Market Update – April 6 – Treasury yields soared & FOMC Minutes ahead

• USD & Treasury yields have been rising. Stock markets have been under pressure, was hit by the surge in yields with the tech-heavy index (USA100) plunging -2.26% as selling picked up into the close.
• The market has priced in a lot of bearish elements, yields shot higher again on hawkish comments from Fed, RBA. Disappointing China PMI reports weighted on both bond and stock market sentiment.
• USOil up to $1002.48 as the west mulls further sanctions against Russia. – Saudi which boosted prices by over by $2 per barrel in late March
• US coal prices climbed over $100 a ton today for the first time in 13 years after the EU said it is mulling restricting coal imports from Russia.
• US Rates on the 5-, 7-, and 10-year maturities were up almost 17 bps to 2.7108%, 2.678%, and 2.565%, respectively. The bond was 13.5 bps higher at 2.596%, while the 2-year rose over 10 bps to 2.526%. The curve bear steepened to 4.8 bps, after having been inverted for the prior three sessions at -3 bps Monday and -8 bps Friday.
• USD (USDIndex 99.72) rallied from 98.80 yesterday.
• Equities – USA500 -72.15 (1.57%) at 4530. US500 FUTS 4547. Banks & Technology stocks led the broadbased month end decline.
• Gold – steady at $1920 low after 1947 high yesterday.
• Bitcoin closing the gap at 45370?
• FX markets – EURUSD dipped to 1.0883, USDJPY continued to struggle at 124.04, Cable back to 1.3120 now. AUD and NZD also remained supported as yields moved higher. 

European Open – The German manufacturing orders came in much weaker than expected – with orders falling -2.2% m/m in February.  The actual slump was a surprise that will add to concerns that the German manufacturing sector could be heading for recession as the spike in energy prices and supply chain disruptions hit Germany’s industrial core. Exports orders dropped -3.3% in February.

FOMC preview: the minutes should prove very interesting to the markets as they should provide details on the balance sheet run off. We’ll also read the various comments about the abrupt, hawkish pivot from the FOMC. Of course the threat of surging inflation and the likelihood that it would not prove as “transitory” as expected, along with the robust recovery and strength in the labor market were the major factors finally forcing the Fed to shift into high gear and accelerating the pace of trimming accommodation and then toward eyeing aggressive rate hikes. The dot plot reflected the pivot, and Fedspeak since then has affirmed it. Governor Brainard’s comments Tuesday, in fact, indicated the Fed would announce the start of balance sheet reduction as soon as May. She also supported her colleagues’ views on the need for a larger and speedier pace of balance sheet runoff. We will look for details on that in the minutes. We suspect at a minimum the Fed will double the pace of that from the last cycle with $60 bln in Treasuries and $30 bln in MBS, although the still hot housing market could see a higher cap on MBS.

Today –

Biggest FX Mover @ (07:30 GMT) USDCHF (+0.37%) At 6-day highs and close to R2 at 0.9331. Next resistance 0.9376. MAs aligned higher, MACD signal line & histogram higher & over 0 line, RSI 77 & rising, H1 ATR 0.00087, Daily ATR 0.00617.

Click here to access our Economic Calendar

Andria Pichidi

Μarket Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distribution.

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The cost of living crisis is getting worse, here's what to do about it

Inflation in the UK is running at 6.2% a year (if you use the consumer price index – CPI), or as much as 8.3% (judged by the old retail price index-based measure that used to form the basis of the Bank of England’s inflation target). Unfortunately, this month the cost of living squeeze is only set to get worse. Here’s what’s changing – and what you can do to lessen the impact.

The deep freeze on allowances

The personal allowance (the level of earnings at which you start paying income tax) will be held at £12,570 until 2026, while the higher-rate income tax threshold will be frozen at £50,270. This is “probably the biggest change coming in from 6 April”, says AJ Bell. Usually these thresholds would increase in line with inflation “to offer some protection to taxpayers”, but it’s proved an irresistible stealth tax for
the chancellor.

