Full Risk Mode

Today’s Highlights

€100 Billion Bill for Brexit


Fed Today

Geopolitical Overview

The markets remain extremely attached to the geopolitical situation around the globe. Clients in eToro are increasingly taking short term positions and holding off on long term trades until we get a bit more clarity.

Here are the three biggest focuses at the moment…


With elections coming up this weekend. Analysts and investors are tripping over themselves trying to price in a Macron victory. The man who married his teacher is currently leading in the polls, still with a margin of 10 percentage points.

Le Pen is taking a bit of heat for plagiarizing a part of a speech from her former rival Francois Fillion. Fillion was knocked out in the first round and Le Pen is obviously trying to pick up some of his voters.

Tonight, there will be a televised debate in France between the two remaining candidates. If Le Pen wants to gain some ground, she will really need to bring it.

United Kingdom

After the elections in France, the world will likely give a stronger focus to the UK elections. However, Brexit is still taking up a large portion of today’s headlines.

The spat between May and Junker is somehow still in the news cycle. Seemingly related, the European Union as allegedly raised their Bill for Brexit to €100 Billion.

The British Pound is coming down a bit this morning. Yet it is holding tightly onto the gains made when May announced the snap elections on April 18th.

As of midnight tonight, the UK parliament will be completely dissolved and all current MPs will be stripped of their power ahead of the General Election.

United States

Trump is certainly moving things in Washington. Further to suggesting that a government shutdown could be a good thing, President Trump has managed to turn heads around several other issues as well.

At the moment, the White House is working on two things that on the face of it seem to contradict each other.

One is the reduction of Dodd-Frank. The second is to reinstate Glass-Steagall.

Dodd-Frank represents the current regulation of Wall Street, which was signed into law by Obama in response to the 2008 crisis and Trump is trying to repeal.

Glass-Steagall was a law that used to regulate Wall Street by preventing commercial banks from investing the money of private banks. Essentially, keeping big bankers from taking risks with the money of private citizens.

This law was revoked by Bill Clinton in 1999, an act that looked great on Clinton at the time but eventually lead to the 2008 crisis.

If we think about it. What Trump is trying to do here is not to deregulate but rather switch the type of regulation that’s in place.

Market Overview

Given that the geopolitics are all looking good at the moment. The markets are currently in full risk mode.

Stocks continue to climb at a rapid pace. Yesterday, saw record highs in the Nasdaq and in the German DAX. The Dow Jones the S&P500, and even the CAC40 in France are not far from their all time highest levels either.

Last night’s earnings report from the world’s largest company rustled a few feathers. Even though Apple increased their revenues and raised their dividend payment to an astonishing $13 Billion, investors were disappointed by the fact that fewer iPhones were actually sold.

Not to worry, says Tim Cook. Most iPhone users are likely waiting for the iPhone 8 and they’ll grab the market share back once that comes out. I can relate directly to what he’s saying here. Personally, I use an android but my wife is on the iPhone 6. Upgrading her to the 7 didn’t make much sense but when number 8 comes out, we’ll be the first in line. :/

Despite the apparent risk on sentiment in the market, Oil seems to be having trouble staying afloat. According to this chart from @Martyn87 crude is seriously testing its last support level at the moment.

Oil inventories will be published later today. This announcement could very well impact the price action for the next few months. If the line is broken it will be seen as a serious sign of weakness, but if it holds it could lead to an eventual break above $55.

What else?

We haven’t heard much from the US Federal Reserve since they raised rates in March. This evening, they will be giving another interest rate decision but probably will not be raising their rates again.

Economic data has not been outstanding lately and inflation has again become a bit stagnant. They put a lot of weight into the last hike so currently are in a difficult spot. Tonight’s statement will hopefully give us some hint as to the Fed’s future policy.

But before that, we’ll get a special treat as former Fed Chairman Ben Bernanke will be live on Bloomberg. There’s a good chance that Helicopter Ben will be able to give us an even greater insight than the Fed itself as to the way they think and how they make decisions.

There are two more major announcements on the calendar today. The ISM Non-manufacturing PMI from the United States and then the ADP NFP will give us a preview of the big NFP announcement this Friday.

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