@ 2024 Saracen Markets

Market
Outlook FOURTH WEEK OF APRIL

BY SARACEN MARKETS ANALYST

 Table Of Contents
Market Overview
Events Calendar
Weekly Indicator Forecasts
Geopolitical Risk

SECTION 1 SECTION 2
Foreign Exchange Currency COMMODITIES

USD - United States Dollar XAU - Gold

Fed Faces Uphill Battle as Inflation what next for gold prices? Gold Holds
Proves Stubborn, Supporting Steady Near All-Time Highs Despite
Prolonged Rate Hikes Macroeconomic Headwinds
Economic Outlook Commitment of Traders

SECTION 2.1
SECTION 1.1
WTI - Crude Oil
JPY - Japanese Yen Israel-Iran Escalation: Nerves Calm
BOJ to Unveil Price Forecasts Amidst Amidst Symbolic Strikes
Rate Hike Speculation Commitment of Traders

SECTION 2.2
SECTION 1.2 Stock Market Index
EUR - Euro S&P500, NASDAQ & DOW JONES
Eurozone Economy Faces Double Middle East Tensions and Tech
Threat Without Rate Cuts, US Policy Sector Slump Rattle Broader Market
Shift Commitment of Traders

SECTION 1.3
GBP - Great British Pound
UK Inflation Eases, But BoE Rate Cuts
May Come Later Than Expected
 Market Overview
Investors Brace for Data Deluge Amidst Stall in Stock
Rally and Geopolitical Tensions

As the new market week unfolds, a sense of caution prevails as the rally in U.S.
stocks shows signs of losing momentum, primarily driven by concerns surrounding
persistently high interest rates. Attention turns to Friday's release of U.S. inflation
data, particularly the Personal Consumption Expenditures (PCE) price index,
favored by the Federal Reserve, which economists anticipate will remain elevated
for March.
Recent economic indicators indicating a plateau in inflation control efforts, coupled
with robust labor market data and escalating geopolitical tensions in the Middle
East, fueling a surge in oil prices, have led investors to reassess expectations
regarding the timing of potential rate cuts.
The week ahead also brings a slew of economic data, including the initial estimate
of first-quarter GDP, projected to moderate slightly from the previous quarter.
Additionally, new home sales, initial jobless claims, and revised figures on
consumer sentiment and inflation expectations will be released. Market watchers
will closely scrutinize PMI data from the Eurozone, the U.S., and the UK on Tuesday
for insights into the potential resurgence of inflation, particularly in the services
sector.
Notably, March's U.S. PMI revealed a further slowdown in services industry growth,
accompanied by softening services inflation. PMI figures may also shed light on the
Eurozone's economic trajectory, with signs of stabilization observed in March's PMI
data and easing services inflation, aligning with expectations of an anticipated June
rate cut by the European Central Bank.
Attention will also be on the Bank of Japan's policy meeting on Friday, with
anticipation surrounding the release of quarterly growth and inflation forecasts. BOJ
Governor Kazuo Ueda's recent remarks emphasizing the potential for interest rate
hikes if underlying inflation trends upwards reinforce expectations of a rate
adjustment later this year.
In the commodities market, oil prices settled slightly higher on Friday but posted a
weekly decline following Iran's subdued response to Israel's retaliatory drone strike.
Despite the easing of oil's risk premium, concerns linger over the potential
disruption of supply amid ongoing Middle Eastern tensions.
Meanwhile, reports from Friday indicate the International Monetary Fund's
expectation for OPEC+ to commence increasing oil output from July, after agreeing
to extend voluntary output cuts until the end of June last month. This agreement, led
by Saudi Arabia and Russia, has contributed to maintaining elevated oil prices.
Highlight Event's Calendar
MONDAY, APRIL 22
EUR Consumer Confidence (Apr)

TUESDAY, APRIL 23
USD PMI
AUD PMI
EUR PMI
GBP PMI

WEDNESDAY, APRIL 24
AUD Consumer Price Index (QoQ)(Q1)
USD Durable Goods Orders

THURSDAY, APRIL 25
USD Gross Domestic Product Annualized(Q1)

FRIDAY, APRIL 26
JPY Tokyo Consumer Price Index (YoY)(Apr)
JPY BoJ Interest Rate Decision
USD Core Personal Consumption Expenditures
Weekly Indicator Forecasts