Similarly, on the asset taxation front, the capital gains tax (CGT) allowance remains frozen at £12,300 until 2026, while the inheritance tax threshold is also staying at £325,000, which will “start to bite into estates” that grow in value over the next four years. While the chancellor did announce plans to cut income tax from 20% to 19%, this is little comfort as it’s not due until 2024.

The health and social care levy

The threshold at which national insurance (NI) starts to be paid will rise to £9,880 from £9,568 in April, and then to £12,570 (matching the personal allowance) in July. But from 6 April most workers will also start to pay the health and social care levy, which is an increase of 1.25 percentage points on NI contributions, driving rates from 12% on earnings up to £50,270 and 2% on anything above that to 13.25% and 3.25% respectively. Taking the changes to the NI threshold from July into account, a worker on £30,000 will be better off overall, paying £2,309 a year in NI contributions, down £143 from the current £2,452.

However, someone earning £50,000 will pay £4,959, up £107 from their current contribution of £4,852.

Investors should note that dividend tax is rising along with the NI increase, which means basic-rate taxpayers pay 8.75% on dividend income; higher-rate taxpayers 33.75%; and additional rate 39.35%.

State pensions and energy prices

Households already struggling with rising costs will also have to deal with an increase in the energy price cap, which is a regulatory cap on the amount per unit of gas and electricity that utility companies can charge. Based on average household usage, it is rising by an eye-watering 54%, from £1,277 to £1,971 from 1 April, although of course that will vary depending on your individual usage.

The regulator is playing catch-up with soaring energy prices, and there’s no guarantee that October (the next time the price cap changes) won’t see another significant increase.

As for pensions, the state pension will rise with the rate of inflation (as measured by CPI), but that’s based on the figure from September 2021, which means an increase of just 3.1%. Meanwhile, the pensions lifetime allowance (LTA) – the total pension pot you can accumulate over a lifetime before being taxed at 55% on the excess – will be frozen at £1,073,100 for another four years.

Practical solutions

There are few government measures to help, although do check your council tax band – houses in bands A to D in England will get a £150 rebate on their council tax bills in April. If you pay by direct debit, this will be paid into your account directly. Otherwise, contact your council. Also ensure you use your individual savings account and pension allowances this year – at least those shield you from CGT and dividend taxes.

from Moneyweek RSS Feed https://moneyweek.com/personal-finance/604652/the-cost-of-living-crisis-is-about-to-get-worse-in-april-heres-what-to-do
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Why the nagging approach can make boards more active

When the limited liability company first got going as a popular structure not everyone was convinced it could work. Here’s Adam Smith on the matter in The Wealth of Nations (published in 1776): “The directors of such companies . . . being the managers rather of other people’s money than of their own, it cannot well be expected that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own.”

The question back then was who would make them — and how. Almost 250 years on, this has still not been properly answered.

The obvious bit is the who — it should be the actual owners of the company, the shareholders. The less obvious bit is the how: if every large listed company has millions of separate beneficial owners, how can they all co-ordinate to hold a board’s feet to the fire?

Average AGM attendance rate is falling 

Long term they mostly haven’t been able to — and managers have been left to do their own thing. More recently the rise of giant asset management companies such as BlackRock and others has meant an effective contracting out of nagging the directors to a new group of powerful middlemen.

That has sort of worked — in that there is lots of nagging. But there needs to be more. Link, the investor services business, notes that the average AGM attendance rate in the UK has fallen even in the last year (from 75.9 per cent in 2020 to 73.9 per cent in 2021). It also tends to be the wrong kind of nagging — often generalised asks (adopt a net zero climate target, appoint a diverse board etc), driven by box-ticking from big proxy advisers such as ISS and devoid of much actual strategic challenge.

During the 2020-21 proxy season, BlackRock voted for one or more directors on an activist slate in only 15 per cent of US proxy contests (attempts by activists to get new directors on the board). Mostly they support management as it is. That’s a shame — as it does little to neutralise the tendency to “negligence and profusion” that Smith worried about.

Active shareholders have generated robust returns 

For evidence, look to the generally higher returns from private equity, where owners are obviously active. The returns to investors here may be in the round no higher than those from the stock market.

