The Market Radar

We anticipate, monitor, and comment on market moving global economic and geopolitical issues.  No dark side brooding, no wanting the world to end, no political rants.  Traders, investors, policymakers, or market observers can’t  afford to ignore us.

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Swan Lake – June 18

Same story, different day.

Euro periphery continues to recover with short-end outperforming.

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LatAm currencies stable x/ Brazil.   South Africa lower.

Brazil and Mexican stocks lower.

 

 

SwanLake_Table

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Two Weeks And Counting For Angela Merkel

Coalition gives her two weeks to find European deal… READ MORE : http://www.euronews.com/2018/06/18/me…

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Week In Review – June 15

Summary

  • Friday’s markets were surprisingly resilient given the escalation of the trade wars
  • Big recovery in Euro periphery sovereign spreads on the back of Italian FinMin’s statement backing the euro currency
  • Angela Merkel is having big problems within her government. Some speculate here days are numbered.  Watch this space
  • Turmoil in EM financial markets continues. Turkey 10-year up 117 bps on the week, Brazil up 45 bps
  • 2-10’s yield curve continues to flatten in the U.S.
  • Junk spreads tighter on the week with CCC in big
  • The relentless hammering of the Argentine peso continues. A move this large is not sustainable unless the country is monetizing.  Take a look at the chart below; the monetary base is growing 30 percent on an annual basis.  Argentina does not have the luxury of being a reserve currency.  In order to stabilize the peso, the central bank must tighten up base money growth.
  • EM currencies weak across the board as monetary screws in the S. continue to tighten
  • The dollar index hit significant resistance in low 95’s. An interesting chart is forming.  Is it a head and shoulders bottom forming or just a pause before the breakout?
  • Euro stock markets outperformed last week, led by Italy
  • Tech continues to outpace other sectors in the U.S. stock market
  • Natural gas had a decent week
  • Oil continues to correct in front of this week’s OPEC meeting

 

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Jan16_Argentina Money Base

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Happy Fathers Day

Here’s what Dads are for:

 

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Sector ETF Performance – June 15

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ETF_YTD

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Global Risk Monitor – June 15

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Cristiaaaaaaaaaaaaaanooooo!!!!

 

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China vs. U.S. trade war: Who would win?

 

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World Cup Prediction: Spain or Germany?

The machine learning random forest algo predicts Spain is favored over Germany mainly due to the fact that Germany has a comparatively high chance to drop out in the round-of-sixteen.

Combining the odds from many different bookmakers puts Brazil as the clear favorite to win the 2018 World Cup, with a probability of 16.6 percent, followed by Germany (12.8 percent) and Spain (12.5 percent).

MIT reports there is a better way to predict the 2018 World Cup winner,

But in recent years, researchers have developed machine-learning techniques that have the potential to outperform conventional statistical approaches. What do these new techniques predict as the likely outcome of the 2018 World Cup?

…a combination of machine learning and conventional statistics, a method called a random-forest approach, to identify a different most likely winner.

First some background. The random-forest technique has emerged in recent years as a powerful way to analyze large data sets while avoiding some of the pitfalls of other data-mining methods. It is based on the idea that some future event can be determined by a decision tree in which an outcome is calculated at each branch by reference to a set of training data.

…The predictions arrived at through this process differ from others in some important ways. For a start, the random-forest method picks out Spain as the most likely winner, with a probability of 17.8 percent.

 …a big factor in this prediction is the structure of the tournament itself. If Germany clears the group phase of the competition, it is more likely to face strong opposition in the 16-team knockout phase. Because of this, the random-forest method calculates Germany’s chances of reaching the quarter-finals as 58 percent. By contrast, Spain is unlikely to face strong opposition in the final 16 and so has a 73 percent chance of reaching the quarter-finals.

If both make the quarter-finals, they have a more or less equal chance of winning. “Spain is slightly favored over Germany mainly due to the fact that Germany has a comparatively high chance to drop out in the round-of-sixteen,” say Groll and co.  – MIT Technology Review

 

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There you have it, folks, the machines predict Spain or Germany while the bookies bet on Brazil.   Make sure to read the entire article on how machine learning makes it prediction, it is well worth your time.  See here.

Let’s revisit in July.

 

 

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S&P500 Camped Out In Doji City

The S&P500 has generated a Doji candlestick in three out of the last four trading days.

Also of interest is the rejection at 2792,  an important Fibonacci retracement in the current correction, which we flagged a few days ago.

June14_SPX

 

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