SARACEN
Date United States Event Period Consensus Previous
Forecast

23-Apr New Home Sales Mar 670K 668K 662K

24-Apr Durable Goods Orders (MoM) Mar 2.8% 2.1% 1.3%

24-Apr Durable Ex Transportation (MoM) Mar 0.3% 0.2% 0.3%

25-Apr GDP Annualized (QoQ) Q1 2.3% 2.5% 3.4%

25-Apr Personal Consumption (QoQ) Q1 - 3.0% 3.3%

26-Apr Personal Income (MoM) Mar 0.5% 0.5% 0.3%

26-Apr Personal Spending (MoM) Mar 0.6% 0.6% 0.8%

26-Apr PCE Deflator (MoM) Mar 0.3% 0.3% 0.3%

26-Apr PCE Deflator (YoY) Mar 2.6% 2.6% 2.5%

26-Apr Core PCE Deflator (MoM) Mar 0.3% 0.3% 0.3%

26-Apr Core PCE Deflator (YoY) Mar 2.7% 2.7% 2.8%

Geopolitical
Risk
Financial markets also respond to
geopolitical risks usually via the
sharemarket both in directly affected
countries but also across the major
economies because of the impact to
confidence.
Geopolitical Turmoil Sparks Market
Anxiety
ISRAEL-IRAN TENSIONS
CONFLICT UNLIKELY
Recent developments in the Middle East
highlight the persistent tension in global
geopolitics and the ongoing challenge of
stabilizing the Israel-Hamas conflict.
Iran's recent aerial assault represents a
significant escalation, marking the first direct
attack on Israel from Iranian territory rather
than through proxies. This shift signifies a
dangerous escalation in the Israel-Hamas
conflict, bringing the region closer to broader
military confrontation, which could potentially
involve the United States due to its strategic
ties with Israel.
Despite the gravity of Iran's strike, it does not
necessarily signal an immediate regional
conflict. The retaliation appeared transparent
and premeditated, allowing Israel and its
allies to prepare. Furthermore,
defenses successfully intercepted most of
the incoming drones and
minimizing damage and casualties.
Notably, Iran's targets were primarily military
sites, avoiding civilian centers and U.S.
assets, a move likely aimed at preventing a
more severe response from Israel or the
United States. This suggests that Iran's
retaliation may have been more symbolic
than a genuine attempt to inflict significant
harm.
Israel's subsequent response
measured, indicating a reluctance
escalate further. With both sides showing
restraint, the risk of broader
spreading to Tehran or beyond appears
contained, at least for now.
HEIGHTEN, BUT BROADER
Despite these tensions, the broader impact
on global economic activity and monetary
policy remains uncertain. While geopolitical
risks persist, monetary policy trends are
expected to play a more significant role in
shaping the long-term performance of the
U.S. dollar. In the near term, we may see the
dollar strengthen, but as the Fed adjusts its
policy and global financial conditions evolve,
depreciation pressures could mount in late
2024 and into 2025. As analysts ponder the
next moves in the Middle East conflict,
opinions diverge on who holds the reins of
escalation. While some point to Iran,
suggesting the ball is in their court, we
argue that Israel remains the pivotal player.
The outcome of last night's strike carries
Israeli weighty implications. If seen as a setback
and if Netanyahu appears vulnerable on Iran,
missiles, there's a risk of Israel initiating a more robust
response to bolster its image and authority.
Diplomatic endeavors to mitigate tensions
are expected to ramp up, spearheaded by
the U.S., although Netanyahu's
administration has thus far shown little
interest in such initiatives aimed at stabilizing
the conflict.
The rhetoric emanating from Israel will
provide vital insights into the trajectory of the
was crisis. Observers will closely monitor
to Netanyahu and the Israeli war cabinet for
signals regarding the next moves in the
conflict Middle East theater.
Foreign
Exchange
Currency
Foreign exchange (Forex or FX) is the
conversion of one currency into
another at a specific rate known as the
foreign exchange rate. The
conversion rates for almost all currencies are
constantly floating as they
are driven by the market forces of supply
and demand.
Section 1
United States Dollar
FED FACES UPHILL BATTLE AS INFLATION PROVES
STUBBORN, SUPPORTING PROLONGED RATE HIKES
Federal Reserve officials are bracing for
further evidence that the fight against
inflation has hit a roadblock, reinforcing a
shift toward maintaining higher interest rates
for an extended period.
Expected data releases in the upcoming
week will likely confirm that the central
bank's preferred inflation gauge, the
personal consumption expenditures price
index, remained elevated in March.
Projections suggest the index will tick up
slightly to 2.6% on an annual basis, driven by
escalating energy costs. Meanwhile, the
core metric, which excludes volatile food and
energy prices, is anticipated to show a 0.3%
increase from the previous month, mirroring
February's uptick.
Although the core PCE data may not be as
alarming as the consumer price index, which
surpassed expectations earlier this month
and triggered market jitters, Federal Reserve
Chair Jerome Powell and his colleagues
have hinted at a prolonged wait for
convincing signs of declining inflation
before considering rate cuts.
Ahead of their two-day meeting concluding
on May 1, policymakers will observe the
customary public-speaking blackout period
during the week. Meanwhile, Friday's release
of fresh inflation figures will be accompanied
by March's personal spending and income
data.
Amid robust job growth, economists
anticipate another solid increase in
household expenditures for goods and
services, with income growth also expected
to pick up. Additional data for the week
include the government's initial estimate of
first-quarter GDP, which is projected to show
a slight cooling from the previous period's
robust pace, albeit still exceeding the Fed's
sustainable long-term growth rate.
