InvestMacro

COT Stock Market Charts: Speculator bets led by Nasdaq & DowJones

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday January 30th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets.

Weekly Speculator Changes led by Nasdaq-Mini & DowJones-Mini

The COT stock markets speculator bets were lower this week as just two out of the seven stock markets we cover had higher positioning while the other five markets had lower speculator contracts.

Leading the gains for the stock markets was Nasdaq-Mini (6,209 contracts) with the DowJones-Mini (6,162 contracts) also showing positive weeks.

The markets with the declines in speculator bets this week were the S&P500-Mini (-36,489 contracts), the VIX (-5,347 contracts), the Russell-Mini (-4,315 contracts), the Nikkei 225 (-175 contracts) and the MSCI EAFE-Mini (-596 contracts) also registering lower bets on the week.

Stock Markets Speculators Leaderboard

Legend: Weekly Speculators Change | Speculators Current Net Position | Speculators Strength Score compared to last 3-Years (0-100 range)

Strength Scores led by Nasdaq-Mini & DowJones-Mini

COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that the Nasdaq-Mini (100 percent) and the DowJones-Mini (100 percent) lead the stock markets this week and are at the top of their 3-year ranges. The Russell-Mini (78 percent) comes in as the next highest in the weekly strength scores.

On the downside, the S&P500-Mini (31 percent) comes in at the lowest strength level currently with the next lowest strength score being the MSCI EAFE-Mini (36 percent).

Strength Statistics:
VIX (72.8 percent) vs VIX previous week (76.4 percent)
S&P500-Mini (31.0 percent) vs S&P500-Mini previous week (36.5 percent)
DowJones-Mini (100.0 percent) vs DowJones-Mini previous week (90.0 percent)
Nasdaq-Mini (100.0 percent) vs Nasdaq-Mini previous week (90.4 percent)
Russell2000-Mini (77.6 percent) vs Russell2000-Mini previous week (80.7 percent)
Nikkei USD (39.1 percent) vs Nikkei USD previous week (40.4 percent)
EAFE-Mini (35.8 percent) vs EAFE-Mini previous week (36.4 percent)

DowJones-Mini & Nasdaq-Mini top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the DowJones-Mini (28 percent) leads the past six weeks trends for the stock markets. The Nasdaq-Mini (26 percent), the Russell-Mini (14 percent) and the MSCI EAFE-Mini (9 percent) are the next highest positive movers in the latest trends data.

The VIX (-16 percent) leads the downside trend scores currently with the Nikkei 225 (-11 percent) coming in as the next market with lower trend scores.

Strength Trend Statistics:
VIX (-16.3 percent) vs VIX previous week (-1.9 percent)
S&P500-Mini (-4.6 percent) vs S&P500-Mini previous week (-18.5 percent)
DowJones-Mini (28.1 percent) vs DowJones-Mini previous week (24.1 percent)
Nasdaq-Mini (26.5 percent) vs Nasdaq-Mini previous week (38.7 percent)
Russell2000-Mini (13.9 percent) vs Russell2000-Mini previous week (31.5 percent)
Nikkei USD (-10.8 percent) vs Nikkei USD previous week (-9.7 percent)
EAFE-Mini (8.7 percent) vs EAFE-Mini previous week (26.6 percent)

Individual Stock Market Charts:

VIX Volatility Futures:

The VIX Volatility large speculator standing this week equaled a net position of -54,540 contracts in the data reported through Tuesday. This was a weekly lowering of -5,347 contracts from the previous week which had a total of -49,193 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 72.8 percent. The commercials are Bearish with a score of 25.0 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 83.7 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

VIX Volatility Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	20.2	45.9	8.1
– Percent of Open Interest Shorts:	35.9	29.5	8.8
– Net Position:	-54,540	57,042	-2,502
– Gross Longs:	70,187	159,581	28,032
– Gross Shorts:	124,727	102,539	30,534
– Long to Short Ratio:	0.6 to 1	1.6 to 1	0.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	72.8	25.0	83.7
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-16.3	14.4	11.4

S&P500 Mini Futures:

The S&P500 Mini large speculator standing this week equaled a net position of -225,962 contracts in the data reported through Tuesday. This was a weekly decline of -36,489 contracts from the previous week which had a total of -189,473 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 31.0 percent. The commercials are Bullish with a score of 59.5 percent and the small traders (not shown in chart) are Bullish with a score of 70.4 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

S&P500 Mini Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	12.3	74.3	11.5
– Percent of Open Interest Shorts:	22.1	68.1	7.8
– Net Position:	-225,962	142,194	83,768
– Gross Longs:	284,559	1,715,110	264,947
– Gross Shorts:	510,521	1,572,916	181,179
– Long to Short Ratio:	0.6 to 1	1.1 to 1	1.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	31.0	59.5	70.4
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-4.6	2.6	4.7

Dow Jones Mini Futures:

The Dow Jones Mini large speculator standing this week equaled a net position of 24,410 contracts in the data reported through Tuesday. This was a weekly boost of 6,162 contracts from the previous week which had a total of 18,248 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 100.0 percent. The commercials are Bearish-Extreme with a score of 0.0 percent and the small traders (not shown in chart) are Bullish with a score of 53.4 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

Dow Jones Mini Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	36.4	48.2	13.8
– Percent of Open Interest Shorts:	13.8	72.7	12.0
– Net Position:	24,410	-26,351	1,941
– Gross Longs:	39,325	52,040	14,936
– Gross Shorts:	14,915	78,391	12,995
– Long to Short Ratio:	2.6 to 1	0.7 to 1	1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	100.0	0.0	53.4
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	28.1	-28.6	11.9

Nasdaq Mini Futures:

The Nasdaq Mini large speculator standing this week equaled a net position of 39,251 contracts in the data reported through Tuesday. This was a weekly gain of 6,209 contracts from the previous week which had a total of 33,042 net contracts.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

Nasdaq Mini Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	32.0	53.0	14.2
– Percent of Open Interest Shorts:	18.7	69.3	11.3
– Net Position:	39,251	-47,893	8,642
– Gross Longs:	94,317	156,086	41,844
– Gross Shorts:	55,066	203,979	33,202
– Long to Short Ratio:	1.7 to 1	0.8 to 1	1.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	100.0	0.0	100.0
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	26.5	-24.3	13.6

Russell 2000 Mini Futures:

