The "What Ian Can See" WICS trading information newsletter - previous edition.
Ian's weekly look at the world economic situation. Members get access to the current edition, searchable archives, chart analysis and one-to-one mentoring on your trading.
June already eh! More or less half the year gone and the long (so, so long) awaited Big Drop is still barely under way. Oh well, there's always July to look forward to.... Mind you, nasty things are still a'bubblin' just under the surface and "stability" isn't really the watchword of the moment, that's for sure.
What kind of "things" do I mean?
Well, there's Eetalee for a start. I'm sure I don't need to go into all the blurb about the new "government" that was formed the other day, then unformed due to the president's refusal to accept the proposed new finmin, then formed again. New Italian governments are hardly a rarity after all. However, this one is different, with its unholy alliance of the hard left and equally hard right, both of which sides of the same coin don't like another coin. I refer of course to the yooro coin, and there's even talk of an Italian "parallel currency" to run alongside the euro. Now there's a concept to send shivers down the spines of all the Brussels snakes! A long time ago in these mutterings (back when Greece was the country causing Brussels to get somewhat agitated), I suggested that Italy was potentially far more dangerous to the euro, and to the EU leaders' determination to create a federal state. I believe that still to be the case, only even more so now. Markets tend to be well ahead of politicians, and Italy's bonds are now yielding three times more than they were two short years ago. Digging a wee bit deeper, there's an even more significant fact to consider - ISDA (the International Swaps and Derivatives Association), the setup that provides insurance for Credit Default Swaps, and does all the calculations necessary to price said insurance policies, never paid any attention to insuring against a reversion to its old currency by any eurozone country. You couldn't insure eg Italian CDS against a return to the Lira because nobody thought that could ever occur, but guess what? Now you can...... And if that doesn't qualify for "nasty things a'bubblin' just under the surface" then I don't know what does!
You want more under the surface stuff? Oh, all right then, seeing as it's a lovely day out there. How about the European Investment Fund? Yes, it's government backed - ie, taxpayer funded. It insures loans taken out by companies if it's hard for said companies to tap their banks for more dosh. Might that imply these loans are a tad on the "covenant-lite" side perhaps? Hmmm. And the EIF currently has about €1.3bn in the piggy bank to cover any potential default, so that's OK then. Or is it? The loans meantime total rather more than they did a year or two ago. They're now standing at a mere €30bn....
Speaking of troubled loans, Moody's is suggesting that 65% of all Yank corporate borrowing is now rated at B+ or lower - ie, junk. A third of US corporate bonds are junk! Go figure, in the inimitable words of the Yank brother in law. (I note that Deutsche Bank's bonds are still OK, at three whole notches above junk, if you like that kind of risk. Mind you, the Fed is now suggesting that Deutsche Bank is "troubled". Oh yes.)
Still with Yankland and banks, Dodgy Donald has repealed some law or other, in order to let Wall St off the leash again - so we can expect all kinds of toxic waste yet again to hit the markets and be sold to an unsuspecting public. That will stop a crash happening then. Ho ho ho.
Back in BBBB land (Blighted By Brexit Blighty) Dun & Bradstreet is suggesting that thirty-one out of eighty-seven energy companies are teetering on the edge of failure, so we can expect a bit of consolidation in that sector, not to mention the inevitable increases in our electricity bills. That won't help "challenged" households! And speaking of challenged households, here's a rather scary piece to consider.
Too many avocado purchases, not enough saving going on.............. And of course, job losses continue apace. Dixons Carphone is closing 92 stores, and doubtless many P45s will result from that, while a Scottish civil engineering company (Crummock) has just gone bust, causing 300 more of the forms to be printed.
Anyway, you get the picture I'm sure - nothing changes quickly enough but all the signs are there for a major stock market correction, if you know where to look.
Moving on to lighter matters, how about these three Scottish "charity hill walkers" who got lost in the mist the other day? They were only trying to get to the top of the country's second highest mountain (Beinn MacDuibh) after all, complete with T-shirts, shorts and trainers. It's truly hard to comprehend just how stupid some people can be!
Then there was the report that "an independent Scotland would keep the Poond till a new currency could be developed". It will be called the Scotlira and will have the grinning, complacent and fundamentally stupid-looking visage of Nicola Krankie on the 100000 lira note.
And how about the judge in England who suggested that "owners of kitchen knives that are long and with sharp points, could be taken somewhere to be modified". Methinks he needs a course in the use of the English language...... There again, maybe he means it.
Then there was the thing about owners of drones having to pass an online safety test. Duh - how to pass ANY online test...... (I know the answers. All of them. Nae problem.)
And finally, another 88000 Beemers recalled in Blighty, adding to the 310000 already recalled unless they have already gone on fire. Modern cars eh?
OK - enough nonsense - onward to the interesting stuff and first today a look at Dixons Carphone after its mention earlier. "Investors" (ho ho ho) clearly liked the news of the 92 store closures, and on Friday the price managed to get a wee bit into the previous gap down. It looks mighty like an inverted flagpole to me though, with a wee flag on it too. There's also some horizontal support and resistance to consider. Then Greggs has a similar inverted flagpole, but this time it sports a pennant, not a flag. Next, there's a "small picture" rising wedge to be seen on the chart of Domino's Pizza, complete with a wee throwover, so a further drop back is to be expected. And finally, the Dow (DJIA) where I have redrawn the countertrend channel better to reflect what's going on at the moment. In effect there was a false downwards breakout back in February before the channel formed properly. Since then there has been a probe, retrace, and upside breakout that is now teetering on the edge of failure. A break below the 29th May lows could see the channel re-entered with much lower prices to follow.
And that's your lot for this muggy day - time now to do all the video updates!
See you next weekend.
All the best
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