Furthermore, a composite measure of
activity in both manufacturing and service
sectors, as well as new-home sales, will be
unveiled. The University of Michigan's final
April reading of consumer sentiment and
inflation expectations will wrap up the week.
Although real GDP is expected to have
moderated to around a 2.7% pace in the first
quarter, it remains above the Fed's longer-
term sustainable pace of 1.8%, suggesting
persistent inflationary pressures. Looking
ahead, economic activity may face
headwinds from weakened discretionary
spending, as consumers grow increasingly
price-sensitive amid elevated inflation.
United States Economic
Outlook
New Home Sales • Tuesday
New Home Sales Face Affordability
Hurdles Despite Builder Incentives
The resilience of the jobs market and builder
incentives, combined with a shortage of
existing home inventory, have propelled new
home sales to a 5.9% increase over the past
year. However, affordability remains a key
challenge, exerting downward pressure on
prices.
In February, new home sales experienced a
slight dip of 0.3% as mortgage rates began
to climb again. We anticipate that sales
remained relatively unchanged in March,
particularly with mortgage rates edging up
further and existing home inventory reaching
a near four-year high last month.
The increased availability of both existing
and new homes for sale, as builders ramp up
single-family construction, is likely to
continue weighing on prices. The median
price of a new home sold has declined by
7.6% over the past year, settling at
$400,500. This places it only 3% higher than
the median price of an existing home.
Looking forward, the structural shortage of
available single-family homes, coupled with
builders' efforts to address affordability
through price incentives, is expected to
support sales throughout the year. Despite
recent fluctuations in mortgage rates, this
dynamic should help sustain demand in the
housing market.
United States Economic
Outlook
GDP • Thursday Looking ahead, economists anticipate a
U.S. Economy Maintains Momentum, but further easing of GDP growth compared to
Growth Expected to Ease the rapid pace seen in the second half of last
The U.S. economy displayed robust year. High interest rates are weighing on
performance in the first quarter, maintaining capital expenditure, with indicators such as
its momentum despite facing headwinds capital goods orders remaining stagnant and
from elevated interest rates and inflation. nonresidential construction spending
GDP is estimated to have expanded at a declining in recent months. Government
2.5% annualized rate, marking a slight outlays are also expected to slow as staffing
slowdown from the exceptionally strong levels recover and COVID-related funds
growth witnessed in the previous two diminish.
quarters. However, this growth rate still While consumer spending remains robust,
surpasses many estimates of the economy's slower growth in real income may pose
potential. challenges to sustaining the current pace of
Consumer spending, a key driver of expenditure. Despite these potential
economic activity, remained resilient despite headwinds, the overall outlook for the U.S.
the challenging environment. Strong retail economy remains positive, with growth
sales figures for March and a notable expected to continue, albeit at a more
increase in services spending in February moderate pace.
indicate that real personal consumption
expenditures likely advanced at a 3.0%
annualized pace during the quarter.
Additionally, there was a modest uptick in
equipment spending, accompanied by
steady growth in investments in software and
other intellectual property, suggesting a
similar increase in business fixed
investment.
The housing sector also contributed
positively to growth, with residential
investment expected to record its strongest
quarter of growth in three years. This was
fueled by a rebound in home sales and an
uptick in construction activity.
United States Economic
Outlook
Personal Income & Spending • Friday As the year progresses, the pace of inflation
American Consumers Show Resilience reduction is anticipated to slow,
Despite Inflation Pressures accompanied by a moderation in hiring,
Recent spending data for February served which could dampen both real income
as a strong reminder of the resilience of the growth and consumer spending. Despite
American consumer, with spending surging these challenges, American consumers
by 0.8% driven by robust increases in continue to demonstrate resilience in the
services outlays. This marked the most face of inflationary pressures, supporting
significant monthly rise in services spending overall economic stability.
in over a year and a half. Looking ahead,
expectations remain optimistic for solid
spending figures in March, supported by a
notable leap in retail sales indicating
increased goods spending. This uptick in
goods spending is anticipated to
counterbalance any potential slowdown in
services spending following February's
exceptional growth.
Consumers have been buoyed by several
factors, including a willingness to allocate
less income towards saving and steady
gains in wage and salary income. The
continued strength in hiring and
improvements in earnings growth observed
in recent months suggest that consumer
spending, underpinned by labor income,
likely remained robust in March. Projections
indicate that total personal income likely
increased by 0.5% last month. However, the
persistence of inflation, as measured by the
PCE deflator, is expected to limit the impact
of nominal income gains. It is estimated that
headline PCE inflation rose by 0.3% in
March, reaching a year-over-year rate of
2.6%.
Section 1.1
Japanese Yen
BOJ TO UNVEIL PRICE FORECASTS AMIDST RATE HIKE
SPECULATION

