Asian asset markets are positive this morning as headlines continue to be dominated by Moderna’s trial vaccine headlines. I most certainly hope that Moderna has managed to help the planet avoid a bullet. The result of the news was entirely predictable, equities rose sharply, the US Dollar faded, oil jumped and gold, quite significantly fell and avoided an outside reversal day by the narrowest of margins. That story may yet contain heartbreak for bulls. Sectors I would characterise as “the little shop of horrors,” comprising big oil, airlines, leisure industries such as cruises, and consumer discretionary in general, all, unsurprisingly, outperformed.
As ever, in my role as the voice of reason, floating alone on a sea of non-thinking FOMO-ness that characterises the world’s financial markets in this day and age, I should point out a few things. Moderna’s trial is terrific news, but the sample size was eight. Not statistically significant. The experiment was to make sure that dosages didn’t make recipients fall over dead, or otherwise suffer serious side effects. It didn’t, which is pleasing. At least two more large scale trials will be required, and Moderna’s CEO himself said that he was hopeful of results by the end of the year. After that, even with fast approval, the vaccine would have to be manufactured on a previously unimaginable scale, and then the whole world will have to receive it.
Thus, in the best-case scenario, it will probably be another year before normal life will make a comeback, at best. That is a long time in this day and age, especially if you are unemployed or shortly to be; or a company that is running tight on cash flow in the next few months. The zombie apocalypse may well finally occur, in the shape of many corporations existing on paper as zombies only due to central bank and government life support. The amount of debt issued by governments globally, and will continue doing so, will compete for capital with private sector requirements for a generation. Let’s all hope for some decent inflation to make it inflate away, as markets price in return to normal life by July. Did I also mention we have a US Presidential election in November?
Climbing off my soapbox, alone in speakers’ corner, and back into the here and now, the peak-virus trade has been supercharged by last night’s news. That sentiment is unlikely to fade anytime soon and has left some interesting set-ups, to my wizened eyes, in various markets—more on that below.
In other news, the Euro out per-performed overnight, as did the Eurostoxx 600, as France and Germany agreed on a EUR 500 billion recovery package for the region. Although only members of a larger grouping, everyone is sure to fall into line behind the two biggest kids in the playground. The elegant solution allows the EU to borrow cash through an EU entity, which will then give it all to Italy, I mean those countries within the EU that need it to rebuild devastated economies. The solution elegantly circumvents EU countries jointly guaranteeing Italy’s I mean the broader groups national debts.
Attention today will be focused on Indonesia’s latest rate decision due at 1530 SGT. The Indonesian Rupiah has staged a spectacular, if quiet, comeback since the start of April, and give the Bank of Indonesia (BOI) plenty of breathing room to cut rates again. We are expecting a 25-basis reduction to 4.25%, as the BOI will have one eye on the currency still. Fifty bps, though, is not out of the question.
UK unemployment and Germany’s ZEW survey are expected to print at nightmarishly poor levels this afternoon. Luckily for both, the results will be largely ignored as both expected, and irrelevant in the context of the peak-virus sentiment sweeping financial markets. They should both be sending thankyou note to the Moderna CEO.
Equities march boldly forward on peak-virus sentiment.
The Moderna news spurred the peak-virus trade to new heights overnight, with European markets and Wall Street enjoying an out-sized positive day. The S&P 500 leapt by 3.15%, the NASDAQ rose by 2.44%, and the Dow Jones, home to many previously unloved stocks, jumped an impressive 3.85%.
Asia has needed no second chance, and markets across the region are a sea of green today. The Nikkei 225 and the South Korean Kospi are 1.80% higher, as are the Hang Seng, Straits Times Index and Jakarta Composite. China’s Shanghai Composite and CSI 300 are 1.0% higher> Australia’s ASX 200 and All Ordinaries have climbed 2.0%.
We expect the positive momentum to be maintained through the remainder of the Asian session. Europe had an excellent day yesterday, and with no data surprises on the horizon that haven’t already been priced in, that should continue today. The peak-virus trade continues to gather momentum after last night’s Moderna headlines, and there is no reason to doubt that will not continue.
The US Dollar retreats as haven positioning is reduced.
The Moderna vaccine headlines accelerated the rotation out of defensive positioning in currency markets overnight. The US Dollar fell across the board with the dollar index of developed currencies falling 0.78%. Both the GBP and EUR made notable advances, GBP/USD rising 0.77% to 1.2200, and the EUR/USD rising 0.95% to 1.0915. In Euro’s case, the potential EUR 500 bio EU support package also supported the single currency.
EUR/USD is notable, as it has been tracing out a symmetrical triangle pattern since the nadir of mid-March. Today, the top of the triangle lies at 1.0955, and a daily close above that level implies that the EUR/USD could rally strongly, targeting the 1.1400 region. GBP/USD must still overcome strong resistance at 1.2250 before the technical picture swings strongly positive. Brexit and data nerves may temper its gains.
Light at the end of the return-to-normal-life tunnel saw the trade-sensitive and China proxy Australian Dollar, strongly outperform overnight. AUD/USD rose 1.70% to 0.6525 in overnight trading. Although unchanged this morning, it looks set to test resistance nearby at 0.6570. A daily close above sets up the Antipodean for further advances.
Locally, the Indonesian Rupiah has now recovered around 65% of its mid-March losses. It is trading at 14,800 this morning, having fallen to a low of 16,750 during the March asset market capitulation. That will allow the Bank of Indonesia to cut rates today, but may also, therefore, temper further gains to what has been a mighty rally.
Currency markets are, for the most part, sedate and unchanged in Asia today. More than likely, they are awaiting the arrival of London, from whence we expect to see the US Dollar once again, pick up steam.
Vaccine hopes propel oil aggressively higher.
Oil continues to bask in a combination of falling production from OPEC+, a return to regular consumption by China, a short squeeze in the WTI futures, the ending of lockdowns globally and, as of last night, hopes that a COVID-19 vaccine is on the horizon. It is no surprise, therefore, that Brent crude and WTI strongly outperformed overnight. Brent crude rose 9.0% to $35.40 a barrel, and WTI leapt 10.60% higher to $32.55 a barrel.
Both contracts have seen profit-taking in Asia tempering the overnight gains, with Brent and WTI easing by just over 1.0%. The dips are shallow, however, and appears technical. Brent crude will be eyeing resistance at $36.50 a barrel, and a daily close above there implies further gains to $40.00 a barrel. WTI has resistance at $33.00 and $36.00 a barrel, with $40 a barrel also the target if the later gives way.
Today, the June WTI deliverable futures expiry. Open interest fell once again overnight, from around 55,000 contracts to 34,000 contracts. That still leaves a significant position that needs to either be closed out, rolled, or delivered by today. Interestingly open interest fell by 12,000 contracts in the July tenor, but rose by around the same in the September one, implying that being exposed to the front-month contract remains. The squeeze has definitely been on short positioning in the June contract, and thus, sharp spikes higher cannot be ruled out into the expiry today. That is in complete contrast to last month’s expiry.
Gold narrowly avoids an outside reversal day implying heartbreak for long positions.
Gold avoided an outside reversal day by the narrowest of margins overnight. Having traced out new highs at $1765.00 an ounce, gold then plunged on the Moderna vaccine news to close at $1733.00 an ounce. That was a mere two dollars above the previous days open.
Although the reversal pattern has been narrowly avoided, investors should be alert to the possibility that gold could now suffer a sharp reversal as peak-virus sentiment reaches new levels. A failure of support around $1725.00 an ounce sets up further losses to the next support at $1700.00 an ounce. I also note that gold has tested, but failed, to close above $1750.00 an ounce for two days in a row.
Gold has risen slightly by 0.25% in Asia, mostly driven by profit-taking flows from short-term traders after the overnight drop. Caution should be exercised though; gold could potentially suffer an aggressive downward whipsaw price correction following the price action overnight.
Bitcoin has failed multiple times at the $10,000 mark.
Bitcoin has tested and failed to close above $10,000 multiple times during May. With the Moderna vaccine hopes invigorating the rotation into recovery positioning and out of defensive plays, Bitcoin is vulnerable to a deeper downward technical correction. Bitcoin is trading at $9,542.00 this morning and a failure of the $9,500.00 region, sets up a potentially sizeable downward correction to $8,500.00, and possibly as far as $8,000.00.
Adding weight to this theory, a good friend of mine in Singapore, who has no experience with this market, asked me yesterday if it was a good time to invest in cryptos? Sell signals come in all sorts of forms. This is one of them.
The Bitcoin aficionados who believe 5G towers, or Bill Gates, are the original of COVID-19, should prepare to wrap an extra layer of tinfoil around their heads.