But add in the managers’ take (usually several percentage points) and one could argue that the total return is higher. You might say that this is partly to do with their use of leverage but it also suggests that owner engagement matters. Studies from McKinsey over the past 20 years have generally found that the more active the owners of a company — and hence the board — the more effective a board.

There are, of course, many excellent activist shareholders around and, increasingly, there are also unexpected causes in the mix. There have been high-profile moves this year from activist investor Carl Icahn — he bought a stake in McDonald's and nominated two new directors to its board in an effort to change the thoroughly unpleasant way the firm treats pigs.

He is doing something similar at Kroger in a bid to change their treatment of workers and animals. There’s also been an interesting rise in more conservative activism (pushing for more scrutiny of racial equity programmes, for example).

Overall, activist campaigns in 2021 (the ones that ended up public at least) were more or less back to pre-pandemic levels. At the same time there is a trend towards a less confrontational form of activism: Pershing Square Capital Management, long one of the most vocal of these firms, plans to take a more “positive constructive” approach than in the past.

The problem is that, for most companies, having anything close to what you might call active owners is still more the exception than the norm. Passive investors are far too passive and, despite the impressive efforts of many grassroots groups, retail investors still have little way of effectively demanding any change.

How can we change this?

The first part of the answer is not the way the SEC are currently attempting it. Their plan to force activists building stakes in companies to disclose them very early on in the process will be remarkably unhelpful. If they have to disclose before building the kind of stake that gives them a voice, the profit motive rather disappears.

The SEC would be much better to focus on creating more direct pathways between shareholder and company.

There’s a lot going on in this space. In the UK this week, for example, Link introduced a new app that should ease the voting process for shareholders. But if we really want to make things simple — and to get public companies acting more like private ones — we might just work on the board.

In theory all boards represent all shareholders. In practise they tend to be bogged down in regulation compliance and succession issues, operating more as stewards than challengers.

A regulatory shift should require one well-supported non executive director to be fully responsible for shareholder communication and engagement — retail and institutional; for asking about and understanding what activist investors are thinking about; and for directly promoting their views on the board. Adding a little activist magic along the way might help change boards for the better.

• This article was first published in the Financial Times

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Lockdown winner Homeserve has had another strong year

At the end of March, Canadian financial powerhouse Brookfield Asset Management (TSE: BAM) announced that one of its private infrastructure funds was putting together a bid for the international home repairs and improvements business, HomeServe (LSE: HSV). That sent the FTSE 250 company’s share price soaring by 15%. 

Yet while a full offer has yet to emerge (and there is no guarantee one will at this stage), Homeserve is not hanging around. 

The home repair services industry was a big winner of pandemic lockdowns, and Homeserve has been a beneficiary. Customers who were stuck at home spent more time and money on renovations, validating the firm’s recent expansion. 

Over its financial year to the end of March 2021, adjusted earnings rose by 3%. That’s pretty impressive given that many companies struggled just to stay afloat in the first year of the pandemic. 

Demand for its services continues to grow. Adjusted earnings jumped by 27% in the six months to the end of September thanks to strong performance in its North America market.

And the company’s figures have continued to improve since then, according to its latest trading update. 

Homeserve’s business is making progress on all fronts

In a trading update released today ahead of the publication of its full-year results at the end of May, the firm reported an “acceleration in performance” compared to its 2021 financial year. 

In the year to end-March 2022, customer retention rose to 84% compared to 83%, while the number of “affinity partner” households grew by a net seven million (compared to two million previously) to 73 million (up from 66 million).

What’s an affinity partner? Under the scheme, utility companies allow Homeserve to provide services on their behalf to consumers. Utilities have the advantage of being able to rely on a trusted third-party brand with a wide customer base without needing to invest large amounts of time and resources. The agreement also benefits consumers who are able to access a range of services through one supplier (Homeserve). 

The group also wants to help consumers burnish their green credentials. It has launched an installation and maintenance proposition for domestic electric vehicle charging. This is now available to nine million homes through a new 4.6 million household utility partnership. 

Other products across the group also made decent progress, notably the Home Experts division, which owns the Checkatrade brand (which aims to help consumers find reliable tradespeople more easily). 