The Bank of Japan (BOJ) is set to unveil its While the BOJ is widely expected to maintain
latest price forecasts, marking a significant its policy stance in April following the recent
development following its first rate hike since rate hike, analysts and investors are eager to
2007. As anticipation mounts, economists glean insights from the bank's inflation
and investors are closely eyeing the BOJ's forecasts, seeking clues about the timing of
policy stance, particularly its characterization future rate adjustments.
of inflation risks, for any clues regarding the During Friday's briefing, Governor Ueda
pace of future rate hikes. Governor Kazuo refrained from indicating the timing of the
Ueda's remarks during Friday's briefing next interest rate move. A significant portion
following the decision are expected to add of economists forecast October as the
further insight, especially against the next potential rate hike, although the
backdrop of ongoing weakness in the yen. majority anticipate no policy changes at
Amidst these expectations, Japan's
the upcoming BOJ meeting. Meanwhile,
consumer inflation has shown signs of
discussions surrounding the BOJ's policy
easing, albeit remaining above the Bank of
shift and recent currency market
Japan's target. In March, consumer prices
developments have been prevalent,
excluding fresh food rose by 2.6% year-on-
particularly during Governor Ueda's
year, a slight cooling from February's 2.8%
participation in the spring meetings of the
gain, according to the internal affairs
International Monetary Fund and World Bank
ministry's report. This figure was slightly
in Washington.
lower than the consensus estimate of 2.7%.
Japanese Finance Minister Shunichi Suzuki
A deeper measure of inflation, excluding
and senior currency official Masato Kanda
fresh food and energy prices, also
have expressed concerns about the yen's
moderated to 2.9%, dropping below the 3%
weakness during these meetings, signaling a
mark for the first time since November 2022,
potential avenue for currency intervention as
and missing the 3% estimate.
a means to address market dynamics.
Despite this slowdown, inflation has
consistently remained at or above the BOJ's
2% target for two consecutive years,
providing a foundation for the central bank to
continue normalizing policy if this trend
persists.
Section 1.2
Euro
EUROZONE ECONOMY FACES DOUBLE THREAT
WITHOUT RATE CUTS, US POLICY SHIFT

