Serial Entrepreneur, Marvin Steinberg, Explains Why STOs are Better than IPOs

Unfortunately, the reality is that startups often struggle for various reasons and the inability to push past these struggles can cause them to shut down even if they’re offering a genuinely good product/service.

German serial entrepreneur, Marvin Steinberg, explains that most startups do not anticipate all the upcoming obstacles and challenges they will face during just their first year, especially when it comes to making sure that they have enough funding to satisfy their needs. This lack of planning can be devastating for startups, and the room for error is really minor. They simply have to get it right from the start.

This also goes hand-in-hand with time management. Startups have to make hundreds of difficult decisions at any given time and no matter how much the team wants to work, there are only 24 hours in a day. Money problems hit startups hard, delaying the development of products or services as well as limiting growth.

Marvin Steinberg, an expert in marketing who has helped dozens of projects succeed, knows how hard it can be for startups to get started. Marvin explains that many of the problems startups face are rooted in capital constraints, and it’s no wonder.

Every business or marketing decision hinges on capital constraints: how much to spend on promotion, how many people to hire for the next expansion phase, invest in customer support or build another version of the product that might be able to be a good fit for another target audience. There are ample questions that – together with the sporading nature of funding – can create a lot of uncertainty for these ambitious companies.

However, there might be a way to significantly lower this uncertainty. According to Marvin, new technologies like the blockchain, cryptocurrencies, and new financial instruments are making it easier than ever for startups to raise funds.

As the most important thing for startups is to raise money, they definitely can’t afford to neglect these new promising technologies. And for a time, it seemed like Blockchain-based startups have found an easy way to raise funds by making use of ICOs, Initial Coin Offerings, a method alternative to the traditional IPO.

Initial Coin Offerings, a crucial development for blockchain-based startups

Over the last few years, companies realized that it’s getting harder and harder to reliably get the funding sources they need for expansion via traditional methods, so they started looking for new sources.

Fortunately, the timing was just right for an innovative solution. Blockchain technology was developing rapidly, and it quickly became obvious that it will serve as the basis for future innovation within the financial industry.

According to Don & Alex Tapscott, authors Blockchain Revolution (2016), “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”

By allowing digital information to be distributed but not copied, blockchain technology created the backbone for a new type of internet that would allow the use of digital currencies, Bitcoin, and other innovations.

Shortly after, in 2013, the Initial Coin Offering (ICO) technology was developed.

These have been a tremendous help for blockchain-based startups. There were many benefits to launching an ICO, as opposed to a traditional IPO. For instance, ICOs didn’t need to comply with regulations, and this meant that everyone could easily launch an ICO and everyone could easily participate in them. There were no barriers anymore.

This made ICOs extremely attractive to high-risk investors and helped startups raise funds easily. ICOs have helped blockchain projects raise billions from 2013 until today.

Unfortunately, this didn’t last too long as the lack of regulations also meant a huge risk for investors. In fact, leading blockchain agencies that offer research, including Mesari, estimate that around 90% of ICOs have either failed or were scams. The freedom to launch an ICO made the method extremely attractive to scammers and fraudsters. Combined with the cryptocurrency boom in 2017, the unregulated nature of ICOs led to hundreds of failed ICOs as well as hundreds of scams.

The Evolution of Initial Coin Offerings

Investors’ trust diminished significantly and ICO’s were almost guaranteed to fail unless there was a great product or service involved in the token sale. Regulations were also harder on ICOs with some countries outright banning them completely.

This led to the creation of other fundraising methods like IEOs (Initial Exchange Offerings) and eventually STOs (Security Token Offerings).

IEOs are similar to ICOs but the token sale is launched by an exchange. This method became quite popular after Binance launched their launchpad platform for IEO’s.

Marvin Steinberg continues saying that because IEOs are conducted on cryptocurrency exchanges, people usually think this means the token sales are scam-free as the exchange itself has to make sure the project is legit. However, Marvin warns people that most exchanges are faking their trading volume through wash-trading and other methods and that they don’t necessarily care if they offer a token sale from a fraudulent project.

Marvin Steinberg is a keen believer in STOs, Security Token Offerings. as they are fully regulated. this gives investors an extra layer of security. Marvin asserts that STOs are the safest and most reliable ways of conducting a fundraise for tokenized projects.

The Reality of IPOs

Marvin Steinberg explains that the primary means of conducting a regulated offering remains to be IPOs, or initial public offerings of equity. However, this is at the disadvantage of startups.

Mr. Steinberg continues that the reality of IPOs is that they are expensive, time-consuming, and studded with bureaucratic jargon that covers the process with red tape. In the hyper competitive nature of startups today, pursuing an IPO can often be a path to destructive decision-making as the limited team members will be constrained to fulfilling the IPO needs for an extremely long period of time, rather than the development of the company.

Despite these problems, IPOs raise far more capital than ICOs as they are regulated and thus offer a safe investment channel for investors. Marvin Steinberg asserts that this aspect draws the interest of important institutional investors who can enable not only access to more funds, but also great growth networks.

Thus, startups are at a tough choice. They need funds but should they do so with an IPO that could potentially also be the cause of their end?

The Real Solution is STOs

Marvin Steinberg, with his company Steinberg Invest, is the co-founder of CPI Technologies and one of the leading Security Token Offering (STO) experts and top-recognized crypto entrepreneurs in the industry. He’s helped hundreds of companies collectively raise over 250 Mio $ so far. He also has direct contact with family offices worldwide and his influential network includes almost all licensed companies that sell tokens internationally.

In a recent interview with Bitcoin Magazine, Marvin Steinberg explained how he also helped drive mainstream adoption for tokenized bonds and tokenized buildings like hotels with regulators across Europe, and how he’s the leading the largest STO project in the world, the Times Square project.

Marvin Steinberg explains that what startups truly seek is a security token offering, something that has all the positives of an IPO, without the negatives.

Marvin goes on that STOs are used for the issuance of security tokens, which are regulated offerings that offer investors the same rights and protections that would be delivered with an IPO. However, Marvin Steinberg continues, STOs do not involve the same amount of red tape as IPOs do.

And that’s because STOs completely changed the game by fixing all the problems with ICOs, in addition to offering even more flexibility. In fact, the tremendous experience accumulated by investors during the ICO boom made everyone realize that it’s crucial to always comply with existing regulations on securities.

Therefore, STO technology was specifically designed to open the door to safe global investments, revolutionize capital markets, change the way conventional securities circulate, and provide businesses with a simple yet efficient tool to access the global capital market.

Not only that but it also enables much more productive relationships between entrepreneurs and investors, thereby fixing another big problem that ICOs had: not enough protection for investors.

That fact of the matter is that IPOs are still dominated by traditional investment banks and an IPO demands massive bureaucratic hurdles. Marvin Steinberg explains that this is not the case with a STO. Marvin describes that security tokens allow both startups and enterprises to tokenize assets, including equity, and issue them on a blockchain, while retaining the legal safety that would otherwise attract institutional investors to only IPOs.

In addition, STOs have a number of extremely valuable benefits compared to anything else. For example:

  • The ability to raise more funds in record time without the hassle & uncertainty of traditional fundraising
  • A cost-effective way to get instant access to a worldwide pool of investors and virtually unlimited funding opportunities (hundreds of times larger than the ICO market)
  • Unprecedented freedom because – in contrast to stocks – STOs are globally liquid and not anchored to any trading platform
  • Peace of mind and lower risk because of cutting-edge blockchain technology and comprehensive regulatory controls that make scam almost impossible
  • The flexibility to raise funds not only for blockchain-based projects, but also for traditional enterprises, IT companies, and even general startups
  • Measurable and regulated investment risk, with guaranteed respect for the rights of investors. In contrast to utility tokens, a security token (Type #2) is a full-fledged instrument investment, since it’s secured by a particular asset
  • Instant online access to investment markets, and the ability to become “globally liquid”, thereby not being anchored to any trading platform (unlike traditional stocks and stock markets)
  • Better protection for both the issuing company and the investor because of verified investor eligibility and automatically secured investor rights

Marvin Steinberg is the co-founder of CPI Technologies, a company that is leading the market for white label STO solutions. In fact, the company has completed over 40 projects and its upcoming flagship venture is a $700M tokenization of a part of Times Square itself. Marvin explains that the tokenization of real estate makes it accessible to anyone, making way for opportunities that never existed before.

