where the era of super easy money is coming to an end. And the ECB's policy is also tough. So let's talk about the euro area.What's happening to Europe's economyEurope's problems are similar to those in the U.S., only the inflation rate in the Union is much higher. Investors and officials are happy to see that price growth in the EU is slowing rapidly: in October, it was 10.6%, but now it's 8.5%.Eurozone industrial production fell 1.1% in December 2022. The economy is slowing down amid high inflation, which is exactly what the ECB is fighting.The regulator raised interest rates by 0.5% in early February. The same increase is planned for March. And even then the rate will not stop rising. Such statements from the ECB have been trying to dampen market optimism. Where is the positivity coming from? Recession is likely to be avoided: the energy crisis is gone and the supply chain is recovering.Since the beginning of the year, euro zone blue chips have been rising as strongly as the U.S. market. But inflation is still high and monetary policy is tight. So it's too early to rejoice.In addition, the energy crisis can come back to the EU at any time. Because Russia is cutting oil production and OPEC is not going to increase production. Prices will go up - Goldman Sachs predicts oil at $105.What will happen to the euro in 2023The European currency looks stronger than the American one. Exactly because the ECB policy now looks tougher than the Fed actions. Which we have already talked about. Now let's move on to another global economy, China.What's going on with China's economyThere are 2 main topics of conversation in China right now: the opening of the economy after covid restrictions and tensions with the U.S.China has officially "decisively defeated" COVID. So restrictions in the Celestial Empire should no longer stifle production and disrupt supply chains. China's opening promises to be massive. The UN and IMF expect 4.8% growth, while Morgan Stanley expects 5.7%.During the lockdowns, the Chinese have accumulated the money to unleash demand. Household deposits exceed 100% of last year's GDP, The Economist noted. Inflation in China rose to 2.1% in January, showing a pickup in demand.Markets are counting on China to pull the entire global economy up with it. On its own, China has a chance to take off - the covid shackles will fall after all. But external pressures could stifle growth.High inflation in the U.S. forces the Fed to keep rates high in the economy. And that means business activity will slow against this backdrop, and so will demand for Chinese goods.We predict that the Chinese central bank may be stiff in its policy. The population has large savings, demand for exports is declining, and inflation is rising. And because of this, China's market growth may slow down. China is now highly dependent on Western demand and it is the main beacon for the Celestial market.What will happen to the yuan in 2023The yuan is also a headache and uncertainty. Will China be able to successfully open up? Will there be a global recession? It is still unclear how China will survive U.S. restrictions. The decline in trade with the U.S. is negative for the renminbi.But a big positive could be the use of the RMB in international trade. First of all oil. The more countries move away from the dollar and euro to the yuan, the stronger it will be.In the near future the yuan is unlikely to strengthen - there is nothing to strengthen it on. Even it will gradually decline: demand for Chinese goods is decreasing and geopolitical tensions are growing.World economic outlook for 2023The outlook for the global economy is not good. Growth is slowing - the problems are starting in the West and dragging the East with them. After all, economies are still very closely integrated, no matter what political slogans about the "polarity" of the world say.Markets behave ambiguously. And at such moments, distortions and inefficiencies appear - someone doesn't know something, someone doesn't understand something. You can make money or lose money on this.We make forecasts because we are constantly watching macroeconomics and market data. Don't take them as a signal to act, but as the opinion of our team. But don't forget - look at the economy and markets more broadly, don't let short-term fluctuations distort your perception and your ...