The Russell 2000 Mini large speculator standing this week equaled a net position of -10,504 contracts in the data reported through Tuesday. This was a weekly reduction of -4,315 contracts from the previous week which had a total of -6,189 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 77.6 percent. The commercials are Bearish-Extreme with a score of 19.5 percent and the small traders (not shown in chart) are Bullish with a score of 69.4 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

Russell 2000 Mini Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	16.4	75.9	6.7
– Percent of Open Interest Shorts:	18.4	76.2	4.3
– Net Position:	-10,504	-1,488	11,992
– Gross Longs:	83,470	387,387	34,014
– Gross Shorts:	93,974	388,875	22,022
– Long to Short Ratio:	0.9 to 1	1.0 to 1	1.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	77.6	19.5	69.4
– Strength Index Reading (3 Year Range):	Bullish	Bearish-Extreme	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	13.9	-16.3	19.6

Nikkei Stock Average (USD) Futures:

The Nikkei Stock Average (USD) large speculator standing this week equaled a net position of -3,868 contracts in the data reported through Tuesday. This was a weekly reduction of -175 contracts from the previous week which had a total of -3,693 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 39.1 percent. The commercials are Bearish with a score of 47.2 percent and the small traders (not shown in chart) are Bullish with a score of 69.8 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

Nikkei Stock Average Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	11.5	63.9	24.6
– Percent of Open Interest Shorts:	34.5	52.9	12.6
– Net Position:	-3,868	1,857	2,011
– Gross Longs:	1,931	10,736	4,133
– Gross Shorts:	5,799	8,879	2,122
– Long to Short Ratio:	0.3 to 1	1.2 to 1	1.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	39.1	47.2	69.8
– Strength Index Reading (3 Year Range):	Bearish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-10.8	0.4	23.8

MSCI EAFE Mini Futures:

The MSCI EAFE Mini large speculator standing this week equaled a net position of -29,562 contracts in the data reported through Tuesday. This was a weekly fall of -596 contracts from the previous week which had a total of -28,966 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 35.8 percent. The commercials are Bullish with a score of 61.8 percent and the small traders (not shown in chart) are Bearish with a score of 43.9 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

MSCI EAFE Mini Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	7.4	89.2	3.2
– Percent of Open Interest Shorts:	14.4	83.5	2.0
– Net Position:	-29,562	24,171	5,391
– Gross Longs:	31,441	376,774	13,648
– Gross Shorts:	61,003	352,603	8,257
– Long to Short Ratio:	0.5 to 1	1.1 to 1	1.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	35.8	61.8	43.9
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	8.7	-11.2	12.6

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

02 Feb

Speculator Extremes: DowJones, Nasdaq, Soybeans & Corn lead Bullish & Bearish Positions

By InvestMacro

The latest update for the weekly Commitment of Traders (COT) report was released by the Commodity Futures Trading Commission (CFTC) on Friday for data ending on January 30th.

This weekly Extreme Positions report highlights the Most Bullish and Most Bearish Positions for the speculator category. Extreme positioning in these markets can foreshadow strong moves in the underlying market.

To signify an extreme position, we use the Strength Index (also known as the COT Index) of each instrument, a common method of measuring COT data. The Strength Index is simply a comparison of current trader positions against the range of positions over the previous 3 years. We use over 80 percent as extremely bullish and under 20 percent as extremely bearish. (Compare Strength Index scores across all markets in the data table or cot leaders table)

Here Are This Week’s Most Bullish Speculator Positions:

DowJones Mini

The DowJones Mini speculator position comes in as the most bullish extreme standing this week. The DowJones Mini speculator level is currently at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score totaled 28.1 this week. The overall net speculator position was a total of 24,410 net contracts this week with a rise of 6,162 contract in the weekly speculator bets.

Speculators or Non-Commercials Notes:

Speculators, classified as non-commercial traders by the CFTC, are made up of large commodity funds, hedge funds and other significant for-profit participants. The Specs are generally regarded as trend-followers in their behavior towards price action – net speculator bets and prices tend to go in the same directions. These traders often look to buy when prices are rising and sell when prices are falling. To illustrate this point, many times speculator contracts can be found at their most extremes (bullish or bearish) when prices are also close to their highest or lowest levels.

These extreme levels can be dangerous for the large speculators as the trade is most crowded, there is less trading ammunition still sitting on the sidelines to push the trend further and prices have moved a significant distance. When the trend becomes exhausted, some speculators take profits while others look to also exit positions when prices fail to continue in the same direction. This process usually plays out over many months to years and can ultimately create a reverse effect where prices start to fall and speculators start a process of selling when prices are falling.

Nasdaq

The Nasdaq speculator position comes next in the extreme standings this week. The Nasdaq speculator level is now at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score was 26.5 this week. The speculator position registered 39,251 net contracts this week with a weekly increase of 6,209 contracts in speculator bets.

3-Month Secured Overnight Financing Rate

The 3-Month Secured Overnight Financing Rate speculator position comes in third this week in the extreme standings. The 3-Month Secured Overnight Financing Rate speculator level resides at a 96.7 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at 6.6 this week. The overall speculator position was 705,145 net contracts this week with a decline of -64,042 contracts in the weekly speculator bets.

Gasoline

The Gasoline speculator position comes up number four in the extreme standings this week. The Gasoline speculator level is at a 94.0 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of 1.0 this week. The overall speculator position was 73,270 net contracts this week with a dip of -471 contracts in the speculator bets.

Mexican Peso

The Mexican Peso speculator position rounds out the top five in this week’s bullish extreme standings. The Mexican Peso speculator level sits at a 88.2 percent score of its 3-year range. The six-week trend for the speculator strength score was -2.2 this week.

The speculator position was 80,393 net contracts this week with an increase of 5,294 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

Soybean Oil

The Soybean Oil speculator position comes in as the most bearish extreme standing this week. The Soybean Oil speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -13.0 this week. The overall speculator position was -38,035 net contracts this week with a drop of -12,677 contracts in the speculator bets.

Corn

The Corn speculator position comes in next for the most bearish extreme standing on the week. The Corn speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -12.7 this week. The speculator position was -224,832 net contracts this week with a decline of -5,632 contracts in the weekly speculator bets.

Soybeans

The Soybeans speculator position comes in as third most bearish extreme standing of the week. The Soybeans speculator level resides at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -36.4 this week. The overall speculator position was -140,577 net contracts this week with a reduction of -34,583 contracts in the speculator bets.

