Bulls n Bears Daily Market Commentary : 15 January 2021

Sun Jan 17 14:45:14 CAT 2021

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Bulls n Bears Daily Market Commentary : 15 January 2021

ZSE commentary

The stock market maintained its unpredictable trend this week after it swung back to positive territory. Performance levels were lifted by CBZ Holdings. The three benchmark indices in our review closed in the positive territory. The All Share Index, Industrial Index and Top Ten Index gaining by 5.28%, 5.25% and 7.78%  espectively.

Weekly volume aggregate was boosted by Africa Sun and Econet which traded 6 235 600 and 6 022 900 shares respectively. Major gains were recorded in GetBucks  up 20.00%, the conglomerate Innscor Africa up 17.75%, the financial firm giant CBZH adding 14.67%. Mash and Padenga gained 14.75% and 14.66% respectively. Mitigating gains were losses in Art Corporation with a loss of 18.35% share depreciation, followed by Star Africa and Africa Sun which also went down by 11.68% and 12.82% respectively. Lastly trailing the bears for the week were Zimre Holdings and Dawn which went down by 9.68% and 11.53% respectively..- wealthaccess

Global Currencies & Equity Markets

South Africa

South Africa

South African Rand Rallies Vs. Pound Sterling Amidst Broader Pick Up In Emerging Market Currencies

The Pound to South African Rand (GBP/ZAR) exchange rate has traded in a wide range over the past week as a result of shifting market sentiment.

The South African Rand (ZAR) faced a volatile session of trade this week, as the emerging market currency was driven mostly by global developments

This resulted in a sharp sell-off of the Rand at the start of the week as a slump in equity markets spooked investors and sent them flocking to the US Dollar (USD)

However, the Rand was well positioned to take advantage of the subsequent pull-back in USD exchange rates, as ZAR investors welcomed President Cyril Ramaphosa announcement that South Africa had secured more coronavirus vaccine doses.

The Rand’s rally was then extended into the latter half of the week amidst a broader pick up in emerging market currencies, driven by hopes for a massive new injection of stimulus in the US once Joe Biden assumes office next week.

Whilst it has struggled to hold its ground against the South African Rand (ZAR) this week, the Pound (GBP) was able to soar higher against the majority of its other peers after some hawkish comments from the Bank of England (BoE).

best exchange rates todayBoE Governor Andrew Bailey downplayed speculation the bank could slash interest rates below zero, as he pointed out ‘there are a lot of issues’ with negative rates.

Also supportive of GBP exchange rates was the UK’s latest monthly GDP release, with November’s figures beating expectations, and suggesting that the economy is building up some resilience to lockdowns.

Alpesh Paleja, lead economist at the Confederation of British Industry, said: ‘The impact of the second lockdown was significantly smaller than the downturn seen in the spring. Steps taken by businesses earlier in the year to Covid-proof their operations – combined with the time-limited nature of the restrictions, and schools remaining open – meant more companies were able to continue trading safely.

However, there were a couple hiccups along the way for Sterling, mostly attributed to UK coronavirus developments.

With UK coronavirus cases rising at an alarming rate and the daily death toll climbing to a record high there was considerable speculation that the government may need to impose stricter restrictions to keep the situation under control and alleviate some of the strain on the NHS.

Looking ahead, it looks like the South African Reserve Bank’s (SARB) first policy meeting of 2021 will act as a key catalyst of movement in the Pound to South African Rand (GBP/ZAR) exchange rate next week.

While the majority of analysts expected the SARB to leave interest rates on hold this month, a few are predicting that the bank could make another cut, an outcome which could put significant pressure on the Rand.

Also of note to ZAR investors will be the publication of South Africa’s latest retail sales figures, where a rebound in sales growth in November could offer some support to the Rand.

Meanwhile, with the UK still under threat of stricter coronavirus restrictions, we may see the Pound’s upside potential capped next week.

In addition, GBP investors will be paying close attention to the UK’s latest PMI figures, with Sterling sentiment likely to take a hit if January’s preliminary figures report that the latest lockdown has had a larger-than-expected impact on domestic economic activity.

Nigeria

Naira gains across markets as daily turnover falls to lowest since October

The Naira appreciated against the dollar at the Investors and Exporters (I&E) window on Wednesday.

