The IndeX Files 30-03-2021

Risk Rallies Following Suez Canal Solution Global equities benchmarks have mostly started the week on a firm footing as news of a resolution to the Suez Canal crisis has been met with relief. A super cargo-carrier which ran aground in the key shipping-lane for 6 days caused a back-log of more than $30 billion in global trade goods, wreaking havoc on international supply chains and heavily disrupting shipping contracts. Equities had come under selling pressure late last week as the crisis worsened with some engineers suggesting it might be weeks until they could move the ship. However, following constant work over the weekend the ship has now been freed, returning the shipping-lane to normal service.Aside from that issue, the global risk backdrop appears a little more favourable this week with the UK progressing through another stage of lockdown easing and the US continuing to make strong momentum with its vaccination push. While concerns are still lingering about a potential third wave of the virus underway in Europe, plans from Pfizer to dramatically increase its vaccine production have offset these somewhat, allowing equities to fund upside momentum once again.Technical Views DAXThe rally in the DAX this week has seen price breaking out above the 14783.12 level following the rebound off the 14411.90 level support. Price is now challenging the top of the bull channel which is holding as resistance for now. While above 14411.90 the near term bias remains bullish.S&P500The S&P is one again putting pressure on the 3964.25 level following the return of demand as price pierced below the rising trend line support once again last week. For now, the bias remains bullish however, bearish divergence in momentum studies suggests reversal risks with 3786.25 the big support level to watch.FTSEThe FTSE is once again testing the 6803.1 level resistance following the bounce off the 6640.6 level last week. While price holds above that level, the breakout from the contracting triangle pattern remains intact, keeping focus on a further push higher in the near term, targeting 7025.8 next.NIKKEIThe sell off in the Nikkei last week found support into a test of the 28372.5 level low, turning price higher once again. However, price is yet to surpass the 29749.1 level and is at risk of putting in another lower high, flagging reversal risks. For bears, 28372.5 is the key level to break.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/the-index-files-30-03-2021"
via IFTTT

Market Update – March 30 – USD & Equities remains bid

USDJPY, H1

European stock markets are broadly higher in early trade and GER30 and UK100 are posting gains of 0.47% and 0.53% respectively. US futures continue to trade narrowly mixed, however, as the tech heavy USA100 struggles to find a footing. Asian markets had also painted a slightly mixed picture overnight, although generally it seems recovery hopes are back and that is also driving reflation trades and putting pressure on bonds this morning. 10-year yields are currently up 2.9 and 4.2 bp respectively in Germany and the UK, with the latter now at 0.83%. The marked rise in UK refinancing costs won’t help the government tackle the rapidly increasing debt mountain, but with the currency strengthening, the large current account deficit will be easier to handle.

The Dollar rallied to a near five-month high on the measure of the narrow trade-weighted USDIndex. The high is 93.02, with the USDIndex rising above 93.0 for the first time since the first week of last November. The Dollar’s gains were in tandem with a vault higher in mid- to longer-dated Treasury yields, with the 10-year note yield rising nearly 4 bp from yesterday in testing the 1.760% level for the first time since January 2020. The yield had been foraying under 1.60% just last Thursday. At the same time, yield differentials have widened more in the dollar’s favour, with the 10-year T-note over Bund spread, for instance, stretching out to new 14-month highs over 203 bp. A marked yield differential widening has also been seen in the case of the T-note versus JGB yield, while the cases for US versus UK and Australian 10-year yields have seen much less, if any, widening. This yield dynamic has been playing out against a backdrop of overall positive risk appetite.

The MSCI Asia-Pacific stock index rallied over 0.6% and US index futures were showing modest gains, as of the early London morning. Weakness in Nomura shares was a drag on Japan’s Nikkei 225, which underperformed most regional peer indices today. Nomura and Credit Suisse have been hit hard by the Archegos Capital default, and both banks are facing regulatory scrutiny. Investors are wary about who else might be exposed, although the overall tone across Asian equity markets has been positive.