Soybean Meal

The Soybean Meal speculator position comes in as this week’s fourth most bearish extreme standing. The Soybean Meal speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -45.2 this week. The speculator position was -33,932 net contracts this week with a shortfall of -13,316 contracts in the weekly speculator bets.

10-Year Note

Finally, the 10-Year Note speculator position comes in as the fifth most bearish extreme standing for this week. The 10-Year Note speculator level is at a 2.8 percent score of its 3-year range.

The six-week trend for the speculator strength score was -16.0 this week. The speculator position was -859,015 net contracts this week with a decline of -74,337 contracts in the weekly speculator bets.

Article By InvestMacro – Receive our weekly COT Newsletter

COT Updates Forex and Currency News Opinions

02 Feb

African countries are struggling with high debt, demands to spend more and collapsing currencies: the policy fixes that could help

By Jonathan Munemo, Salisbury University

Highly indebted African countries are facing stark trade-offs between servicing expensive debt, supporting high and growing development needs, and stabilising domestic currencies.

Government debt has risen in at least 40 African countries over the past decade. As a result, some are experiencing a bad combination of high debt, elevated development spending needs amid budget shortfalls, and unfavourable exchange rate pressures.

These issues have become more pressing since 2022, when persistently high inflation prompted major central banks around the world to embark on the most aggressive monetary tightening campaign in decades. Monetary policy tightens when central banks raise interest rates.

Since then, global interest rates have climbed even higher, triggering a jump in repayments on external loans and adding to debt burdens accumulated over the last decade. In addition, some countries with worsening debt situations have endured large exchange rate depreciations and struggled to stabilise the value of their domestic currencies.

My perspective, shaped by years of researching Africa’s development challenges, is that this presents many countries with a triple set of dilemmas that’s not easy to navigate. Tackling any of one of these issues imperils the others.

Here are some examples:

stemming the rise in public debt and containing exchange rate decreases would make it more difficult to meet bigger public spending needs
pushing for lower public debt while supporting extra spending risks putting more strain on domestic currencies
prioritising higher spending needs and easing currency strains runs the risk of inviting extra government debt.

Steps can be taken to expand the policy space to tackle these challenges while easing difficult trade-offs. These steps include prioritising public spending measures that raise growth, fixing the revenue collection problem facing all African countries, and restructuring unsustainable government debt.

Rising government debt and policy dilemmas

The triple dilemma unfolded as government debts rose substantially over the last decade. As shown in Figure 1, median government debt has more than doubled since 2012 and amounted to 61% of GDP as of 2023.

At first, historically low global interest rates in the decade after the global financial crisis in 2008 contributed powerfully to burgeoning debt by making it easy to borrow large amounts of cheap money.

The debt trends of countries have worsened sharply since then. Factors have included the COVID-19 pandemic, which triggered a cost-of-living crisis, and Russia’s invasion of Ukraine, which contributed to a rapid rise in global interest rates.

In Africa, the pain from higher borrowing costs is particularly acute for governments, given that public debt represented nearly 60% of the region’s total external debt in 2022 (Figure 1). Nineteen countries, including Ghana and Zambia, are already in debt distress (meaning they are unable to meet financial obligations) or at high risk of debt distress.

Ghana’s public debt has more than doubled since 2012 and amounts to 85% of GDP. Zambia’s went up much higher and stood at 98% as of 2022.

Both Ghana and Zambia, along with Ethiopia, have defaulted on their foreign debt, sparking fears about a broader sovereign debt crisis on the continent if more countries fall into debt distress.

Others face high risk of debt distress. Kenya is on the edge of financial distress after its debt increased steadily to 70% of GDP. South Africa also faces elevated public debt, which has almost doubled over the last decade and currently stands at 74% of GDP.

And yet trimming high debts won’t be easy. Development needs are high after coffers were drained by higher spending tied to the pandemic and fallout from Ukraine.

The International Monetary Fund estimates that the median sub-Saharan African country needs to increase spending by at least 20% of GDP to meet sustainable development goals on health, education and infrastructure by 2030. Climate change adaptation is expected to add billions of dollars each year for the continent.

Coffers are also being depleted by more money being spent repaying expensive loans. This has the additional effect of depleting foreign exchange reserves, which means countries overburdened by debt also have to contend with weakening currencies.

Kenya’s debt interest payment as a share of revenue rose from 11% in 2014 to more than 20% after 2020. This depleted its reserves as a share of external debt from 47% to less than 20% over the same period. This has pressured the Kenyan shilling, which lost more than 19% against the US dollar last year.

In the cases of Ghana and Zambia, debt interest payments climbed even higher. For Ghana they were around 45% of revenue. For Zambia, around 39%. By 2022 reserves had dwindled to 22% in Ghana and to 10% in Zambia.

This precipitated large depreciations of Ghana’s cedi and Zambia’s kwacha.

South Africa’s debt interest payments increased at a relatively slower pace to about 15% of revenue after 2021 and it kept a higher reserve share of about 35%. This was why the decline in the rand was not as steep as in the other three countries.

Weakening currencies also make foreign debt servicing costlier. Consequently, reasonable debt can quickly turn into unmanageable debt.

Lower government revenue collection has also intensified debt risks.

In 2023, revenue collected was 16% of GDP in Ghana, 17% in Kenya and 21% in Zambia. This is significantly below the 27% median level seen in other developing economies. Although this median level is matched by South Africa, rising costs of social transfers including welfare grants and subsidies to state-owned enterprises such as the power utility Eskom and transport utility Transnet have added upward pressure on public debt amid slowing growth.

What can be done

A number of steps can be taken to alleviate the trade-offs countries are having to make.

Firstly, governments should prioritise public spending measures that raise growth.

These include critical spending on education, health, infrastructure and other high-quality growth enhancing investments. As economic growth picks up, it is likely to generate more government revenue to pay down the debt.

It also means allocating more spending on first generation reforms. These are structural reforms that alleviate major growth constraints. For example, long-standing reforms in governance remain critical in African countries which generally lag behind countries in other regions on various measures of governance quality such as rule of law, control of corruption and government accountability.

Secondly, countries need to fix their revenue collection problems. While growth leads to a larger economy that generates additional revenue, low levels of domestic revenue collection constrain the ability of governments to pay down debt and fund vital social and growth sectors.

Across Africa, several countries, including South Africa, Nigeria, Ghana, Zambia, Kenya and Ethiopia, have mobilised efforts to spur gains in revenue collection. These include new levies, higher taxes, registering more shops on the tax roll, broadening tax bases, strengthening tax administration and other revenue enhancing measures.