The eurozone's economic trajectory hangs in Such a scenario would revive memories of
the balance as speculation mounts over the the ECB's aggressive policy measures,
need for interest rate reductions both including negative interest rates and
domestically and in the United States. quantitative easing, deployed in response to
Failure to implement rate cuts could deal a the threat of deflation. As policymakers
severe blow to the region's fragile economy, navigate this complex landscape, the
particularly as the European Central Bank decisions made in the coming months will be
(ECB) grapples with a restrictive monetary pivotal in shaping the eurozone's economic
policy stance amid dwindling inflation. trajectory.
The potential scenario of unchanged ECB
rates coupled with a tightening monetary
policy in the US poses a double whammy for
the euro area, exacerbating economic
challenges. Despite President Christine
Lagarde's optimism about signs of recovery,
output across the 20-nation bloc remains
precarious, highlighting the urgent need for
policy adjustments.
While the prospect of lower borrowing costs
offers a glimmer of hope, concerns about
delayed action by the Federal Reserve,
compounded by geopolitical tensions in the
Middle East, have policymakers on high
alert. The ECB, acknowledging the
moderation in consumer-price gains, is
eyeing a reduction in the deposit rate from its
record high of 4% by June.
However, caution prevails within the ECB,
with warnings against premature
declarations of victory over inflation. Striking
a delicate balance is crucial, as policymakers
aim to avoid a repeat of past challenges
where inflation remained persistently low,
reminiscent of the post-debt crisis era.
Section 1.3
Great British Pound
UK INFLATION EASES, BUT BOE RATE CUTS MAY COME
LATER THAN EXPECTED

Recent economic indicators from the UK This would result in a cumulative reduction
suggest a gradual alleviation of inflationary of 125 basis points in 2025, concluding with
pressures, although not at the pace a target rate of 3.25% by the end of next
anticipated by Bank of England (BoE) year.
policymakers. Despite some progress, the Overall, our outlook suggests that the BoE
March Consumer Price Index (CPI) figures, is likely to implement a marginally more
particularly the core and services inflation, accommodative monetary policy stance
remained significantly above the 2% target. than initially anticipated by market
While energy-related factors are expected participants for both 2024 and 2025.
to contribute to a sharp decline in headline
inflation in April, the underlying measures of
inflation are projected to exhibit a more
moderate deceleration. This slower
disinflation trajectory could prompt BoE
policymakers to exercise caution before
implementing rate cuts prematurely.
In light of these developments, our revised
forecast suggests that the BoE will maintain
its policy interest rate at a higher level for a
longer duration. We now anticipate an initial
25 basis points rate cut to 5.00% at the
August monetary policy meeting,
postponing our earlier projection of a cut in
June. Subsequently, we expect the central
bank to abstain from rate adjustments in
September, followed by 25 basis points cuts
in November and December, totaling 75
basis points of reductions by the end of
2024, with the policy interest rate closing
the year at 4.50%.
The easing trajectory is anticipated to
continue into early 2025, with additional 25
basis points reductions in February, March,
and May. However, as underlying inflation
stabilizes and UK economic growth
strengthens, we foresee a deceleration in
the pace of easing, with further 25 basis
points cuts in August and November.
Commodities
Commodity markets are integral to the
global economy. Understanding what drives
developments of these markets is critical to
the design of policy frameworks that
facilitate the economic objectives of
sustainable growth, inflation stability,
poverty reduction, food security, and the
mitigation of climate change.
Section 2
XAU - Gold
WHAT NEXT FOR GOLD PRICES? GOLD HOLDS STEADY
NEAR ALL-TIME HIGHS DESPITE MACROECONOMIC
HEADWINDS
Gold, having reached a record peak of
$2,432 last week, has stabilized just below
the $2,400 mark this week.
consolidation phase follows a significant rally
since March, a development
unexpected given the scale of the surge.
Notably, despite indications that US interest
rates might remain elevated for an extended
period, gold prices have remained resilient.
Federal Reserve Chair Jerome Powell's
recent remarks suggested a delay
potential rate cuts, prompted by consistently
high inflation readings throughout the year.
Consequently, Treasury yields have climbed
to new highs for the year, bolstering the
dollar. However, despite
macroeconomic challenges, gold
maintained its position near all-time highs.
Institutional interest has played a crucial role
in supporting gold prices at these levels.
Notably, a surge in tactical interest in options
and futures trading has provided significant
momentum to the rally in recent weeks.
However, other factors, such as gold's
appeal as a hedge against uncertainties,
robust central bank buying, and sustained
physical demand in Asia, have
contributed to lifting prices.
Ongoing geopolitical tensions, exemplified
by the Israel-Iran conflict, have further
bolstered gold's safe-haven appeal.
Additionally, various other tail risks, including
fiscal uncertainties in the US and Europe and
This economic challenges in China's property
sector, have reinforced gold's attractiveness
hardly to institutional investors seeking
diversification.
Gold has also benefited from strong equity
gains since late 2023, prompting interest
from private investors with longer-term
horizons. Similarly, reserve managers have
in shown consistent interest in gold throughout
2024, with net official sector purchases
remaining robust. This steady accumulation,
alongside strong price performance, has
provided support to gold's price floor.
these Despite record-high prices, physical demand
has remains resilient across key markets in Asia
and the Middle East. While sharp price
increases have impacted jewelry
consumption, demand for bars and coins has
risen due to bullish price expectations and
limited alternative investment options.
Looking ahead, while gold may face
profit-taking in the short term and a
potential correction in equity markets, its
appeal as a hedge against uncertainties
also
is expected to persist. With the geopolitical
landscape remaining volatile and various tail
risks looming, gold is likely to maintain its
allure for both official sector entities and
long-term investors.
Section 2
XAU - Gold
GOLD INVESTORS ON EDGE AHEAD OF CRUCIAL US DATA
RELEASE