The global rollout of Covid vaccines remains a central focus for investors, especially with cases spiking again in Brazil and some other Latin American countries, in addition to continental Europe. The Philippines in Asia is also seeing a sharp spike in new cases. Vaccination supply capacity is ramping higher, however, and given the evident success of the vaccination programmes in the US, UK and Israel, where the rollout has been expensive compared to most other countries, it is anticipated that the reflation trade will fully recommence after the passing of month- and quarter-end, and the end of the financial year in the case of Japan. Expectation is that this will be bullish for the Dollar and dollar bloc and other cyclical currencies, and bearish for the Euro and Yen.

Click here to access the HotForex Economic Calendar

Stuart Cowell

Head Market 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 distributed without our prior written permission.

from HF Analysis /224997/
via IFTTT

Daily Market Outlook, March 30, 2021

Daily Market Outlook, March 30, 2021 Asian equity markets are mixed, as Treasury yields climbed and markets take note of the progress in the US vaccine deployment with President Biden indicating that 90% of adults will be inoculated by 19 April. Investors are also assessing an expected announcement of a major US infrastructure plan on Wednesday. In the UK, PM Johnson said he is ‘hopeful’ that another lockdown will not be necessary and that the roadmap out of lockdown remains on schedule, including next month’s reopening of non-essential retail.The Lloyds Business Barometer, released this morning, showed UK business confidence in March at 15, the highest level for over a year. Staffing levels also turned positive for the first time since March 2020. The results reflect progress in the vaccine rollout, the government’s roadmap out of lockdown and extended support in the Budget.Early tomorrow morning (7am), the UK Q4 GDP report is a second estimate that is not expected to be revised from the initial reading of a 1.0% rise. However, it will provide further information on household finances and, in particular, the savings rate. This has climbed sharply during the pandemic primarily due to forced saving driven by a lack of spending opportunities. It points to the possibility of strong pent-up consumer demand that will likely be released later this year.German state CPIs through the morning and the preliminary national estimate at 1pm will provide more clarity on how big the jump in Eurozone March inflation (due on Wednesday) is likely to be. French numbers are also due tomorrow morning. Look for Eurozone headline CPI to accelerate to 1.5% from 0.9%, driven by energy prices.Eurozone economic confidence surveys for March are also out this morning. The flash consumer confidence was already released last week and was stronger than expected, rising to a 13-month high of -10.8. Look for improvements too in industrial confidence and services confidence, and for the overall economic sentiment index to increase to 96.0. Nevertheless, the ECB is stepping up its bond purchases to counter a potentially tightening of financial conditions.In the US, the Conference Board measure of consumer confidence is expected to rise for a third consecutive month. Look for an increase to 96.0 from 91.3, supported by fiscal stimulus measures and an improving labour market. Markets will also focus on China PMIs which will be released early tomorrow morning and are predicted to improve.CitiFX Quant Month End FlowsWe are publishing this unscheduled update of month-end FX hedge rebalancing flows because the signal has changed to a moderate USD sell.· Based on 24 March asset index closes we had previously estimated roughly balanced USD rebalancing needs. The MSCI US equity index has gained 2.12% since then, out-performing most other major markets. This has tilted the estimated net USD rebalancing flow towards a sell as foreign investors need to hedge gains in US equities. The strength of this month’s signal is below the historical norm, measuring 0.4 standard deviations on average.· A combination of strong Japanese asset performance and our assumption of low hedge ratios employed by Japanese investors gives a sell-signal for JPY, almost entirely driven by foreigners’ needs to hedge gains in Japanese assets.