With VIX trading with a 12 handle and The White House patting itself on the back after a 4 handle GDP print, one could be forgiven (ignoring the bloodbathery in NFLX, FB, & TWTR) for thinking all is well.
Here is Nasdaq’s “VIX” – it is flat over the last week despite the chaos in mega-cap tech…
That would be “pure folly” according to former fund manager and FX trader Richard Breslow who warns next week is going to be huge for markets for a number of reasons.
Via Bloomberg,
The markets were, mostly, quiet overnight. Yet for some reason I feel breathless. It’s the placid-looking duck on the surface paddling furiously beneath the surface. Option volatilities remain low, volumes are mediocre other than occasional spikes, traders are furiously trying to ignore the news. But there are, nevertheless, a lot of things in play. And the quips about ECB President Mario Draghi’s short press conference proving policy makers were done for the summer aside, next week is utterly jam-packed with events and economic number releases.
It may not be the best of moments to leave your positions with an assistant.
Are you a central bank junkie? There are a slew of monetary policy meetings.
Will the BOJ talk about tinkering with its yield curve policy? Whatever they decide will get the yen and JGB markets motoring. Even if it’s just an itty bitty hint. JGBs finished this week at their highest yield in a long time. The yen crosses look like they are simply dying to test support. Japanese asset prices won’t be here a week from now.
Just where does the BOE stand, with so many countervailing factors pulling it in different directions? The market thinks both meetings could very much be “live”.
Certainly India’s RBI might reshuffle the Asian crosses. Even the banks that are expected to stand pat have interesting and important messages they might potentially divulge.
I want to hear from Brazil’s BCB. Are policy makers worried or still in wait-and-see mode? The accompanying statements are unlikely to pass quietly.
U.S. employment and China PMIs are on the docket. It is hard to believe that those China numbers won’t move all sorts of things. Especially with USD/CNY having gone ballistic and the forward curves showing a lot of pressure. The U.S. has so many numbers that count, suggesting dot expectations could be bouncing all over the place.
Have you been following the wild gyrations of the Turkish lira? You only have to wait until Tuesday to have the CBRT Governor Cetinkaya tell you what he’s thinking on the inflation front. That could be very good theater.
Maybe you follow earnings releases. Berkshire Hathaway is always a ratings magnet. European banks are weighing in. And tell me you won’t be salivating to see the latest on Tesla. Important industry sectors galore will be weighing in. Stocks indices have been trading great and optimism reigns. It’s hard to believe that Facebook feels like yesterday’s news.
And don’t forget that while lots of people laze on the beach, your government is hard at work. Lots of meetings. For my money, I want to see the new Italian prime minister up close. The situation in Italy remains fluid. And having Secretary of State Pompeo at the same Asean meeting as Iran’s foreign minister will be an interesting exercise in diplomacy.
I’ll stop the laundry list there. But you get the idea. It is going to be busy, possibly fun and could tell us a lot about how markets might set up for the run toward the year’s finish line. You have to seize opportunities when they present themselves, and it would be foolish to dismiss next week as just more quiet summer fare
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