As anticipation mounts for upcoming US In terms of technical analysis, the mid-

economic data, gold investors are poised for February support level at $2,335 emerges as
potential market shifts next week. Eyes the initial barrier for XAU/USD on the
remain fixated on geopolitical developments, downside. A breach below this threshold,
with the Iran-Israel crisis holding sway over coupled with its subsequent use as
market sentiment. A resolution could signal a resistance, could pave the way for further
downturn for XAU/USD, diverting attention declines towards $2,300 and $2,270.
towards pivotal data releases from the US. Conversely, resistance levels are delineated
Conversely, any escalation in tensions may at $2,400, $2,430, and $2,500, marking key
prolong gold's safe-haven appeal, buoying thresholds for potential upside movement.
its position in the market. As the market braces for potential shifts
The spotlight falls on Thursday, as the US driven by both geopolitical events and
Bureau of Economic Analysis (BEA) forthcoming US data, gold investors remain
prepares to unveil Advanced Gross vigilant, navigating a landscape rife with
Domestic Product (GDP) data for the first uncertainty.
quarter. A robust showing from the US
economy could bolster the dollar and
dampen the allure of gold. Despite recent
resilience in the face of climbing US yields
and a strengthening dollar, gold may face
downward pressure if geopolitical concerns
wane, aligning with growing expectations of
a Fed policy hold in June.
Friday brings the release of the Personal
Consumption Expenditures (PCE) Price
Index data, a key metric for inflation favored
by the Fed. This data, coupled with
Thursday's GDP report, is expected to
provide insight into inflationary trends.
However, with Fed Chair Powell signaling
little change in core PCE inflation for March,
Friday's reading may lack surprises, limiting
its impact on the market.
 Commitment Of Traders
The Commitment of Traders (COT) report is a weekly publication that shows the aggregate
holdings of different participants in the U.S. futures market. Published every Friday by the
Commodity Futures Trading Commission (CFTC) at 3:30 E.T., the COT report is a
snapshot of the commitment of the classified trading groups as of Tuesday that same
week.

As of April 16, 2024: GOLD

Non-Commercial Commercial Total Non-Reportable

Long Short Spreads Long Short Long Short Long Short

(CONTRACTS OF 100 TROY OUNCES) Open Interest: 517,193

278,777 76,854 55,487 132,684 355,442 466,948 487,783 50,245 29,410

Changes (Change In Open Interest: +11,979 )

-1,022 -526 +9,725 +4,590 +2,766 +13,293 +11,965 -1,314 +14

Percent of Open Interest for Each Category of Traders

53.9% 14.9% 10.7% 25.7% 68.7% 90.3% 94.3% 9.7% 5.7%

Number of Traders in Each Category (Total Traders: 340)

186 77 80 48 61 268 186

MARKET BIAS THIS WEEK

Non - Commercial Commercial Non - Reportable
53.9% LONG 25.7% LONG 9.7% LONG
14.9% SHORT 68.7% SHORT 5.7% SHORT
Section 2.1
WTI Crude oil
ISRAEL-IRAN ESCALATION: NERVES CALM AMIDST
SYMBOLIC STRIKES