· The discrepancy between the JPY sell and buy-signals for other currencies suggests that EURJPY, GBPJPY and other JPY crosses may also move higher ahead of this month-end.· There are no major data releases scheduled ahead of the month-end fix.G10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby)Larger Option PipelineEUR/USD: Mar31 $1.1770-75(E1.0bln), $1.1800(E1.2bln), $1.1850(E1.2bln-EUR puts), $1.1900(E1.8bln), $1.1920-25(E1.7bln), $1.1945-56(E1.3bln), $1.2000(E1.0bln); Apr01 $1.1850(E1.1bln-EUR puts)USD/JPY: Apr01 Y106.80-85($1.6bln-USD puts)GBP/USD: Mar31 $1.3800(Gbp921mln-GBP puts)EUR/GBP: Mar31 Gbp0.8515-25(E925mln-EUR puts), Gbp0.8540-50(E1.0bln-EUR puts), Gbp0.8600(E1.26bln)AUD/USD: Mar30 $0.7960(A$1.1bln); Mar31 $0.7500(A$1.3bln), $0.7680-00(A$1.6bln), $0.7750-60(A$1.8bln), $0.7770-80(A$1.3bln), $0.7790-0.7800(A$1.1bln)USD/CAD: Apr01 C$1.2450($1.5bln), C$1.2600-10($1.25bln-USD puts), C$1.2660-75($1.2bln)USD/CNY: Apr02 Cny6.58($1.2bln)USD/TRY: Apr06 Try6.60($916mln)Technical & Trade ViewsEURUSD Bias: Bullish above 1.20 bearish belowEURUSD From a technical and trading perspective, the failure to recapture 1.20 on the upside leaves the 1.1830 lows exposed, through here bears will press for a test of the yearly pivot at 1.1720.Flow reports suggest light offers through the 1.1800 area with weak stops on a move through the 1.1820 area with limit with light offers then running through the 1.1840-60 area before stronger offers start to appear on a test through the 1.1880 level and stronger through the 1.1900 area. Downside bids into the 1.1740-50 area and then increasing on a dip through the 1.1720-1.1680 level with congestion through to the 1.1600 area.GBPUSD Bias: Bullish above 1.3750 bearish belowGBPUSD From a technical and trading perspective, the loss of 1.3750 is a significant development opening a move to test a corrective equality objective 1.3550, only a close back through 1.39 would suggest the correction lower is complete.Flow reports suggest downside congestion around the 1.3660-40 area with stronger bids on any push towards the 1.3600 level and weak stops likely on a dip through opening to a deeper move, Topside offers through light through to the 1.3800 level with congestion through to the 1.3850 area before opening up to light offers and weak stops through the 1.3900 level and then stronger congestionUSDJPY Bias: Bullish above 107.30 targeting 109.85USDJPY From a technical and trading perspective, as 108.30 continues to attract demand bulls will target a test of pivotal 109.85 ahead of the yearly R1 pivot at 110. UPDATE...upside objective achieved look for any initial foray through 110 to prompt a profit taking pullback to retest bids to 108.50Flow reports suggest topside congestion is likely to soak up some of the weak stops above the 110.00 and like the previous spikes at the beginning of last year any move is likely to find resistance above and continuing through the 110.20 with break out stops likely to be a little more nervous, downside bids light through to the 108.00 level with weak stops on any retrace through the 107.80 level and opening a dip to the 106.00 area possible over the coming weekAUDUSD Bias: Bullish above .7560 bullish targeting .8200AUDUSD From a technical and trading perspective, as .7820 contains upside attempts there is potential for a head & shoulders pattern to develop, a loss of pivotal .7560 would open a move to test trend support at .7400 nextFlow reports suggest light topside offers through to the 0.7700 area with weak stops on a move above the 0.7720 area Then stronger offers through to the 0.7840-60 area and then increasing offers onwards through 0.7900, with the offers likely to continue through to the 0.7950 area and likely increasing resistance through to the 0.8000 levels, downside bids into the 76 cents level with strong bids likely through to the 0.7580 area, weak stops are likely to be few and far between with stronger bids likely into the 0.7550 level and likely stronger congestion through to the 0.7500 area.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/daily-market-outlook-march-30-2021"
via IFTTT

