Today's highlights
Was Brexit Just Canceled?
Trump's Actual Chances
What Kind of a Jobs Report is This?
Please note: All data, figures and graphs are valid as of November 4th. All trading carries risk. Only risk capital you are prepared to lose.
Overview
From Friday to Wednesday we had a very clear trend in the market. Thursday was more of an evaluation, with the markets testing out old support & resistance levels trying to asses their strength and relevance given the current conditions.
Will the current continue or will the tide change? We should find out next week, but for today let's ride the awesome waves.
The VIX volatility index is up at 22 this morning. It's been rising steadily for the past 2 weeks and is now at its highest level since June.
In the meantime, the SPX500 has been falling steadily and is now sitting a mere 4 points above the 200 day moving average that we discussed yesterday.
This plays right into the narrative that we've been discussing in these updates. Any volatility, no matter what the cause has been bad for stocks lately. In this chart from Bloomberg we can see the S&P500 (Green) against it's own volatility, VIX (blue).
So the global stock markets continued their decline yesterday, but only slightly. If things start falling any further, it could get ugly.
Oil was much the same. Declining slightly according to it's trend. The range remains, as we discussed at $40 to $50 a barrel. Right now we're smack in the middle of that range so it could easily go either way from here.
Gold and silver did not continue their surge. Both had wild swings. Gold ended slightly up, and silver slightly down.
The Aussie and kiwi remain strong as well, but haven't broken any significant levels to speak of. We can call a breakout if they go above 0.7750 and 0.7400 respectively.
Tea Time
No, Brexit was not canceled. Yesterday's ruling from the high court simply means that the government will need to approve. Of course parliament will approve, how could they not, given the will of the people. This is just another rubber stamp, an additional bureaucratic process that will need to take place.
MPs may however attempt to alter the terms of Brexit, perhaps make it a somewhat softer Brexit than was previously expected.
The GBP/USD reacted to the ruling quite sharply...
The announcement also overshadowed the Bank of England who did have some incredibly interesting things to say.
What did they say?
Inflation is likely to get very bad very quickly. They have set their expectation at a massive 2.7% next year.
Say what???
Yes, that's extremely high. Especially in a global economy that has been battling deflation.
In order to fight this the BoE may need to raise the interest rate fairly quickly.
Quick Elections Update
Just wanted to give you one more resource here: http://projects.fivethirtyeight.com/2016-election-forecast/
This site shows aggregated polling information in real time to give you the best possible clue about what may be the outcome of the US election.
As we can see, DJ Trump now has a one in three chance of winning.
Today's Jobs Report
It will certainly be exciting I can tell you that much. Analysts are already divided about how to take today's NFP numbers and they haven't even come out yet.
Will it be about the elections, will it be about the Fed, will it be about the economy??
Well, all of the above really.
Analysts are expecting the US to report an addition of 175,000 jobs in October.
A sour number, anything below 100k could make the Fed nervous about raising rates next month and would probably be picked up by The Trump Organization™ as a weakness in the status quo's economy.
A strong number, above 220k would embolden the Fed and the Clinton Foundation™.
Anything between 100 and 220 will probably just add to the noise like somebody shouting in an already loud room. The decibels will spike but they'll quickly return to their already elevated levels.
Remember, the news is out 1 hour early today for most of the world. The USA will change their clocks over the weekend so everybody should be back on the same page.
This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation.
Past performance is not an indication of future results. All trading carries risk. Only risk capital you're prepared to lose.