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TRUMP: WHO ARE THE WINNERS AND LOSERS?

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Check out AUD USD below, depending on direction of gold and DXY pressure could mount enough for a break out here, at the same time of course if ADP numbers are strong then we could see this continue lower. Hourly however much clearer risk to the downside greater than upside.

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Big NFP test today after DX hit Wed by FOMC minutes and Thur by low ADP employment figures. A good NFP could lead to a retest of 10350 while downside may be already mostly priced in on a poor figure.

 

 

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Small NFP miss overridden by bigger revision to last months figure, also average hourly earnings beat. EURUSD still hampered by big monthly support but USDJPY back up into prior range could be worth watching.

 

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So DOW hit 20000 or 1 point away same thing. 2017 is going to be a very interesting year, but looking at some of the big movers on the DOW index you can clearly see that the American people are being taken for a ride. Just look at the charts below JPM and GS below up 35% and 45% for Goldman in-fact at 2008 highs. And this is all on speculation of Trump going all out with fiscal stimulus increasing the national debt. Unemployment is running under 5% and housing has recovered, one would question such a need for fiscal stimulus. I think we also need to watch what is going to happen with NAFTA as well. Trump has bullied Toyota this week stating that they would face a border tax if they went to Mexico. Under the NAFTA agreement companies have a right to trade and export without hefty tariffs placed on them and this was meant to benefit countries and companies trading with each other. It also against WTO. So how he thinks he can impose this without ripping up the NAFTA agreement is anybodies guess. No doubt Canada is also going to be very worried as well. 

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Trump trade dominates markets this week

Investors focused on tweets and words from the president-elect.

 

Here are the big questions for investors ahead of the coming trading week.

 

What impact will Donald Trump’s press conference have on markets?

“I will be having a general news conference on JANUARY ELEVENTH in N.Y.C. Thank you.” That was how the president-elect last week [3] tweeted news of what is surely the first big market-moving event of the year — if it takes place. Mr Trump has form in announcing press conferences that subsequently are cancelled.

It may even be more significant than his January 20 inauguration, since the press conference should provide pointers to the address he will deliver to the American nation from the US Capitol after taking the oath of office.

The president-elect has demonstrated an unerring capacity to dominate the news agenda within 140 characters — last week, he tweeted variously on North Korea, China, Mexico, Toyota, Obamacare, Congress, Guantánamo Bay, job creation, Russian hacking, Arnold Schwarzenegger and a singer called Jackie Evancho who is performing at the inauguration.

As if investors didn’t know it, Mr Trump has a lot to say, and a lengthy press conference is the setting that will help answer the question that dominates every investor’s thinking: what will his presidency look like?

Investors began to answer that question after his acceptance speech in the early hours of his election triumph. After slumping nearly 2 per cent as his victory became clear, the dollar index promptly jumped 2.7 per cent as the market awoke to the possibilities of the incoming president delivering a package of tax cuts and fiscal stimulus.

The dollar was volatile in the first trading week of the year, a sure indication that investors are wondering whether the post-election rally was overdone. Wednesday will tell us more — if it happens.

 

So what does the president-elect think about the value of the dollar?

In the 2.5m words spoken or published by the president-elect and collected by Factbase, the combination “strong dollar” appears only once: a March 2016 town hall interview on MSNBC.

Mr Trump said: “People aren’t coming here, our high dollar — which sounds good to people. Everyone says, oh, that’s great. We have a strong dollar. We’re getting killed worldwide”

“Manufacturing and even — you look at tourism and everything else coming into this country, it’s not happening. We’re getting absolutely outmanoeuvred by devaluation.”

His promises on trade, tax and healthcare policy have naturally received most attention, and many might assume pro-growth policies are likely to mean higher interest rates, bond yields and a stronger dollar.

However, Bilal Hafeeze of Nomura points out the implication of a president determined to renegotiate trade deals for the benefit of domestic businesses: “A natural extension of these policies is a weak dollar policy. Simply put, dollar strength will offset the benefits of any import tariffs or other treaty gains to US companies.”

Foreign exchange traders may want to watch out for any clarifying tweets.

 

 

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Bearish bets against US Treasuries climb to new record

Big short positions accompany a steep sell-off in US government debt

 

The amount of money making bets that US Treasuries will fall in value climbed to a new record high over the last week in a wager that faster US economic growth and higher inflation will weigh further on government bond prices.

 

So-called “non-commercial” speculative positions selling the 10-year Treasury futures contract have been rising since the US presidential election and hit 816,156 contracts in the week to January 3, outnumbering long positions by 344,931 — a record level — according to fresh data from the Commodity Futures Trading Commission on Friday.

The bearish tilt has accompanied a steep sell-off in US government debt since the US election, which has unleashed pent-up animal spirits among investors and driven equity markets higher, on the expectation that a looser regulatory regime and lower taxes will spur growth and rekindle inflation.

“There are big shorts out there,” said Michael Cloherty, a strategist at RBC Capital Markets. “We see it in the futures data and we see it in the cash market too.”

The CFTC data applies to outright, speculative positions termed non-commercial. Commercial positions related to hedging activity continued to rise for the same 10-year Treasury contract, hitting a record long position of 549,000 contracts.

More granular data shows asset managers continuing to buy the 10-year contract, but more aggressively buying the 5-year Treasury future, as fears about rising rates push them into shorter, less rate-sensitive products, said John Brady, managing director at RJ O’Brien.

Even having fallen 18 basis points in the past three weeks, Treasury yields have climbed 56 basis points since the election to 2.42 per cent alongside a renewed rally in US stock markets. On Friday, the Dow Jones Industrial Average came within a hair of the 20,000 point level while the S&P 500 set a new record.

Speculative short positions will pay off if rates continue to rise. It also offers protection against a sharp, more unexpected rise in rates that could hurt equity markets. Leveraged accounts — a proxy for hedge funds — have built a net short position in the 10-year contract since November, but it is even more pronounced in the 5-year future, taking the opposite side of asset managers buying activity.

“The animal spirits are coming back,” said Mr Brady. “If you believe that, then being short 5-year futures offers nice protection in case that view doesn’t work out.”

President-elect Donald Trump’s ability to reinvigorate growth has fuelled a wide market rotation and upended the expectations of many Federal Reserve policymakers. In the central bank’s most recent minutes, almost all Fed officials said that the risk of economic activity surpassing their forecasts had increased on the prospect of more expansionary fiscal policies.

Investors have taken heed of the Fed’s view and the possibility that it may lift interest rates three times this year. Alongside the sell-off in both short- and long-dated Treasuries, federal funds futures have priced a near 40 per cent chance that interest rates climb at least that amount. And while that is below the 47 per cent odds recorded after the Fed released its December statement, it is eight-times greater than the odds implied on election night.

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Donald Trump is going to be the greatest asset to every trader this year, "big pharma" my favourite 2 words of the day

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 Reuters have been pro-Democrat anti-Trump throughout. Modest deficit?  well yeah, down to just 600 billion a year, debt now at 20 trillion.

Some have suggested Trump will probably do what all recent Presidents have done, take one look at the real accounts, soil himself, then spend the next 4 years playing golf ;)

 

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