The recent Israel strike on Iran appears to However, Netanyahu's past disregard for
carry more of a cautionary message than a such efforts aimed at finding a lasting
declaration of all-out conflict. While there's a resolution to the conflict adds a layer of
discernible uptick in tensions, our analysis uncertainty.
suggests that the specter of a full-blown In the days ahead, much attention will be
Israel-Iran war remains as remote as it was devoted to parsing the rhetoric emanating
before the latest events unfolded. from Israel. Signals from Netanyahu and the
Israel's precision targeting of military Israeli war cabinet will provide crucial
installations, coupled with the absence of insights into the trajectory of the Middle East
civilian casualties and any strikes on Iran's crisis, shaping the narrative for what lies
nuclear facilities, underscores a measured ahead.
approach to escalation. This calculated
response seems to have resonated with Iran,
which appears inclined to let the incident
pass without immediate retaliation. Market
reactions reflect this sentiment, with the
initial risk-off mood swiftly giving way to
stability, even witnessing a reversal in oil
prices.
As observers speculate on the next moves in
this geopolitical chess game, opinions
diverge on who holds the power to dictate
the conflict's course. While some argue that
Iran now holds the reins, we contend that
Israel remains the primary arbiter of
escalation.
Should last night's strike be perceived as a
setback, and if Netanyahu's stance on Iran
appears weakened, there's a possibility of
Israel adopting a more assertive posture to
shore up its image and political standing.
Diplomatic maneuvers to de-escalate
tensions, likely spearheaded by the U.S., are
expected to intensify.
 Commitment Of Traders
The Commitment of Traders (COT) report is a weekly publication that shows the aggregate
holdings of different participants in the U.S. futures market. Published every Friday by the
Commodity Futures Trading Commission (CFTC) at 3:30 E.T., the COT report is a
snapshot of the commitment of the classified trading groups as of Tuesday that same
week.

As of April 16 , 2024: WTI CRUDE OIL

Non-Commercial Commercial Total Non-Reportable

Long Short Spreads Long Short Long Short Long Short

(CONTRACTS OF 1,000 BARRELS) Open Interest: 1,799,606

411,987 121,525 701,503 601,207 930,291 1,714,697 1,753,319 84,909 46,287

Changes (Change In Open Interest: +37,512 )

+8,190 +14,865 +32,100 +6,265 -2,398 +46,555 +44,567 -9,043 -7,055

Percent of Open Interest for Each Category of Traders

22.9% 6.8% 39.0% 33.4% 51.7% 95.3% 97.4% 4.7% 2.6%

Number of Traders in Each Category (Total Traders: 338)

147 70 151 94 102 307 268

MARKET BIAS THIS WEEK

Non - Commercial Commercial Non - Reportable

22.9% LONG 33.4% LONG 4.7% LONG
6.8% SHORT 51.7% SHORT 2.6% SHORT
Stock Market
Index
Stock market indexes around the world are
powerful indicators for global and country-
specific economies. Indexes can be
constructed in a wide variety of ways but
they are commonly identified generally by
capitalization and sector segregation.
Section 2.2 : S&P500,NASDAQ
& DOW JONES
MIDDLE EAST TENSIONS AND TECH SECTOR SLUMP
RATTLE BROADER MARKET
Market indices witnessed a mixed
performance on Friday as escalating strife in
the Middle East and a dip in tech stocks sent
ripples across Wall Street. The S&P 500
Index ($SPX) (SPY) concluded the day down
by -0.88%, marking a retreat to levels not
seen in 1-3/4 months, while the Dow Jones
Industrials Index ($DOWI) (DIA) edged up by
+0.56%. In contrast, the Nasdaq 100 Index
($IUXX) (QQQ) experienced a notable
decline, closing down by -2.05% and hitting
a 3-month low.
The market mood soured as investors
offloaded long positions ahead of a flurry of
megacap earnings reports scheduled for the
upcoming week, prompting a sell-off in the
renowned "Magnificent Seven" tech giants.
Adding to the market's woes were negative
corporate updates, with Super Micro
Computer plummeting over -23% amidst
earnings apprehensions. Netflix also faced a
steep drop of more than -9% after its Q2
revenue forecast fell below consensus
estimates. Furthermore, Jabil saw its shares
tumble more than -8% following the CEO's
placement on paid leave pending an
investigation into corporate policies.
Chip stocks faced headwinds on Friday
following a downward revision of 2024
semiconductor market growth expectations
by Taiwan Semiconductor Manufacturing
Co., the world's largest producer of
advanced chips.
Geopolitical tensions in the Middle East
amplified market jitters after reports of
Israel's retaliatory strikes on Iran emerged.
However, the impact was somewhat
mitigated as the strikes targeted military sites
in Syria and Iran, with an Iranian military
official downplaying the severity of the
incidents.
Despite the tumultuous atmosphere, some
stocks managed to buck the trend.
Paramount Global surged over +13% after
reports surfaced of potential joint bids from
Apollo Global Management and Sony Group.
American Express also saw a notable uptick
of more than +6% after reporting Q1
adjusted EPS above consensus, aiding the
Dow Jones Industrials to remain in positive
territory. Additionally, Fifth Third Bank gained
over +5% following better-than-expected Q1
net interest income figures.
Chicago Fed President Goolsbee's remarks
on Friday hinted at a hawkish stance on Fed
policy, emphasizing the need for clarity on
inflation before considering rate cuts. Market
sentiment seems to align with this sentiment,
with the probability of a -25 bp rate cut at the
upcoming FOMC meeting on April 30-May 1
discounted at 3%, and a mere 19% chance
for the subsequent meeting on June 11-12.
 Commitment Of Traders
The Commitment of Traders (COT) report is a weekly publication that shows the aggregate
holdings of different participants in the U.S. futures market. Published every Friday by the
Commodity Futures Trading Commission (CFTC) at 3:30 E.T., the COT report is a
snapshot of the commitment of the classified trading groups as of Tuesday that same
week.