Today we want to look at predictions from a slightly different angle - who should we trust when it comes to predictions of the future? Who was right in their predictions for 2022 and who was totally wrong? Let's find out!Traditionally, let's start with Wall Street.What did the investment houses forecast for 2022?By the end of 2021, the value of the S&P500 index reached 4,800 points. The investment houses said the markets would continue to rise.The investment banks' forecasts for the S&P 500 index for 2022 were as follows:The index ended up down 1,000 points for the year, a drop of more than 20 per cent.Only two banks were "toxic" pessimists: Bank of America and Morgan Stanley.They did not guess the magnitude of the fall. But at least they pointed in a downward direction. Morgan Stanley was the closest to the truth out of all the investment houses.What is the outlook for banks in 2023?What is BANK OF AMERICA's forecast for 2023The main shock of 2023 is a recession. Bank of America strategists believe that for the US, the Eurozone and the UK a recession is "almost inevitable". The rest of the world, apart from China, will also weaken. In the US, the start of a "moderate recession" is expected in the first half of the year. However, as Bank of America writes, "there is a risk that it will start later". The bank strategists thus expect the first half of the year to be good for bond investments and the second half to be interesting for equities. However, this is as far as I understand, if the recession is not delayed, but starts in the first half of the year.With China it is different - it will wake up from covid hibernation. But very unevenly. Most restrictions will not be lifted until the second half of the year. Chinese equities are likely to strengthen.What about the S&P? Analysts at the bank expect it to end 2023 at 4,000. That is roughly where it is now...US rates are expected to fall by the end of 2023 - both two-year and ten-year treasuries should end the year at 3.25%. The industries which suffered from rising rates in 2022 could benefit in 2023.After a historically bad year for industrial metals in 2022, cyclical and long-term factors will lead to higher metals prices in 2023, with copper prices rising by around 20%!!!Oil, according to Bank of America estimates, will also remain high. Factors that will contribute to this: Russian sanctions (I wonder what they mean by "Russian sanctions" - sanctions against Russian oil or our retaliatory sanctions?), low oil reserves, China opening up and OPEC ready to cut production if demand weakens. The bottom line is that with all these factors, Brent crude will average $100/bbl during 2023 and rise to $110/bbl in the second half of the year.Long: 30-year Treasuries, Chinese stocks, gold and silver, bonds, US Small cap, European banks.Short: Dollar, US technology sector, private equity.What is MORGAN STANLEY's forecast for 2023So, the bank's strategists write: "The general consensus is that corporate profits will start to collapse in early 2023, followed by the stock market. But the economy has proved too resilient". So Morgan Stanley expects earnings to fall slowly - to spite the bears.In fact they repeat the forecast of Bank of America - they expect a delay in the start of the recession until the second half of the year.Attitudes towards mega-cap stocks are sceptical. Here's what they write: "At their peak in 2000, the 5 largest tech stocks accounted for 20% of the S&P500 index. These were Microsoft, Cisco Systems, Nokia, Intel and IBM. These same 5 stocks bottomed out 5 years later and already accounted for 5% of the index.At their peak in 2022, the top 5 companies accounted for 25% of the S&P500. Apple, Microsoft, Google, Amazon and Tesla. But are they heading towards 5% of the index now?"Markets underestimate the risk of recession, stocks could fall another 22%.By the end of 2023, expect the S&P 500 to be at 3900 - even lower than its current value.Like Bank of America, predict a rise in Chinese equities. Expect global GDP growth to slow in 2023 as central banks tighten inflationary pressures. The exception is China, where the spring 2023 opening should lead to a significant recovery in economic activity in H2 2023.What did the Wall Street Gurus predict for 2022?Many of them said a correction in the stock market was inevitable. But there were those who were wrong.For example, Buffett's associate Charlie Munger was betting on Alibaba. Those who followed Munger were clearly wrong.Ray Dalio also bet on China. He also advised to get rid of cache. Wrong too, in fact.On the other hand, his reasoning was quite lengthy, which is hard to pin down. For example, he did advise buying inflation-linked bonds.Larry Williams is another prediction outsider. He is a famous trader with 60 years of trading experience. He created a technical indicator, Williams %R, which is used to estimate the overbought and oversold state of the market. A cobbler without boots - he could not estimate the overbought market.Said that "All markets will rise and be higher than at the beginning of the year, but gold doesn't stand a chance".Who predicted the 2022 market?Jim Rogers predicted the problems of 2022Jim Rogers is Soros' former hedge fund partner Quantum. What did Rogers say?He said - verbatim - "something bad is going to happen, but I'm not selling anything yet".Rogers warned that the US market had actually been rising since 2009. It is the longest growth in US history. But the market can't grow forever, which means there must be a rate hike and a downturn in 2022.Silver, though, has been falling in value for most of the year... That said, it's unclear exactly when Rogers was going to buy silver... Perhaps in this first half of the year's downturn.In addition to silver, Jim recommended investing in agriculture. What does he predict for 2023?Recession, debt crisis, US-European disputes due to energy shortages. Rogers also does not