Global Shorts
June 24, 2024

Canadian retail sales grow 0.7% in April, likely to fall in May

 Data on Friday showed Canadian retail sales rose 0.7% in April as expected, bucking a downward trend over the past three months, with sales at the pump boosting the overall figure. Statistics Canada said retail sales, which includes cars, clothing, furniture, food and beverages and more, rose to C$66.8 billion ($48.78 billion) monthly. In terms of sales, overall sales grew 0.5% in April.Statscan, which polled just half of the respondents, initially estimated retail sales could fall 0.6% in May. In addition to petrol pump sales, which rose 4.5% for the first time this year, sales at food and drink retailers also rose 1.9%, the data showed. Petrol pumps and food and beverage retailers accounted for 10% and 19% of total retail sales respectively.Since the start of the year, Canada’s retail sector has been reeling from the highest interest rates in more than two decades, which has dented consumer spending. But economists had predicted sales would rebound in April due to higher gasoline and diesel prices, although consumer pressure remains. The Bank of Canada cut interest rates by 25 basis points to 4.75% for the first time in four years on June 5, and money markets raised expectations for another rate cut in July to about 73% from 71% before the release of retail sales data.Economists say Canadian consumer prices continue to slow, and consumer price index (CPI) data due next week will provide clarity on whether the expected drop in retail sales in May is due to lower sales or lower prices. Core retail sales, which exclude sales at gasoline pumps and motor vehicle and parts dealers, rose 1.4% in April. Sales grew in seven of nine subsectors. The biggest sales declines were at auto and parts dealers, where sales fell 2.2% in April. Statscan data shows this sub-sector is the largest contributor, accounting for more than a quarter of total retail sales.

Global Shorts
June 20, 2024

UK house prices rose for second month in April, ONS says

 UK house prices rose for a second month in a row in April, rising by an annual average of 1.1% to 281,000 pounds ($358,000), the Office for National Statistics said on Wednesday, after rising 0.9% in March. The Office for National Statistics (ONS) private sector rents measure grew by 8.7% in the year to May, slightly slower than growth in the 12 months to April when it rose by 8.9%.The UK housing market has shown signs of recovery in recent months from a slowdown spurred by a surge in mortgage rates in late 2022 and 2023. But falling consumer price inflation has boosted household incomes and raised prospects for interest rate cuts. Official data released earlier on Wednesday showed that UK consumer price inflation returned to the Bank of England’s 2% target for the first time in nearly three years.

Global Shorts
June 17, 2024

China’s new home prices fall at fastest pace in nearly 10 years

 Prices of new homes in China fell at their fastest pace in more than 9-1/2 years in May, official data showed on Monday, as the property sector struggled to find a bottom despite government efforts to curb oversupply and support debt-laden developers. According to calculations based on data from the National Bureau of Statistics (NBS), prices fell by 0.7% month-on-month in May. This was the 11th consecutive month-on-month decline and the largest decline since October 2014. On an annual basis, new house prices fell 3.9% on the year, compared with a 3.1% decline in April.China’s debt-laden real estate industry, once a key engine of China’s economic growth, has been hit by multiple crises since mid-2021, including debt defaults by developers and stalled construction of pre-sale housing projects. Authorities have stepped up support for the crisis-hit real estate sector, including providing 300 billion yuan ($41.35 billion) in funding to clear massive housing inventories, reducing payments and easing mortgage rules. However, analysts believe that these measures will have little effect on digesting the large housing inventory, and the lifting of purchase restrictions in large cities may further suppress purchasing sentiment in small and medium-sized cities. Last month, new house prices fell in almost all of the 70 cities surveyed by the Office for National Statistics.Separately, official data on Monday also showed that real estate investment fell by 10.1% annually in the first five months of this year, following a 9.8% decline from January to April. Home sales fell faster from January to May. Nie Wen, an economist at Shanghai Huabao Trust, said China’s real estate market will diverge, with new home sales in big cities driven by those who have the ability to renovate and sell existing homes, while real estate in smaller cities is expected to diverge. continued decline due to overpopulation and outmigration. Policymakers are expected to support local governments and state-owned enterprises in purchasing unsold low-rent housing through subsidized loans, while lowering interest rates and fees to support property owners in improving their homes, Nie said.

