The Week Ahead

Good morning world,

Last week every prediction was met bar the 10yr. As the 10yr continued to anchor around the 3% mark, I decided to take the opportunity to short the two-year whilst covering my ten-year position. I think in the near term we can see the 2yr head towards 3.75-4.00. As I have mentioned before the Fed will need to go to a minimum of 4%. The higher the Fed goes the more anchored 10yr will be to 3%.

Earnings season has begun… This week is a big-ish week for earnings.

Monday pre - BAC, GS, SYF

Monday post - IBM

Tuesday pre - JNJ, HAL, LMT

Tuesday post - NFLX

Wednesday pre - ASML, ABT, NDAQ, BKR

Wednesday post - TSLA, UAL, AA, CSX, KMI

Thursday pre - T, AAL, BX

Thursday post - SNAP, COF

Friday pre - VZ, AXP, SLB, TWTR

What do I expect for this week?

I expect to see the S&P to try and explore above 3900 with the possibility to visit above 3970. I would expect momentum to slow at ~3970. I am not overly bearish for the week as it’s reasonably quiet. I would expect a move up to 3950 or so and a move back down to 3800. If 3970 can hold then obviously there is a clear chance to revise 4000+. I expect markets to roll over come the next Fed meeting.

Risk/reward wise - I think the VIX is definitely worth buying here.

FX - Expect a breather in the dollar steaming ahead, in the next month I expect the dollar index to visit 110… but for this week probably a bit quieter. EURUSD will probably be range bound for the week.

Commodities - Oil… Expect some sort of move back above 100. Remain bearish long term. Gold, still no opinion - a joke asset to say the least.