Well, well, well… Jackson Hole didn’t disappoint. I suppose that depends on which side of the fence you are on. If you were/are an equities bull, then indeed Jackson Hole and Jerome Powell’s speech disappointed very much. If you were just an observer, then at least you were thrillingly entertained by the markets reaction. Jackson Hole? More like Jackson pit of despair! The market did not like the fact that Jerome Powell basically stuck to his guns and did what the Fed outlined they would do some time ago. Below are some ‘takes’ from (some) the big boys.
Citi Bank: Chair Powell used his about 8-minute Jackson Hole speech to send a more targeted message with less room for dovish (mis)interpretation: interest rates will continue to rise and Fed officials plan to achieve and maintain tighter financial conditions to slow the economy and bring down too-high inflation. Meanwhile, recent data suggest a re-acceleration of economic activity and a labor market that remains historically tight. We expect a 75bp rate hike in September following a strong 305k August jobs report next week and 0.2-0.4%MoM core inflation weighed down by used cars, but showing persistently strong details, released September 13.
Barclays: As expected, Powell’s speech at Jackson Hole was hawkish, highlighting the risks of declaring a premature victory over inflation, and signalling a data-dependent decision between 50 and 75bp in September. Meanwhile, data suggest resilient US activity, reinforcing the Fed’s message that its job is not done.
TD Securities: In our view, there can be no doubt after Powell’s remarks that the Fed will continue to tighten policy over the coming months. We continue to look for the Fed to slow the pace of rate hikes in September to 50bp, however, a larger 75bp increase is on the table and will hinge on upcoming economic data.
Clearly the ‘Fed pivot’ that the market was hoping for, is a little less likely than what everyone had hoped and it seems that we are going to see higher interest rates for longer. So buckle up!
WARNING: Bear porn (reeaaaly bad looking charts) below.
Offshore trade ideas
S&P 500 (SPY)
We’ve not changed the drawings on this chart for a good while now and want to just point out that the 3370 index level ($337 for SPY ETF) is the pre-covid high. So all this fear and loathing aside, a pullback to that previous high seems fairly logical as markets begin to unwind the massive amount of QE that ‘saved the world from covid’. The real question is: does it go deeper?
Nasdaq (QQQ)
Not too much to add in terms of comments here, but we’ve also highlighted the pre-covid high (white line). Lot’s of downside to go before we test ‘old resistance’.
S&P 500 Volatility Index (VIX)
Did you buy protection when you could? Because you need it now.
Brent Crude Oil
The primary trend line seems to be holding well and the global energy crisis just keeps getting worse. We are of the view that OPEC will cut production soon as well, to ‘bring balance’ to the paper market ‘to reflect reality’. Seatbelts on. We’re going flying soon!
Bitcoin (BTC)
We’ve not mentioned good ol BTC for a long while now, but our view has not changed at all. Our call was an 80% to 90% ‘pullback’ during 2022 and 2023… wen we are almost there. We do also still stand by our ‘buy the primary trend line around or sub $15k’ call as well. Will BTC lead the risk assets lower?
South African trade ideas
JSE Top 40 Index (ALSI)
After what started off a great day on Friday, the ALSI turned solidly red to end the week on the back foot. Thereafter SPY (and pretty much everything else) fell to pieces. I don’t mean to be bearish but, I just dropped something steamy in the woods. As is the case with the equity index charts above, pre-covid highs are market (this time in green) and it’s looking very much like a target if you ask me.
Aspen Pharmacare (APN)
Results due early this week and there is no more tailwind from vaccines. In a difficult market, disappointing earnings could really hurt. Be on ‘short watch’ on this one.
Blue Label Telecoms (BLU)
Gravity is starting to feel stronger and stronger here. If the market goes into solid ‘panic’ mode, BLU could drop hard and fast. It’s a fairly illiquid small cap though, so be careful if you get involved here and trade smaller than you usually would.
Compagnie Financiere Richemont (CFR)
Nice little range to trade on the daily chart here. Obviously we are bearish heading into the new week, but we’re open to taking this long if it breaks out of this range to the upside. That said, we’d also short it if it goes the other way. In other words, we think this is a high probability setup to trade in either direction, only one the breakout is confirmed with a daily close outside of the range.
Joining HCA trading
HCA trading offers a number of different trading accounts to suit different types of traders. Our offshore trading accounts allow traders to buy shares, ETFs, CFDs and even fractional shares in the United States for only $2 a trade. Locally, we offer shares, ETFs and CFDs at good rates with robust and reliable trading platforms. All our trading, including CFDs, is done on a Direct Market Access basis and thus our clients are able to interact directly with the real equity market and not have to worry about excessive counterparty or liquidity risk. Our prime broker locally is a big four bank and offshore we make use of one of the largest non-bank prime brokers in the world.
Local stockbroking rates
| Trading instrument | Brokerage rate | Margin rate | Minimum trade charge |
| JSE listed equities and ETFs | 0.30% | 100% | R150 |
| CFDs on JSE listed equities | 0.20% | 10% – 25% | R50 |
| SAFEX listed index futures (ALSI) | R20 | 6% – 8% | R20 per contract |
Offshore stockbroking rates
| Trading instrument | Brokerage rate | Margin rate | Minimum trade charge |
| U.S. listed equities and ETFs | USD 1 cents per share | 100% | USD 2 |
| Canada listed equities and ETFs | CAD 2 cents per share | 100% | CAD 2 |
| U.K. listed equities and ETFs | GBP 12 + 0.1% | 100% | GBP 12 |
| Germany listed equities and ETFs | 0.20% | 100% | EUR 8 |
| Forex | 0.40% | 100% | USD 4 |
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*Please note that these trade ideas form part of a larger weekly plan and the value of financial products can increase as well as decrease over time, depending on the value of the underlying securities and market conditions. The risk of loss arising from trading in Contracts for Difference can be substantial. You should carefully consider whether such investments are suitable for you in the light of your circumstances and financial resources.