As of April 16, 2024: S&P 500

Non-Commercial Commercial Total Non-Reportable

Long Short Spreads Long Short Long Short Long Short

(S&P 500 INDEX X $50.00) Open Interest: 2,124,352

359,023 276,745 62,283 1,409,806 1,594,944 1,831,112 1,933,972 293,240 190,380

Changes (Change In Open Interest: +8,659 )

+72,567 -61,222 +3,867 -72,369 +70,517 +4,066 +13,161 +4,594 -4,502

Percent of Open Interest for Each Category of Traders

16.9% 13.0% 2.9% 66.4% 75.1% 86.2% 91.0% 13.8% 9.0%

Number of Traders in Each Category (Total Traders: 480)

94 66 50 234 217 353 309

MARKET BIAS THIS WEEK

Non - Commercial Commercial Non - Reportable

16.9% LONG 66.4% LONG 13.8% LONG
13.0% SHORT 75.1% SHORT 9.0% SHORT
As of April 16, 2024: NASDAQ

Non-Commercial Commercial Total Non-Reportable

Long Short Spreads Long Short Long Short Long Short

(NASDAQ 100 STOCK INDEX X $20) Open Interest: 255,698

66,139 57,610 5,521 141,080 158,974 212,740 222,105 42,958 33,593

Changes (Change In Open Interest: -4,732 )

+197 -789 +838 -6,030 -2,639 -4,995 -2,590 +263 -2,142

Percent of Open Interest for Each Category of Traders

25.9% 22.5% 2.2% 55.2% 62.2% 83.2% 86.9% 16.8% 13.1%

Number of Traders in Each Category (Total Traders: 293)

71 53 28 112 97 196 165

MARKET BIAS THIS WEEK

Non - Commercial Commercial Non - Reportable
25.9% LONG 55.2% LONG 16.8% LONG
22.5% SHORT 62.2% SHORT 13.1% SHORT
 As of April 16, 2024: DOW JONES

Non-Commercial Commercial Total Non-Reportable

Long Short Spreads Long Short Long Short Long Short

($5 X DJIA INDEX) Open Interest: 93,614

23,705 10,026 2,801 52,698 69,157 79,204 81,984 14,410 11,630

Changes (Change In Open Interest: +1,130 )

-5,154 -1,872 +702 +5,406 +3,467 +954 +2,297 +176 -1,167

Percent of Open Interest for Each Category of Traders

25.3% 10.7% 3.0% 56.3% 73.9% 84.6% 87.6% 15.4% 12.4%

Number of Traders in Each Category (Total Traders: 88)

24 19 9 29 24 57 48

MARKET BIAS THIS WEEK

Non - Commercial Commercial Non - Reportable
25.3% LONG 56.3% LONG 15.4% LONG
10.7% SHORT 73.9%% SHORT 12.4% SHORT