David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Email of the day on moving average calculations

    Good afternoon, I am a long-time subscriber to your wonderful website and just have a question regarding the chart library. 

    I was looking at the moving averages on daily, weekly and monthly charts in your library, and noticed that when comparing to other chart terminals like Bloomberg or sites such as StockCharts, the MA values for weekly and monthly charts don't appear to match despite the same values being inputted. As an example, I attach the weekly charts for S&P500 with the MA values of 34, 89 and 200. Interestingly, the daily charts do have MAs matching.

    I was wondering what would be the cause of this discrepancy, perhaps a different formula or method for calculating the MA? I like the way that your chart library appears to calculate the MAs, so if this is indeed the case, is there a way to use the same method for calculating the MA on, say, a Bloomberg terminal? 

    Thank you in advance and I look forward to hearing from you.

    This section continues in the Subscriber's Area.

    Draghi Ends ECB Bond-Buying Era Saying Economy Can Beat Risks

    This article by Piotr Skolimowski for Bloomberg may be of interest to subscribers. Here is a section:

    Mario Draghi said the euro-area economy is strong enough to overcome increased risk, justifying the European Central Bank’s decision to halt bond purchases and end an extraordinary chapter in the decade-long struggle with financial crises and recession.

    Policy makers agreed to phase out the stimulus tool with 15 billion euros ($17.7 billion) of purchases in each of the final three months of the year, the ECB president said after his Governing Council met on Thursday in Latvia. The central bank also pledged to keep interest rates unchanged at current record lows at least through the summer of 2019.

    In doing so, officials bet that the euro-area economy is robust enough to ride out an apparent slowdown amid risks including U.S. trade tariffs and nervousness that Italy’s populist government will spark another financial crisis. Almost half of economists in a Bloomberg survey had predicted the announcement would be put off until July.

    “We’ve taken these decisions knowing that the economy is in a better situation, with an increase in uncertainty,” Draghi said at a briefing in Riga, where the Frankfurt-based ECB held its annual out-of-town meeting. “We may well have this soft patch being somewhat longer than in the staff projections in some countries.”

    This section continues in the Subscriber's Area.

    China's Economy Is Slowing Just as Trump Readies a Trade Beating

    This article from Bloomberg News may be of interest to subscribers. Here is a section:

     

    China’s economy fell short of expectations and its central bank chose not to follow the Federal Reserve in raising borrowing costs, adding fresh caution on the outlook for global growth as trade tensions with the U.S. escalate.

    With President Donald Trump renewing threats to impose tariffs on the world’s second-largest economy, May data for industrial output, retail sales and investment all came in beneath economist forecasts on Thursday. The People’s Bank of China kept the cost of reverse-repurchase agreements steady, defying predictions it would track the Fed’s hike of Wednesday.

    Investors now face greater uncertainty over what had been the strongest global upswing since 2011. That doubt is set to fester after Trump said on Wednesday that he’ll confront China "very strongly" over commerce in coming weeks. His administration is scheduled to announce a new list of duties on Friday.

    "A slowing China will add to the challenges for the global economy," said Louis Kuijs, chief Asia economist at Oxford Economics in Hong Kong and a former International Monetary Fund researcher. "Until recently, the resilience of growth in China was an important buffer for the global economy in the face of headwinds from trade friction, slower growth in Europe, higher oil prices and issues in various emerging markets."

    Both industrial output and retail sales rose less than expected in May compared to a year ago. Fixed-asset investment growth in the first five months was the slowest since the data began in 1999, as was the investment in the services sector. The decade-long decline in investment has intensified this year, as policy-makers act to reduce leverage at state-owned companies and local governments. While that’s a deliberate policy, officials risk a worse-than-desired deceleration in growth.

    This section continues in the Subscriber's Area.

    Email of the day on UK listed gold shares:

    Fresnillo and Hochschild, both on LSE, have had a waterfall downdraft of about 10 pc this month, whereas many gold/silver miners on the HUI or in Sydney are going sideways or upwards, and even Randgold seems to be bottoming. Would you care to comment on why this is happening? Yours anon

    This section continues in the Subscriber's Area.

    Fed Raises Rates; Officials Lift Outlook to Four 2018 Hikes

    This article by Craig Torres for Bloomberg may be of interest to subscribers. Here is a section:

    Federal Reserve officials raised interest rates for the second time this year and upgraded their forecast to four total increases in 2018, as unemployment falls and inflation overshoots their target faster than previously projected.
    The so-called “dot plot” released Wednesday showed eight Fed policy makers expected four or more quarter-point rate increases for the full year, compared with seven officials during the previous forecast round in March. The number viewing three or fewer hikes as appropriate fell to seven from eight.

    The median estimate implied three increases in 2019 to put the rate above the level where officials see policy neither stimulating nor restraining the economy.

    The Federal Open Market Committee indicated that even though it’s stepping up the pace of interest-rate hikes, economic growth should continue apace. “The committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the committee’s symmetric 2 percent objective over the medium term,” according to its statement following a meeting in Washington.

    The statement omitted previous language saying that the main rate would remain “for some time” below longer-run levels.

    Other changes included referring to “further gradual increases” instead of “adjustments.” Officials also said that “indicators of longer-term inflation expectations are little changed.”

    Previously, the statement made separate references to survey- based and market-based measures of such expectations.

    This section continues in the Subscriber's Area.

    Email of the day on Total Known Holdings of Gold:

    On Total Known ETF holdings of Gold. The charts are telling us that after a long period of ranging Gold and the precious metals are poised to break to the upside. I was rather alarmed therefore on the one- day plunge by about 7% of the above chart. Should I be, or is this some explainable aberration?

    This section continues in the Subscriber's Area.

    How Trump's Lumber Tariffs May Have Helped Increase Home Prices

    This article by Peter Eavis for the New York Times may be of interest to subscribers. Here is a section:This article by Peter Eavis for the New York Times may be of interest to subscribers. Here is a section:

    Want to better understand what may happen in the United States economy as President Trump pursues his combative trade policies?

    Look no further than the lumber that goes into many houses in the United States.

    Long before the sharp clash with Canada at the Group of 7 meeting this weekend, the Trump administration imposed tariffs on lumber imports from Canada, which American home builders use in large quantities. The United States Commerce Department contended that Canadian companies were selling lumber into the United States at unfair, subsidized prices.

    Those tariffs, which took effect last year, combined with other factors to drive up the price of lumber in the United States. As a result, the anti-dumping and countervailing duties, as the tariffs are officially known, have added to the cost of housing in the United States at a time when homes are becoming less affordable. The Trump administration’s tariffs on steel and aluminum, and any others that follow, could also contribute to rising costs for businesses and consumers.

    This section continues in the Subscriber's Area.