Marvin Steinberg, a successful serial entrepreneur, asserts that businesses that seek capital raise can dodge the jargon involved with an IPO and simply pursue the future of fundraising: STOs. He believes that much of the media does not yet reflect on STO news, but that is only due to the novelty of this technology.

In order to draw fresh exposure to security tokens, Marvin has created a short 2-minute quiz on STOs which – once completed – reveals whether starting an STO can help you secure more funding and grow your business, without the hassle of traditional fundraising.

This lets anyone get a quick footing of their knowledge about the most advanced solution on the market today for raising the essential capital they need.

This simple quiz only takes 2-minutes to complete and you don’t even need any special knowledge or skills for it.

Futures Fall Despite Solid EPS, Retail Sales Miss, Brexit Deal Remains Elusive

Futures Fall As Worries Creep  Back Into Focus

The U.S. equity market is indicated lower in early Wednesday trading despite signs 3rd quarter earnings are better than expected. The Dow Jones Industrial Average and S&P 500 are both indicated lower by 0.20% while the NASDAQ Composite is down about -0.30%. The move is driven by growing concern China will not follow through on its pledge to buy more U.S. agricultural products. If this is the case it is likely additional tariffs will be enforced later this year. China has pledged as part of the Phase I trade deal to buy up to $50 billion in U.S. products.

In earnings news, financial stocks Bank of America and Bank Of New York Mellon both reported better than expected EPS. Both companies reported strength in consumer segments that helped drive share prices higher. Shares of BAC are up more than 2.5% while BNY-Mellon is up about 1.5%. In economic news, Retail Sales were weaker than expected. September retail sales fell -0.3% versus an expected gain of 0.3%. The mitigating factor is an upward revision to the past month of 0.2%. Later in the session traders will have an eye out for the NAHB Index and the FOMC’s Beige Book.

Europe Mixed, Brexit Deal Is Still Elusive

European markets are flat and mixed at midday as traders fret over trade and the Brexit. On the trade front, China’s demands the U.S. remove the threat of more tariffs before signing the Phase I deal has thrown a wrench into the works. At this stage it is becoming less and less likely Phase I will come to fruition. In Brexit news, negotiations stalled on Wednesday despite a narrowing of differences. The Irish PM confirms the back-stop is yet to be resolved but there is hope. The two sides will begin a two-day summit tomorrow that will, hopefully, result in a deal.

The German DAX is in the lead at midday with a gain of 0.22% while the FTSE and CAC are both edging lower. In stock news, shares of UK tech giant Micro Focus is up 4.3% on its results as is seafood producer Mowi. At the other end of the rankings, IMCD and DBA Aviation are both down more than -4.0%.

Asia Mostly Higher On Brexit Hopes

Asian markets are mostly higher at the end of Wednesday’s session. The Nikkie and ASX are both up more than 1.0% while the Hang Seng and Kospi are up closer to 0.70%. The moves are driven by hope for a Brexit deal, however elusive it may seem right now. In Hong Kong, leader Carrie Lam is under intensifying pressure as she rejects HK’s bid for autonomy. The Shanghai composite is the only index to move lower, it posted a loss of -0.41%.

Wrong Response by Trump to China’s Countermeasures Threat Could Blow Up Trade Deal

There’s a breaking story out of Asia early Wednesday that could blow up into something major later in the day if U.S. President Trump decides to exacerbate the issue. The current price action in the financial markets indicates a sense of caution may be developing in the financial markets with safe-haven assets – Treasury bonds, Japanese Yen and gold turning higher, while demand for risky assets is edging lower.

According to reports, China is threatening to take countermeasures against the U.S. in response to a bill that favors the Hong Kong protesters, the Chinese Foreign Ministry said Wednesday.

That is a pretty bold threat to make while the United States and China are trying to finalize the first phase of a partial trade deal agreed upon on Friday. It’s also closely similar to the threat China made against the National Basketball Association (NBA) before it caved to pressure from the Chinese government last week after an NBA team official made comments supporting the Hong Kong protesters.

The Background

Three bills were approved in the House of Representatives Wednesday evening, one supporting the right of individuals to protest, another allowing for the U.S. to check on Beijing’s influence over the territory and a third aimed at preventing U.S. weapons from being used by police against protesters.

China’s Response

“If the relevant act were to become law, it wouldn’t only harm China’s interests and China-U.S. relations, but would also seriously damage U.S. interests,” said Geng Shuang, China’s Foreign Ministry spokesperson, in a statement on the body’s website. “China will definitely take strong countermeasures in response to the wrong decisions by the U.S. side to defend its sovereignty, security and development interests.”

Geng said while China was working to restore law and order in Hong Kong, U.S. lawmakers were “disregarding and distorting facts,” by turning criminal acts and violence against police into issues of “human rights or democracy.”

“That is a stark double standard. It fully exposes the shocking hypocrisy of some in the U.S. on human rights and democracy and their malicious intention to undermine Hong Kong’s prosperity and stability to contain China’s development,” said Geng, who urged the U.S. to “stop meddling.”

Trump’s Problem

Last week, CNN reported, Trump, in a call with Chinese President Xi Jinping, promised that the U.S. would stay quiet on the Hong Kong protests while the two countries continued to negotiate a possible end to the ongoing trade war.

Early Wednesday, traders are taking precautionary positions in response to the comments from China’s Foreign Ministry Spokesperson. Bonds, gold and Japanese Yen are being bought and stocks in the U.S. and Europe are being sold.

What traders could be waiting for is Trump’s response. Will he defy his promise to Chinese President Xi Jinping, or will he remain silent?  It’s highly unusual for Trump to remain silent for too long especially when a foreign country threatens the U.S. with “strong countermeasures.”

Traders should keep an eye on this story because it could develop into something major during the trading session. Somewhere, somehow, somebody in the press may try to push Trump’s button’s to get a response, and if they push the wrong one, Trump could say something to shake up the financial markets.

Trump certainly knows how to pick his battles. He’s usually quick to respond to comments from CEO’s, coaches, athletes, politicians and celebrities. However, if he doesn’t speak up, he’ll show the world that he just gave in to pressure from China, the country he keeps saying is weaker than the United States.

Asian Shares Rise as Upbeat Brexit News Offsets IMF’s Prediction of Lower Global Growth

The major Asia Pacific stock indexes are trading mostly higher on Wednesday, boosted by upbeat news regarding Brexit from the previous day. Brexit hopes were boosted by news that the European Union and United Kingdom were close to a deal. However, gains may have been limited by a warning from the International Monetary Fund (IMF) on Tuesday that the U.S.-China trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis.

At 07:09 GMT, Japan’s Nikkei 225 Index is trading 22472.92, up 265.71 or +1.20%. Hong Kong’s Hang Seng Index is at 26644.67, up 140.74 or +0.53% and South Korea’s KOSPI Index is trading 2082.83, up 14.66 or +0.71%.

In Australia, the S&P/ASX 200 Index is trading 6736.50, up 84.50 or +1.27% and in China, the Shanghai Index is at 2976.77, down 14.28 or -0.48%.

Brexit Traders Eye Imminent Draft Deal

Asian shares were supported on Wednesday after optimistic comments on Brexit from European negotiator Michel Barnier were backed up by reports that a draft legal text over the divorce was being drawn up.

“Our team(s) are working hard, and work has just started now today, this work has been intense over the weekend and yesterday, because even if the agreement will be difficult, more and more difficult, to be frank, it is still possible this week,” Barnier told reporters in Luxembourg on Tuesday morning.

He added that “any agreement must work for everyone,” saying it is “high time to turn good intentions into a legal text.”

By mid-afternoon (Tuesday), one report suggested that a draft deal was in the works according to two separate sources familiar with negotiations.

IMF Says Trade War Will Cut Global Growth

The U.S.-China trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis, the International Monetary Fund (IMF) warned on Tuesday, adding that the outlook could darken considerably if trade tensions remain unsolved.

