SC Weekly – When Bad News is Good!

Overview:

The purpose of this article is to provide some insight into potential upcoming trades and portfolio management across several markets. 

Cryptos:

Cryptos continue to consolidate and are pointing to a likely swing lower after Bitcoin tested the 8120 level.  How far lower can we go or are we looking at a higher low?

Stocks:

After a pretty lackluster NFP number of 75k the market took this as good and rallied Friday afternoon.  Unemployment remained low, average hourly earnings increasing 3.1% YoY, and consumer confidence nudging up 2.8 pts to 100, provided more optimism that the economy was still strong.

All in all the economic data was good, and the market likes what it is seeing.  I think the market is over pricing in two Fed rate decreases this year.

If there is a China trade deal in June or July, or at least some major progress, there will be no need for the Fed to lower rates twice this year, and this makes the bond market an interesting trade. 

Forex:

With the market pricing in a FED Cut or two, the Dollar is reversing course and setting up for a leg lower.  However it is testing the broader trend.  We may see a bounce or consolidation before moving lower and with this move we are looking to short the dollar.

Gold:

Gold has made a solid move and we are expecting the move to continue over the midterm. 

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