Lastly, governments need to restructure their debt portfolios. When a debt crisis cannot be avoided, restructuring debt can reduce the amount owed to creditors by revising the amount and timing of future principal and interest payments. Chad reached an agreement to restructure its external debt under the G20 Common Framework for Debt Treatment in 2022. This is an initiative designed to support low income developing countries with unsustainable debt. Since then, Ghana and Zambia have also launched debt restructuring negotiations under the G20 Common Framework.

Other highly indebted countries struggling to service their liabilities may have to do the same amid rising concerns about slow progress of the Common Framework.

About the Author:

Jonathan Munemo, Professor of Economics, Salisbury University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Forex and Currency News Opinions

02 Feb

Week Ahead: Gold set for potentially volatile week

By ForexTime

Big week ahead for gold due to risk-events

Watch out for geopolitical developments

Real shaker could be US CPI revisions

Bulls back in action D1 chart

Bloomberg model: 74% chance XAUUSD trades within the $2019.23 – $2095.58

Even as anticipation mounts ahead of the US jobs report this afternoon (Friday 2nd February), mindful investors may be keeping tab on what’s to come in the week ahead.

Key economic reports from across the world and speeches by Fed officials will be in focus. However, the real shaker could be the revised US CPI figures which have the potential to make or break expectations around rate cuts.

Monday, 5th February

CNH: China Caixin PMI’s
AUD: Australia MI inflation, PPI
JPY: Japan Jibun Bank PMI’s
EUR: Eurozone S&P Global Services PMI, PPI
USD: US S&P Global Services PMIs, ISM

Tuesday, 6th February

AUD: RBA rate decision
EUR: Eurozone retail sales, Germany factory orders
USD: Cleveland Fed President Loretta Mester, Philadelphia Fed President Patrick Harker speech

Wednesday, 7th February

CNH: China forex reserves
EUR: Germany industrial production
US30: Walt Disney earnings
USD: Fed Governor Adriana Kugler, Richmond Fed President Tom Barkin speech

Thursday, 8th February

CNH: China PPI, CPI
USD: US initial jobless claims, Treasury Secretary Janet Yellen speech

Friday, 9th February

CNH: China money supply, new yuan loans
CAD: Canada unemployment
EUR: Germany CPI
USD: Revisions: CPI
Lunar New Year’s Eve celebrations

After shedding just over 1% in January, gold prices could be ready to shine in the new month due to various fundamental forces.

Despite initially weakening on the Fed’s hawkish remarks, the precious metal bounced back thanks to falling Treasury yields and heightened geopolitical risks concerning the developments in Jordan.

Note: The incoming US jobs report this afternoon could result in heightened volatility for gold prices.

With bulls making their presence known and pressing against resistance, a potential breakout could be on the horizon.

Here are 3 factors that may rock gold:

US CPI revisions

Top-tier US economic data and Fed speeches are likely to influence gold prices throughout the week.

However, the gamechanger may be the US CPI revisions published on Friday.

The CPI revisions are released once every year with seasonally adjusted factors recalculated to reflect price movements from the just-completed calendar year (2023). It does not end here; this routine annual recalculation also looks at inflation for the previous 5 years. So essentially, investors will see revised figures for the period January 2019 through December 2023.

Why is this a big deal?

One of the major themes influencing financial markets last year was signs of falling inflation!

This fuelled speculation around central banks cutting interest, supporting equity markets along with gold prices as a result.

So essentially, any major revisions to the CPI could heavily influence expectations around Fed rate cuts.

Gold prices could push higher if the CPI revisions confirm that inflation has been trending downwards.
Any major revisions that show CPI was higher than expected, could hit gold as investors re-evaluate expectations around Fed cuts.

Geopolitical tensions

The negative developments concerning the United States and Iran could keep markets on edge.

Geopolitical tensions are likely to influence gold prices as investors brace for the US response to attacks on US troops in Jordon. Concerns are likely to rise over any retaliation escalating US-Iran tensions even further. This growing uncertainty and unease may stimulate appetite for safe-haven assets like gold

Technical forces

Gold seems to be turning bullish on the daily charts with prices trading above the 50, 100 and 200-day SMA.

A solid breakout and daily close above $2060 may open a path to the 2024 high at $2079 and $2085.
Should prices fail to break above $2060, this could trigger a selloff towards the 50-day SMA at $2032 and support around $2020.

Bloomberg’s FX model points to a 74% chance that XAUUSD will trade within the $2019.23 – $2095.58 range over the next one-week period.

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Economics & Fundamentals Opinions

01 Feb

Target Thursdays: UK100 & AUDUSD hit profit target

By ForexTime

UK100 soars through profit levels

AUDUSD bears bag 30 pips

Bonus: Keep on USDInd trading range

Check out these potential profits that you may have missed from our Daily Market Analysis.

UK100 hits all take-profit levels

The UK100 which tracks the benchmark FTSE100 index soared through the bullish intra-day price targets this morning.

Profit target hit: YES, 4 out of 4 profit targets have been hit.

Why: The UK100 has an inverse relationship with the British pound. A weaker pound is bullish for the index.

Technical forces: Prices are bullish on the 30-minute timeframe.

The above scenario (UK100) is based on the FXTM Signals that are posted twice a day (before the London and New York sessions) for all FXTM clients to follow.

AUDUSD selloff rewards 30 pips

AUDUSD tumbled like a house of cards, sliding past and beyond all the pre-defined take profit levels.

Profit target hit: YES, 4 out of 4 profit targets have been hit this morning.

Why: A broadly stronger dollar following Wednesday’s Fed meeting dragged prices lower.

Technical forces: Prices are bearish on the 30-minute timeframe.

The above scenario (AUDUSD) is based on the FXTM Signals that are posted twice a day (before the London and New York sessions) for all FXTM clients to follow.

GBPUSD bears halted by BoE

In our trade of the week, we discussed whether the GBPUSD was on the brink of a major breakout. On Thursday morning prices started to move with the BoE policy decision sparking volatility.

Profit target hit: NO, but bears came close to hitting 1.2600 level.

Why: Despite tumbling on Wednesday evening, prices rebounded following the BoE decision on Thursday. UK rates were left unchanged, but BoE Governor stated more evidence was needed before lowering rates.

Technical forces: Prices back within range but weakness below the 50-day SMA may support bears.