The IMF said its latest World Economic Outlook projections show 2019 GDP growth at 3.0%, down from 3.2% in a July forecast, largely due to increasing fallout from global trade friction.

The World Economic Outlook report spells out in sharp detail the economic difficulties caused by the U.S.-China tariffs, including direct costs, market turmoil, reduced investment and lower productivity due to supply chain disruptions.

Other News

South Korea’s central bank cut its interest rate for the second time in three months on Wednesday, as expected, following its first cut in July.

In Australia, the listing of lender Latitude Financial, what was to be the biggest Australian IPO of the year, has been canceled, according to Reuters. The IPO was canceled because a large proportion of demand for shares was coming from hedge funds rather than desired long-term investors.

In New Zealand, the Reserve Bank signaled more rate cuts, or even unconventional stimulus measures, may be needed to counter global headwinds, as figures on Wednesday showed the country’s annual inflation rate slowed in the third quarter.

Inflation fell to 1.5% in the year to end-September from 1.7% previously, Statistics New Zealand said, moving further away from the central bank’s target, but slightly ahead of a 1.4% rise predicted in a Reuters poll of economists.

Two-Weeks Before Fed Meeting, Policymakers Remain Divided Over Rate Cut

It’s not too early to start thinking about the U.S. Federal Reserve’s next move on interest rates. With two weeks to go until their next monetary policy meeting on October 29-30, U.S. central bank policymakers appear unconvinced phase one of a partial U.S.-China trade deal is enough to dismiss the policy uncertainty that has weighed on U.S. economic growth for months.

At the same time, Federal Reserve decision-makers remain far from united behind additional rate cuts beyond the two cuts they made in July and September with unemployment at a 50-year low and consumer spending strong.

On Tuesday, it was San Francisco Fed President Mary Daly and St. Louis Federal Reserve President James Bullard’s turn to voice their opinions about the direction of interest rates.

Off-Setting Views

On Tuesday, Daly told reporters after a speech at the Lost Angeles World Affairs Council & Town Hall, “Right now, I see the economy in a good place, and policy accommodation in a good place.”

However, businesses retain an overarching sense of uncertainty, Daly said, even though “the gusting (of headwinds) seems to have gone down a little bit on the news of some progress on Brexit, some progress on trade negotiations between the U.S. and China.”

Current weak inflation levels, and a three-year inflation outlook among U.S. consumers falling to its lowest level on record, has caught her eye.

On Tuesday, a report showed the inflation outlook among U.S. consumers remained muted in September, rising slightly over the near-term but falling to the lowest level on record over a three-year time frame since the New York Federal Reserve began its monthly survey of consumer expectations in 2013.

Although Daly expressed some concerns over low inflation, she still expects it to rise back to the Fed’s 2% target, and believes the Fed’s two rate cuts so far this year, in July and September, will help sustain the longest U.S. expansion in history.

“In terms of what to do going forward, I would like to see additional data, because the economy is in a really good place right now,” Daly said.

Speaking in London, Bullard painted a gloomier picture. Like Daly, he sees what he called continued “trade regime uncertainty” as a key risk to the U.S. economy. However, he also put more emphasis on continued weak inflation and slowing global growth.

Unlike Daly, who sees Fed policy as currently “slightly accommodative”, Bullard said on Tuesday in his view policy may be “too restrictive”.

As a result, the Fed “may choose to provide additional accommodation going forward, but decisions will be made on a meeting-by-meeting basis,” Bullard said.

Fed Still Divided

Two weeks before the Fed’s interest rate decision, and policymakers still haven’t budged from their September meeting positions.

One group like Fed Chair Jerome Powell believes the outlook is generally positive. Another believes the U.S. economy needs even easier policy to avoid sinking into a recession. Still a third group believes the Fed has gone far enough or even a little too far in trying to revitalize the economy. Their biggest fear is a too-easy policy could lead to financial instability if investors take on too much risk and asset values get stretched.

As of Tuesday’s close, investors expect Fed policymakers to reduce rates when they meet October 29-30. According to the CME FedWatch Tool, the latest probability of a 25-basis point Federal Open Market Committee (FOMC) rate cut is 75.4%.

The focus ahead of the next Fed meeting will be on U.S. economic data. This week, the key report is Retail Sales. Next week, it’s Durable Goods. On October 29, the Conference Board releases its Consumer Confidence report. On October 30 while the Fed is meeting, a report on Advance GDP will be released.

Unfortunately, Fed members won’t have the chance at this meeting to react to data on Personal Spending and the Core PCE Price Index.

Additionally, ISM Manufacturing, which last month posted its second consecutive contraction, will be released on November 1 along with the October Non-Farm Payrolls report.

This could be a problem for Fed members because some may favor another rate cut in anticipation of a weak ISM Manufacturing report, and some may pass on a rate cut due to expectations of a solid jobs report.

Impressive Earnings Reports Provide Clarity for Investors

What a relief! Finally a day when we didn’t have to watch the box all day scanning for meaningless U.S.-China trade talk headlines Yes, earnings season began with a flurry of activity on Tuesday, allowing us to focus on the reports and only the reports. It certainly made trading easier because the numbers were cut and dry. There was very little to read into, very little was left to interpretation. The reports were either bullish or bearish.

In the cash market on Tuesday, the benchmark S&P 500 Index settled at 2995.68, up 29.53 or +1.01. The blue chip Dow Jones Industrial Average finished at 27024.80, up 237.44 or +0.91% and the technology-driven NASDAQ Composite Index closed at 8148.71, up 100.06 or +1.27%.

The big takeaway this week for traders is the impact of clarity. We learned on Monday that a lack of clarity usually has a negative impact on investor decisions, encouraging them to shed risky assets. Tuesday taught us that clarity over earnings brings them right back then.

Since it’s “the market”, I don’t expect bullish earnings reports to line up like they did on Tuesday. We’re likely to see days featuring mixed reports. Furthermore, we’re likely to see both bearish and bullish headlines on the progress of the trade talks. For that matter, you can throw in headlines about Brexit. Since we’re coming down to the deadline set for October 30, this phenomena has been capturing its share of headlines lately. It was reported on Tuesday that upbeat news over Brexit contributed to the rally.

Investors Bullied by Headlines

As I wrote earlier, this week’s price action in the stock market has been all about the impact of clarity on an investor’s decision process. I’m sure you heard the old adage, “when in doubt, stay out” for investors looking to enter a new position, and “when in doubt, get out” when holding a position.

In my opinion, trying to keep up with the headlines is primarily behind trader indecision. Furthermore, traders have even built algorithms to generate buy and sell signals on key words. This could be the source of stock market volatility also. Additionally, even the headline writers at Bloomberg, Reuters and CNBC aren’t telling you anything useful. Most of the time the headline is late and the story is stale by the time traders act upon it.

I think you’ll have more success if you react to numbers in a report and the price action than a headline unless the headline is stating a fact. Any headline implying hope, fear or greed is dangerous.

Last week, CNBC’s Jim Cramer warned against trading stocks on the roller coaster of U.S.-China headlines. Markets are “hostage to events that are not only totally out of our hands, but totally out of the president’s hands,” Cramer said on “Squawk on the Street.”

“I am describing an unfathomable market,” declared, “where if you have conviction, you are out of your mind,” meaning fundamental cases for buying or selling are useless.

Just the Fact Ma’am

If you’re going to trade the headlines then look for something that states a fact. On Tuesday, Reuters said, “JPMorgan Hits Record High, Lifts Bank Stocks, UnitedHealth Eyes Best Day in Eight Years, and JNJ (Johnson & Johnson) Set for Biggest One-Day Percentage Gain Since January. Those are facts.

“Brexit Deal Hopes Brighten Sentiment” – “Hope and Sentiment” – the kiss of death for traders. Clarity breathes life into a market.

Brexit and Economic Data Put the GBP and USD in Focus

Earlier in the Day:

It was a relatively busy day on the economic calendar through the Asian session this morning.

New Zealand 3rd quarter inflation figures provided the Kiwi Dollar with direction early in the session.

Outside of the stats, positive updates on Brexit and U.S corporate earnings failed to support risk sentiment early on.