believe in price ceilings and embargoes and believes that Europe will still continue to buy oil and gas from Russia - just in a grey area.Mark Mobius is another soothsayer of the yearPredicted cryptocurrencies falling in 2022, increased tensions between the US and China and lower markets in general"Expect the market to decline and don't panic," he saidHe also said that India would become the new China.Mark Mobius - worked for over 30 years at Franklin Templeton Investments, specialising in emerging markets - including Russia. He was even an independent director of LUKOIL. In 2018, he founded his own company.What does he predict for the year 2023A word on crypto. Bitcoin, according to Mobius, could collapse 40% to $10,000 in 2023."With higher interest rates, the appeal of owning or buying bitcoins or other cryptocurrencies becomes less attractive because simply owning the coin does not generate interest," Mobius said."Of course, there have been a few offers with interest rates of 5% or higher for crypto deposits, but many of these companies offering such rates have gone bankrupt in part because of FTX. As these losses grow, people are wary of holding cryptocurrency for the sake of interest."He is also an advocate of investing in India. He believes it is the Indian equity market that is most interesting in 2023.Who else has guessed?Saxo Bank with their crazy forecasts have hit the bullseye this year. Much of their shocking predictions have come true. They predicted a weakening of the ESG agenda, a drop in Facebook and other mammoth quotes, high inflation, weakening of ties between China and the US, and a new Cold War.We already talked about what they predicted for 2023 in one of the videos.The Rothschilds also got it right with their magazine The Economist. Remember the weird cover showing bitcoin and other assets falling down the rabbit hole. Now let's take a closer look at their ...

The annual compensation of CEOs in the United States is breaking records, despite a shortage of workers and inflation. According to MyLogIQ (a provider of analytical products of the U.S. Securities and Exchange Commission), the median salary of executives from the S&P 500 companies reached $14.2 million last year. The salary growth of the majority of company executives was at least 11%.Half of the companies also said that the salary of ordinary employees increased by 3.1% last year, and a third of the companies reported that employee compensation, on the contrary, decreased between 2020 and ...

The past year ended very successfully for the American market: the S&P 500 rose by 26.9%, although initially a more modest increase was expected. So, our optimistic (!) scenario included an increase in the broad market index to only 10%. However, the US stock markets got off to a good start and remained on top with the support of the adoption of infrastructure reform. The economic recovery also turned out to be more active than we expected, and this helped companies to increase revenue and profit more intensively. At the same time, the development of all these trends contributed to the acceleration of inflation, which went far beyond the expectations of the Fed, the market and our forecasts. It was inflation that became the most discussed topic last year and will absolutely remain at the top of the agenda in the first half of 2022.To bring inflation under control, the Fed thought about reducing the balance sheet only at the beginning of this year: even in December 2021, there was no talk about it. The reduction of the balance sheet, combined with a sharper than originally planned increase in rates, can act as a reliable way to curb inflation expectations. These expectations are formed mainly on stock exchanges, which excludes their negative impact on the economy in general and on the labor market in particular. A steady positive trend in the labor market is indicated by data for October, when the number of open vacancies reached a record 11.03 million, 1.5 times exceeding the number of applicants. This ratio was last observed 50 years ago. Together with an increase in logistics efficiency, the restoration of production capacities and the gradual opening of the economy, this will lead to a gradual decrease in inflation. Of course, we have repeatedly talked about the upcoming opening of the economy after the pandemic during the second half of 2021, but this event is delayed due to the appearance of new COVID-19 strains. And yet, the longer the pandemic continues, the closer its end is.After a negative start to the year for most securities in the technology sector and a general correction, investors should consider closing hedging positions that I advised opening at the end of last year. Now is the time to buy a wide range of stocks with a focus on "value" and "quality" companies. The intensive growth of the economy serves as the basis for optimistic expectations regarding revenue and profit. That is why the upcoming reporting season is the strongest driver of the growth of quotations of representatives of the real sector of the economy. Of course, there is also a trend to reduce the cash flows of companies, since there is no effect of a low base and economic growth begins to slow down. However, it is predicted that the S&P 500 companies will increase sales by almost 15%, and their earnings per share will increase by 21.5%. Among the leaders will be the energy, raw materials and industrial sectors, as well as the segment of secondary necessities. The momentum for an upward movement in their quotes will be provided by strong results for the fourth quarter and optimistic forecasts for January-March. Separately, I would like to note the financial sector, which will not be able to demonstrate a record increase in revenue and profit, but industry forecasts for 2022 may become one of the most optimistic, taking into account the plans of the Federal Reserve to actively raise the key ...

