The EURUSD pair has recently exhibited significant volatility, with a notable bounce from the 1.0223 level, extending upwards to a high of 1.0436. This upward movement broke above the top of the falling price channel on the 4-hour chart, suggesting a potential shift in the trend dynamics. Understanding the Breakout The breakout above the falling price channel is a crucial indicator for traders. A falling price channel typically signifies a downtrend, with prices oscillating within a downward-sloping trend line. However, breaking above this channel can signal a reversal or at least a pause in the downtrend, indicating potential strength in the currency pair.  The Pullback and CorrectionDespite the initial upward surge, the pair failed to breach the resistance level at 1.0458, leading to a pullback to 1.0338. This pullback suggests a corrective phase within the broader uptrend from 1.0223. Traders should view this as a consolidation period, where the market is likely to range between 1.0300 and 1.0458 in the coming days.  Key Support and Resistance Levels Support at 1.0300: As long as this level holds, the uptrend from 1.0223 is likely to resume. Traders should keep an eye on this level, as a breakdown could signal a shift in momentum. Resistance at 1.0458: A breakout above this level could pave the way for further gains, potentially targeting the 1.0530 area.   Potential Scenarios Uptrend Resumption: If the 1.0300 support holds, traders can expect the uptrend to continue, with a possible retest of the 1.0458 resistance. A successful breakout above this level could […]

There are very few long-running products with decades of history that are fundamentally the same as they were when they first introduced to the market. Campbell’s Tomato Soup is one of them, with a history that stretches back to the final years of the nineteenth century.2025 marks the 128th year in which Americans can go to a grocery store and buy a can of Campbell’s condensed tomato soup. When the Campbell’s Company (NYSE: ) first produced the product, it was revolutionary. John Dorrance’s innovation of condensing soup, removing water while preserving the flavor, made it possible to produce, can, store, and ship much larger quantities of soup than ever before. Consumers only needed to pour the contents of the can into a pot on their stove and add water to transform it into their next meal.Campbell’s Condensed Tomato Soup quickly became the most popular of the first soups the company produced and shipped to grocery stores across the entire United States by train and truck. Today, it is Campbell’s second-most popular soup, selling around  and lagging only behind the company’s equally iconic Chicken Noodle Soup, which was introduced in the 1930s.In 1898, consumers could buy a Number 1 (10.75 oz) size can of Campbell’s Condensed Tomato Soup for just 10 cents. Today, consumers can walk into a Walmart and buy the exact same size can of Campbell’s Condensed Tomato Soup for $1.26.The consistency of Campbell’s Tomato Soup as a product over the 128 years it has been available for consumers to buy […]

EU/USD dips for a second day in a row after being rejected above 1.0400 this week.  German factory orders are sinking lower and could not have come at a worse time. Meanwhile, President-elect Donald Trump is ramping up geopolitical rhetoric on the global stage.   extends its correction and trades around 1.0320 at the time of writing on Wednesday after being rejected above 1.0400 earlier in the week. The pair erases most of the initial weekly gains after German factory orders data for November came out. The heavily industrialized core European country saw Factory Orders shrink by 5.4% in November, compared to a 1.5% decline in October. The data could not have come at a worse time, given the political campaigning ahead of the German snap elections on February 23.Meanwhile, markets are on edge over President-elect Donald Trump, who is further shaking up the geopolitical scene. In a statement held at Mar-a-Lago on Tuesday, Trump reiterated his desire to incorporate Greenland, the Panama Canal, and Canada into the . Trump also mentioned again that he will address the US , which are too high at the moment and need to come down substantially, Bloomberg reports.   Daily digest market movers: Red and Blood Red German Factory Orders sank in November, contracting by 5.4% on the month compared to the 0% expected. On a yearly basis, factory orders fell by 1.7%, compared to the rise of 5.7% last seen in October.  German Retail Sales decreased by 0.6% in November, missing the positive 0.5% expectation. At […]

The question asked of us most often recently: “Why are bond yields rising?”After verbally answering it plenty of times, it’s time to put our answer in writing for everyone to see. The answer will help you understand what is causing bond yields to rise, and more importantly, it will help you better appreciate when the trend may reverse.Unlike short- and medium-term gyrations in stock prices, which are often due to changes in investor sentiment, the bond market has a much more fundamental grounding. Interest rates, representing the cost of money, strongly impact economic activity and inflation in a highly leveraged economy like ours. Thus, economic growth, inflation, and Treasury bond yields are highly correlated.That said, bond investor sentiment does impact yields and can be relatively accurately quantified, unlike the stock market. In bond market parlance sentiment is called the “term premium or discount.”Quantifying the term premium or discount and, equally important, understanding the market narratives responsible for the premium or discount is valuable. With such knowledge, one can assess whether the narratives make sense. Thus, is the premium or discount likely to be sustained? If the narrative(s) are illogical, there could be an opportunity to profit when the premium or discount normalizes.With that, let’s better appreciate why bond yields are rising.  Fundamental Bond Yield ModelWe created a relatively simple but highly effective proprietary fundamental yield model based on inflation and economic growth. Our bond yield model only uses two inputs. Inflation– The Cleveland Fed Inflation Expectations Model. Their model is […]

Probably the most important development in financial markets over the last few months is the steep rise in interest rates. Since the Fed started cutting rates with a 50 basis point cut on September 18, the 10 year yield has actually risen about 100 basis points to around 4.70%. Why? The market is clearly signaling its belief that looser monetary policy combined with the  will be inflationary.This is potentially a problem for stocks that are currently as expensive as they’ve ever been. One measure of broad market valuation is known as The Buffett Indicator. It divides the total market capitalization of US stocks by GDP. It is currently over 200%: “If the ratio approaches 200%, as it did in 1999, you are playing with fire” – . As almost all of you know, fundamentally the value of a stock is the discounted value of its future cash flows. As the risk free rate rises so does the discount rate and as a result the present value of future cash flows decreases.(Click on image to enlarge)I have offered many examples of extremely overvalued stocks in recent blogs. As another example consider Intuitive Surgical (). ISRG is the maker of the Da Vinci robots that assist doctors in surgery. I have no doubt that it’s a great product and ISRG is a great company. But it’s P/E multiple on trailing 12 months EPS is 79x at Tuesday’s close ($531.88 / $6.72 = 79x).

Image Source:   The market is showing signs of discomfort with the implication of yet another round of stronger economic data out of the US. On Tuesday, JOLTs job openings and ISM services both exceeded expectation. Looking ahead, we get German factory orders, German retail sales, Eurozone confidence and sentiment reads, Eurozone producer prices, US ADP employment, US initial jobless claims, and the Fed Minutes late in the day.Video Length: 00:00:46