For the Kiwi Dollar

The annual rate of inflation eased from 1.7% to 1.5% in the 3rd quarter, while coming in ahead of a forecast of 1.4%. Quarter-on-quarter, consumer prices rose by 0.7%, following a 0.6% rise in the 2nd quarter. Economists had forecast a 0.6% increase.

According to NZ Stats,

  • Higher prices for rents and cigarettes and tobacco supported the 1.5% increase in the CPI, year-on-year.
  • The increase was partially offset by falling prices for vegetables, petrol, and telecommunications equipment.
  • Quarter-on-quarter, the 0.7% rise in consumer prices came off the back of price rises for local authority rates and payments, vegetables, and meat and poultry.
  • Falling prices for fruit, petrol, and new cars were negatives for the quarter.

The Kiwi Dollar moved from $0.62858 to $0.063125 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.21% to $0.6281.

Elsewhere

At the time of writing, The Japanese Yen was up by 0.14% to ¥108.71 against the U.S Dollar, while the Aussie Dollar was down by 0.21% to $0.6739.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Finalized Italian and Eurozone inflation figures for September are due out later this morning, along with the Eurozone’s August trade figures.

Barring material deviation from prelims, the Eurozone’s trade data will likely have the greatest influence on the EUR.

Outside of the numbers, Brexit will continue to have an impact throughout the day.

At the time of writing, the EUR was down by 0.02% to $1.1031.

For the Pound

It’s a relatively busy day ahead on the data front. September inflation figures are due out later this morning.

We can expect the Pound to show greatest sensitivity to the annual rate of inflation and the Input Producer Price Index figures.

Direction for the Pound will ultimately come from Brexit updates, however. With the EU Summit now just 4-days away, time is rapidly running out.

Positive updates from the EU and the Brexiteers delivered more upside for the Pound at the start of the week. Expect plenty of volatility and a reversal should negative updates begin to filter through, however.

At the time of writing, the Pound was down by 0.28% to $1.2751.

Across the Pond

It’s a relatively busy day ahead on the economic calendar. September retail sales figures are due out later today, along with August business inventory numbers.

Retail sales will have the greatest influence on the day. Consumer spending remains a key contributor and barometer to the U.S economy. Any unexpected slide in spending and expect the markets to balk as recession chatter continues to do the rounds.

On the geopolitical front, demand for the Dollar could rise should progress on Brexit negotiations hit a wall. Chatter from the Oval Office also needs monitoring throughout the day.

The Dollar Spot Index was up by 0.02% to 98.312 at the time of writing.

For the Loonie

It’s a busier day on the economic calendar, with September inflation figures due out later today. Expect the Loonie to react to today’s figures, with support likely to kick in should inflationary pressures build. The monthly movement in consumer prices will likely have the greatest impact.

With the BoC holding steady on the monetary policy front, inflation will need to hold steady at best.

The Loonie was down by 0.04% at C$1.3204, against the U.S Dollar, at the time of writing.

European Equities: Brexit, Earnings and Economic Data in Focus

Economic Calendar:

Wednesday, 16th October

  • Italian CPI (MoM) (Sep) Final
  • Eurozone Core CPI (YoY) (Sep) Final
  • Eurozone CPI (MoM) (Sep)
  • Eurozone CPI (YoY) (Sep) Final
  • Eurozone Trade Balance (Aug)

The Majors

It was a bullish day for the European majors on Tuesday. The DAX30 led the way, rallying by 1.15%, with the EuroStoxx600 and CAC30 up by 1.11% and 1.04% respectively.

Following a bearish start to the week, the majors were able to brush aside continued uncertainty over the ongoing U.S – China trade war.

Positive updates on Brexit from the EU on the possibility of a Brexit deal this week provided strong support for the majors.

Michael Barnier, the EU’s chief negotiator, spoke on Tuesday of a deal still being possible this week.

From the U.S, corporate earnings were a boost for the global equity markets, with JPMorgan earnings impressing.

The Stats

It a relatively busy day on the Eurozone economic calendar on Tuesday. Economic data included Germany and the Eurozone’s ZEW economic sentiment figures for October.

Of less influence on the day were Germany’s ZEW current conditions and French finalized September inflation figures.

According to the latest ZEW report,

  • The German ZEW Current Conditions Index fell from -19.9 to -25.3 in October. Economists had forecast a decline to -26.0.
  • Germany’s ZEW Economic Sentiment Index fell from -22.5 to -22.8 in October, which was better than a forecast of -27.0
  • The Eurozone’s ZEW Economic Sentiment Index fell from -22.4 to -23.5 in October. Economists had forecast a decline to -33.0.

Concerns over a possible recession weighed on consumer sentiment at the start of the 4th quarter, with progress in the U.S – China trade talks having provided little comfort.

From the U.S, a modest pickup in manufacturing sector activity in New York State was enough to avoid stressing the majors. The NY Empire State Manufacturing Index rose from 2 to 4 in October.

The Market Movers

For the DAX: Autos found strong support, with BMW leading the way, rallying by 2.45%. Daimler was also amongst the best performers on the DAX, rallying by 2.26%. Continental and Volkswagen weren’t far behind, with gains of 1.8% and 2.20% respectively.

Bank stocks also found further support. Deutsche Bank rallied by 2.88% to lead the way on the DAX30, while Commerzbank rose by 0.97%

From the CAC, it was also a bullish day for the banks. BNP Paribas and Soc Gen led the way with gains of 3.64% and 2.12% respectively. Credit Agricole saw a more modest rise of 1.51%. For the autos, it was also positive with Renault rising by 1.36%, while Peugeot rallied by 2.85%.

On the VIX Index

The VIX Index saw red for a 5th consecutive day on Tuesday, declining by 7.07%. Following on from a 6.48% fall on Monday, the VIX ended the day at 13.5.

Progress on Brexit and U.S corporate earnings, with JPMorgan Chase earnings, in particular, supported risk appetite on the day.

VIX 16/10/19 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. Economic data includes finalized September inflation figures for Italy and the Eurozone. Alongside the inflation figures, the Eurozone’s August trade data is also due out.

We would expect the inflation figures to have a relatively muted impact on the majors, however, with Brexit and corporate earnings in focus.

A material narrowing in the Eurozone’s trade surplus could test the majors in the early part of the session.

From the U.S, September retail sales figures will provide direction later in the day. With recession talk continuing to do the rounds, any unexpected slide in sales will impact.

On the earnings front, corporate earnings from the U.S will also have influence. Bank of America and Morgan Stanley’s 3rd quarter results are in focus.

While U.S stats and corporate earnings will be key, expect Brexit chatter to have the ultimate say on the day. With just days remaining until the EU Summit, it’s crunch time for Boris and the Brexiteers.

In the futures market, at the time of writing, the DAX30 was down by 11 points, with the Dow down by 50 points.

The Crypto Daily – Movers and Shakers -16/10/19

Bitcoin slid by 2.14% on Tuesday. Reversing a 0.78% gain from Monday, Bitcoin ended the day at $8,191.1.

A bullish start to the day saw Bitcoin rally to an early morning intraday high $8,439.7 before hitting reverse.

Falling short of the first major resistance level at $8,456.37, Bitcoin fell to a late afternoon intraday low $8,100.

The sell-off saw Bitcoin fall through the first major support level at $8,255.47 and second major support level at $8,140.93.

Finding support late in the day, Bitcoin broke back through the second major support level to $8,200 levels.

Negative sentiment across the broader market ultimately weighed, however, with Bitcoin easing back to sub-$8,200 levels.

It was Bitcoin’s lowest closeout since 6th October’s $7,883.

For the bulls, the extended bullish trend remained intact in spite of hovering at sub-$9,000 levels. While falling back through the 38.2% FIB, Bitcoin continued to hold above the 62% FIB of 7,245.

The Rest of the Pack

Across the rest of the top 10 cryptos, it was a mixed bag across the crypto board on Tuesday.

Binance Coin and Bitcoin Cash SV bucked the trend on the day, rising by 0.49% and by 2.30% respectively.

It was deep red for the rest of the majors, however.

