2024.04.29 Weekly

We’re so back…

14 min readApr 29, 2024

Equity indices are looking exceptionally strong across the board, and definitely not the type of action one would want to fade, at least not yet.

Over the weeks, I’ve noted my focus on earnings growth expectations as the main catalysts for equity markets to top out and enter a long corrective phase. I also noted the possibility that strong earnings expectations could hold up for another season before it starts to ease off, and that is certainly proving the case.

We are halfway through the Q1 season and Forward EPS growth expectations have hit a new high! Other than for brief tactical periods, I don’t see any reason to take a bearish view on risk overall.

Another action packed week on the event calendar along with the Quarterly Refunding Announcment (initial financing estimates released on Monday April 29, details released on Wednesday May 1st) …

and some big tech earnings.

I maintain a more constructively bullish view from my tactically bullish one at the start of last week, so long as this week’s data doesn’t come in exceptionally hot to induce another bout of bear steepning in yields. If so, I would consider



  • S&P 500 Q1 earnings estimated growth improves; stocks up for week (RTS). S&P’s Risk-On Momentum Gets Added Boost From Rebounding Profits — With quarterly reporting season roughly half over, earnings have largely lived up to Wall Street’s optimistic expectations even as macroeconomic headwinds linger (BBG). Global stocks gain on Big Tech lift; yen slides to 34-year low (RTS). ‘AI Craze’ Powers Best Week in 2024 for Stocks (BBG). Wall Street Humbled as Fast-Reversing Markets Confound the Pros — Mixed macro data reignites concern over soft-landing outlook, Tech skeptics just missed Nasdaq’s best gain since November (BBG). Tech Rally Propels Emerging Stocks to Best Week Since July (BBG). HK Stocks Eye Turnaround With Best Week in 12 Years (BBG) — There’s cautious optimism about Chinese stocks, Pictet says, Tencent has outperformed Magnificent Seven gauge this month (BBG). Japan’s Retail Investors Bought Record Shares as Stocks Plummet (BBG). BofA’s Hartnett Says US Megacaps to Lead Stocks Until Rates Bite — Largest 10 US stocks at record 34% of S&P 500 market cap, Rising bond yields and credit spreads would threaten recession (BBG). Wall Street Bulls Say Stock Rally Can Resume Even Without Rate Cuts (BBG). S&P 500 Is Ripe for Further Gains, JPMorgan’s Trading Desk Says (BBG). Retail Traders Are Turning Pessimistic on Stocks for First Time Since November — Bull-bear spread flips to negative after 24 positive weeks, Survey shows individual investors split on stocks’ direction (BBG).
  • Microsoft and Alphabet enjoy AI-powered gains from cloud divisions — Combined market value of the two tech giants rose by more than $250bn after revenue growth beat expectations (FT). Google and Microsoft Cushion Their AI Capital Pains — Record-high capital expenditures come as both core businesses are performing well (WSJ). Alphabet surges past $2tn valuation as search giant announces first dividend (FT). Meta’s License to Spend on AI Gets Checked — Facebook parent’s capital expenditures this year will rival outlays from Google and Microsoft, but advertising growth is slowing (WSJ). Tencent Shares Blow Past Magnificent Seven on China Tech Outlook — Shares up more than 10% this month as gauge of US giants slips, Valuations, technicals may support further gains for Tencent (BBG). Cathie Wood’s Popular ARK Funds Are Sinking Fast — Investors have pulled a net $2.2 billion from ARK’s active funds this year, topping outflows from all of 2023 (WSJ). US regulators seize troubled lender Republic First, sell it to Fulton Bank (RTS).
  • Inflation Data Reinforce Powell’s Shift Toward High for Longer (BBG). Investors bet global central banks will be forced to delay rate cuts (FT). Investors brace for 5% Treasury yields as US inflation worries mount (RTS). US bond bulls lean into latest selloff despite inflation scare (RTS). US Treasury refunding set to offer relief from supply rises (RTS).
  • Yen Drops Beyond 158 Per Dollar as BOJ Keeps Key Rate Unchanged (BBG). Dovish BOJ Decision Paves Way for Even Weaker Yen, Analysts Say (BBG). Yen Traders See Risk of Intervention at Highest Since Late 2022 — Traders add option exposure that pays out on sizable yen rally (BBG). Carry Trade Gets Turned on Its Head, Stoking Rush to the Dollar (BBG). Hedge Funds Cut Back on ‘Super Peso’ Bets in Flash Crash Week — Funds cut bets on Mexico’s currency by the most since February, Asset managers reduced long wagers to lowest in three months (BBG). Citi, JPMorgan See Carry Trade Revive as Fed Hawkishness Spreads (BBG). US Bitcoin ETFs Suffer One of Their Worst Outflows as Digital Token Wavers (BBG).
  • Oil settles higher on supply concerns in the Mideast, economic woes subdue gains (RTS). US Crude Oil Stockpiles Fall For First Time in Five Weeks — Oil inventories fell by 6.4 million barrels; Analysts had predicted an increase of 500,000 barrels (WSJ). Biggest Oil ETF Has Record Outflow on Thawing Geopolitical Risks (BBG). European Gas Traders Are Already Worrying About Next Winter — Gas capacity deals at Russia-Ukraine border set to end, Next winter gas is trading at a premium to all other contracts (BBG). Copper Hits $10,000 a Ton as BHP Bid Shows Tight Supply Pipeline (BBG). Traders See Cocoa Rally Top $15,000 on Lingering Supply Shortage (BBG). Sugar Rises From Near One-Year Low on Signs of Tighter Supply (BBG). Commodity prices could keep inflation high, warns World Bank (FT).


