View from Toronto: Global Outlook the Week of August 21

08/21/2017 2:57 am EST


Ziad Jasani

Managing Director and Partner, Independent Investor Institute

Trade ideas: USD remains more attractive than the euro or yen, with expectations for the USD to strengthen front end of the week in tandem with US Equities. CAD is also in bounce formation with FXC as an acquisition target, says Ziad Jasani in his weekly video report. 

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Global Outlook & Summary – Week of August 21-25 
Global Equity Markets: Entering lowest liquidity week ahead, with buyers in control staging a bounce after N. Korea, Cohn-fidence, Spain terror issues move to the back-burner, coupled with a potential Bannon-Bye-Bye party. We are in swing-low formation again, for a mini-market bounce that can take the S&P 500 (SPX) back above its 50-Day Average (2,450) and the TSX to its 50-Day Average (~15,200).

Global Bond Markets: Yields are likely to rise front end of the week, but they soften as we approach the Jackson Hole Symposium Friday, August 25. Bonds, in general, are relatively expensive and yields are relatively cheap on annual routines; this positioning into a week of light economic data and the beginnings of another mini-global-equity-market bounce starting August 18 suggests taking short-term bond-trades off the table, and putting stops under longer-term positions.

Global Commodity Markets: Oil is looking to re-test ~$49 while Gold is setting up for a swing-high under $1,294. Commodities globally remain in a longer-term downtrend channel but industrial input commodities including base metals are pointed north the front end of next week.

Global Currency Markets: USD remains more attractive than the euro or yen, with expectations for the USD to strengthen front end of the week in tandem with US Equities. The CAD is also in bounce formation with Guggenheim CurrencyShares Canadian Dollar Trust (FXC) as an acquisition target (short-term). As Equity markets decide on whether Jackson-Hole will be dovish or hawkish the back-end of the week, we can expect the USD to soften again.

THEME FOR THE WEEK: Risk-on to start the week, we are in swing-low formation, with leadership from North American markets, then it’s up to Central Bankers to deliver a dovish presentation at the Jackson-Hole-Symposium August 25 to keep the bounce alive, or kill it.

Broad-Decisions: Hold for mid-to-longer-term equity positions but get your stop-losses in, especially on defensive interest rate sensitive sectors. Short-term we’re in the initial stages of confirming another mini-macro-market-swing-low (August 18) much like the one on August 11. The front end of the week looks long into August 24 with short-term capital:

SPDR S&P Pharmaceuticals ETF (XPH)

Energy Select Sector SPDR ETF (XLE)
Technology Select Sector SPDR Fund (XLK)  
iShares US Technology ETF (IYW)
SPDR S&P Biotech ETF (XBI)

iShares S&P/TSX Capped Composite Index (XIC-T)
iShares S&P/TSX 60 Index ETF (XIU-T)
iShares S&P/TSX Capped Financials Index ETF (XFN-T)

iShares S&P/TSX Capped Energy Index ETF (XEG-T)


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Recorded:  August 21.

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