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Sat, 22nd July 2017

Anirudh Sethi Report

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Archives of “July 12, 2017” Day

56 Points for Traders -Read & Try to Follow !

  • Think in terms of probable outcomes, not 100% accuracy. You will be 6 feet under before you achieve the latter.
  • Fester over turning points that produce yield. A market turning point or inflection zone is worthless to most people unless it is followed by a price movement that pays off relative to your risk.
  • Work in numbers, not aesthetics. Save the cute charts for the powerpoint team.
  • Good value propositions are found in all markets. The best investors on planet earth have learned to identify significant value and take advantage when it is present.
  • Wait until reality slaps you in the face prior to thinking you are the smartest person in the room.
  • Until it’s proven, it’s just a hypothesis.
  • No, you shouldn’t be taking that trade ahead of the data release.
  • Analysts and economists risk nothing but their reputations.
  • Beware of the people that always have a strong opinion. Unwavering systems of belief are far more susceptible to loss than those willing to accept alternative outcomes.
  • What is plain-to-see rarely works in the real world.
  • You are passing on all the good trades and taking all the bad ones because your strategy lacks a winning percentage in alignment with your expectations.
  • Markets are primarily driven by the expectation or surprise of fundamental news and data. And governments.
  • Conspiracy theorists get stopped out 99.99999999% of the time. Subjects of “The Big Short” entertain us because they are as rare as a total solar eclipse.
  • Build your strategy by working backwards. This industry significantly lacks emphasis on exit strategies. A strong price magnet relives concerns about risk and pressures on pinpointing entries.
  • Governments are oftentimes poor judges, giving passes to those big enough to pay a legal settlement. Do your homework and make sure your money is in good hands.
  • The best trading strategy ideas are on websites that lack images of Ferraris, sailboats, beaches or mountains.
  • If you’re afraid to use it, don’t. Your brain has already pronounced the outcome.
  • People that instantly make you feel good usually aren’t the ones taking you to the next level.
  • In all cases, people, thus prices, are drawn to heavy order flow like bees to a hive.
  • When someone asks you, “what’s the trade logic”? You should be able to answer in under 30 seconds.
  • Just because an entry looks good doesn’t mean everything that follows is going to be good, too. Trading for one or two ticks on a retail platform is the ultimate waste of time and money.
  • Always work with the end in mind. The best portfolio managers fester over performance metrics first, because that’s all that matters in the end.
  • If you stink at managing risk, you will always lose until you figure this out.
  • Drawdown is another way of saying “you were wrong”. Focus on what’s right about the situation, not where you went wrong. Look at your valleys and and see what’s going on there, not your flawed points of entry.
  • Avoid money-making buzzwords in the same way you would a psychopath who’s foaming at the mouth and running after you with a chainsaw.
  • Commissions, spreads and fees should be treated like a chronic disease. Learn to live with them but don’t let them stop you from moving forward.
  • Writing a trading plan in your early career is the equivalent of a toddler drawing a stick figure. Realize it will get better in time but by no means treat it as an end result.
  • Trading plans should be renamed Risk plans. Because that’s all that matters in the end.
  • Your strategy should consist of a parameters that produce a clean return distribution, with the peak being as long as possible, and the valleys keeping the strategy afloat during various trading environments.
  • It doesn’t matter what you trade or how you trade it. If it works, it works.
  • If you can’t get a favorable result with plain Jane parameters, odds are the exotic ones are going to blow up down the line. This is the epitome of over-optimization. Parameters need to fall with in a group with specific ones producing better outcomes than others, but all keeping the ship afloat.
  • All instruments consist of different levels of liquidity. Liquidity drives more market versus limit orders being used. These have a direct effect on the types of price movements they exhibit. Treat them all differently, because they are.
  • None of us are born dumb. Society makes us that way.
  • Funnel your dopamine addiction to something that adds value, like actionable research. Clicking buy and sell buttons should not be your “rush”.

India Gold Imports Surge – First Half 2017 Higher Than All 2016

– India gold imports in H1, 2017 greater than all of 2016
– India imported 521 tonnes of gold in first half of 2017
– H1 figure for gold imports $22.2 Bln versus $23 Bln in all ’16
– Gold demand was up 15% year- on-year in the first quarter
– June gold imports climbed to an estimated 75 tonnes from 22.7 tonnes a year ago
– Annual total set to surpass 900 tons, strongest year since ’12
– “I trust gold more than the currencies of countries” – 63% of Indians in Survey


Gold imports into India have surged in the last six months thanks to festivals, economic recovery and concerns over a new tax regime and the push for the cashless society in India.

Imports totalled 521 tonnes in the first half of this year, compared to just 510 tonnes in all of 2016.

Should buying levels continue then India could end 2017 having imported over 900 tonnes, a level not seen since 2012.

These figures are impressive given where the country’s gold demand was at the end of the 2016. The low figure of just 510 tonnes imported in the entire year was mainly thanks to a range of political and economic issues which had a more negative role than anyone foresaw.

Many of those issues are now resolved, but some had lingering effects. Some good, some bad. So it is with tentative celebration that we look at this boost in gold demand from the world’s second-largest lover of gold and ask how the country has begun to favour gold once again and if it will continue at pace.

