Today’s Key Market Drivers: 26th February 2019

Traders continue to price in their expectations of a positive conclusion to US China trade talks.

The safe haven currencies continued to lose ground on Monday as traders continue to price in their expectations that Trump and Xi will announce a new trade agreement in coming days. Trump also said he was going to delay any new trade tariffs that would kick in on March 1st and once a deal is done, he will meet the Chinese President at his Mar-a-Lago Resort in Florida for the signing. Trump is currently on his way to meet the North Korean leader in Vietnam and rumours are he may stop by China to see Xi on his way home.

It appears to the market that a trade deal is going to happen but the real question is will the market like the deal. Don’t fall in love with the AUD and NZD continuing to rally, the Australian and New Zealand economies have some serious challenges in coming quarters and the probability is interest rates will go lower at both Central Banks whilst the US Fed will raise rates at least once in 2019. A lower interest rate at the RBA and or RBNZ will continue to widen the interest rate differential between the Central Banks and put downward pressure on both currencies.

Australia has one giant FOR SALE sign up.

According to an article published by the ABC buyers are scarce and lending rules at banks is keeping houses on the market for longer and they are selling for less. The article says.

  • More properties listed nationally than at any time since 2012
  • Properties in most capital city spending significantly more time on the market
  • Vendors offering price reductions to encourage buyers
  • Not yet at the bottom of the market

According to CoreLogic, there has been a 15% increase in the number of homes on the market in Australia compared to the same time last year. There are simply not as many buyers with the ABC saying;

“More than 83 percent of all properties in Sydney have been on the market for more than 60 days, an increase of almost 10 percent on last year. In Melbourne, that figure is 80 percent of all properties a jump of more than 20 percent.”

Markets will likely continue to drift today.

With the US and North Korean leaders not set to meet until Wednesday and no genuine high impacting news scheduled for the Asian trading session, I expect currency markets to drift until we get some news on the China-US trade deal or something out of line with expectation occurs.

It’s times like right now when understanding the market both fundamentally and technically is beneficial. Knowing why the price is moving doesn’t just help you build confidence in staying with trades but it also builds your confidence about when not to trade. Tens of thousands of FX traders globally will place positions in the FX market today not understanding a thing about what’s likely going to drive currency values and how investment banks and hedge funds will likely react to the data that is coming. It’s pure gambling to trade this way and those of you that have been with me at my Master Classes this month I trust you are adhering to the 20 trade rule concept that I shared with you.

Buffett says he messed up with Kraft.

After he watched Kraft Heinz shares plunge even further on Friday Warren Buffett told CNBC on Monday that he messed up with Kraft and overpaid for the stock.

Buffett also told CNBC “I liked stocks in the fourth quarter. I would like buying a business even better,” he added, echoing the sentiments he expressed in Saturday’s annual letter to Berkshire shareholders, in which he wrote that “prices are sky-high for businesses possessing decent long-term prospects” but he remained on the hunt for an “elephant-sized acquisition.” Berkshire — whose stock holdings, including the top six by market value Apple, Bank of America, Wells Fargo, Coca-Cola, American Express and Kraft Heinz — was worth nearly $173 billion at the end of 2018. Source CNBC.com

Buffett also called Bitcoin a delusion, it has no value whatsoever and that it only attracts charlatans. From what I have seen and learned I could not agree more.

If you would like to watch the full-length interview I posted a link on the Train With Andrew Facebook page @TrainwithABnow

Today is an opportunity to get better. Don’t waste it. AB

 

About the Author: Andrew Barnett

Andrew is a professional trader and successful investor who has a strong focus on education. He is a regular Sky News Money Channel Guest and one of Australia’s most awarded and respected financial experts and is regularly contacted by the Australian Media for the latest on what is happening with the Australian Dollar. Director at LTG GoldRock, Andrew Barnett, guides thousands of traders around the world in the live market on a daily basis, advising them on buy and sell directions, as well as trading his own personal account. Andrew, a regular keynote speaker at trading and wealth-creation events throughout the Asia Pacific region, is an authorized representative registered with the Australian Securities and Investment Commission (ASIC).

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