S&P 500 Will Break Past 3,000 Quickly, Keep Rising: Blackstone
By Mark Kolakowski
Among the more bullish voices on Wall Street is Joe Zidle, an investment strategist with The Blackstone Group. While other market watchers have been predicting severe plunges in stock prices, Zidle is sticking with his prediction that the S&P 500 Index (SPX) will surge past the 3,000 mark in 2018, CNBC reports. This would represent a 3.6% advance from the Sept. 13 open, and a gain of 12.2% for 2018.
Indeed, Zidle now believes that the magic number will be attained earlier than he previously expected, perhaps shortly after the midterm elections to Congress in November, rather than by year-end. Moreover, he foresees a positive trend in corporate earnings propelling stock prices yet higher.
NZD Rise to Gain if GDP Sinks RBNZ Rate Cut Bets, Trade War a Risk
By Daniel Dubrovsky
The week ahead contains the second quarter New Zealand GDP report. Growth is expected to slow to 2.5% y/y which would be the weakest since Q4 2013. However, local economic news flow has been tending to outperform relative to economists’ expectations in recent weeks. This opens the door to an upside surprise which could pour cold water on RBNZ rate cut bets.
Overnight index swaps price in a 30% chance of a cut from the Reserve Bank of New Zealand in February 2019. If those will be suppressed by a GDP beat, we could see monetary policy fundamentals sending NZD/USD prices higher.
With that in mind it is tempting to offer a bullish Kiwi Dollar fundamental outlook, but the risk that Donald Trump rekindles trade war fears is a threat. This could reverse gains in emerging markets which would arguably send the New Zealand Dollar lower.
Trade war: American autos look to be hit the most by both US and China tariffs
By Evelyn Cheng
U.S. automakers in China are feeling the most pain as some American companies are getting hurt by new tariffs from both the White House and Beijing, according to a survey released this week from the American Chamber of Commerce in Shanghai and Beijing-based American Chamber of Commerce in China.
The move came as both countries implemented tariffs this summer on $50 billion worth of goods from the other. Vehicles and components appeared on both lists. U.S. President Donald Trump’s administration has also proposed duties on an additional $200 billion worth of Chinese goods, while Beijing is planning counter tariffs on $60 billion worth of U.S. goods.
Members of AmCham China include local branches of General Motors, Ford, BMW, Goodyear and Harley-Davidson, according to the chamber’s website.
Earlier in August, Morgan Stanley cut its price target and earnings per share estimates on General Motors due to concerns about a slowdown in the Chinese market.
CAD Bulls Long for NAFTA Deal
By Justin McQueen
The largest risk to the outlook for the Canadian Dollar is the outcome regarding NAFTA. With a touted deadline of October 1st, the headline risk for USDCAD is high and will turn likely dictate near term price action for the pair.
Given the firm data out of Canada, the BoC has signalled that their willingness to raise rates in the short term, as such, the current BoC tightening path is unlikely to provide a significant amount of support for the Loonie with expectations already high. However, if indeed a NAFTA agreement is reached this could potetially see markets repirce a steeper rate path from the BoC, particularly after Deputy Governor Wilkins affirmed the BoC’s hawkish stance by discussing whether to remove “gradual approach” to current rate guidance.
Nikkei 225 Eyes Bullish Breakout, US Equities Point to Fresh Record
By Justin McQueen
Since the rejection of the rising trendline from the 2018 low, the Nikkei 225 has pulled back towards the top of the consolidation range that has been in place since May. The near-term target for Nikkei 225 bulls is the August high (23145) in which a break above could see the index make a run in on the next value area at 23538-23860. The BoJ monetary policy will be next week’s key risk event for the Nikkei 225, whereby the central bank is expected to maintain its ultra-dovish policy stance.
Why Intel’s Bear Market Plunge May Steepen
By Mark Kolakowski
Shares of leading semiconductor manufacturer Intel Corp. (INTC) are in a dive, having fallen nearly 20% since reaching an 18-year high close on June 1. Moreover, its 50-day moving average has dipped below its 200-day moving average, a so-called “death cross” that usually signals further declines ahead to chart-reading technical analysts, according to data from FactSet Research Systems, MarketWatch reports. Meanwhile, fundamental analysts have their own reasons for pessimism, per the same article, based on reports that Intel is suffering production problems and delays that are leaving it unable to keep up with demand.
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