Bonus: Will USDInd bullish setup be triggered?

Last Friday, the USDInd hijacked our attention due to the heavy-hitting events this week. After swinging within a range, a breakout could be around the corner.

Profit target hit: NO, but prices are testing the 103.70 resistance.

Why: Dollar boosted by Fed’s hawkish remarks and falling odds of rate cut in March. NFP on Friday in focus.

Technical forces: Daily close above 103.70 may open a path towards the 100-day SMA at 104.40.

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Economics & Fundamentals Financial News

01 Feb

Stock indices were pressured by Powell’s comments. German inflation retreats

By JustMarkets

As of Wednesday’s stock market close, the Dow Jones Index (US30) decreased by 0.82%. The S&P 500 Index (US500) was down by 1.61% yesterday. The NASDAQ Technology Index (US100) closed negative by 2.33%. The S&P 500 (US500) and NASDAQ (US100) indices fell to weekly lows.

As expected, the FOMC maintained the target range for the federal funds rate at 5.25%-5.50% and stated that the risks to employment and inflation targets are becoming more balanced. The FOMC removed mention of possible additional policy tightening but declined to immediately ease monetary policy, saying it did not believe it was appropriate to lower the target range until there was greater confidence that inflation was moving steadily toward 2%. During the press conference, Powell said a rate cut in March was not a base scenario and reiterated a commitment to keep rates at current levels. Markets are discounting the odds of a 25 bps rate cut at the March 19-20 FOMC meeting at 37% and fully discounting (100%) the probability of the same 25 bps rate cut at the April 30-May 1 meeting. Investors now await the weekly jobless claims and PMI reports from ISM on Thursday and the much-anticipated monthly employment report on Friday.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE40) fell by 0.40%, France’s CAC 40 (FR40) lost 0.27%, Spain’s IBEX 35 (ES35) rose by 0.38% on Wednesday, and the UK’s FTSE 100 (UK100) closed negative by 0.47%.

German Consumer Price Index for January (EU harmonized) declined to 3.1% y/y from 3.8% y/y in December, better than expectations of 3.2% y/y. Germany’s January unemployment change unexpectedly fell by 2,000, indicating a stronger labor market than expectations of an 11,000 increase. The unemployment rate for January was unchanged at 5.8%, indicating a stronger labor market than expectations of 5.9%. German retail sales for December unexpectedly fell by 1.6% m/m, weaker than expectations for a 0.6% m/m increase.

ECB Vice President Gindos said that inflation has been delivering mostly positive surprises lately and will be slightly lower than the ECB’s forecast. Swaps estimate the odds of a 25 bps ECB rate cut at the next meeting on March 7 at 23% and fully discount (103%) the same rate cut at the next meeting on April 11.

Silver prices came under pressure on Wednesday amid weaker-than-expected reports on Chicago’s PMI and China’s manufacturing PMI for January, a negative for industrial metals demand.

WTI crude futures rose above $76 a barrel on Thursday, recovering some of the previous session’s losses amid an improved demand outlook. The IEA executive director recently said that global oil demand is likely to grow by 2 million barrels per day in 2024, well above the previous forecast of 1.24 million barrels per day. Prospects for lower interest rates in major economies and a series of stimulus measures in China, a major oil importer, have also boosted the demand outlook. OPEC+ representatives will meet online today. No changes in production are expected, but we should always be ready for surprises.

Asian markets traded mixed yesterday. Japan’s Nikkei 225 (JP225) gained 0.74%, China’s FTSE China A50 (CHA50) added 0.52%, Hong Kong’s Hang Seng (HK50) was down by 1.39% on the day, and Australia’s ASX 200 (AU200) was positive by 0.12%.

China’s Caixin manufacturing PMI unexpectedly jumped to 50.8 in January 2024, matching December’s reading but exceeding market forecasts of 50.6. It was the third consecutive month of rising factory activity, contrasting with official data that indicated prolonged weakness.

Japan’s Consumer Confidence Index for January rose by 0.8 to a 2-year high of 38.0, exceeding expectations of 37.5. Japanese industrial production for December rose by 1.8% m/m, weaker than expectations of 2.5% m/m. Retail Sales in Japan for December unexpectedly fell by 2.9% mom, weaker than expectations of 0.2% mom and the biggest decline in 3 years. A summary of the BoJ’s January 22-23 policy meeting said policymakers are getting closer to raising interest rates for the first time since 2007. A BoJ official indicated that conditions for a policy review, including an end to the negative interest rate policy, are being met. Swaps estimate the odds of a 10 bps rate hike from the BOJ at 24% at the next meeting on March 19 and 80% at the April 26 meeting.

Indonesia’s annual inflation rate eased to 2.57% in January 2024 from 2.61% in December, compared with expectations of 2.55%, approaching the midpoint of the central bank’s target of 1.5 to 3.5% for 2024.

S&P 500 (US500) 4,845.65 −79.32 (−1.61%)

Dow Jones (US30) 38,150.30 −317.01 (−0.82%)

DAX (DE40) 16,903.76 −68.58 (−0.40%)

FTSE 100 (UK100) 7,630.57 −35.74 (−0.47%)

USD Index 103.57 +0.29 (+0.28%)

News feed for 2024.02.01:

– Japan Retail Sales (m/m) at 01:50 (GMT+2);
– Japan Manufacturing PMI (m/m) at 02:30 (GMT+2);
– Switzerland Manufacturing PMI (m/m) at 10:30 (GMT+2);
– German Manufacturing PMI (m/m) at 10:55 (GMT+2);
– Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+2);
– OPEC+ meeting (m/m) at 12:00 (GMT+2);
– Eurozone Consumer Price Index (m/m) at 12:00 (GMT+2);
– Eurozone Unemployment Rate (m/m) at 12:00 (GMT+2);
– UK BoE Interest Rate Decision at 14:00 (GMT+2);
– UK BoE Monetary Policy Statement at 14:00 (GMT+2);
– UK BoE Gov Bailey Speaks at 14:30 (GMT+2);
– US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
– Eurozone ECB President Lagarde Speaks at 15:45 (GMT+2);
– Canada Manufacturing PMI (m/m) at 16:30 (GMT+2);
– US Manufacturing PMI (m/m) at 16:45 (GMT+2);
– US ISM Manufacturing PMI (m/m) at 17:00 (GMT+2);
– US Natural Gas Storage (w/w) at 17:30 (GMT+2).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News

01 Feb

Is This Rare Earth Stock Undervalued?