Global Shorts
June 13, 2024

U.S. consumer prices were flat in May, missing expectations for a slight rise

 U.S. consumer prices unexpectedly remained unchanged in May as gasoline prices fell, but inflation may still be too high for the Fed to start cutting interest rates before September amid continued strength in the labor market.Consumer price index data released Wednesday by the U.S. Department of Labor’s Bureau of Labor Statistics remained unchanged, with consumer prices rising 0.3% in April. CPI has been trending downward since reliable data became available in February and March. Price pressures are likely to continue to ease as major retailers including Target (TGT.N) slash prices on items from food to diapers with new tabs to appeal to inflation-weary consumers .Although annual gains in consumer prices have slowed from a peak of 9.1% in June 2022, inflation remains above the Fed’s 2% target. The government reported last week that job growth accelerated in May and wages rose, but the unemployment rate rose to 4%. Fed officials are expected later Wednesday to keep the benchmark overnight rate at its current range of 5.25%-5.50%, where it has been since July.Since March 2022, the Federal Reserve has raised policy rates by 525 basis points. Financial markets expect the Fed to begin an easing cycle in September, although that belief is waning. Some economists favor a rate cut in December, but others are less sure borrowing costs will be lower this year.

Technical Analysis
June 10, 2024

Gold Trend 10/06 – Consodiate further this week ?

Gold price experienced the largest single-day decline in recent months last Friday, downed by $82. The price stayed within the range of 2320-2360(1) early last week until Wednesday after a disappointing ADP employment figure was released. It cleared the resistance(2) in the Asian session on Thursday. The breakout triggered a new round of buying, resulting in a weekly high of 2387(3) within 24 hours. However, the gold price started selling at the European session on Friday, again back into the previous sideways range(1). After the release of US employment data that evening, the price fell below 2320(5) and touched our target of 2300, closing at the weekly low near 2286.

As mentioned last week, the gold market is in a profit-taking cycle. The latest data from the COMEX gold futures shows that the open interest continues to decline, at 440,000 contracts now. This is about 90,000 contracts less than the peak when gold prices reached a historical high a few weeks back. This indicates that the long buying is still on the limited side, and there is still room for further decline. The key events this week are the US inflation data and the FOMC meeting on Wednesday. Take advantage of a range-bound market while investors are waiting for these economic figures at the beginning of the week. From the M-T perspective, gold prices are still in the phase of consolidation. It will be a good chance to short-sell the market if the high level of uncertainty this week leads to a jump in gold prices.

1-hr chart > The key support level is at the previous low of 2280-2285(6). Expect the price to be bounded within the range of 2280-2320(7), while the market is waiting for Wednesday’s news. A new round of selling will be triggered if the price breaks through the support zone(6).

Daily Chart > Gold cleared the ascending channel(9) last week. The closing near the weekly low on Friday indicates that the selling is still dominating the market, and the price might have another attempt to the low in the next 2 days. In S-T, support lies at the previous low of 2277 (10). If there is a successful breakthrough below 2277(10) later this week, the first target can be set at the 50% retracement level around 2216(11).

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Global Shorts
June 04, 2024

Eurozone manufacturing showed signs of potential recovery in May

  A long-term slump in euro zone manufacturing may have turned around last month, a survey showed, improving business sentiment by showing new orders fell at the slowest pace in two years. HCOB’s final Eurozone Manufacturing Purchasing Managers’ Index (PMI) compiled by S&P Global rose to 47.3 in May from 45.7 in April, below the 50 mark, showing economic activity growing for the 23rd consecutive month. That was slightly lower than the initial estimate of 47.4.The index measuring output, which will be included in Wednesday’s composite PMI and is seen as a good gauge of the economy’s health, jumped to a 14-month high of 49.3 from 47.3 in April, although it was below an initial forecast of 49.6. This improvement may be at least partly due to a rebound in the new orders index, a measure of demand, from 44.1 to a two-year high of 47.3. Falling production costs are once again allowing factories to lower the prices they charge, which could give the European Central Bank room to cut interest rates on Thursday, a move widely expected as inflation eases.

Global Shorts
May 30, 2024

Big companies shake off bank failure costs U.S. bank profits jump 79.5%

 U.S. banking profits soared 79.5% to $64.2 billion in the first quarter of 2024, largely as big banks didn’t absorb billions of dollars in extraordinary charges to cover the costs of bank failures last spring. The FDIC said the profit increase was largely due to banks not being aware of the review, which led to lower bank profits at the end of 2023.Specifically, the FDIC said banks’ noninterest expenses fell by $22.5 billion in the first quarter, which was the main reason for the profit increase. The decline in special assessment fees accounted for more than half of these declining fees. Overall, the FDIC said asset quality measures remained generally good but noted deterioration in credit card and commercial real estate (CRE) portfolios. In particular, the FDIC said the illiquid rate on non-owner-occupied CRE loans is currently at 1.59%, the highest level since the fourth quarter of 2013, driven primarily by the office portfolios of large banks.The FDIC also said its “list of problem banks” expanded from 52 companies to 63 in the first quarter, with the banks’ total assets rising to $82.1 billion. Currently, 1.4% of banks are considered “problem banks,” a number the FDIC says is within the normal range. Bank deposits rose 1.1%, or $190.7 billion, for the second consecutive quarter. Uninsured deposits are expected to grow 0.9%, the first increase since late 2021.