Dollar Hits One-Year High Versus Yen as Treasury Yields Rise

from Forex News https://www.investing.com/news/forex-news/dollar-hits-oneyear-high-versus-yen-as-treasury-yields-rise-2460772
via IFTTT

Dollar Down but Reaches One-Year High Against Yen as Inflation Fears Rise

from Forex News https://www.investing.com/news/forex-news/dollar-down-but-reaches-oneyear-high-against-yen-as-inflation-fears-rise-2460696
via IFTTT

Dollar hits one-year high versus yen as inflation worries lift yields

from Forex News https://www.investing.com/news/economic-indicators/dollar-hits-oneyear-high-versus-yen-as-inflation-worries-lift-yields-2460656
via IFTTT

Dollar Rides Rates Higher, but Short-Squeeze on Bears Nearing End

from Forex News https://www.investing.com/news/forex-news/dollar-rides-rates-higher-but-shortsqueeze-on-bears-nearing-end-2460430
via IFTTT

Oil gets back, US Dollar VS Yen and Euro

Treasury yields have dipped slightly alongside modest losses in US equity futures. US Equity futures are mildly weaker, with the USA30 off -0.4%, the USA500 down -0.4% and the USA100 easing -0.2% in market trading. The WSJ (paywall) reports that Credit Suisse and Nomura announced today that they could be hit with sizable losses from dealings with a US client. Nomura Holdings Inc was hit by warnings of a possible “significant” loss related to the unwinding of trades and Credit Suisse was also under pressure, after the bank warned of losses related to a US hedge fund defaulting on margin calls. The client remains unnamed, and the reason(s) why the hedge fund had to liquidate are unknown. However, the news weighed on shares of other global banks, adding to the unsettled tone in equities this morning. Also adding to the defensive tone were reports that Archegos Capital Management LLC (the family office of Bill Hwang) was the source of block trades selling Chinese tech giants and US media firms. Markets thus far point to little systemic risk, but investors are on alert for signs of contagion as a number of banks reportedly have exposure to Archegos.

As markets turned a little defensive, the US Dollar remained firm, matching the near 5-month high that was last seen at 92.92 by the measure of the USDIindex. The Yen traded moderately firmer, finding a safe haven draw amid a cautious sentiment in global markets. Base metal prices were mixed, while USOIL prices lifted by over 1%.

USOIL printed 1-week highs of $61.75 into the New York open, up from overnight lows of $59.42. The lows were seen after reports circulated that the container ship stick in the Suez Canal had been “partially” freed, though since rallied to highs, as it remains unclear when the ship will be able to clear the canal. More recently, headlines indicate marine traffic may begin again later today. Meanwhile, rising Covid cases in Europe and other parts of the globe should limit oil price gains going forward.

Nevertheless, the approach of month- and quarter-end, along with Japan’s financial year end, is the cause of portfolio rebalancing flows, which might be net positive for the Yen over the near term. The pronounced divergence between stock market gains and bond market losses over Q1 has resulted in an usually large need, by the standards of recent years, for major investment managers to rebalance their portfolios to maintain weightings in the different asset classes, which typically maintain a 60/40 ratio between stocks and bonds. Taking a step back, we could see more pronounced Yen weakness on the proviso that the global reflation trade continues, which we expect despite the disappointing vaccine rollout in the EU and rise in tensions between the West and China.

In conclusion, the passing of month- and quarter-end, and the end of the financial year in the case of Japan, should set the scene for a revival of the reflation trade, which could be bullish for the US Dollar and US dollar bloc and other cyclical currencies, and bearish for the Euro and Yen.