The metaverse is real: Zuck’s ‘incredible’ photorealistic tech wows crypto twitter
Often roasted for his metaverse tech demos, Zuckerberg appears to have blown away internet users with his latest avatar tech.
Often roasted for his metaverse tech demos, Zuckerberg appears to have blown away internet users with his latest avatar tech.
While critics have been busy writing eulogies for Meta’s metaverse dream over the last few years, Mark Zuckerberg’s latest demonstration of its photorealistic avatars shows it could be pretty far from dead after all.
Appearing on a Sept. 28 episode of the Lex Fridman podcast, Zuckerberg and the popular computer scientist engaged in a one-hour face-to-face conversation. Only, it wasn’t actually in person at all.
Instead, the entirety of Fridman and Zuckerberg’s conversation used photorealistic realistic avatars in the metaverse, facilitated through Meta’s Quest 3 headsets and noise-canceling headphones.
Here's my conversation with Mark Zuckerberg, his 3rd time on the podcast, but this time we talked in the Metaverse as photorealistic avatars. This was one of the most incredible experiences of my life. It really felt like we were talking in-person, but we were miles apart It's… pic.twitter.com/Nu8a3iYWm0— Lex Fridman (@lexfridman) September 28, 2023
However, in this case, users on social media, including those from Crypto Twitter, seemed to be genuinely impressed by the sophistication of the technology.
The Metaverse has upgraded pic.twitter.com/QT1LAkjQGB— Dexerto (@Dexerto) September 28, 2023
“Ok the metaverse is officially real,” wrote pseudonymous account Gaut, a rare moment of seemingly genuine praise from a user typically known for his satirical and sarcastic takes on current events.
“9 minutes into Lex / Mark metaverse podcast I forgot I was watching avatars,” wrote coder Jelle Prins.
Fridman alsoshared his impressions of the experience in real-time, noting how “close” Zuckerberg felt to him during the interview. Moments later, he explained how difficult it was to recognize that Zuckerberg’s avatar wasn’t his physical body.
“I’m already forgetting that you’re not real.”
The technology on display is the newest version of Codec Avatars. First revealed in 2019, Codec Avatars is one of Meta’s longest-running research projects which aims to create fully photorealistic real-time avatars that work by way of headsets with face tracking sensors.
However, users may need to wait a few years before donning their own realistic avatars, said Zuckerberg, explaining that the tech used requires expensive machine learning software and full head scans by specialized equipment featuring more than 100 different cameras.
This would be, at the very least, three years away from being available to everyday consumers, he said.
Still, Zuckerberg noted that the company wants to reduce the barriers as much as possible, explaining that in the future, these scans may be achievable with a regular smartphone.
The most-recent demonstration comes just one day after Meta unveiled its answer to ChatGPT, revealing its newest AI assistant Meta AI, which is integrated across a range of unique chatbots, apps and even smart glasses.crypto crypto
New Tables Show Intermediate-Term Overview is Negative
We have introduced two new tables in the DecisionPoint ALERT to give an overview of trend and BIAS for the major market indexes, sectors, and industry…
We have introduced two new tables in the DecisionPoint ALERT to give an overview of trend and BIAS for the major market indexes, sectors, and industry groups that we track. The first is our Market Scoreboard, which shows the current Intermediate-Term and Long-Term Trend Model (ITTM and LTTM) signal status. To review:
- The IT Trend Model generates a BUY Signal when the 20-day EMA crosses up through the 50-day EMA (Silver Cross).
- The IT Trend Model generates a NEUTRAL Signal when the 20-day EMA crosses down through the 50-day EMA (Dark Cross) above the 200-day EMA. This is a soft SELL Signal, going to cash or a hedge. It avoids being short in a bull market.
- The IT Trend Model generates a SELL Signal when the 20-day EMA crosses down through the 50-day EMA (Dark Cross) below the 200-day EMA.
- The LT Trend Model generates a BUY Signal when the 50-day EMA crosses up through the 200-day EMA (Golden Cross).
- The LT Trend Model generates a SELL Signal when the 50-day EMA crosses down through the 200-day EMA (Death Cross).