The year 2022 on world markets will largely be determined by the tightening of monetary policy in the United States, and the first week of the new year confirmed this. The minutes of the Fed's December meeting published last week showed a significant tightening of the position of the regulator's representatives – Fed members believe that the rate can be raised as early as March, and also see a faster reduction in the balance sheet as appropriate. Representatives of the regulator believe that the current economic conditions are already in many ways conducive to tightening the labor market, some even noted the recovery of the labor market already sufficient for such actions, although the majority still expects further improvement in the labor situation. Against this background, it is worth noting the publication of December labor data in the United States, which came out ambiguous. On the one hand, employment in December increased by only 200 thousand. The Bloomberg consensus forecast assumed an employment growth of 450 thousand, and the actual growth rate of the indicator was the lowest since the beginning of 2021. Nevertheless, in many respects such weak employment growth is explained by seasonal adjustment, and the unemployment rate in December fell more than expected. Thus, the indicator has updated the next lows since the beginning of the pandemic, dropping to 3.90% against the expected 4.10%. The unemployment rate continues to approach a historic low of 3.40%, and labor statistics have further increased fears in the market of an imminent tightening of the PREP in the United States. As a result, on Friday, the yields of ten-year US treasuries at the moment exceeded 1.80% per annum - the maximum since the beginning of the pandemic. Today they have returned to these levels again.This week, the dynamics in the market will continue to be determined by expectations for the actions of regulators - investors will follow the statements of representatives of the Fed and the ECB, as well as the publication of price data in the United States for December. Statistics published last week showed an increase in inflation in the EU to 5.00% YoY. As a result, the topics of price growth in December updated the historical maximum, while analysts expected a slight slowdown in price growth. The situation on the supply side also has high inflation in the United States. The December business activity indices indicated a slight easing of logistical problems, however, the further deterioration of the epidemiological situation again intensified disruptions in logistics chains, which does not lead to a significant slowdown in price growth. The FAO World Food Price index fell in December for the first time since July, but food inflation remains at elevated levels. Against this background, US inflation data is likely to continue to bring the Fed rate hike closer, intensifying the negative in the markets.The main event for the oil market in early 2022 was the OPEC+ meeting. However, as expected, it was decided to stick to the current plan to increase production. Nevertheless, the cartel lowered its forecasts for a surplus in the oil market, which allowed Brent crude futures to exceed the level of $80/bbl. Moreover, against the background of interruptions in the supply of black gold from Kazakhstan and Libya, quotations were close to $83/bbl. However, at the end of the week they declined from these levels, today Brent futures are growing by 0.35% and are trading around $82.05/bbl. The main negative for oil this week may be related to the potential strengthening of the dollar amid expectations of a tightening of the PREP in the United States. However, in the absence of a significant strengthening of the dollar, Brent futures may still exceed the levels of $83/bbl– - the quotes may be supported by another weekly decline in oil ...

The German Statistical Office published the final data on the dynamics of consumer prices in October in accordance with European reporting standards. They indicate an acceleration of inflation to 4.6%. The indicator is calculated in relation to the prices that were fixed a year earlier. In monthly terms, consumer prices showed an increase of 0.5%. For comparison: in September, inflation in annual and monthly terms was 4.1% and 0.3%, respectively. The calculation of indicators according to German standards showed an increase in the inflation rate in Germany to a maximum for the period since 1993. It amounted to 4.5% in annual terms. Compared to September, prices rose by 0.5%. Both indicators correspond to the forecasts of the surveyed analysts. By the end of September, inflation was 4.1% compared to the same month last year. In monthly terms, it showed zero dynamics. The largest contribution to the growth of October inflation was made by energy carriers. They have risen in price by 18.6%. The cost of food increased by 4.4%. Prices for services increased by ...