This unit was profitable for the first time on a full-year basis, with Checkatrade leading the charge. The platform ended the year with 47,000 paying trades (up 7% year-on-year) and average revenue per trade is expected to exceed Homeserve’s “Milestone 1” target of £1,200.

The company ended the year with a net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) ratio of two (up from 1.8 times last year), as acquisitions offset cash generated from operations. 

Growth at a reasonable price – even if there’s no bid

A bid from Brookfield would be a nice windfall for shareholders, but Homeserve’s underlying growth is reassuring and picking up momentum. Further, the recurring nature of the company’s subscription business generates a steady stream of cash for the business to reinvest. 

The broker consensus on 2022 earnings per share (according to Refinitiv data) is 48.7p. That’s a 14% increase on 2021. The resulting forward price-to-earnings (P/E) ratio of 18.2 does not look too demanding considering the recurring nature of the company’s business model.

from Moneyweek RSS Feed https://moneyweek.com/investments/stockmarkets/uk-stockmarkets/604670/lockdown-winner-homeserve-has-had-another-strong
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Does Russia's move to price energy in roubles threaten the US dollar?

There's been a lot of excitement (if that's the right word) over the idea that Russia is no longer accepting dollars as payment for its energy.

Overall, it would prefer gold ("hard currency") or roubles, but it'll take most other national currencies as long as they're not greenbacks.

Is this the beginning of the end for US dollar hegemony?

The answer is "no".

Here's why...

The US dollar is not perfect...

Before we get into this I want to make one thing clear. I've written about the decline of the US dollar on several occasions in the past. I'm not a US dollar "maximalist" by any means.

It's clear that the US decided that the role of "World Police" was a burden and responsibility it could no longer be bothered to shoulder. The US dollar was also "weaponised" a long time ago. This weaponisation became overt as long ago as 2012, when Iran was sanctioned over its nuclear activities.

So anyone who feared that the US dollar might not be a financial operating system that was compatible with their own nation's values or ambitions had been given every reason to find alternatives well before the most recent sanctions were imposed on Russia.

Moreover, the US dollar has been declining as a share of central bank reserves for a long time. As economic professor and general currency commentator Barry Eichengreen pointed out in the FT the other day, the US dollar accounted for around 70% of foreign exchange reserves in 2001. Now it accounts for just 59%.

So dollar dominance as such, has been on the decline for some time. (Although "decline" in this case is probably the wrong word, because in fact what's happened is that most of this move out of the US dollar has been into smaller currencies – such as the Australian dollar, South Korean won, and Swedish krona – which have become increasingly viable as their markets have deepened, ie become more like American markets).

Anyway, all of this is to say that we are in complicated times, and that – as Eichengreen puts it – we are "already seeing movement towards a more multipolar international monetary system". I think it's also fair to say that the world has also been quietly hunting for an alternative to the post-1970s monetary order ever since the 2008 financial crisis.

But I don't feel that Russia's desire to trade energy in anything other than US dollars is particularly significant in terms of this hunt for a new monetary order.

... but what's the alternative?

Why not? You can argue that the US dollar is being debased by money printing. You can argue that the US is increasingly less reliable as a partner, given its willingness to cross the Rubicon when it comes to cutting countries off from the global reserve currency.

But you have to have an alternative. History shows that reserve currencies give way to one another when another comes along that is more attractive.

That's usually because the dominant power is on the way down, while the up and coming power is up and coming. That's how the pound gave way to the US dollar. But this is a simple symptom of the fact that capital flows to where it is treated best and where it finds the most opportunities.

The war has resulted in Russia losing capital of all kinds – financial, human, social. The country has had to impose capital controls in order to prevent capital from fleeing its borders. This is not the recipe for supplanting the global financial hegemon.

Think of it this way. Does Russia's demand to swap Russian energy for anything but US dollars make the world keen to find an alternative to US dollars? Or does it instead make most countries keener to find an alternative to Russian energy?

Neither Russia, nor China – the rising power today – have demonstrated any reason to trust them with your hard-earned capital. Russian property rights have always been built on a "gangster rules", "might is right" basis.