EOS led the way down, with a 6.34% loss

Litecoin, Bitcoin Cash ABC, and Ethereum also saw heavy losses on the day. Litecoin slid by 4.08%, with Ethereum and Bitcoin Cash ABC falling by 3.36% and 3.21% respectively.

Ripple’s XRP (-3.14%) and Stellar’s Lumen (-2.04%) saw more modest losses on the day.

Through the early part of the week, the total crypto market cap rose from a Monday low $223.92bn to a high $228.17bn before hitting reverse. The Tuesday sell-off saw the total market cap fall to a current week low $221.83bn before support kicked in. At the time of writing, the total market cap stood at $222.65bn.

Bitcoin’s dominance continued to sit at sub-67% levels in spite of Tuesday’s sell-off.

This Morning

At the time of writing, Bitcoin was down by 0.11% to $8,181.7. A bearish start to the day saw Bitcoin fall from an early morning high $8,191.1 to a low $8,156.8.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, Bitcoin Cash SV and Bitcoin Cash ABC found early support, rallying by 2.87% and 1.72% respectively.

EOS (+0.33%), Litecoin (+0.62%), and Ripple’s XRP (+0.65%) were also in the green at the time of writing.

Ethereum and Binance Coin struggled at the start of the day, however, with losses of 0.43% and 0.42% respectively.

BTC/USD 16/10/19 Daily Chart

For the Bitcoin Day Ahead

For the day ahead, Bitcoin would need to move through to $8,240 levels to support a run at the first major resistance level at $8,387.2.

Support from the broader market would be needed, however, for Bitcoin to break out from $8,200 levels.

Barring a broad-based crypto rebound, the first major resistance level would likely pin Bitcoin back from $8,400 levels.

Failure to move through to $8,240 levels could see Bitcoin spend another day in the red.

A fall back through Tuesday’s low $8,100 would bring the first major support level at $8,047.5 into play.

Barring a crypto meltdown, Bitcoin should steer clear of sub-$8,000 support levels on the day.

Futures Rise, Earnings Season Off To Shaky Start, Trade Concerns Dampen Investor Appetite

The U.S. Futures Are Rising In Early Trading

The U.S. indices are indicated higher in early trading as earnings season kicks off. Today’s news includes reports from more than a half-dozen important names and the results are mixed. The big banks are the main focus as JP Morgan, Goldman Sachs, Wells Fargo, and Citigroup all report. JP Morgan posted a nice beat on the top and bottom lines driven by strength in consumer lending. Citigroup, Goldman Sachs and Wells Fargo are all trading lower after reporting weaker than expected numbers.

In other news, United Health and Johnson & Johnson both beat expectations. Johnson & Johnson also reports strength in the consumer units while United Health upped its full-year guidance. Both stocks are moving higher by roughly 2.0%.

The Down Jones Industrial Average, S&P 500, and NASDAQ Composite are all up about 0.25% in early trading. The sentiment is buoyed by trade hopes but also tempered by caution. While China and the U.S. have signaled a Phase 1 deal is at hand there is still no deal in place. Until such time traders are cautioned to be prepared for negative headlines. On the economic front, the Empire State Manufacturing Survey rose modestly to 4 from last months 2.0 as production and employment edge higher.

European Markets Are Mixed, Hope For A Smooth Brexit Persist

European markets are mixed at midday on Tuesday after remarks from the EU’s Brexit team renewed hope. Michel Barnier said that despite the increasing difficulty it is still possible to reach a deal this week. The DAX and CAC are both up about 0.35% to 0.40% while the FTSE is down roughly -0.25%. Retail is in the lead with a gain of 0.90%.

In economic news, unemployment ticked higher in the UK. The 3rd quarter figure came in at 3.9%, a tenth higher than the previous. In stock news, shares of Hays are up 5.5% after it reported flat results. The good news is weakness in the UK was offset by strength in offshore markets. Share of Wirecard, however, are not so buoyant. The Financial Times did an expose on the company’s accounting practices and shares are down -17% because of it.

Asia Mixed, Trade Hopes Clash With Trade Fears

Asian markets are wildly mixed after Tuesday’s session. The Japanese Nikkei led the market with a gain of 1.9% after being closed Monday for holiday. Chinese indices are broadly lower following the release of inflation data. CPI rose 3% on a 69% increase in pork prices while PPI fell. The Shanghai Composite is down -0.56% on the news, the Hang Seng a more tepid -0.07%. Elsewhere in the region, the ASX and Kospi are both up mildly.

Brexit and Economic Data Keep the GBP and the EUR in Focus

Earlier in the Day:

It was a relatively busy day on the economic calendar through the Asian session this morning.

China’s September inflation figures provided direction ahead of finalized August industrial production figures out of Japan due out later this morning

In the early part of the day, the RBA also released its meeting minutes from last Tuesday’s meeting.

On the geopolitical front, sentiment towards the latest on the U.S – China trade talks and Brexit also influenced early on.

For the Aussie Dollar

Following last week’s rate cut, the RBA meeting minutes had limited influence on the Aussie Dollar. Salient points from the October Minutes included:

  • Risks to the global growth outlook remained tilted to the downside.
  • Businesses scaled back investment plans as a result of the technology and trade disputes between the U.S and China.
  • Further monetary policy easing was delivered to support employment and income growth and greater confidence that inflation would be consistent with the medium-term target.
  • Members noted that the unemployment and inflation outcomes were likely to fall short of forecasts in the near-term.
  • Subdued wage growth also suggested that spare capacity remained in the economy.
  • In spite of strong employment growth, however, the spare capacity remained, with employment growth expected to slow.
  • While lower interest rates could affect confidence, it would also support household cash flows and spending.
  • It was also noted that members were prepared to ease monetary policy further if needed.

The Aussie Dollar moved from $0.67694 to $0.067703 upon release of the minutes that preceded China’s inflation figures.

From China

The annual rate of inflation picked up from 2.8% to 3.0%, coming in ahead of a forecast of 2.9%. Month-on-month, consumer prices rose by 0.9%, coming in ahead of a forecasted and August 0.7%.

Wholesale fell further in September, however, with wholesale prices falling by -1.2% compared with September 2018. While in line with forecasts, the pace of deflation picked up from August’s 0.8%.

The Aussie Dollar moved from $0.67865 to $0.67849 upon release of the figures. At the time of writing, the Aussie Dollar was flat at $0.6775.

Elsewhere

At the time of writing, The Japanese Yen was up by 0.09% to ¥108.30 against the U.S Dollar, while the Kiwi Dollar was up by 0.11% to $0.6306.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Germany and the Eurozone’s ZEW economic condition figures are due out later this morning.

French finalized September inflation figures and Germany’s ZEW current conditions figures will likely have a muted impact on the EUR.

Outside of the numbers, we can expect direction to also come from Brexit as the Brexit clock ticks away.

At the time of writing, the EUR was up by 0.04% to $1.1031.

For the Pound

It’s a busy day ahead on the data front. August earnings and unemployment figures are due out along with September’s claimant count numbers.

We can expect the Pound to show greatest sensitivity to the wage growth and claimant count figures. Any unexpected rise in the unemployment rate, coupled with larger than anticipated increase in claimant counts would weigh heavily, however.

While we expect the stats to influence, Brexit will continue to be the key driver. A further pullback from Friday’s recent high should be expected should little progress be made on a deal.

At the time of writing, the Pound was up by 0.06% to $1.2616.

Across the Pond

It’s a relatively quiet day ahead on the economic calendar. October’s NY Empire State Manufacturing Index figures are due out later today.

With tariffs still in place, any further deterioration in manufacturing sector conditions would be negative.

Chatter from the Oval Office would require monitoring, however. There’s also Brexit to factor in, with any negative news considered Dollar positive.

The Dollar Spot Index was down by 0.04% to 98.417 at the time of writing.

For the Loonie

It’s a quiet day on the economic calendar. There are no material stats out of Canada to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of crude oil prices later in the day.

The Loonie was up by 0.02% at C$1.3232, against the U.S Dollar, at the time of writing.

Wall Street Investors Gearing Up for Earnings Season

After Monday’s lackluster trade, due to the extended holiday week-end, stock market investors will be gearing up for the start of earnings season, which kicks off on Tuesday with 52 S&P 500 companies expected to report by the end of the week. Here are the most important factors to consider before trading on Tuesday.