  • US inflation increases moderately; consumer spending boosts Q2 outlook — March PCE price index increases 0.3% m/m, 2.7% y/y, Core PCE gains 0.3% m/m, 2.8% y/y (RTS). Weak GDP, strong prices, highlight Fed dilemma — Fed officials said it would take a period of below-trend growth to bring price pressures fully into line, 1.6% Q1 growth met that mark after a period where the economy grew faster than the central bank’s median 1.8% estimate of non-inflationary potential. But prices have remained sticky with Q1 Core PCE index at 3.7% pace (RTS).
  • US business activity cools in April; inflation measures mixed — Flash Composite PMI fell to 50.9 from 52.1, Manufacturing slipped to 49.9 from 51.9, Services dipped to 50.9 from 51.7 (RTS). Tepid US core capital goods orders point to weak business equipment spending (RTS). US weekly jobless claims unexpectedly fall — Initial claims dropped 5,000 to a seasonally adjusted 207,000 vs 215,000 expected (RTS).
  • US consumers on lower incomes face loan stress while banks pull back — Bank of America net charge-offs (debts that are unlikely to be recovered) rose to $1.5 billion in the first quarter from $807 million a year earlier; JPMorgan Chase charge-offs nearly doubled to $2 billion in the same quarter while they also increased at Citigroup and Wells Fargo (RTS). US 30-Year Mortgage Rate Rises to Five-Month High of 7.24% (BBG).
  • Bank of Canada Officials Split on How Soon Rate Cuts Could Start, Minutes Say — Officials agreed cuts should proceed gradually given the risk of inflation reaccelerating (WSJ). Canada retail sales miss expectations with second monthly fall (RTS).


  • Divided Bank of England faces political heat over calls for rate cuts (FT). Bank of England policymaker warns against cutting rates too soon — Pound rises against dollar as chief economist Huw Pill sets a different tone from deputy governor (FT).
  • UK business activity beats forecasts in April — flash composite PMI to 54 from 52.8 and well above the 52.6 forecast, driven by Services PMI rising to an 11-month high of 54.9 from 53.1 (FT). UK consumer sentiment returns to two-year high, GfK survey shows (RTS). Asking prices for UK homes close to record high, Rightmove says (RTS). UK retail sales slide in April, early Easter may be partly to blame: CBI (RTS).
  • ECB governors stick to plan for multiple rate cuts despite global headwinds — ECB ready to decouple from Fed, Lagarde keeps options open after June cut but governors hint at more coming (RTS). ECB will need more rate cuts if Fed holds back, says policymaker — Panetta: ‘If markets expect rates to drop but the Fed keeps them unchanged, the rest of the world faces an unexpected monetary tightening’ (FT). Lending and consumer data cements case for ECB rate cuts — Bank loans to companies increased by just 0.4% in March, compared with 0.3% a month earlier. Growth in lending to households, which had been more resilient until last summer, set a new decade-low at 0.2%, from 0.3% in February (RTS).
  • Eurozone business activity rises to 11-month high — 51.4 up from 50.3, 50.8 expected, likely to reassure ECB the eurozone is still on track for a “soft landing” (FT). German Consumer Confidence Reaches Two-Year High — While overall sentiment has improved, it remains at a subdued level, with a sustained economic recovery still obscured from view (WSJ). German industrial production to fall again in 2024, lobby warns (RTS). German unemployment seen rising to highest level in almost a decade (RTS). Germany raises forecasts on boost to outlook for industry and consumers — Expected 0.3% expansion for 2024 comes as energy prices and inflation continue to fall from record highs (FT).