Source: Clive Maund (1/29/24)

Technical Analyst Clive Maund takes a look at Defense Metals Corp.’s 5-year, 15-month, 4-month, and 2-month charts to explain why he believes it is an Immediate Speculative Buy.

Given the excellent and improving fundamentals for Defense Metals Corp. (DEFN:TSX.V; DFMTF:OTCQB; 35D:FSE), it is rather surprising that its stock is not already a lot higher than it is. The core of the story is that the company is advancing a major Rare Earth Metals resource that is situated in North America toward production at a time when demand looks set to ramp up due to increasing demand from the defense industry due to the proliferation of various military conflicts around the world as supplies from the world’s biggest producer of Rare Earth Metals — China — are at risk of being choked off and possibly halted completely.

On its 5-year chart, we see that, apart from a dramatic spike early in 2021 that was completely reversed, the price has essentially been rangebound throughout this period, but even on this long-term chart, we can see that there is something different about the recent rally which kicked off with a large gap move out of the preceding downtrend that was accompanied by the strongest upside volume for at least 5 years, driving the Accumulation line strongly higher.

This action implies that it is going to do more — probably a lot more — than simply rally up to the resistance level shown at the upper boundary of the broad trading range.

Zooming in via a 15-month chart that allows us to see the preceding downtrend in its entirety, we can see the powerful breakout last month. This move was on a very heavy volume and accompanied by a large gap, which, taken together, have strongly bullish long-term implications and portend that the stock will eventually head much higher.

This advance took the price up quickly to hit the resistance level in an overbought state, which is why it has since stopped to consolidate.

On the 4-month chart, we can examine recent action in much more detail, and on this chart it can be discerned that all of the action leading into the recent low and that has followed comprises a rather odd-shaped Cup & Handle base and it is clear that, following the move that broke the price out of the downtrend in December, it has been consolidating to form the Handle of this base pattern, with this period of consolidation allowing time for the earlier overbought condition to ease and for the rising 50-day moving average to pull up closer to the price, the better to propel the next upleg that will break the price out above the resistance at the top of the Handle of the pattern and quickly lead to a bullish cross of the moving averages. Interestingly and unusually, the Handle of this pattern itself contains a lower order Cup & Handle continuation pattern rather in the manner of “Russian dolls” that we will now look at on a 2-month chart.

The 2-month chart “opens out” the action following the sharp December breakout move, enabling us to see the fine small Cup & Handle pattern that has formed, which, unlike the larger order Cup & Handle pattern, is not classed as a base, because it has nothing to reverse, and it is therefore instead classed as Cup & Handle continuation pattern, rather like the Head-and-Shoulders continuation patterns that we sometimes see.

The most important point to observe on this chart, apart from the price action, is the strongly bullish volume pattern, with the gap breakout move being on heavy volume that has since progressively died back, especially as the Handle of this little pattern has formed, with the Accumulation line holding up well all the while.

With the Handle of this pattern looking complete and the Handle of the larger order pattern shown on the 4-month chart also looking complete, and volume now very light, the right conditions exist for another upleg to start soon.

Defense Metals is therefore rated an Immediate Strong Buy for all timeframes, and it is not regarded as being an unduly speculative investment.

Defense Metals’ website.

Defense Metals Corp. closed at CA$0.24, $0.18 on January 26, 2024.

Important Disclosures:

[Defense Metals Corp.] is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of [Defense Metals Corp.].
Street Smart, an affiliate of Streetwise Reports, has compensated [Clive Maund], for writing this article. However, the views, opinions, analyses, and any recommendations in [Maund]‘s article are solely their own personal views, opinions, analyses, and recommendations, and are expressly not those of Street Smart or Streetwise Reports. The content created by [Maund] is about companies they believe in based on their personal investment opinions and analyses, and their opinions and analyses are not influenced or dictated by Streetwise Reports or its affiliates or as a result of compensation provided by Street Smart.
Statements and opinions expressed are the opinions of the author and not of Streetwise Reports, Street Smart, or their officers. The author is wholly responsible for the accuracy of the statements. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Any disclosures from the author can be found below. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.

For additional disclosures, please click here.

Clivemaund.com Disclosures

The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund’s opinions are his own, and are not a recommendation or an offer to buy or sell securities. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund’s opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.

Metals Opinions

01 Feb

How to protect your data privacy: A digital media expert provides steps you can take and explains why you can’t go it alone

By Nathan Schneider, University of Colorado Boulder

Perfect safety is no more possible online than it is when driving on a crowded road with strangers or walking alone through a city at night. Like roads and cities, the internet’s dangers arise from choices society has made. To enjoy the freedom of cars comes with the risk of accidents; to have the pleasures of a city full of unexpected encounters means some of those encounters can harm you. To have an open internet means people can always find ways to hurt each other.

But some highways and cities are safer than others. Together, people can make their online lives safer, too.

I’m a media scholar who researches the online world. For decades now, I have experimented on myself and my devices to explore what it might take to live a digital life on my own terms. But in the process, I’ve learned that my privacy cannot come from just my choices and my devices.

This is a guide for getting started, with the people around you, on the way toward a safer and healthier online life.

The threats

The dangers you face online take very different forms, and they require different kinds of responses. The kind of threat you hear about most in the news is the straightforwardly criminal sort of hackers and scammers. The perpetrators typically want to steal victims’ identities or money, or both. These attacks take advantage of varying legal and cultural norms around the world. Businesses and governments often offer to defend people from these kinds of threats, without mentioning that they can pose threats of their own.

A second kind of threat comes from businesses that lurk in the cracks of the online economy. Lax protections allow them to scoop up vast quantities of data about people and sell it to abusive advertisers, police forces and others willing to pay. Private data brokers most people have never heard of gather data from apps, transactions and more, and they sell what they learn about you without needing your approval.

How the data economy works.

A third kind of threat comes from established institutions themselves, such as the large tech companies and government agencies. These institutions promise a kind of safety if people trust them – protection from everyone but themselves, as they liberally collect your data. Google, for instance, provides tools with high security standards, but its business model is built on selling ads based on what people do with those tools. Many people feel they have to accept this deal, because everyone around them already has.

The stakes are high. Feminist and critical race scholars have demonstrated that surveillance has long been the basis of unjust discrimination and exclusion. As African American studies scholar Ruha Benjamin puts it, online surveillance has become a “new Jim Code,” excluding people from jobs, fair pricing and other opportunities based on how computers are trained to watch and categorize them.