China loves foreign capital when it's made up of greedy overseas investors blindly recapitalising its banking system or foolish manufacturers handing over their intellectual property in hope of accessing a billion-odd Chinese consumers.

But when business people or shareholder capitalism start to kick off and threaten the grip of the Communist party or the social order, you see what happens. Mouthy entrepreneurs and A-listers vanish then come back three months later, much chagrined.

It's clear that China recognises that its recent approach has been toxic to foreign investment, and it is trying to wind that back. Hence the recent surge in Chinese tech stocks. This also explains its somewhat half-hearted support of Russia.

But I'd still be very wary of putting your money to work there.

The real threat to the US dollar is from the US abandoning its values

None of this is to say that the US dollar will be the global reserve currency forever. That’s just not how these things happen. 

But the real risk to US dollar hegemony is internal. The real risk is that the US retreats from the things that make the dollar valuable as a reserve currency – rule of law; enforceable, well-respected property rights; and the protection of those rights for all, regardless of political perspective or socio-economic position.

That's why all this "culture war" stuff actually does matter. Creeping authoritarianism from within is a much greater threat to US dollar hegemony than the overt authoritarianism from hostile nations.

In short, the real risk stemming from weaponisation comes if and when a currency is weaponised against its own people.

Otherwise, the US only needs to worry if and when China decides to open up and embrace democracy and entirely free markets. Capital would flood in. But I suspect most of us would be rather happy about that because that's a pretty benign regime shift.

After all, for all the masochistic joy that some British people get in revelling in tales of decline, it's not as though Britain disappeared after the pound was no longer the world's reserve currency. Sterling remains significant and London is still by far and away one of the world's most important financial centres, underpinned largely by clear respect for property rights. Values matter.

So what could replace the US dollar?

So what about that long run? Well, if you agree with my basic thesis – that this is built on values and property rights – then I suspect that the biggest threat to US dollar hegemony is more likely to be bitcoin, or something like it.

There's a lot of utopian blather around cryptocurrencies, but the fundamental promise is an attractive one. Indeed, it's a currency rooted in precisely the values that underpin the US dollar and US democracy: secure property rights, freedom of individual action, and transparency without sacrificing privacy, to name but a few. 

(Indeed, the ideal of bitcoin is so appealing that I've always thought that if you were a bad actor, and you wanted to find a way to undermine the status of the US dollar, you'd be hard pushed to find a better way to do it than to create something like bitcoin and then launch it during a world-shaking global financial crisis. But that's a conspiracy theory for another day.)

Anyway. Debasement – whether that be of the actual value of the currency or the philosophical values that underpin the currency – is a genuine threat to the reserve currency at all times. There's plenty of risk of that.

And you should certainly own some gold. It's a solid disaster hedge, it tends to do well when inflation surprises on the upside, and it will certainly stay in demand if authoritarian nations' central banks are looking for ways to diversify.

But Russia demanding payment for its oil in something other than US dollars? I just don't think that in and of itself, it's a big deal.

Feel free to disagree or point out where my reasoning has gone awry at editor@moneyweek.com.

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Gold Futures (GC!), H4 Potential for Bullish Upside!

Type: Bullish BounceKey Levels:Resistance: 1959.0Pivot: 1921.0Support: 1910.2Preferred Case:Prices have recently broken out of our descending trendline. We see the potential for further bullish continuation from our Pivot at 1921.0 in line graphical overlap and area of Fibonacci confluences towards our 1st resistance at 1959.0 in line with 61.8% Fibonacci Projection . Our bullish bias is further supported by RSI being at levels where bounces previously occurred.Alternative Scenario:If prices were to reverse, they can potentially reach our 1st support at 1910.2 in line with 61.8% Fibonacci projection .Fundamentals:With continuation of Russo-Ukraine invasions and inflation, we might expect a slight bullish turn towards the precious metal.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/gold-futures-gc-h4-potential-for-bullish-upside"
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Silver Futures (SI1!), H4 Potential for Dip!

