Hello Traders and Investors and thank you for joining me for another edition of the Magnelibra Markets Podcast, I’m your host Mike Agne and today’s episode #23 is entitled “Central Banks In Focus, Netflix and More!”
But first a quick regulatory disclaimer:
DISCLAIMER: The following podcast is for educational purposes only. This is not a solicitation to buy or sell commodity futures or options. The risk of trading securities, futures and options can be substantial and may not be appropriate for all listeners.
So we have some of the major central banks on tap this week and first up was the BOJ, Bank of Japan, where last night they kept rates unchanged and policy loose, keeping with the YCC, yield curve control mechanisms and the upper limit of their 10Y capped at the 1% reference level. The BOJ also lowered their inflation expectations from 2.8% to 2.4% in regards to their median growth forecasts. We have the Bank of Canada tomorrow and the ECB on Thursday, both banks are expected to stay with their hawkish tones for now. We know that the FOMC is next week and if the banks this week remain overly confident with their no landing or soft landing hawkish rhetoric, we believe the FOMC will begin to massage the masses to expect an easier policy here going forward. Yes we know this is against all the talk of a no recession and soft landing, but the reality is, the world cannot have 5.5% US Fed Funds and Trillion dollar interest payments. The world needs US capital and capital flows and higher rates are not helping as much as they are hurting at this point.
Speaking of flows and when you think about the Q4 spike in equities, well look no further to understand why. The PBOC expanded their balance sheet by $844Bn in Q4, guess where all that capital was deployed? No not the Hang Seng! Great chart here from Tavi Costa at Crescat:
Ok onto the settlements page, we did want to a apologize for not getting the data out earlier, we have had technical and electrical issues on the home front here, so with that said let’s take a look at the settlements sheet from the last two days and we have rolled the Gold futures contract to April from Feb:
Bonds were hit today with the longer end taking the brunt of the selling and the front end steepening out again. When we look at the yield curve today we can see this steepening as the 2s were basically unch and the 30Y was 6.2bp on the day:
All the equities are higher to start the week with the Nasdaq leading today. Bitcoin broke the $40k barrier and we would suspect a test of the $32k level is most likely in the offing. The Dollar has been slightly stronger but not by much. Energies are slightly higher with Nat Gas flopping around here at the 2.15 marker. Metals were higher today led by Silver +16 cents or so.
As far as the Futures Model Tracker there are no changes, we continue to stick with the steeper curve theme, slight long bias in equities, mixed on the currencies with slight longs in energy and metals:
When we look at the MEGA8s they have been on a slow steady grind higher with the market cap of the group hitting $13.389T.
As far as the MEGA8s Nvidia nearing $1.5T in market cap now only $133B below Amazon, pretty impressive run indeed. We continue to go unhedged here on the grouping and will see if we any of the data either fundamental or technical tells us other wise in the next few days, for now the trend is still clear. One thing has us concerned is that the dollar has held up quite well over the last few days and the equities are ignoring it, so we will keep an eye on any of our correlating indicators for any change in sentiment here. We did note that we could get a move back up in Tesla before resuming lower, well it did get a run near $218 but has since backed off again closing under $210 again, let’s see how $208 holds and if we get a double bottom off there or a weekly close below, would indicate further weakness from Tesla. Tesla reports tomorrow after the close so be on the look out for a move to counter this downdraft recently with a chance to resell near $222 or a break of $208 and close pushing us toward a break of $200:
We don’t include Netflix in this group and maybe we should as Netflix reported today a massive 13.1m subscriber jump in Q4 more than 46% higher than expected, nice job analysts! However earnings saw a $2.11 print which was lower than the $2.22 expected earnings per share. Revenue was $8.8B up slightly over the $8.7B expected. Total subscribers is now up to 260 million. MarketWatch reporting Netflix +8.66% after hours to $534.80 + $42.61:
When we look at Netflix technically we can see tonight’s move is pushing it up past our longer term linear green expansion line and now into the resistance area which held the stock all of July 2020 thru July 2021. Ultimately the main target/reversal area comes in at $585 area so any move up to there should be looked at as a longer term heavy resistance and sale first time up opportunity:
Finally we leave you today with a must read from the great Lyn Alden. She puts out excellent analysis and you can sign up for her work at her site, lynalden.com. The insight we want to share today, is her latest work entitled “Assessing the Health of Bitcoin” here is the link to this letter as well, Assessing the Health of Bitcoin
The letter covers five main topics and is an excellent overview of Bitcoin from a very trusted and reliable analyst. The five main points are:
Market Capitalization and Liquidity
Number of Conversion Points
Technical Security and Decentralization
Quality of User Experience
Legal Acceptance and Global Recognition
We particularly liked this point that was made and to quote,
Bitcoin is free open-source code, which makes it hard to stamp out. Even restricting the hardware side is tough; China banned Bitcoin mining in 2021 but China is still the second largest mining jurisdiction. When China has trouble banning something, it’s clearly not easy to ban. The software side is even stickier than that.
For us, this is a must read, must save and keep for future reference. We think you should too.
Alright that does it for today. We hope you learned something, as always thank you to all of our subscribers for your continued support. We hope we inspire you to think outside the box as we navigate these complex issues together. Please share our work if you can, give it a like at the minimum or more importantly think about hitting that subscribe button! We want our subscribers to stay ahead of the game, to be able to have the necessary data and information to impress your friends and colleagues and most likely to correct their faulty logic and analysis! This is why we do what we do, we do it for you, to be well informed of the things that matter, not simply a subject to the main stream narrative! Till next time…Cheers
Share this post