 

Click here to access our Economic Calendar

Andria Pichidi

Market 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 distributed without our prior written permission.

from HF Analysis /224582/
via IFTTT

Weekly Market Outlook 29-03-21

In this Weekly Market Outlook 29-03-21, our analyst looks into the trading week ahead, possible market moving data releases across the globe and the technical analysis to accompany it!Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/weekly-market-outlook-29-03-21"
via IFTTT

Greenback Extends Corrective Rally, Albeit at Slower Pace

Greenback kicked off the week on a firm footing and there are few signs of an impending U-turn in its corrective rally. A number of positive developments for USD may occur this week - ADP labor market report on Wednesday and NFP on Friday. Employment indicators released during March, in particular weekly unemployment claims, increased the odds towards a positive surprise in Payrolls data. Conceptually, the main trading idea for EURUSD this week will be continued advance of the US economy relative to the EU economy in the post-pandemic recovery race, which will be reflected in increased capital flows into US assets compared the EU’s. This, in turn, should determine direction of FX flows.CFTC data as of March 23 showed that speculative short dollar bet continued to dwindle and reached 5.6% of open interest. In mid-January, it was at 19.6%. As the position inches closer to a neutral one, the space for short squeeze decreases, so the strengthening of the dollar in the uptrend is expected to be less active. The main resistance is expected at the November high of 94 points in DXY:In addition to economic data, Biden's success in pushing his $3 tn infrastructure plan should be closely monitored. It will be more difficult to “sell” the project than the $1.9 tn fiscal stimulus, but fortunately, only support from party colleagues is needed. The story with corporate taxes and taxes on the rich will be one of the key factors of equity markets pressure. With the recovery of the economy, further development of this story is inevitable, since a new, huge borrowing plan cannot be fulfilled without guarantees that the government will increase its income.Near-term dynamics of European indices and the Euro will depend on epi curves of covid, which correlate well with the level of severity of restrictions and indicators of consumer mobility. The downturn will tell us that the recent tightening of lockdowns has worked. EURUSD may be sensitive to headlines related to vaccination rates, as the European currency has recently been actively declining on news of the suspension of Astra Zeneca vaccine and the supply disruptions. The latest CFTC data showed that speculators didn’t cut their long positions in the euro, so there is room for a cut. A level 1.17, which constitutes the lower bound of the current trend channel, remains vulnerable on EURUSD in early April:Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/greenback-extends-corrective-rally-albeit-at-slower-pace"
via IFTTT

Bitcoin jumps to one-week high above $58,000

from Forex News https://www.investing.com/news/forex-news/bitcoin-jumps-to-oneweek-high-above-58000-2459999
via IFTTT

The Natwest Trial

During the month it became known that the FCA has initiated criminal proceedings against NatWest Group, which would be the first attempt at prosecution against a British bank under the money law that was enacted in 2007, due to the fact that the British bank showed some flaws in its fight against money laundering and was notarized by the Financial Conduct Authority on not having detected suspicious activity on a customer who deposited 365 million pounds ($500 million) between November 2011 and October 2016. The bank was notified by the FCA in July 2017 and has cooperated; if it pleads guilty before the Westminster Magistrates Court on April 14 of the current year, the bank may face an unlimited fine. (1)

The criminal proceedings brought by the FCA against NatWest are linked to a separate case by the Crown Prosecution Service, which filed charges for money laundering offenses against 13 people based in cities across the country, of which several individuals stand out: former gold trader James Stunt, who runs a Mayfair-based gold bullion business and once supplied Formula One with Gold and Silver coins; Fowler Oldfield, a Bradford gold dealer and a former NatWest customer, whose company’s assets are in the hands of the police; and Gregory Frankel and Daniel Rawson, who have not declared anything to the press, who  have both  been liquidated. (2)

Added to this, today, the British government raised around £1,100 million ($1,525.70 million) by selling part of the stake of the taxpayers who helped NatWest during the global financial crisis when it was still calling itself the Royal Bank of Scotland and announced that it had gone bankrupt due to its enormous exposure to risk when it acquired ABN Amro. The government announced its third sale of the taxpayer’s stake, reducing stake in the group from 61.7% to 59.8%. (3)

At the same time, the British Treasury sold 591 million shares to NatWest at 190.5 pence per share, when the purchase of shares was around 440 pence, so the loss of the transaction was £1,500 million ($2,080.50 million),  marking an important step in the Government’s plan to return private property to institutions that became public property as a result of the financial crisis of 2007 and 2008. (3)