Type: Bearish DipKey Levels:Resistance: 25.005Pivot: 24.665Support: 24.050Preferred Case:Prices are approaching a pivot. We see the potential for a dip from our Pivot at 24.665 in line with 50% Fibonacci Retracement towards our 1st support at 24.050 in line with 61.8% Fibonacci Projection . Our bearish bias is further supported by prices trading below our Ichimoku cloud resistance.Alternative Scenario:If prices were to continue their rally, they can potentially reach our 1st resistance at 25.005 which is an area of Fibonacci confluencesFundamentals:With inflation and war tensions might result in a fundamentally upwards bias on the pair. As FA and TA are in conflict, we would advise investors to be prudent in trading the precious metal.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/silver-futures-si1-h4-potential-for-dip5"
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The IndeX Files 05-04-2022

Risk Assets Lacking Bullish Momentum Following Russian Atrocities NewsA quiet but mostly positive start to the week for global equities markets. Risk assets remain supported despite fears of harsher sanctions to be applied to Russia in the wake of news of the Bucha atrocities. Reports over the weekend confirmed mass civilian murders carried out by the Russian army. The incident has provoked a strong response from global leaders, likely to further embolden the economic and political sanctions being used against Russia. However, there are some concerns over the impact an all-out gas and oil embargo might have on the eurozone economy. For now at least, it looks as though markets are in wait and see mode. There are already concerns around global demand following news of China locking down Shanghai and the risk of further lockdowns in the world’s second largest economy.On the data front, we have a relatively light schedule this week. Main focus will be on US PMIs midweek, along with the meeting minutes from the March FOMC. Given the hawkish shift which took place at the meeting, traders will be keen to ascertain any further hawkish details which might help lift USD, potentially hampering equities near term. The RBA overnight took a hawkish shift also in terms of its rates outlook. The bank removed the word “patient” from its language around rate hikes, bringing forward market pricing for an RBA hike into this year.Technical ViewsDAXFor now, the DAX continues to hold against the bear channel resistance level, hemmed in also by the 14791.27 level. With both MACD and RSI bullish, the focus is on a further push higher near term with 15636.39 the next upside target for bulls. Should we slip back below 14170.79, however, the focus will turn to support at 13672.31 next.S&P 500The recovery rally in the S&P has seen the market extending the bear-channel break with price now testing above the 4575.50 level. With both MACD and RSI bullish, the focus is on a further push higher while above here with 4744 the next upside marker to note. To the downside, 4475.25 will be the next support to watch on any pull-back.FTSEThe rally in the FTSE has seen the market trading back up to test the 7558.7 level. This region continues to prove strong resistance for the index. With both MACD and RSI bullish here, the focus is on a further push higher though worth noting that momentum is waning. To the topside, 7691.6 and the bull channel top are the next resistance levels to note. To the downside, 7362.6 is the key support to watch.NIKKEIThe recent test of the channel top and the 28356.6 level has seen the Nikkei correcting lower initially. However, with price holding above support at the 24722.9 level and with both MACD and RSI bullish, the focus is on a further push higher for now with 29464.9 the next upside marker to note.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/the-index-files-05-04-2022"
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Wheat Futures (ZW1!), H4 Bearish Dip

Type: Bearish DipKey Levels:Resistance: 1075'6Pivot: 1036'6Support: 982'0Preferred Case:Prices have approached our Pivot at 1036'6 in line with 61.8% Fibonacci Retracement. We see the potential for a dip from our Pivot at 1036'6 towards our 1st support at 982'0 in line with 61.8% Fibonacci Projection. Prices are trading below our Ichimoku cloud resistance, further supporting our bearish bias.Alternative Scenario:Price might continue to climb towards the 1st resistance level of 1075'6 in line with 100% Fibonacci projection.Fundamentals:No Major News

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/wheat-futures-zw1-h4-bearish-dip"
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Soybeans Future (ZS1!), H1 Bearish Drop

Type: Bearish DropKey Levels:Resistance: 1643'2|Pivot: 1623'2Support: 1579'6Preferred Case:With price moving below the Ichimoku cloud and expected to reverse off the stochastics indicator, we see a potential bearish dip from our Pivot at 1623'2 in line 38.2% Fibonacci retracement towards our 1st support at 1579'6 in line with the horizontal swing low support and 161.8% Fibonacci extension.Alternative Scenario:Alternatively, if price breaks our pivot structure, it may head for 1st resistance at 1643'2 in line with the 61.8% Fibonacci retracement and horizontal pullback resistance.Fundamentals:No major news

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/soybeans-future-zs1-h1-bearish-drop5"
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Dax Futures (FDAX1!), H1 Potential For A Drop!