  • Yen sinks to 34-year low after Bank of Japan holds interest rates near zero — Ueda says weakening currency is having ‘no major impact’ on underlying inflation (FT). BOJ keeps low rates, hints of future rate hikes fail to stem yen fall — keeps short-term rate target at 0–0.1%, to stick with bond-buying guidance made in March, projects inflation to stay near 2% in coming years, will hike rates if data confirms its price view, persistence of weak yen could affect inflation and policy (RTS). Rapidly Weakening Yen Threatens Higher Power Bills in Japan — Yen’s decline is pushing fossil fuel import costs higher, Power bills already set to rise as government curbs subsidies (BBG).
  • South Korea Q1 GDP growth smashes estimates, but outlook’s uncertain (RTS). Shadow Banking Stress in South Korea Sends Warning to Global Investors — Korea shadow-bank real estate debt rose to record $671 billion, Regulator may conduct on-site inspections of savings banks (BBG).
  • Indonesia raises interest rates to support sliding rupiah — Currency has lost nearly 5% of its value against dollar this year amid expected delays to US rate cuts (FT).
  • China factory profits slip as overcapacity troubles economic recovery — US and EU have raised alarms about Beijing’s plans to use manufacturing to boost lagging growth (FT). Why China Keeps Making More Cars Than It Needs — Despite overcapacity, government officials keep supporting automakers (WSJ). China Approves Self-Driving Startup’s U.S. Listing Amid Signs of Easing Rules — Pony.ai plans to issue up to 98.2 million ordinary shares on Nasdaq or the New York Stock Exchange (WSJ). Musk Courts Chinese Officials to Seek Approval for Tesla’s Self-Driving Technology (WSJ). Hong Kong Home Prices Rise for First Time in 11 Months After Curbs Scrapped (BBG).


Global equity indices are looking incredibly strong — Demark sequential 9 countdown occuring at key support areas with RSI near the 30 level proved to be a robust signal last week.

SPX made a strong bounce after meeting its initial breakdown target and is back to retesting the key 5100–5110 area.

NDX 17700–800 the key area. Despite the strong bounce, these levels are likely to serve as resistance until proven otherwise, so in my view — if US equities is to sustain the strong bullish reversal it will need to keep making headway beyond these levels.

Tech stocks to drive upside again? Real Pure Growth vs Value, and Large-cap Growth vs Value have made a meaningful bounce off support and is back in the drivers seat.

NYFANG+ is also at an interesting juncture completing the 61.8 retracement with RSI looking to flip bullish. Ordinarily one would have to view these levels as resistance until proven otherwise, but given the positivity to mega-cap earnings thus far, I can’t see resistance being particularly strong.

TDEX tail risk premiums are back to the lows signalling little to no fear while SDEX is holding the middle of the range, but I think we will continue to see vol supression via the latter based on how equity index charts have shaped up after last week.

DAX is looking equally constructive. As with the Stoxx 50 and 600 and the US indices above, it is retesting a key area and again, I can’t see this area of potential resistnace being particularly strong given the price action thats closed the week right back into the key area (suggesting it is likely to push the highs than not), and European sentiment and prospects of a European soft-landing continuing to improve.

OMX is often a good barometer of European cyclical sentiment and it’s made new all-time-highs on Friday.

Nikkei bounced from a prior swing high but the ensuing price action has been unconvincing. I’m still short from 40,500 levels (trailing 39,600) while playing the bounce in risk via NDX and it leaves in 2-minds on what I want to do with it — on one-hand broad risk looks incredibly positive based on the charts we’ve seen above, but on the other, the pummeling in the Yen is likely to add more negative pressure on the domestic economy on top of rising wages to squeeze margins and BoJ with a tightening bias. I intend to keep the short exposure despite being constructive on risk overall for now.