Big Banks on Deck

Investor focus will be on the big Wall Street banks as J.P. Morgan Chase, Citigroup, Goldman Sachs and Wells Fargo are expected to report on Tuesday, Bank of America on Wednesday and Morgan Stanley on Thursday.

According to Reuters, “The big U.S. banks are expected to report a 1.2% decline in earnings due to falling interest rates, a raft of unsuccessful stock market floatation and trade tensions.”

FactSet is expecting S&P 500-financial company earnings to drop 2.6% this quarter, weighed down by the Federal Reserve lowering interest rates twice since July, which pressures bank’s main business of deposits and lending.

Overall Earnings Weakness

Reuters also said, “Overall, analysts are forecasting a 3.2% decline in profit for S&P 500 companies for the quarter from a year earlier, based on IBES data from Refinitiv.

Analysts at FactSet presented a more bearish outlook, saying as the season kicks into gear this week, S&P 500 firms are expected to report a 4.6% earnings decline over the same period a year ago. If the period ends up with a negative number, that will make three quarters in a row, the first time that’s happened in three years.

Quarterly Market Outlook

Analysts at Edward Jones are saying, “Stocks appear on track to finish the year strong, with the S&P 500 near a record high, despite a volatile past quarter during which slower global growth and trade tensions caused recession fears to spike.”

“Twists and turns on the U.S./China trade front continue to drive market swings, with stocks rising last week on optimism that both sides are looking at a phased approach to a trade deal, which was announced after market close on Friday.”

“This incremental progress is encouraging, but additional phases of agreement or a larger deal that includes key issues like intellectual property, technology transfers and enforcement will likely take more time.”

“Thus, trade issues will remain a source of volatility. More broadly, we expect stocks to continue to rise but at a slower pace than they have over the past few years, supported by ongoing economic growth, earnings growth and lower interest rates.”

US Stocks Retreat on Trade Deal Uncertainty, but Losses Dampened by Light Holiday Trade

The major U.S. equity indexes settled slightly lower on Monday in a generally lackluster trade due to the U.S. Columbus Day holiday. Although it was not an official U.S. bank holiday, several banks were closed as well as the Treasury market. The price action suggests many of the major investment firms took advantage of a long-holiday weekend.

In the cash market on Monday, the benchmark S&P 500 Index settled at 2966.15, down 4.12 or -0.14%. The blue chip Dow Jones Industrial Average finished at 26787.36, down 29.23 or -0.11% and the technology-based NASDAQ Composite closed at 8048.65, down 8.39 or -0.11%.

Stocks Pause

U.S. stocks paused on Monday after posting gains the three previous sessions as a lack of clarity over “phase one” of a U.S.-China trade agreement weighed on investor sentiment, while investors enjoyed an “unofficial” holiday, ahead of the start of the third-quarter earnings season.

Investors were upbeat at the start of the futures market session on Sunday after the S&P 500 and Dow Jones indexes ended Friday with their first weekly gain in a month and President Trump signaled the two economic powerhouses had taken a major step in easing the back-and-forth tariffs measures that have hammered global growth this year.

However, prices quickly retreated after a Bloomberg News report said that Chinese officials would like to continue trade talks before signing phase one of the deal and moving on to phase two.

Additionally, gains were capped after President Trump acknowledged that the agreement could still collapse, while Treasury Secretary Steven Mnuchin said on Monday he had “every expectation” that if a U.S.-China trade deal was not in place by December 15, additional tariffs would be imposed.

The price action suggests investors are still trying to grasp the concept of a trade deal done in phases. However, if investors were really skeptical about the matter, the markets would’ve sold off a lot harder. This indicates they may be comfortable with the idea that both sides are still talking.

Empire State Manufacturing Index Edges Higher

It was a light day on the data front. There were no early session reports, but the Empire State Manufacturing Index was released at 20:00 GMT. The report was posted about 18 hours earlier than expected, due to “technical difficulties”, according to a Fed spokeswoman.

The New York Federal Reserve’s Empire State business-conditions index showed slight improvement in October. The report showed that a rebound in sentiment pushed the headline Empire State Index up to 4 in October from 2 in the prior month. Economists were looking for a 0.8 reading, according to Econoday.

The Empire State index is closely watched as one of the first indicators of a month’s manufacturing activity. Recent reports have been flat as regional manufacturing has been impacted by the trade war between the United States and China, the sluggish global economy and the strong U.S. Dollar.

European Equities: Brexit, Corporate Earnings and Stats in Focus

Economic Calendar:

Tuesday, 15th October

  • French CPI (MoM) (Sep) Final
  • French HICP (MoM) (Sep) Final
  • German ZEW Current Conditions (Oct)
  • German ZEW Economic Sentiment (Oct)
  • Eurozone ZEW Economic Sentiment (Oct)

Wednesday, 16th October

  • Italian CPI (MoM) (Sep) Final
  • Eurozone Core CPI (YoY) (Sep) Final
  • Eurozone CPI (MoM) (Sep)
  • Eurozone CPI (YoY) (Sep) Final
  • Eurozone Trade Balance (Aug)

The Majors

It was a bearish start to the week for the European majors. The CAC40 led the way down, falling by 0.4% on Monday. The DAX30 and EuroStoxx600 weren’t far behind with losses of 0.20% and 0.49% respectively.

Uncertainty over the U.S – China trade war and Brexit weighed on the broader markets on the day.

While the U.S agreed to defer the rollout of further tariffs on Chinese goods tomorrow, a lack of commitment to removal existing tariffs weighed on risk sentiment.

On the Brexit front, a lack of progress from last week’s hopes of a deal added to the downside on the day.

The Stats

It was a relatively quiet day on the Eurozone economic calendar on Monday. Economic data was limited to the Eurozone’s industrial production figures for September.

According to Eurostat, industrial production rose by 0.4%, month-on-month in August, reversing a 0.4% decline in July. Economists had forecast a 0.3% rise.

  • The production of capital goods rose by 1.2% and intermediate goods by 0.3%.
  • Weighing in August, however, was a 0.3% fall in the production of consumer goods and a 0.6% fall in energy and non-durable consumer goods production.
  • Malta (+5.6%), Estonia (+3.9%) and Latvia (+3.0%) reported the highest increases in production.
  • Slovakia (-2.6%) and Lithuania (-2.4%) reported the largest declines in August.
  • Year-on-year, production fell by 2.8%.

With a lack of U.S stats on the day, geopolitical risk offset upbeat industrial production figures on the day.

The Market Movers

For the DAX: Autos found more upside on Monday, supported by the delay of additional tariffs on Chinese goods. Continental led the way, rising by 0.52%. BMW (+0.50%) and Daimler (+0.40%) saw more modest gains, whilst Volkswagen bucked the trend on the day, however, falling by 0.12%.

Bank stocks found further support, with Deutsche Bank rising by 0.75% and Commerzbank by 0.69%

From the CAC, it was a mixed day for the banks. BNP Paribas and Soc Gen fell by 0.79% and by 0.16% respectively. Credit Agricole managed to buck the trend with a 0.22% gain. For the autos, it was also mixed with Renault rising by 0.69%, while Peugeot slipped by 0.87%.

On the VIX Index

The VIX Index saw red for a 4th consecutive day on Monday, falling by 6.48%. Following on from an 11.33% slide on Friday, the VIX ended the day at 14.6.

Losses on the day came in spite of the U.S majors closing out the day in the red. While existing tariffs on Chinese goods remain, last week’s progress on trade talks was enough to pin back the VIX.

VIX 15/10/19 Daily Chart

The Day Ahead

It’s a relatively busy day ahead on the Eurozone economic calendar. Economic data includes October economic current conditions and economic sentiment figures out of Germany and the Eurozone.

Germany and the Eurozone’s economic sentiment figures will be the key drivers, which is forecasted EUR negative.

Of less influence on the day will be finalized September inflation figures due out of France.

From the U.S, New York Empire State Manufacturing Index figures for October will also provide direction late on.

Another pullback in the Index would add further pressure on the European majors.