Once again, there is no formula for safety. When you make choices about your technology, individually or collectively, you are really making choices about whom and how you trust – shifting your trust from one place to another. But those choices can make a real difference.

Phase 1: Basic data privacy hygiene

To get started with digital privacy, there are a few things you can do fairly easily on your own. First, use a password manager like Bitwarden or Proton Pass, and make all your passwords unique and complex. If you can remember a password easily, it’s probably not keeping you safe. Also, enable two-factor authentication, which typically involves receiving a code in a text message, wherever you can.

As you browse the web, use a browser like Firefox or Brave with a strong commitment to privacy, and add to that a good ad blocker like uBlock Origin. Get in the habit of using a search engine like DuckDuckGo or Brave Search that doesn’t profile you based on your past queries.

On your phone, download only the apps you need. It can help to wipe and reset everything periodically to make sure you keep only what you really use. Beware especially of apps that track your location and access your files. For Android users, F-Droid is an alternative app store with more privacy-preserving tools. The Consumer Reports app Permission Slip can help you manage how other apps use your data.

Here are more details on how to reduce your exposure to data collection online.

Phase 2: Shifting away

Next, you can start shifting your trust away from companies that make their money from surveillance. But this works best if you can get your community involved; if they are using Gmail, and you email them, Google gets your email whether you use Gmail yourself or not. Try an email provider like Proton Mail that doesn’t rely on targeted ads, and see if your friends will try it, too. For mobile chat, Signal makes encrypted messages easy, but only if others are using it with you.

You can also try using privacy-preserving operating systems for your devices. GrapheneOS and /e/OS are versions of Android that avoid sending your phone’s data to Google. For your computer, Pop!_OS is a friendly version of Linux. Find more ideas for shifting away at science and technology scholar Janet Vertesi’s Opt-Out Project website.

Phase 3: New foundations

If you are ready to go even further, rethink how your community or workplace collaborates. In my university lab, we run our own servers to manage our tools, including Nextcloud for file sharing and Matrix for chat.

This kind of shift, however, requires a collective commitment in how organizations spend money on technology, away from big companies and toward investing in the ability to manage your tools. It can take extra work to build what I call “governable stacks” – tools that people manage and control together – but the result can be a more satisfying, empowering relationship with technology.

Protecting each other

Too often, people are told that being safe online is a job for individuals, and it is your fault if you’re not doing it right. But I think this is a kind of victim blaming. In my view, the biggest source of danger online is the lack of public policy and collective power to prevent surveillance from being the basic business model for the internet.

For years, people have organized “cryptoparties” where they can come together and learn how to use privacy tools. You can also support organizations like the Electronic Frontier Foundation that advocate for privacy-protecting public policy. If people assume that privacy is just an individual responsibility, we have already lost.

About the Author:

Nathan Schneider, Assistant Professor of Media Studies, University of Colorado Boulder

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Economics & Fundamentals Opinions

31 Jan

The IMF has raised its global economic growth forecast. Australia has seen a decline in inflationary pressures

By JustMarkets

The Dow Jones Index (US30) was up by 0.36% as of Tuesday’s stock market close. The S&P 500 Index (US500) decreased by 0.06% yesterday. The NASDAQ Technology Index (US100) closed negative by 0.76%.

The US economic reports released on Tuesday showed a growing US economy, bolstering optimism that the Federal Reserve will be able to provide a soft landing. The January Conference Board US Consumer Confidence Index rose by 6.8 points to a 2-year high of 114.8, matching expectations. In addition, the December JOLTS Job Openings Index unexpectedly rose by 101,000 to 9.026 million, indicating a stronger labor market than expectations of a decline to 8.750 million.

The US Federal Reserve will hold its monetary policy meeting in the US today. The Central Bank intends to keep interest rates unchanged, but the focus will be on any hints about the timing and speed of rate cuts this year. Markets will react to any change in the tone of the FOMC statement. A more dovish tone of the statement will put pressure on government bonds and the US dollar, giving confidence to indices and gold. On the other hand, a cautious tone due to persistent service inflation and data dependence may provoke investors to be overly cautious in the form of a sell-off in equities, especially as indices are at all-time highs.

General Motors shares rose by 7.8% after the company beat earnings and revenue forecasts and provided a better-than-expected earnings outlook for 2023. Meanwhile, Nvidia shares hit an all-time high of 627.74. Alphabet (GOOG) shares fell by 6% on the report. Alphabet disappointed Wall Street as holiday ad sales came in below expectations, but the company said its spending on servers to power artificial intelligence will increase this year. Microsoft (MSFT) reported second-quarter results Tuesday that beat analysts’ forecasts, as rising demand for artificial intelligence boosted the tech giant’s cloud computing business. But the company’s shares fell by nearly 2% on the report.

The IMF raised its global economic growth forecast for 2024 to 3.1% from 2.9% in October and left its 2025 forecast unchanged at 3.2% amid better-than-expected resilience in the US and several large emerging market and developing economies, as well as fiscal support in China. Growth forecasts for 2024 were revised upward for the US (2.1% vs. 1.5%), China (4.6% vs. 4.2%) and India (6.5% vs. 6.3%), but the institution expects lower growth in the Eurozone (0.9% vs. 1.2%) and Japan (0.9% vs. 1%).

Equity markets in Europe were mostly rising yesterday. Germany’s DAX (DE40) rose by 0.18%, France’s CAC 40 (FR 40) gained 0.48%, Spain’s IBEX 35 (ES35) jumped by 1.51% on Tuesday, and the UK’s FTSE 100 (UK100) closed positive by 0.44%.

Frankfurt’s DAX (DE40) index rose above the 17,000-point mark for the first time but then eased back to close at 16,980 points. Investors were analyzing the latest GDP data and its potential impact on the European Central Bank’s monetary policy outlook. The German economy contracted by 0.3% in the fourth quarter after two consecutive periods of stagnation, driven by persistent inflation, rising energy prices, and weaker external demand. On an annualized basis, the German economy contracted by 0.2% in the fourth quarter, entering a technical recession for the first time since 2020-21.