Naira maintains stability at forex markets as dollar supply rise by 57%, Exchange rate, dollar, Foreign Direct Investment, Global Investment, Naira appreciates at I & E window, hits N384 to $1.

On January 13, 2021, the exchange rate between the naira and the dollar closed at N393.33/$1 at the NAFEX (I&E Window) where forex is traded officially, an appreciation from the N394 recorded on the previous trading day, 12 January 2021.

However, the exchange rate at the black market where forex traded unofficially appreciated marginally at N474/$1. The exchange rate at the parallel market closed at N475/$1 on the previous trading day of 12 January 2021, representing a N1 gain.

 <mailto:info at bulls.co.zw> 

Global Markets

US Dollar Rebound in Focus Ahead of US Presidential Inauguration

The US Dollar Index (DXY) breaks out of the range bound price action from the first of January amid the recent pullback in global equity prices, and key market themes may continue to influence the reserve currency as the Greenback still reflects an inverse relationship with investor confidence.

The US Dollar trades to fresh monthly highs going into the inauguration of President-elect Joe Biden, but it remains to be seen if the Greenback will continue to appreciate ahead of the Federal Reserve interest rate decision on January 27 as the rebound in longer-dated US Treasury yields starts to unravel.

Recent remarks from Vice-Chair Richard Clarida suggests the Federal Open Market Committee (FOMC) will retain the current policy at its first meeting for 2021 as the board member insists that the central bank “will continue to increase our holdings of Treasury securities by at least $80 billion per month and our holdings of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward our maximum-employment and price-stability goals.”

In turn, it seems as though the FOMC will retain a dovish forward guidance as Chairman Jerome Powell and Co. lay out an outcome-based approach for monetary policy, and swings in risk appetite may continue to sway the US Dollar as the FOMC relies on its balance sheet to achieve its policy targets.

However, a further contraction in the Fed’s balance sheet may drag on investor as it narrows for the third consecutive week, with the latest figure sitting at $7.334 trillion in the week of January 13 compared to $7.335 trillion the week prior.

With that said,a further pullback in global equity prices may produce fresh monthly highs in the US Dollar index as the reserve currency still reflects an inverse relationship with investor confidence, and the rebound in the Greenback may persist going into the US Presidential inauguration as DXY breaks out of the opening range for January.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold Sheared, Silver Smeared

Gold was sheared this past week by -1.2% and is now -3.9% year-to-date.Silver was smeared this past week by -2.6% and is now -6.4% year-to-date.

But relax: have a cracker ‘n schmear, perhaps even a beer, and we’ll try to relate to making it all clear.

Know where Gold is headed? Take advantage now with 

To be sure — given all that we and you from here to Kalamazoo fundamentally understand about Gold – its moving lower in the ongoing financial environment makes nary a wit of sense whatsoever. The market is never wrong by traders having put price where ’tis, irrespective of its going the wrong way.

And given the fundamental precious-metals-positive state of essentially everything, ’tis diabolical that price descend.

Indeed as Gold leaped out of the gate to commence the New Year by gaining +3.2% (and Silver +6.0%) within the first three trading days, it struck us that our call for a Gold high this year of 2401 may have been too conservative. And from the “Under-State and Over-Deliver Dept.”, such 2401 forecast may still be too conservative even given the present pullback.

Either way, Gold settled out the week yesterday (Friday) at 1828 … which is but half the above Scoreboard’s debasement valuation of 3644. Moreover, ’tis before President-to-be-Biden rolls out his nearly $2 trillion instant COVID/economic relief plan, which with Congress now all “blue” ought pass right through.

And again, please spare us the argument that bits**t is the modern alternative to Gold. Cryptocrap — which within two trading days just fell -27% — ain’t fallin’ into our lap.

And again (again), the fundamental stance for Gold we continue to view as 100% positive given the ever-burgeoning levels of the 3Ds (Debasement, Debt, Derivatives), the declining Economic Barometer (as we’ll below show), COVID clearly not contained (nor the effects of its vaccines preordained), and the endless spending of even more $trillions beyond the initial $2 trillion under Biden/Harris/Congressional reign!

So: why has Gold been declining? Reprise: the technical stance for Gold may merely be viewed as price having leapt too far too fast, as least by its recent deviation above the 300-day moving average.