The current table shows that there is considerable stress in the intermediate-term; however, the long-term is still comfortably green for market and sector indexes. But we need to remember that the market indexes are cap-weighted, which means that they can be held aloft by large-cap stocks. The 11 sectors shown are composed solely of S&P 500 components, meaning that they will reflect the strength of that index. Industry groups, however, are not doing as well because they are less protected by the large-cap umbrella.
Next, let's look at how we determine the BIAS of a given index. First, the Silver Cross Index shows the percentage of stocks in an index that have a Silver Cross (20-day EMA above the 50-day EMA), and the Golden Cross Index shows the percentage of stocks in the index that have a Golden Cross (50-day EMA above the 200-day EMA). Next, we determine BIAS based upon the relationship of the Silver Cross Index to its 10-day EMA and the relationship of the Golden Cross Index to its 20-day EMA. When they are above, the BIAS is bullish. When they are below, the BIAS is bearish. See the chart below.
The following table shows the current intermediate-term and long-term BIAS of the market, sector, and industry group indexes we follow. Note that the picture is extremely bearish, but it is a very oversold condition, which will shift toward the positive in the event of a strong rally.
Conclusion: These new tables, available daily in the DecisionPoint ALERT, provide a quick overview of market trend and BIAS. They are intended to help focus attention on areas that may be of interest. They do not give action commands, but provide information flags to prompt assessment of the relevant charts.
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Tesla rival Polestar reveals lineup of its new electric vehicles
The Sweden-based electric vehicle maker completes key testing before launching production of its new SUV.
Tesla's Model Y crossover, the best-selling vehicle globally, is the standard that electric vehicle makers strive to compete with. The Austin, Texas, automaker sold about 267,200 Model Y vehicles in the first three months of the year and continued leading the pack well into the second quarter.
It's no wonder that the Model Y is leading all vehicles in sales as it retails for about $39,390 after tax credits and estimated gas savings. Ford (F) - Get Free Report hopes to compete with the Model Y about a year from now when it rolls out the new Ford Explorer SUV that is expected to start at $49,150.
Plenty of competition in electric SUV space
Mercedes-Benz (MBG) however, has a Tesla rival model with its EQB all-electric compact sports utility vehicle with an estimated 245 mile range on a charge with 70.5 kWh battery capacity, 0-60 mph acceleration in 8 seconds and the lowest price of its EVs at a $52,750 manufacturers suggested retail price.
Tesla's Model X SUV has a starting price of about $88,490, while the Model X full-size SUV starts at $98,490 with a range of 348 miles. BMW's (BMWYY) - Get Free Report xDrive50 SUV has a starting price of about $87,000, a range up to 311 miles and accelerates 0-60 miles per hour in 4.4 seconds.
Polestar (PSNY) - Get Free Report plans to have a lineup of five EVs by 2026. The latest model that will begin production in the first quarter of 2024 is the Polestar 3 electric SUV, which is completing its development. The vehicle just finished two weeks of testing in extreme hot weather of up to 122 degrees in the desert of the United Arab Emirates to fine tune its climate system. The testing was completed in urban cities and the deserts around Dubai and Abu Dhabi.
“The Polestar 3 development and testing program is progressing well, and I expect production to start in Q1 2024. Polestar 3 is at the start of its journey and customers can now visit our retail locations around the world to see its great proportions and sit in its exclusive and innovative interior,” Polestar CEO Thomas Ingenlath said in a statement.
Polestar plans 4 new electric vehicles
Polestar 3, which will compete with Tesla's Model X, Model Y, BMW's iX xDrive50 and Mercedes-Benz, has a starting manufacturer's suggested retail price of $83,000, a range up to 300 miles and a charging time of 30 minutes. The company has further plans for the Polestar 4, an SUV coupé that will launch in phases in late 2023 and 2024, as well as a Polestar 5 electric four-door GT and a Polestar 6 electric roadster that the company says "are coming soon."
The Swedish automaker's lone all-electric model on the market today is the Polestar 2 fastback, which has a manufacturer's suggested retail price of $49,900, a range up to 320 miles and a charging time of 28 minutes. The vehicle accelerates from 0-60 miles per hour in 4.1 seconds. Polestar 2 was unveiled in 2019 and delivered in Europe in July 2020 and the U.S. in December 2020.
Polestar 1, the company's first vehicle, was a plug-in hybrid that went into production in 2019 and was discontinued in late 2021, according to the Polestar website.
The Gothenburg, Sweden, company was established in 1996 and was sold to Geely affiliate Volvo in 2015.
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