This would be the third sale of shares that the State has made with the objective of returning the bank to the private sector by March 2025, after sales made in 2015 for £2,100 million ($2,912.70 million) and in 2018 for £2,500 million ($3,467.50 million), with which the Office of Budgetary Responsibility, which supervises public finances, expects that the reprivatization operation of the State entity will lose around £38,800 million($53,815.60 million). (4)

NatWest has marked an all-time high at 1.9835 very close to its psychological level of 2.0. The current price of 1.8960 remains above the 21-day SMA thus ending the second long impulse of its bullish rally that started from the low of 0.9046. In the case that the moving average is broken support will be at the 38.2% Fib. level  at 1.7788 that joins the bullish guideline of the channel. To break the guideline we will have to look for the past highs as supports that coincide with the psychological level of 1.7000 and below the 61.8% Fib. level at 1.6523. If all these supports fall we have the level of 1.5000 which was where the first momentum of this bullish rally reversed.

ADX at 25.26 confirms the uptrend while holding above 25. +DI at 20.77 with a bearish slope at the moment, and -DI at 14.50. Crossing the -DI over the +DI would cast doubt on the continuity of this rally momentum.

---

1.https://finance.yahoo.com/news/natwest-nwg-face-charges-over-160104783.html

2.https://finance.yahoo.com/news/natwest-money-laundering-case-linked-190408579.html

3.https://www.standard.co.uk/business/government-sells-down-taxpayers-stake-in-natwest-to-59-8-in-ps1-1-billion-share-sale-b925068.html

4.https://es.investing.com/news/stock-market-news/gobierno-britanico-reduce-al-598–su-participacion-en-el-rescatado-natwest-2095231

Click here to access our Economic Calendar

Aldo Weidner Z.

Market Analyst– HF Educational Office – Mexico

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 distributed without our prior written permission.

from HF Analysis /224171/
via IFTTT

Live Analysis – March 29 – Quarter End Ahead

Markets were focused on reports that Archegos Capital Management LLC – the family office of Bill Hwang – was the source of block trades selling Chinese tech giants and US media firms. Bloomberg said investors are on the lookout for signs of contagion as a number of banks are said to be exposed to Archegos. European stock markets are mixed, after a largely higher session in Asia overnight. The GER30 is currently up 0.5%, and the UK100 down -0.04%. US futures are in the red, but the USA100 future in particular is up from early lows.

Click here to access the HotForex Economic Calendar

Stuart Cowell

Head Market 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 distributed without our prior written permission.

from HF Analysis /224586/
via IFTTT

How a mountain of paperwork could put off a generation of investors

Remember child trust funds (CTFs), Gordon Brown’s attempt to make sure that all young people had something to their name when they turned 18? Well, their time has come. They started maturing in September.

That’s nice for any of the young people who were eligible. Even if their parents did nothing about it, there will still be a useful pile of cash knocking around in a default fund for them to find. And it will be very nice indeed for anyone with proactive parents with the spare cash to have turned them into junior Isas (Jisas) and kept them topped up, as has been possible since 2015. There’s a lot of money up for grabs here: £9bn in the CTFs alone. The question is just who gets their hands on it, and how.

When the CTF or Jisa holders turn 18, their products generally roll into being adult Isas. Exciting! Until they actually want access to them, that is. The problem is paperwork. A friend’s son tells me that – for today’s young, at least – this is complicated stuff. It isn’t online with everything verified with codes sent to phones and the like. Instead, it involves actual letters on real bits of paper and the production of bits of ID they mostly can’t lay their hands on.

You need to verify your ID and address. Most will have a passport (if they don’t, there is a long search for their birth certificate ahead) so the ID part isn’t too hard but, for the address, the list of things most institutions will accept aren’t easy for the average 18-year-old to find, particularly as mobile phone bills aren’t acceptable. Not so exciting.