Type: Bearish DropKey Levels:Resistance: 14893Pivot: 14683Support: 14346Preferred Case:With price expected to reverse off the Ichimoku cloud resistance, we have a bearish bias that price will drop to our support at 14346 in line with the 78.6% Fibonacci projection and swing low support from our pivot at 14683 in line with the 61.8% Fibonacci retracement and swing high resistance.Alternative Scenario:Alternative scenario:Alternatively, price may break pivot structure and head for 1st resistance at 14893 in line with the swing high resistance. Fundamentals:No major news.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/dax-futures-fdax1-h1-potential-for-a-drop5"
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Investment Bank Outlook 05-04-2022

CIBCFX FlowsBoJ Governor Kuroda caused some volatility today. He spoke in parliament and commented about forex, indicated current YEN moves somewhat rapid. Then he reiterated no change in stance that weak YEN is positive for the economy overall. The first statement sent $YEN lower from 122.71 to 122.39. Then it was back up to 122.60. Kuroda also said may not be the last resort but we will offer to buy unlimited amount of 10-year JGBs if rise in long-term interest rates is rapid. Comments from Kuroda continued to roll but this time, market was fatigue and $YEN stalled.The main event today is RBA meeting at 12.30 pm Hong Kong, no change expected in cash rate target but markets believe the RBA to hike rates in June and cash rate at 1.75% by end of 2022. What’s important today will be the messaging if the RBA pushes away from current expectations. AU$, best performing G10 currency this year, didn’t do much, it was at 0.7543 when I took over and ended Asia morning at 0.7538. Strong AU$ resistance at 0.7555/60, I suspect there will be a push higher ahead of RBA, this could invite breakout artists to jump in. 0.7617 will be the next big target.Oil futures firmed up as the US and Europe prepare to impose a fresh wave of sanctions on Russia. However, $CAD faced some buyers. Talk of decent option strikes due in coming week, more than $1.9bn worth of $CAD put strikes at 1.2400 and mixture of 1.2600 strikes around $1.6bn. Economists are expecting a strong January merchandise trade out today. Our economics team said trade surplus will have been bolstered by higher energy prices in February, with an even larger boost from that area coming in March.Bridge closures and protests during the month could have impacted two-way trade, particularly the Ambassador bridge closure and its impact on the auto industry. Advance data from the US suggests that Canadian exports of autos and parts could have seen a greater weakening than imports during the month. That will partly offset the improvement in energy prices within the overall trade surplus, which we estimate will be $3bn in February.Not much to talk about the EUR$, few ticks lower from where New York closed. Chatter of option bids near 1.0950-60 and offers atop 1.0990, could be linked to 1.1000 strikes maturing this week total €4.5bn.CitiEuropean OpenA hawkish shift by the RBA in today’s monetary policy decision (rates left unchanged) sent AUD and Australian bond yields soaring higher as markets repriced rate hike expectations. NZD also rose, following AUD. JPY initially rose early in Asian trading on Governor Kuroda’s comments, although it pared some gains later in the day. DXY and USTs remained flat, while the rest of G10 FX held in a tight range on a quiet day as China, Taiwan and Hong Kong were on holiday. Oil prices continued their march higher following concerns of sanctions yesterday, while equities held onto their gains today. Over in EM, CPIs from KRW, PHP and THB came in above consensus, with all three sitting in the green against the dollar.Looking ahead, we continue to monitor Russia-Ukraine headlines with The Economic and Financial Affairs Council meeting Tuesday at 09:00 BST. We will continue to monitor movements of assets that are showing geopolitical risk premium given further speculation on action from the EU. USD will observe ISM servives data alongside Fedspeak from Brainard and Williams.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/investment-bank-outlook-05-04-2022"
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Corn Futures (ZC1!), H1 Potential for Bullish Rise!