The euro area economy unexpectedly stalled in the last three months of 2023 after contracting by 0.1% in the previous period. The common bloc avoided recession at the end of 2023 thanks to better-than-expected growth in Spain (+0.6%) and Italy (+0.2%), while the French economy stalled and the largest Germany contracted by 0.3%. Other small economies, including Portugal (+0.8%), Belgium (+0.4%), Latvia (+0.4%), and Austria (+0.2%), also contributed positively to GDP. On the other hand, declines were seen in Ireland (-0.7%) and Lithuania (-0.3%). The Eurozone’s outlook for 2024 remains challenging amid high borrowing costs and prices, weaker domestic and external demand, and a weakening manufacturing sector, especially in Germany.

Asian markets traded mixed yesterday. Japan’s Nikkei 225 (JP225) was up by 0.11%, China’s FTSE China A50 (CHA50) was down by 1.74%, Hong Kong’s Hang Seng (HK50) lost 2.32% on the day, and Australia’s ASX 200 (AU200) was positive by 0.29% on Tuesday.

Australian inflation fell to 4.1% y/y in Q4 2023 from 5.4% in Q3, indicating the lowest level since Q4 2021, compared to market expectations of 4.3%. The Australian dollar depreciated to $0.657, hitting its lowest level in a week, as weak inflation data spurred bets the country will cut interest rates soon. The Reserve Bank of Australia (RBA) is expected to leave rates unchanged at next week’s meeting, while there is about a two-thirds chance of a rate cut in June, and a rate cut in August is already fully priced in.

China’s official manufacturing PMI came in at 49.2 in January 2024, matching forecasts and up from December’s 6-month low of 49.0. China’s composite PMI rose to 50.9 in January 2024 from 50.9 in the previous month. This is the highest reading since September last year, with the services sector rising the most in four months, while the decline in factory activity continued for the fourth consecutive month. The latest data suggests that the momentum of the Chinese economy remains weak amid numerous piecemeal support measures targeting specific sectors. Meanwhile, the central bank has taken a raft of measures in recent months, including large cash injections and an unexpected reduction in the reserve requirement ratio for commercial banks, which will take effect in early February.

S&P 500 (US500) 4,924.97 −2.96 (−0.06%)

Dow Jones (US30) 38,467.31 +133.86 (+0.35%)

DAX (DE40) 16,972.34 +30.63 (+0.18%)

FTSE 100 (UK100) 7,666.31 +33.57 (+0.44%)

USD Index 103.39 −0.22 (−0.21%)

News feed for 2024.01.31:

– Japan Retail Sales (m/m) at 01:50 (GMT+2);
– Australia Consumer Price Index (m/m) at 02:30 (GMT+2);
– China Manufacturing PMI (m/m) at 03:30 (GMT+2);
– China Non-Manufacturing PMI (m/m) at 03:30 (GMT+2);
– German Retail Sales at 09:00 (GMT+2);
– German Unemployment Rate (m/m) at 10:55 (GMT+2);
– German Consumer Price Index (m/m) at 15:00 (GMT+2);
– US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+2);
– Canada GDP (m/m) at 15:30 (GMT+2);
– US Chicago PMI (m/m) at 16:45 (GMT+2);
– US Crude Oil Reserves (w/w) at 17:30 (GMT+2);
– US FOMC Statement at 21:00 (GMT+2);
– US Fed Interest Rate Decision at 21:00 (GMT+2);
– US FOMC Press Conference at 21:30 (GMT+2).

By JustMarkets

Economics & Fundamentals Financial News

31 Jan

Lithium Tech Stock on the Verge of an Imminent Break Out

Source: Clive Maund (1/26/24)

Technical Analyst Clive Maund takes a look at Lithos Energy Ltd.’s 1-year and 6-month charts to explain why he believes it is a Strong Buy.

Lithos Group Ltd. (LITS:CBOE.CA;LITSF:OTCQB) looks set to commence a major bull market as it is on the point of breaking out upside following a long period of consolidation.

The 1-year arithmetic chart gives us an overview of the stock’s history from when it started trading last February following a restructuring or reorganization of the company. On this chart, we see that immediately after it started trading early in February, it went into a small Pennant consolidation that led to a significant advance for about two weeks, but after that, it ran off into a long period of consolidation that, apart from a rally into early September that was completely reversed, has continued right up to the present.

Throughout this consolidation, the Accumulation line has been trending steadily higher, which is a strong positive divergence suggesting that a new bull market phase is incubating. The downtrend from the ephemeral early September peak gradually eased with the price finding support and stabilizing at the strong support level in the CA$0.52 – CA$0.54 zone, which marks the lower boundary of the trading range.

Now, we will proceed to look at recent actions in more detail on a 6-month logarithmic chart, which makes it easier to see what is going on.

On the 6-month chart, we see that the decelerating downtrend from the early September peak has taken the form of a 3-arc Fan Correction. While you can have more than 3 arcs, generally, once the price breaks above the third fanline, especially if there is marked diminution in downside momentum, which the MACD indicator climbing back to the 0 line shows to be the case, it normally marks the completion of a reversal and the start of a new bullmarket — and the price is now close to breaking above the third fanline.

The probability of Lithos Group breaking out into a new bull market soon and probably very soon is greatly enhanced by the strongly bullish volume pattern, especially recently — we can see the persistent heavy upside volume so far this month that is driving the Accumulation line to new highs as the price approaches the completion of a bull Flag or Pennant that has formed in the vicinity of the 50-day moving average which is now turning up.

So a very important breakout looks imminent, and it will be very important because it will involve a breakout from the Pennant, a breakout above the third fanline of the Fan correction, and a breakout above the nearby quite strong resistance level shown all at about the same time. It will thus have great technical significance and should mark the start of a major bull market in the stock.

Lithos Group is therefore rated a Strong Buy for all timeframes.

Lithos’ website.

Lithos Group Ltd. closed at CA$0.61 on January 19, 2024.

Important Disclosures:

[Lithos Group Ltd.] is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Lithos Group Ltd.
Street Smart, an affiliate of Streetwise Reports, has compensated Clive Maund, sole proprietor of clivemaund.com, for writing this article. However, the views, opinions, analyses, and any recommendations in Maund’s article are solely his own personal views, opinions, analyses, and recommendations, and are expressly not those of Street Smart or Streetwise Reports. The content created by Maund are about companies he believes in based on his personal investment opinions and analyses, and his opinions and analyses are not influenced or dictated by Streetwise Reports or its affiliates or as a result of compensation provided by Street Smart.
Statements and opinions expressed are the opinions of the author and not of Streetwise Reports, Street Smart, or their officers. The author is wholly responsible for the accuracy of the statements. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Any disclosures from the author can be found below. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
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