A couple of risk events to be aware of:
We are heading into earnings season – US companies are going to start releasing earnings for Q2 – this takes place one or two weeks after the last month of each quarter – Q2 is April, May and June. Earnings has an impact on securities (stocks and bonds) due to investors buying and selling off of the earnings releases and therefore can strengthen or weaken funding currencies and safe haven asset classes.
It’s summer in the northern hemisphere and we know what that means – if you caught Wayne’s webinar on Friday (so good to see him again after he’s been away for the last month at Harvard, note that he is back in action from tomorrow so be sure to catch him here from 13:30 every day) you’ll remember him speaking of the annual migration of Americans as they head off for summer holidays armed with beer and selfie sticks, dressed in Acapulco shirts and ready to demolish the all you can eat buffet followed by the Europeans who do the same in August (ok so maybe less Acapulco and more Lederhosen for the Europeans).
Talking about risk off – there’s also that issue with North Korea’s Intercontinental Ballistic Missile launch last week that resulted in an emergency UN security council meeting on Friday (can’t find any news on the outcome of that meeting) and subsequently in the news today the US flew two bombers over the Korean Peninsula joined by South Korean and Japanese fighter jets as a show of force. Bombs were dropped in the drill though North Korea was not targeted. North Korea has responded by saying that Washington is pushing the peninsula to the “tipping point” of nuclear war. Read more 1 Read more 2 Read more 3
So you’re a hedge fund or bank and your job is to manage the risk of your very big client investments. What’s your move – buy the dip or take profit and move money to safety until late August/ Early September when you get everyone back in the office, fire up the engines and get those positions in for Q4? I know what I would do for my clients. In fact, my clients would have already received phone calls telling them that they have nothing to worry about along with their Q2 performance and R.O.I report and a care package which includes a box of Gurkha Black Dragons, a bottle of Goût de Diamants and a giant inflatable yellow rubber duck named Winthorpe.
So as for the rest of us, as we head into these risk events, there are a couple of charts we should be aware of and some possible trading opportunities. The only caveat? I could be completely wrong and this year Americans don’t go on holiday so no one takes profit, earnings have no impact on securities and the market is not the least bit concerned about geopolitical tensions that are clearly getting quite serious between North Korea and America.
As always – no trade setup, no trade.