On the earnings front, corporate earnings from the U.S will also have an impact. Citigroup, Goldman, JPMorgan, and Wells Fargo release 3rd quarter results later today.

Geopolitics will also influence on the day, as Johnson looks to wrap up a Brexit deal ahead of the EU Summit this weekend.

In the futures market, at the time of writing, the DAX30 was up by 17 points, with the Dow up by 16 points.

US Stock Market Overview – Stocks Slip on Concern over Interpretation of Phase One Agrement

 

Stock prices flip-flopped back and forth between positive and negative territory on Monday as investors absorbed the phase one of the US-Chinese trade agreement. The difference between the initial coverage between the US and China was stark. The Chinese coverage of a trade agreement was not nearly as upbeat. What is important to garner is that nothing was signed which means that it’s still up for interpretation. China agreed to buy more agriculture products from the US, but this was not a concession.

The US will not go forward with the increase in tariffs on around $250 billion of Chinese goods from 25% to 30%, which is largely symbolic. For this deal to really feel like its ready to be signed the Chinese are going to need more and want an agreement that the December tariff hikes will be taken off the table. Trade-in China came in weaker than expected.

Most sectors in the S&P 500 index were lower led down by Materials, while financials were the best performing sector. Apple shares hit a fresh all time high as the company is poised to continue to lift the broader markets. Chinese import and export data were softer than expected which will likely further weigh on global growth.

Trump and Xi Meeting

Trump and Xi are scheduled to meet on the sidelines of the APEC meeting next month, in the middle of November. The mid-December tariff on about $160 billion of Chinese goods, is what is now a key decision for both sides. The Chinese also have a concern that President Trump will pull the plug on an agreement even if he verbally agrees to one. They have accused the US of flip-flopping which is what the US accused China of doing. Those who surround President Xi believe that President Trump could embarrass President Xi, at the APEC meeting, if he changes his mind.

Chinese Trade Data Disappoints

China’s trade data disappointed with imports and exports coming in weaker than expected. The trade surplus widened to $39.65 billion in September from $34.78 billion. Exports were off 3.2% year-over-year after the 1.0% decline in August and forecasts for a 2.8% decline. Pork imports are 44% higher from a year ago, and beef imports are 54% higher, but overall imports contracted 8.5% in September following a 5.6% decline in August. China reported auto sales fell 6.6% year-over-year in September, the 15th decline in the past 16 months.

Futures Fall As Uncertainty Grips The Market, Brexit Deal Elusive, China Trade Data Falls

The U.S. Futures Are Down In Early Trading

The U.S. futures are down in early trading despite positive developments on trade. The Dow Jones Industrial Average, NASDAQ Composite, and S&P 500 are all down about -0.55% in early trading. Tech is in the lead. The trade deal, announced on Friday, is an interim stop-gap measure intended to produce a three-phase solution. The first phase includes China increasing its purchases of agricultural products, a pledge the country has made several times in the past. In exchange, the U.S. will postpone or delay tariffs scheduled to take effect later this week.

While both sides have hailed the deal as good there is still no actual document and details are sketchy. China’s Vice Premier Liu He says he will be back to Washington this month to hammer out those details before President Xi will sign any deal. China is expected to purchase up to $50 billion in U.S. agriculture products with those purchases ramping up over the next few weeks. The timeline to end the trade war is now 15 months. Secretary of the Treasury Mnuchin says the October tariffs will go into effect in December if China reneges on its agreements.

In business news, this week begins the peak of 3rd quarter earnings. We are expecting reports from the big banks this week, they are expected to post EPS declines. In economic news, we are expecting several key reads from the Federal Reserve. Also on tap, Retail Sales, the Beige Book, Housing Starts, and the Index of Leading Indicators.

European Indices Are Down With A Case Of Uncertainty

EU indices are down at midday due to a growing case of uncertainty. The trade-deal that is not yet a deal remains a key point of uncertainty as does the Brexit. Brexit negotiators were unable to reach a deal over the weekend raising doubts a solution to the Irish-Backstop can be found. The Queen is expected to deliver her speech to open Parliament today. In it, she will outline the governments plans for Brexit.

The French CAC is leading decliners in early trading with a loss of -0.75% while the DAX and FTSE are both trailing with losses close to -0.50%. In stock news, shares of biopharma company Chr. Hansen rebound 3.8% after last week’s massive selloff.

Asian Markets Rebound Despite Trade Uncertainty

Asian markets are broadly higher after Monday’s session as trade hope fuels optimism. The Shanghai Composite and Korean Kospi both advanced more than 1.1% while the Hong Kong Hang Seng and Australian ASX gained 0.80% and 0.50%. Japan was closed for a holiday. In South Korea chipmakers Samsung and SK Hynix led the advance.

U.S. Stocks Turn Lower as Investors Sour on ‘Phase One’ Trade Deal

The major U.S. stock index futures turned lower for the pre-market session Monday morning and hedgers returned to the Treasury bonds, gold and Japanese Yen after China said it needed to have further discussions before it would sign off on the so-called phase one trade deal President Donald Trump announced on Friday.

The early market price action has the S&P 500 Index opening about 0.42% lower, the Dow off by 95 points or 0.35% and the NASDAQ Composite trading about 0.54% lower.

China Wants More Talks Before Signing ‘Phase One’ Deal

According to a Bloomberg report, China trade officials wanted more talks by the end of October to discuss details of the “phase one” trade deal.

This now has investors wondering if the additional tariffs originally scheduled to start on October 15, and suspended as of Friday, are back on. We’ll probably hear more about this from the Trump administration later in the session.

On Friday, President Trump announced that the first phase of a deal with China had been agreed, though officials on both sides said much more work needed to be done.

However, the deal that does not include many details and Trump has warned it could take up to five weeks to get a pact written. Furthermore, analysts are saying it appears to be more of a “temporary” than a real trade pact.

Investors took no chances upon hearing the news. Besides driving stocks lower and erasing some of Friday’s gains, hedgers drove December Treasury Notes 0.46% higher. December Comex gold futures rose 0.73% and the Japanese Yen jumped 0.24% higher. These protection moves are likely to increase if investors continue to turn sour on the deal.

Asian Markets Up, Europe Down

Shares in Asia rose in reaction to Friday’s partial trade deal news. Investors had no reaction to the Bloomberg report, which came out after the Asian markets had closed.

The major bourses in Europe turned lower after the report was released. According to CNBC, the pan-European Stoxx 600 slipped 1.1% during the morning trade, with basic resource stocks losing 2.6% to lead losses as all sectors traded in negative territory.

The Bloomberg report was not a complete surprise as Citi analysts pointed out in an earlier report.

“Despite what appears to have been achieved in the October talks, we remain cautious on an eventual trade deal,” the analysts wrote in a note. “The US offers are far from what China has been demanding, as showcased in its June State Council White Paper:  reasonable purchases of US imports, removal of existing tariffs, and giving the trade document a balanced treatment.”

In other news, customs data showed that China’s import and export figures were worse than expected in September, with exports falling 3.2% on the year in U.S. dollar terms, while imports declined 8.5%, according to Reuters.

A Light Economic Calendar Puts the GBP and Brexit in the Limelight

Earlier in the Day:

It was a relatively quiet day on the economic calendar through the Asian session this morning.

China’s September trade figures provided direction at the start of the week.

On the geopolitical front, the Asian equity markets responded to the positive updates on Brexit and trade negotiations.

In the FX markets, however, the mood was less bullish. Existing punitive tariffs remain that suggest more doom and gloom before any pickup in economic activity.

From China

The U.S Dollar trade surplus widened from $34.84bn to $39.65bn in September. Economists had forecast a narrowing to $33.30bn.

  • Year-on-year, exports fell by 3.2%, which was worse than a forecasted 3.0% fall. In August, exports had fallen by 1.0%.
  • Imports fell by 8.5%, year-on-year, in September, which was worse than a forecasted fall of 5.2%. Imports had fallen by 5.6% in August.

The Aussie Dollar moved from $0.67760 to $0.67861 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.15% to $0.6784.

While the trade surplus widened, a slide in imports suggests waning demand that could spell trouble in the months ahead.