Global Shorts
May 27, 2024

The Governor of the Bank of Japan said that the Bank of Japan will cautiously advance the inflation target framework

  Bank of Japan Governor Kazuo Ueda said on Monday that the Bank of Japan would advance its inflation targeting framework cautiously, noting that some of the challenges facing Japan after years of ultra-loose monetary policy are “extraordinarily difficult.” In his opening speech at a central bank meeting hosted by the Bank of Japan in Tokyo, Ueda said Japan had “made progress in moving away from zero interest rates and raising inflation expectations.” He said that in order to achieve 2% inflation in a sustainable and stable manner, the Bank of Japan “will act cautiously like other central banks that set inflation target frameworks.” Accurately estimating the neutral rate is particularly challenging in Japan, Ueda noted, given the long period of short-term rates near zero over the past three decades.At the same meeting, Bank of Japan Deputy Governor Shinichi Uchida said Japan’s fight against persistent deflation was coming to an end, but acknowledged that anchoring inflation expectations at the 2% target was “a huge challenge.” Uchida said labor market conditions have undergone structural and irreversible changes that will help address the root causes of deflation such as excess labor supply.In March, the Bank of Japan made a landmark move to end the remnants of eight years of negative interest rates and other aggressive stimulus measures as it believes sustained achievement of its 2% inflation target is within reach. Ueda said the central bank intends to raise interest rates to a level that is neutral for the economy as long as economic growth and inflation are in line with its forecasts. The market expects the Bank of Japan to begin a full reduction in bond purchases soon, with Japan’s 10-year government bond yield rising to a 12-year high last week.  They also expect rates to rise by at least 0.20% by the end of the year.

Global Shorts
May 20, 2024

China’s housing prices plummet, sales will decline this year

 The survey showed new home prices will fall by 5.0% in 2024, compared with a 0.9% drop expected in the last survey in February. Prices are likely to remain unchanged in 2025, compared with a 0.5% rise predicted in February. The poll, conducted between May 10 and 17, may only partially take into account the government support measures announced on Friday to stabilize the housing market.Beijing has pledged up to 1 trillion yuan ($138 billion) in funding and loosened mortgage rules and local governments will buy “some” apartments, in what many analysts say is the government’s strongest move yet to turn around the industry. However, questions remain about the latest measures, particularly whether they were overly enforced and how the government can help clear out the trillions in housing inventory.Since the real estate market fell into crisis in 2021, Chinese authorities have launched wave after wave of policy support measures to boost demand, but with little success. Property sales are likely to contract 10.0% in 2024, up from the 5.0% forecast in the previous survey, while investment is expected to fall 10.0% from the 6.1% forecast in the previous survey, the survey showed.

Technical Analysis
May 20, 2024

Gold Trend 20/05 – Expect a new round of buying

Gold has started its rebound after a series of important U.S. economic data went worse than expected since the beginning of this month, and the US inflation data slowed further last week has accelerated the upward momentum. The price rose to a one-month high of 2422 on Friday, with the week ending near 2414. Note that the price of silver also broke through the 2020 high of US$30 on the same day, reflecting that the precious metals market is strengthening and the bullish trend should resume very soon.

1-hr chart – The upward trend accelerated last week from the support line (1) to (1.1). Gold cleared all the short-selling orders near the previous high of 2430 early in the Asian session on Monday reaching a new high of 2440. While the resistance of 2430(2) is cleared, a new round of buying should be triggered in the next 48 hours, and the target in the early part of this week can be set at 2450 or even higher. Notice, the key support is now at 2430. If the gold price returns below 2430, the current upward momentum will slow down, and the trend will reverse.

Daily Chart—Last Friday was the first time gold prices closed above 2400, showing that buying orders above 2400 are starting to dominate, the first signal for gold prices to break higher. Gold fluctuated by about US$150 during the consolidation period in the past month(3). The M-T target can be set near 2580(3), a 1:1: ratio. As long as the price stays above 2431 on the daily chart, the S-T target can be set at 2448.

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