Shanghai Composite is beginning to look more constructive which I think also gives cause for Nikkei underperformance going forwards. There’s been a lot investment flows being redirected to Japan from China earlier this year and charts are suggesting that could all be reversing.

HSI put in their best week in 12 years and is also breaking out. From my experience, this type of double bottom structure (first bounce being a sharp one to mark the 1st bottom, followed by a decending channel/wedge to mark the 2nd) is an extremely strong one.


Bloomberg commodities index is sizing up for more upside after the breakout into April. The way RSI looks however, it does look as though it needs to consolidate further before getting going again.

Looking at the sub-indexes, Agriculturals maintains its uptrend, Energy in consolidation and looks ready to break higher, Precious metals looks like the top is in for the near-term while Industrial metals holds its uptrend.

Crude has been buoyant on a tightening supply side narrative but I do like it for more downside before resuming another rally with weekly Demark suggesting a bearish pivot and daily carving out a bearish consolidation pattern.

NatGas continues to trade heavy and one I think offers good risk-reward on a longer medium term view. Newsflow in European markets are beginning to hint highlight concerns for the latter half of the year which makes me think there is a good possibility of finding a rally.

Spot Gold is now looking more convincing to trade the short side. We’ve had a bearish follow up to the weekly Demark sequential 9 countup while the daily is carving out a bearish consolidation pattern. Same observations can be seen on Silver also.

Copper continues to grind higher and looks likely to find some resistance on approach to the 4.75 handle. I don’t see much reason to short copper barring some recessionary/slowdown sentiment coming back, but some levels to watch should that narrative gain any traction in the weeks ahead.


Yields were a tad higher last week (weekly change in Yellow, 3 week change in Red) as the bear steepening trend seen so far this month continued.

We get the initial QRA amounts released Monday morning where I think the US treasury will avoid terming-out the debt and risk inducing potential market dislocations given the uncertainty with weakness in foreign currencies, trajectory of growth and inflation, and upcoming elections. Term premiums have also been rising and I doubt they will want to add to that upward pressure than there already is. I would think it more likely that the composition of bills/coupons ratio is held steady if not leaning more towards bills especially given some relief on funding needs on stronger tax receipts and marginal improvement to the deficit outlook.

In terms of policy rate expectations, I don’t expect a material change from the 1 cut priced in for 2024 and think we will roughly remain at this level for the coming months. It may move a little higher if this week’s data comes in exceptionally strong (ISM’s and NFP in focus while FOMC likely to be a non-event), but my view is that there won’t be much of a shock factor at this point to equities though it may continue to support USD strength.

If the data does print very strong beats however, we could see 10yr yields pushing higher and stock market volatility to return.


I went flat in FX on Thursday which included taking profit on USDCAD shorts, as well as the remainder of my EURUSD and GBPUSD shorts I originally intended to keep holding as my risk-on conviction grew and US yields appearing to be in a bit of a stall.

G8 FX Index performance last week reflecting the bounce back in risk:

AUD +1.94% !
GBP +1.07%
NZD +0.86%
CAD +0.54%
EUR +0.26%
USD -0.12%
CHF -0.60%
JPY -3.00% !!

JPY saw the worst week since the June last year when Kanda effectively warned of possible action. JPY weakening has been rapid and it wouldn’t surprise me that we will get a similar type of message from the MoF.

We had an unusual 150pip flash dip on Friday with some chatter of a rate-check, but I’m not so sure that was the case.

Nevertheless it turned out to be a nice opportunity to buy into given the above view of taking advantage of such moves.

I still think this is the way to trade JPY crosses but if we continue to steam above the 160 handle in USDJPY, I ‘could’ be tempted into some very small short positions. In addition to some trailing long USDJPY 155.60, I’ve added some risk-on positions this morning via EURAUD and EURMXN:

As I conclude my notes for the week, USDJPY just produced a big 250pip and you guessed it, I’ve picked some up at 156.60 — like stealing candy from a baby.

[Post-edit: Out and gave a chunk back on the last USDJPY attempt. Still up nicely from the Friday trade but this looks like a real intervention move and doesn’t look like it will easily recover from this. Best wait for the dust to settle, which may take a while, before entertaining longs again.]

Thats all for now, good luck trading!