Elsewhere

At the time of writing, The Japanese Yen was down by 0.03% to ¥108.32 against the U.S Dollar, while the Kiwi Dollar was down by 0.49% to $0.6306.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. The Eurozone’s August industrial production figures are due out of the Eurozone.

Following an unexpected pickup Germany, forecasts are EUR positive.

Outside of the numbers, we can expect direction to also come from Brexit and any chatter on trade.

At the time of writing, the EUR was down by 0.13% to $1.1028.

For the Pound

It’s a quiet day ahead on the data front. There are no material stats due out of the UK to provide the Pound with direction.

The lack of stats will leave the Pound in the hands of Brexit chatter throughout the day. The EU Summit is now within sight and Boris Johnson has just days to finalize a deal with the EU.

Expect Pound sensitivity to Brexit chatter to remain heightened at the start of the week.

At the time of writing, the Pound was down by 0.59% to $1.2593. A lack of progress from the weekend weighed on the Pound early on.

Across the Pond

It’s also a quiet day ahead on the economic calendar. There are no material stats to provide the Greenback with direction on the day.

The lack of stats will leave geopolitics in focus. Any further easing in geopolitical risk would be considered Dollar negative.

The Dollar Spot Index was up by 0.14% to 98.436 at the time of writing. Support kicked in early as trade talks failed to lead to a removal of existing tariffs.

For the Loonie

It’s a quiet day on the economic calendar. There are no material stats out of Canada to provide the Loonie with direction.

We can expect market risk sentiment through the day to influence. Trade data out of China and no suggestion of the removal of existing tariffs were negatives early on.

The Loonie was down by 0.05% at C$1.3209, against the U.S Dollar, at the time of writing.

The Crypto Daily – Movers and Shakers – 14/10/19

Bitcoin fell by 0.19% on Sunday. Partially reversing a 0.5% fall from Saturday, Bitcoin ended the week up 5.36% at $8,304.9.

A bullish start to the day saw Bitcoin rally from a morning low $8,310.0 to a late afternoon intraday high $8,478.0.

Steering clear of the major support levels, Bitcoin broke through the first major resistance level at $8,405.37.

Bitcoin came within range of the second major resistance level at $8,491.13 before hitting reverse.

The reversal saw Bitcoin slide to a late intraday low $8,160.4. Bitcoin fell through the first major support level at $8,252.17 and the second major support level at $8,184.73.

Finding support late in the day, Bitcoin bounced back to $8,300 levels to limit the loss on the day.

For the bulls, the extended bullish trend remained intact in spite of the hold at sub-$9,000 levels. While falling back through the 38.2% FIB, Bitcoin continued to hold above the 62% FIB of 7,245.

The Rest of the Pack

Across the rest of the top 10 cryptos, it was a mixed bag for the majors on Sunday.

Binance Coin continued its recovery, with a 6.34% rally to lead the way.

Ripple’s XRP (+1.75%), Litecoin (+1.24%) and EOS (+1.05%) also made good ground.

Bitcoin Cash SV joined Bitcoin in the red to buck the trend, however, falling by 0.99%.

For the week, it was a bullish week for the majors, Monday through Sunday.

Binance Coin led the majors, surging by 21.3%.

Ripple’s XRP (+8.45%), Bitcoin Cash SV (+7.20%), EOS (+6.65%), and Ethereum (+6.46%) made solid gains.

Litecoin and Bitcoin Cash ABC trailed the pack with more modest gains of 3.65% and 2.51% respectively.

For the week, the total crypto market cap rose from a Monday low $213.1bn to a Friday high $233.53bn. A choppy end to the week left the total market cap back at $223bn levels, however. At the time of writing, the total market cap stood at $224.74bn.

Bitcoin’s dominance remained at sub-67% levels with a number of the top 10 outperforming Bitcoin in the week.

This Morning

At the time of writing, Bitcoin was up by 0.1% to $8,313.6. A mixed start to the day saw Bitcoin fall to an early morning low $8,254.0 before striking a high $8,323.6.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, Ripple’s XRP (+2.67%), Stellar’s Lumen (+1.37%), EOS (+1.06%) and Bitcoin Cash ABC (+1.00%) were on the move.

Binance Coin and Bitcoin Cash SV trailed the pack with gains of 0.35% and 0.54% respectively.

BTC/USD 14/10/19 Daily Chart

For the Bitcoin Day Ahead

For the day ahead, Bitcoin would need to move through to $8,320 levels to support a run at $8,400 levels.

Support from the broader market would be needed, however for Bitcoin to break through the first major resistance level at $8,468.47.

Barring a broad-based crypto rally, the first major resistance level and Sunday’s high $8,478 would likely limit any upside.

Failure to move through to $8,320 levels could see Bitcoin fall back into the red.

A fall through the early morning low $8,254.0 would bring the first major support level at $8,150.87 into play.

Barring a crypto meltdown, Bitcoin should steer clear of sub-$8,100 levels on the day.

European Equities: China Trade Data and Geopolitics to Influence

Economic Calendar:

Monday, 14th October

  • Eurozone Industrial Production (MoM) (Aug)

Tuesday, 15th October

  • French CPI (MoM) (Sep) Final
  • French HICP (MoM) (Sep) Final
  • German ZEW Current Conditions (Oct)
  • German ZEW Economic Sentiment (Oct)
  • Eurozone ZEW Economic Sentiment (Oct)

Wednesday, 16th October

  • Italian CPI (MoM) (Sep) Final
  • Eurozone CPI (MoM) (Sep)
  • Eurozone Trade Balance (Aug)

The Majors

It was a bullish end to the week for the majors, with the DAX rallying by 2.86% to lead the way. The EuroStoxx600 and CAC40 weren’t far behind with gains of 2.31% and  1.73% respectively.

Support for the majors came off the back of news that the U.S administration delayed the rollout of fresh tariffs on Chinese goods. Tariffs were due to hit Chinese goods on 15th October.

Progress on trade talks in Washington led to the delay.

Brexit also provided support as the EU affirmed that progress was indeed being made on an alternative to the Irish backstop.

The Stats

It a relatively busy day on the Eurozone economic calendar on Friday. Economic data included German and Spanish finalized inflation figures for September.

Out of Germany, consumer prices held steady in September, which was in line with prelim figures. In August, consumer prices had fallen by 0.2%.

Inflationary pressures eased in Spain, however, with consumer prices rising by just 0.1%, month-on-month, which was in line with forecast. Consumer prices had risen by 0.3% in August.

From the U.S, a pickup in consumer expectations and sentiment for October also provided support on the data front.

Further upside in consumer sentiment can be expected as the U.S and China make progress on ironing out a trade agreement.

The Market Movers

For the DAX: Autos found further support on Friday, driven by updates from the U.S – China trade talks in Washington. Volkswagen led the way, rallying by 4.71%. Daimler (+3.13%), Continental (+2.50%), and BMW (+3.13%) weren’t far behind.

Bank stocks also found support, with Deutsche Bank rallying by 4.96% and Commerzbank by 4.09%

From the CAC, it was also a positive day for the banks. Soc Gen led the way, rallying by 5.27% off the back of a  3.32% gain on Thursday. BNP Paribas and Credit Agricole weren’t far behind, with gains of 4.72% and 4.52% respectively. For the autos, Renault jumped by 5.12%, while Peugeot up by 4.63% following a 3.48% gain on Thursday.

On the VIX Index

The VIX Index saw red for a 3rd consecutive day on Friday, sliding by 11.33%. Following on from a 5.74% fall on Wednesday, the VIX ended the day at 15.6.

Further progress on the U.S – China trade talks and Brexit supported risk appetite to pull the VIX back into the red.

VIX 14/10/19 Daily Chart

The Day Ahead

It’s a relatively quiet day ahead on the Eurozone economic calendar. Economic data out of the Eurozone is limited to August’s industrial production figures.

Better than forecasted production figures would provide support in the early part of the session.

A lack of stats due out of the U.S, however, will leave geopolitics to continue to influence in the day.

Ahead of the European open, trade data due out of China through the Asian session will set the tone. Any weak numbers and expect market jitters over the global economy to return.

In the futures market, at the time of writing, the DAX30 was down by 35 points, while the Dow was up by 38 points.