To wit: since the start of the millennium we’ve had 5,043 trading days. Therein, Gold has settled more than 10% above its 300-day moving average a fair amount of the time: 1,697 days, to be precise (or one-third of days overall). That alone is a testament to the price of Gold rising over the long-term whilst all of the aforementioned fundamentals reduce the value of the faux dough Dollar.

In commencing 2021, so swift was Gold’s up move that price found itself nearly 13% above its 300-day moving average. And from the year 2001-to-date, Gold’s average price decline within three months upon a deviation of greater than 10% above that average is -6.2% (the standard deviation being 4.9%). So with Gold recently settling at 1954 (05 January), ’twas +12.6% above said average. A -6.2% decline from there puts price at 1833, (the recent low being 1817). ‘Course, hardly have three months yet to ensue: thus let’s further subtract the standard deviation which puts price down to 1739. On verra, but a positive Gold stance by the fundamentals belies such demise.

Besides, as we saw a week ago, Gold’s weekly parabolic trend has flipped from Short to Long, dubious as it appears on the following graphic of the price bars from one year ago-to-date. The wiggle room between the rightmost blue dot (1771) and present price (1828) is but 57 points, somewhat daunting as Gold’s “expected weekly trading range” is now 72 points. Thus the new Long trend is within range of being Short-lived.

And to quickly flip back to Short would leave any fundamentalist further flabbergasted. The point is: the Gold Bull ought not be put out of sorts should the lower 1700s be tested. Indeed, Gold appears to be structurally supported in the 1792-1673 range, but we don’t honestly find any rationale for price to venture there.

‘Course, the Dollar has actually been getting a bit of a bid to start the year, which in turn is why the BEGOS Markets year-to-date ain’t lookin’ all that great, the sole exception being Oil which typically shall slide during a Dollar up-glide. (Speaking of Oil for those of you who follow the website’s Market Rhythms page, the 12-hour MACD study looks to confirm a negative crossing in starting the new week). Otherwise, through these first 10 trading days of 2021, Gold as we below see is thus far the weakest of the five primary components which comprise BEGOS:

In trying to ferret it all out from the FinMedia, one may be better off with a shot of tequila. Try these “back-to-back” readings from the Dow Jones Newswires: “…the labor market is losing momentum amid rising coronavirus cases…” (followed by) “…This Could Be the Best Year on Record for Job Growth. Gains are expected to be driven by a re-emerging economy…” That must have come from their “Now and Then Dept.”

Or try this FinTimes and Reuters bit: “…JPMorgan, Citigroup and Wells Fargo cite increased certainty on vaccines and improving economic outlook…” (followed by) “…U.S. Labor Market Losing Speed as COVID-19 Spirals Out of Control…”

And we know throughout history that such opposing opinions when elicited as policy result as follows:

Even a terrific Q4 Earnings Season would hardly right this ship: bottom lines ought need triple to-quadruple just to get the P/E in line with any acceptable historical norm. And hardly is the economy helping: beyond December’s improvements in Industrial Production and Capacity Utilization, the month’s Retail Sales actually shrank whilst Import and Export Prices rose. Can you say “stagflation”? As well, January’s New York Empire State Index sported its weakest reading since July.

Then we’ve Cleveland FedPrez “Jump Back” Loretta Mester pointing to the StateSide economy’s needing strong 2021 government support, (and you know ’tis coming in $trillions: Got Gold?) Chiming in, too, is overall FedHead Jerome Powell stating the road to recovery for jobs is long with open-ended easy money to remain available. Again: Got Gold?

Still, not everyone has got Gold (now that is to Under-State) nor are stocking up en masse as we turn to our two-panel graphic of Gold’s daily bars from three months ago-to-date on the left and those for Silver on the right. Problematic for both markets is their respective sets of “Baby Blues” falling below the 0% axis, meaning that the 21-day linear regression trends have rotated from positive to negative: Sheared and smeared, indeed:

.

INVESTORS DIARY 2021

Company

Event

Venue

Date & Time

Counters trading under cautionary

ART

Seed co Int.

Dairibord

Starafrica

Medtech

Turnall

Seed co

Invest Wisely!

Bulls n Bears 

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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