Type: Bullish RiseKey Levels:Resistance: 767'0Pivot: 750'2Support: 741'0Preferred Case:With price moving above the Ichimoku cloud along with the recent trendline breakout, we have a bullish bias that price will rise to our 1st resistance in line with the 767'0 in line with he swing high resistance from our pivot of 750'2 in line with the 23.6% Fibonacci retracement and the horizontal pullback support.Alternative Scenario:Alternatively, price may break pivot structure and head for 1st support at 741'0 in line with he 61.8% Fibonacci retracement and the swing low support.Fundamentals:No major news.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/corn-futures-zc1-h1-potential-for-bullish-rise"
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Three healthcare trusts to invest in

The remarkable speed at which scientists were able to discover new vaccines and treatments during the pandemic and roll out mass usage seemed to show that there is no medical affliction which is beyond the scope of ingenuity and innovation. This seemed likely to usher in a new golden era for the healthcare sector, and for biotechnology in particular, that would boost the private companies at the forefront of the medical revolution.

Instead the biotech sector is in its biggest bear market in 30 years. In 12 months, the S&P Biotechnology index has lagged the S&P 500 by 64%, falling nearly 50% back to the level of mid 2015. The broader healthcare sector has fared better, thanks to the resilient share prices of big pharmaceutical firms and healthcare service providers. But smaller, innovative companies focusing on research and development rather than shortterm cash flow have suffered.

Time for the tide to turn

In the year to 28 February, the net asset value of Worldwide Healthcare Trust (LSE: WWH) was down 9%, and that of its sister trust Biotech Growth Trust (LSE: BIOG) was down 35%, each 22% behind their benchmark indices. “Fundamentals did not matter,” says Sven Borho, co-manager of WWH. “Everything was driven by macro trends such as growth into value”. In addition to the poor performance of biotech (22% of WWH’s portfolio, 82% of BIOG’s), exposure to the massive under-performance of Chinese companies (8% in both), also hurt the trusts, he notes.

Still, “the healthcare sector now trades on a 20% discount to the S&P 500, the same as in the financial crisis”, says Borho. “Every single time it has traded at such a discount has been the very best time to be invested, especially in innovation and growth.” Meanwhile, the threat of drug pricing reform and regulatory change in the US has lifted. “We are very confident of recapturing much of the lost performance of WWH and BIOG… We have bounced back from setbacks before.”

Controlling the costs

By far the best performer in the sector is the £1bn BB Healthcare trust (LSE: BBH), which is up by 84%, over the past five years. Manager Paul Major has focused on the rising cost of healthcare – which accounted for 10% of US GDP in 1980 but is now 18% – as a key theme. “The compound annual real growth rate of NHS expenditure is 2.25% but needs to be 3.5%.

Thanks to ageing populations, scientific progress and increasing wealth, healthcare is the secular growth story of our age but it needs to be paid for.” BBH invests in firms that “provide innovative solutions for broken healthcare systems around the world”. For example, healthcare waste in the US is estimated at $750bn per annum.

“The political discussion in the US is about prescription drugs but they only account for 10% of total spending. Hospital care accounts for 31% and physicians and clinics 20%.” This is where efficiency can improve, says Major. “Hospitals are expensive and nobody wants to be there, so newer care models are needed. The first interaction of patients with healthcare needs to be online.”

Other areas of focus are diagnostics, patient monitoring, disease prevention and changing behaviour. “People do not follow medical advice or behave rationally so they need to be nudged. For example, 15% of those with cancer in the US are not receiving treatment. Sensory technology can be used for monitoring the treatment of patients so that their arrival in hospital represents a last resort.”

Other areas of focus are diagnostics, patient monitoring, disease prevention and changing behaviour. “People do not follow medical advice or behave rationally so they need to be nudged. For example, 15% of those with cancer in the US are not receiving treatment. Sensory technology can be used for monitoring the treatment of patients so that their arrival in hospital represents a last resort.”

from Moneyweek RSS Feed https://moneyweek.com/investments/funds/604657/three-healthcare-trusts-to-invest-in
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