So what do you do if you are said friend’s son, you are finding the access documentation difficult to deal with, and a kind relative deposits some birthday cash into your bank account to help you top up your new adult Isa?

Beware the lure of shiny baubles

If you are over 40 the answer isn’t obvious: you will already be down a rabbit hole of stress about the low deposit rates on cash. But if you are under 20 the answer will be obvious. With the money burning a hole in your bank account, a pile of admin faff ahead and YouTube offering you New-Age financial advice on a loop, you will start clicking.

The next thing you know you won’t have what you should have: some nice sensible stakes in a diversified range of investment trusts biased to long term growth. No, you’ll have a portfolio of non-fungible tokens. NFTs are bits of code that attach to anything digital (sound, videos or art) certifying them as unique and hence collectable.

You might go to nbatopshot.com, for example. There you might buy a video of your favourite basketball player doing something brilliant as an NFT. This doesn’t mean no one else can ever see it. It just means, for what it’s worth, that you own the moment.

The top NFTs now for sale on the Top Shot site are $250,000. That is chicken feed compared to the £1m I am hoping to get if the FT allows me to turn this column into an NFT and auction it; the $2.9m Twitter founder Jack Dorsey got for the NFT of his first tweet (“just setting up my twttr”); or the £50m artist Mike Winkelmann, aka Beeple, got for selling a digital collage this month.

These numbers make no sense. Think of an NFT, if you will, like a Scottish island (bear with me). There is currently a tiny one for sale in the middle of Loch Moidart on the west coast. It comes, says Future Auctions, with a “beautiful outlook and approach” and a “unique opportunity to purchase a space that can be enjoyed with zero chance of intrusion”.

The first part of this is true. The second simply isn’t. Scotland has fabulous right to roam laws. You can go pretty much anywhere and do pretty much anything when you get there. Loch Moidart is “extremely popular”. I should think it will be something of a shock to the buyers when they find that they have bought, not a private haven, but a popular local picnic spot open to anyone with a paddle board.

NFTs: useful tech in a speculative mania

What is ownership without exclusivity? The same is true of NFTs. If everyone can watch your video clip, what is it that you have collected? You might say that owning an NFT video which can be copied is no different from owning a Picasso that everyone else can get prints of. But that’s to miss the point. A print is not the same as a painting. But a digital copy of a video of any one slam dunk is identical to the original.

NFTs are lots of fun, partly in a speculative isn’t-the-tech-cool kind of way and partly in a social-justice way. Note that the code can be written so that a payment is made to the artist every time the NFT is traded.

NFTs might also be useful to some people – perhaps money launderers. And there are some interesting aspects to the craze: the thought that the whole thing is just another step towards the full digitalisation of life; and the way which the tokens disintermediate the art industry (we no longer need institutions to authenticate art).

But that doesn’t mean their current ubiquity represents the beginning of the emergence of a new asset class, whatever the YouTubers might tell you. I suspect it represents yet another minor speculative mania driven by free money meeting free time, and one that will end along with the pandemic and within which danger lurks.

My young friend’s NFT trading account suggests he has made money buying and selling (hooray!). But he has not yet been able to get the money paid out of the platform and back into his bank account (no hooray).

There is an important lesson here: there’s a new generation of investors out there and they aren’t much good with, you know, like, letters. We have an amazing opportunity, right now, to bring these people, and the £9bn in their CTFs, into the long-term investing fold. If we want to have a chance of doing so, depositing money in your first Isa needs to be as straightforward as signing up for an NBA Top Shot account.

Providers, adjust your processes accordingly. In the meantime, some advice for those who are newly 18: do not put your CTF money or indeed your granny’s money into NFTs. This is not what Gordon Brown had in mind.

•  This article was first published in the Financial Times

from Moneyweek RSS Feed https://moneyweek.com/personal-finance/savings/isas/603003/child-trust-funds-junior-isas-and-nfts
via IFTTT