Crude oil inventories for the July 7th week -7564K vs -2450K est.

Prior week draw -6299

The API data last night showed a larger than expected draw of -8133K. So this draw is much bigger than the estimate but it mirrors the draw from the API data.

In the other data:

  • Cushing OK crude -1948K vs -1334K last week
  • Gasoline -1647K vs -534K est
  • Distillates rose 3131K vs 900k est.
In addition to the data, is there is a headline that OPEC has scheduled an extraordinary meeting on July 17th.  There is no further details.
The price of Crude oil traded up to $46.48  but is back down to $46.23 currently.  The low for the day came in at $45.61.

 

Full text of the Bank of Canada decision July 12, 2017

Bank of Canada increases overnight rate target to 3/4 per cent

The Bank of Canada is raising its target for the overnight rate to 3/4 per cent. The Bank Rate is correspondingly 1 per cent and the deposit rate is 1/2 per cent. Recent data have bolstered the Bank’s confidence in its outlook for above-potential growth and the absorption of excess capacity in the economy. The Bank acknowledges recent softness in inflation but judges this to be temporary. Recognizing the lag between monetary policy actions and future inflation, Governing Council considers it appropriate to raise its overnight rate target at this time.

The global economy continues to strengthen and growth is broadening across countries and regions. The US economy was tepid in the first quarter of 2017 but is now growing at a solid pace, underpinned by a robust labour market and stronger investment. Above-potential growth is becoming more widespread in the euro area. However, elevated geopolitical uncertainty still clouds the global outlook, particularly for trade and investment. Meanwhile, world oil prices have softened as markets work toward a new supply/demand balance.

Bank of Canada hikes rates to 0.75% from 0.50%

Bank of Canada hikes rates for the first time in seven years

  • First rate hike since 2010
  • 25 of 33 economists expected a hike
  • The OIS market priced in a +90% chance of a hike
  • Says softer inflation mostly from temporary factors
  • Says output gap will close around the end of 2017 vs ‘first half of 2018’ before
  • Recent data have bolstered confidence in outlook for above-potential growth
  • Sees inflation close to 2% by mid-2018
  • Economy has been ‘robust’, fuelled by household spending; a significant amount of slack has been absorbed
  • Activity in housing sector has abated
  • Household spending likely to remain solid in months ahead but pace will slow later
  • Raises Q2 growth forecast to 3.0% from 2.5%. Sees 2.0% in Q3
  • Raises 2017 growth forecast to 2.8% from 2.6%

Here is the forward guidance:

“Governing Council judges that the current outlook warrants today’s withdrawal of some of the monetary policy stimulus in the economy. Future adjustments to the target for the overnight rate will be guided by incoming data as they inform the Bank’s inflation outlook, keeping in mind continued uncertainty and financial system vulnerabilities.”

I would call that a hawkish hike. There is no indication whatsoever of a one-and-done or two-and-done.

Fitch says global sovereign outlook improves but high debt remains

US ratings agency Fitch out with its mid-year sovereign assessment 12 July

  • global sovereign credit cycle reached an inflection point at the end of last year and has turned less negative in 2017
  • global sovereign credit cycle reached an inflection point at the end of last year and has turned less negative in 2017
  • unlike the 2013 “taper tantrum”, there has been no sign of disruption to emerging market capital flows associated with the Federal Reserve tightening, and Fitch does not expect any such disruption in the immediate term
  • higher-than-usual policy uncertainty remains in developed markets. It is still unclear whether Europe’s political setting can deliver the much-needed structural reforms to support growth
  • despite clear upward global growth momentum, most sovereigns are forecast to see deteriorations in their primary fiscal balances (balances excluding interest rates) in 2017 following four consecutive years of general improvements.
  • this is attributed largely to waning political support for additional fiscal tightening in developed markets, and policymakers in a number of emerging market sovereigns still struggling to cope with the downward adjustment in commodity prices

Words of justifiable caution.

Full report here

HSBC expect USD/JPY to finish the year at 100

The main points from HSBC global currency strategy, summarised

  • We are more bullish than consensus on JPY
  • The USD strengthened on aspirations that have not been met. The JPY weakened on promises that have not been kept
  • Cyclical, structural and political change was targeted but not delivered under the three arrows of Abenomics. Inflation has come full-circle during this failed experiment and USD-JPY will circle lower too
Forecast:
  • We expect USD-JPY to finish the year at 100 compared to a consensus at 114

 

Gary Cohn is Trump’s top candidate to replace Yellen at Fed

Politico quoting unnamed sources on what’s going on with Federal Reserve Chair replacement

Vote for whoever the **** you like – you will not escape the Goldman Sachs tentacles!
From the piece:
  • President Donald Trump is increasingly unlikely to nominate Federal Reserve Chair Janet Yellen next year for a second term, four people close to the process said.
  • … sources on Capitol Hill and inside the White House and the Treasury Department said that, at least as of now, if Cohn decides he wants the job, he is likely to get it.
  • “It’s Gary’s if he wants it, and I think he wants it,” one Republican close to the selection process said. A senior congressional GOP aide said that while a few Senate Republicans might express reservations about Cohn, he would probably receive widespread support.
  • “He would be easily confirmed,” this person said. “Most of our conservative members like him.”
Full article is here: