JPY crosses reversing higher again after better than expected US growth data. USD backs off as well.

Recent moves likely to climax between now and Monday with end of month trade behind us at week-end.

Weekly Commodity Update

Commodity markets continue their month long drive higher aided by ample liquidity, a dollar reaching a new low point for 2009 and ongoing strength in stock markets.

Is the Euro looking a bit lonely at the top?

JPY heads weaker still on weak bonds as US Treasury announces another record treasury auction next week.

Watch out for Caterpillar today, it could be the trigger in equities

• Stocks rising on better than expected Apple and TI earnings. We are getting close to our 1121 target in S&P 500, but a downsloping trendline resistance is also capping the upside in stocks (today at 1117) and we advice to go neutral or even short at higher levels.
• What is at play here? A lot of liquidity and decent earnings. But is it priced in? The S&P 500 is up 65% from March and credit spreads can hardly go much lower. In other words, the risk-reward is beginning to be skewed towards the downside.
• RBA using strong man rhetoric in the minutes: low rates might be “imprudent”… signaling even higher rates. AUD getting a boost.

Weekly Commodity update

It has been a very interesting few weeks in the commodity arena with upside breakouts all over the place driven by a wall of liquidity, strong equity markets and a weak dollar.  The five-month range in crude oil finally broke on Thursday following in the steps of a similar move in gold the previous week. Momentum had been building all week as strong equity markets driven by stronger than expected Q3 company earnings continued to drive the dollar lower thereby supporting the upside move in energy.

The earnings season continues today with Citigroup, Goldman Sachs, and Google reporting among others. Stocks will continue higher on better than expected earnings.

• JPMorgan posted a better than expected earnings report yesterday and with Intel's earnings report was the major driver of equity markets. JPM's report was in two parts; record earnings in the investmentbank, but severe losses in their credit division and signaling it is going to get worse.
• The recent rally in equity markets have been quite strong, but the lack of insider buying and the recent surge into fixed-income funds points towards a rally that is running out of steam; so far the fixed-income funds have attracted 18 times more money than stocks in 2009. The FOMC minutes from yesterday made the USD drop as it showed that the major part of the committee members favored increased purchases of assets to speed recovery.

Intel and Johnson & Johnson will report earnings today. Especially Intel (reporting after market close) will attract our attention. We expect a solid earnings report.

• Yesterday was quiet both in terms of macro data and company announcements, but that did not stop risky assets from performing well. European stock indices performed well and so did EUR, CAD, and AUD.
• Intel and Johnson & Johnson will be key today. The latter will report before the US market opens. Both of them should beat expectations whereby we should see stocks go higher.
• Intel posted some fairly poor Q2 numbers, but did beat the market's expectations. Nevertheless they did not expect much change in the second half of the year and we should therefore expect another massive YoY decline in revenues. The market will focus on the analysts' expectations though and these should be beaten.
• We do have a few macro releases today, most importantly the ZEW survey. This is the earnings season however and we do not expect macro numbers to matter much unless they surprise a great deal in either direction.

• New Zealand Sep. QV House Prices fell -1.1% YoY vs. -2.8% in Aug.
• Germany Sep. Wholesale Price Index fell -0.2% MoM vs. +0.3% expected
• Sweden Sep. AMV Unemployment Rate out at 5.3% vs. 5.4% expected and 5.5% in Aug.

While we are still bullish for the short-term, we remain bearish for the longer run. We are sticking to playing the themes from the September Equity Strategy Outlook: domestic cyclical recovery, Global secular and dividend growth, exposing ourselves towards energy, materials and consumers staples.

But we are getting ready to take some risk off – and to allocate a larger part of the capital into defensive sectors. We expect the upcoming earnings season to drive markets higher especially due to positive earnings surprises from especially high quality stocks (staple growth). After this we expect a market correction.

As expected the Bank of England kept its bank rates unchangedat 0.5% and the Asset Purchase Programme unchanged at GBP 175bn.

The bank did however indicate that it had almost spent all its money in the purchasing programme and had about a month's worth of money left, adding that it would concentrate this money on stabilising the housing market.

The odds are overwhelmingly stacked in favour of a pretty uneventful Bank of England MPC announcement today.

There is an almost universal expectation in the markets that the MPC will prefer to wait for next month’s meeting before either tinkering with its Quantitative Easing programme or addressing the possibility of introducing negative overnight interest rates on balances left by commercial banks at the BOE.

Yesterday's better than expected earnings from Alcoa drove European equities higher from the opening. A positive surprise in today's German Industrial orders could fuel equity markets further.

• Alcoa report better than expected on cost-cutting but shipments fell. The company's guidance was moderately positive. Stocks rallied on the news in the aftermarket.
• The AUD is higher (again) on very positively surprising labor market data this morning. US Consumer Credit dropped -$12 bn vs. -$10bn expected. In other words the consumer continues to deleverage despite the CFC stimulus.
• Gold is making new all-time highs, trading @ 1052 and the USD TWI is about to make 13 month lows. Watch 1.4844 in EURUSD. A break higher should lead gold higher as well.
• We maintain a short-term 'buy-on-dips' stance for stocks into the earnings season and target 1121 in S&P500 - probably to be reached at the end of October to mid-November.

After the 50% rally in stocks since March, many investors are staying out of the Forex market - either because they lost money and gave up, or because they simply don’t know where to put their money.

The Saxo Bank Forex Portfolio Model is a way of re-activating this idle money by applying them in a low-cost and relatively low risk fashion. This is a project that has been built over the last three years. The model was completed a year ago, just when the market went berserk. Therefore, we have had a good chance to see if back-testing results are solid, which they seem to be.

Equities rallied yesterday on the outlook of a solid earnings season. It is, however, worrying to some extent that corporate credit ETF's were following.

• Gold making new, all-time highs, but inflation expectations relatively stable. The USD TWI is close (0.7%) to breaking key support. That would probably coincide with EURUSD breaking above 1.4844.
• Stocks saw broad-based strength yesterday and it continues to the APAC session. It is, however, worrying to see that HYG and LQD (corporate credit ETF's) were not following through.
• Watch out for Consumer Credit today as that could signal a continued strong consumer deleveraging, which could lead to worries about a recovery in demand.
• The GBP continues to be under pressure after quite disappointing Manufacturing and Industrial Production figures.

JPY crosses reversing higher again after better than expected US growth data. USD backs off as well.

Recent moves likely to climax between now and Monday with end of month trade behind us at week-end.

Buy on dips with a tight stop in equities. We believe that Durable Goods Orders could surprise significantly to the upside today and the sentiment for tomorrow’s GDP is quite positive.

Is the Euro looking a bit lonely at the top?

JPY heads weaker still on weak bonds as US Treasury announces another record treasury auction next week.

Watch out for Caterpillar today, it could be the trigger in equities

• Stocks rising on better than expected Apple and TI earnings. We are getting close to our 1121 target in S&P 500, but a downsloping trendline resistance is also capping the upside in stocks (today at 1117) and we advice to go neutral or even short at higher levels.
• What is at play here? A lot of liquidity and decent earnings. But is it priced in? The S&P 500 is up 65% from March and credit spreads can hardly go much lower. In other words, the risk-reward is beginning to be skewed towards the downside.
• RBA using strong man rhetoric in the minutes: low rates might be “imprudent”… signaling even higher rates. AUD getting a boost.

The earnings season continues today with Citigroup, Goldman Sachs, and Google reporting among others. Stocks will continue higher on better than expected earnings.

• JPMorgan posted a better than expected earnings report yesterday and with Intel's earnings report was the major driver of equity markets. JPM's report was in two parts; record earnings in the investmentbank, but severe losses in their credit division and signaling it is going to get worse.
• The recent rally in equity markets have been quite strong, but the lack of insider buying and the recent surge into fixed-income funds points towards a rally that is running out of steam; so far the fixed-income funds have attracted 18 times more money than stocks in 2009. The FOMC minutes from yesterday made the USD drop as it showed that the major part of the committee members favored increased purchases of assets to speed recovery.

Intel and Johnson & Johnson will report earnings today. Especially Intel (reporting after market close) will attract our attention. We expect a solid earnings report.

• Yesterday was quiet both in terms of macro data and company announcements, but that did not stop risky assets from performing well. European stock indices performed well and so did EUR, CAD, and AUD.
• Intel and Johnson & Johnson will be key today. The latter will report before the US market opens. Both of them should beat expectations whereby we should see stocks go higher.
• Intel posted some fairly poor Q2 numbers, but did beat the market's expectations. Nevertheless they did not expect much change in the second half of the year and we should therefore expect another massive YoY decline in revenues. The market will focus on the analysts' expectations though and these should be beaten.
• We do have a few macro releases today, most importantly the ZEW survey. This is the earnings season however and we do not expect macro numbers to matter much unless they surprise a great deal in either direction.

• New Zealand Sep. QV House Prices fell -1.1% YoY vs. -2.8% in Aug.
• Germany Sep. Wholesale Price Index fell -0.2% MoM vs. +0.3% expected
• Sweden Sep. AMV Unemployment Rate out at 5.3% vs. 5.4% expected and 5.5% in Aug.

While we are still bullish for the short-term, we remain bearish for the longer run. We are sticking to playing the themes from the September Equity Strategy Outlook: domestic cyclical recovery, Global secular and dividend growth, exposing ourselves towards energy, materials and consumers staples.

But we are getting ready to take some risk off – and to allocate a larger part of the capital into defensive sectors. We expect the upcoming earnings season to drive markets higher especially due to positive earnings surprises from especially high quality stocks (staple growth). After this we expect a market correction.

As expected the Bank of England kept its bank rates unchangedat 0.5% and the Asset Purchase Programme unchanged at GBP 175bn.

The bank did however indicate that it had almost spent all its money in the purchasing programme and had about a month's worth of money left, adding that it would concentrate this money on stabilising the housing market.

Yesterday's better than expected earnings from Alcoa drove European equities higher from the opening. A positive surprise in today's German Industrial orders could fuel equity markets further.

• Alcoa report better than expected on cost-cutting but shipments fell. The company's guidance was moderately positive. Stocks rallied on the news in the aftermarket.
• The AUD is higher (again) on very positively surprising labor market data this morning. US Consumer Credit dropped -$12 bn vs. -$10bn expected. In other words the consumer continues to deleverage despite the CFC stimulus.
• Gold is making new all-time highs, trading @ 1052 and the USD TWI is about to make 13 month lows. Watch 1.4844 in EURUSD. A break higher should lead gold higher as well.
• We maintain a short-term 'buy-on-dips' stance for stocks into the earnings season and target 1121 in S&P500 - probably to be reached at the end of October to mid-November.

After the 50% rally in stocks since March, many investors are staying out of the Forex market - either because they lost money and gave up, or because they simply don’t know where to put their money.

The Saxo Bank Forex Portfolio Model is a way of re-activating this idle money by applying them in a low-cost and relatively low risk fashion. This is a project that has been built over the last three years. The model was completed a year ago, just when the market went berserk. Therefore, we have had a good chance to see if back-testing results are solid, which they seem to be.

Equities rallied yesterday on the outlook of a solid earnings season. It is, however, worrying to some extent that corporate credit ETF's were following.

• Gold making new, all-time highs, but inflation expectations relatively stable. The USD TWI is close (0.7%) to breaking key support. That would probably coincide with EURUSD breaking above 1.4844.
• Stocks saw broad-based strength yesterday and it continues to the APAC session. It is, however, worrying to see that HYG and LQD (corporate credit ETF's) were not following through.
• Watch out for Consumer Credit today as that could signal a continued strong consumer deleveraging, which could lead to worries about a recovery in demand.
• The GBP continues to be under pressure after quite disappointing Manufacturing and Industrial Production figures.