Two Blokes Trading

In this weeks episode Mike and Rory talk about the S&P500 and the recent events causing this slight pullback and where they think markets are headed. Most recently, the S&P500 made highs of 4445 with a pull back to current levels of 4300.

This pull back was due to a deteriorating macroeconomic outlook as well as the Fed median projected dot plot for interest rates in 2023 to end at 5.6%. This would mean another 2 hikes is possible before the year end and Fed chair, Jerome Powell reiterated the same message that inflation is still an issue for the US.

Mike and Rory also mention how the S&P500 rally during 2023 has been greatly assisted by a handful of companies such as AI stocks like NVIDIA and mega cap tech names such META who have both more than doubled in price this year.

Rory also mentions how low interest savings accounts have been discouraging savers and instead encouraging spending and discretionary buying. Could this spending and lack of saving be correlated with the recent large returns seen in markets?

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In this episode, Mike and Rory discuss the importance of understanding the correlation between commodities and the respective FX pair. The currencies highlighted in the podcast include Australian Dollar, Canadian Dollar, Euro, Great British Pound, Norwegian Krone, and US Dollar. At the beginning the blokes mention how 2 of the main traded FX pairs (EURUSD & GBPUSD) are not directly pegged to commodities rather the moves are based on macroeconomics such as changes in interest rates, politics, or other economic indications.

Mike and Rory discuss the importance of understanding the country behind the currency. For example, when looking at CAD or NOK, it’s important to understand that their main export is oil therefore demand for their currency has a strong correlation with the demand for oil. Looking at the chart of USDCAD or USDNOK and overlaying the WTI Crude or Brent price you will be able to see a strong correlation between the two. Rory has also shared resources in the App to help you calculate the correlation between two variables such as USDCAD and WTI Crude prices.

Mike also discusses the importance of having a macro picture and not exclusively focusing on technical analysis. He explains if these ideas were presented to serious investors such as those at Investment banks that they would simply laugh you out of the room. Mike explains that you need a solid fundamental picture with trade data of the country and all aspects of the macro covered and only use technical to gauge entry and exit positions.

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Mike and Rory discuss the events of last week which included the US CPI number for May, FOMC’s decision to not hike interest rates higher as well as the ECB’s 25bps increase to monetary policy along with their hawkish comments in the meeting that followed. In the episode, Rory talks about the divergence between interest rates at the ECB and BOE closing in on those from the FED which is starting to support moves higher in both EUR / USD and GBP / USD. Cable has now been able to break above 1.28 for the first time in over a year following the stronger dollar in 2022 and the weakening sterling that was seen under the short-lived Truss era.

Rory discusses the topic of “higher interest rates are here to stay”. He explains  that before the Great Financial Crisis interest rates were not at the crazy lows that many market participants have been used to and perhaps markets are now adjusting for rates to remain higher at 5% for a much longer period into the future.

Mike talks about how gold paints a good picture in terms of sentiment, prices have been stable the previous few weeks and are still sitting close to all time highs and currently rangebound between 1940 and 1980. Mike shares his reasoning for why he doesn’t think gold is going anytime soon even as he discusses the bearish sentiment on the technical indicators but still thinks the macro environment is supportive to retain these higher prices.

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Too many Retail traders think that technical analysis alone will save them from

being in the majority of traders who lose money. Unfortunately this is not the

case, Mike and Rory uncover the importance of understanding how interest rates

impact Forex, equities, indices, fixed income and all other markets.

Understand interest rates, interest rate differentials and carry trades can automatically

by default give a bias to a certain FX fair, at least in the mid to long term.

Mike explains in the podcast how helps build a strong foundation for growing a

trade idea into an actionable idea.

Rory shares his thoughts on how interest rates impact individual equites from

understanding how companies use debt to leverage themselves to more exposure to

understanding how debt to cash ratios which are too high can negatively impact

the business in a high interest rate environment.

The blokes look at both scenarios of the positives and negatives of higher interest

rates for fixed income and the raging market that is currently taking place

across bonds.

To understand more how interest rate changes impact different asset classes, make

sure to join the app for free today and join Mike, Rory and thousands of other

members sharing their opinions on financial markets.

In this weeks market update, Mike and Rory discuss the quiet events of last week

and the low number of economic data releases. The blokes then talk about the

main focus of this week, the US CPI which came out at 4% Vs 4.1% expected.

Mike discusses what this means given the lower than expected unemployment data that

was also released by the UK on Tuesday morning and why he thinks this allows

for great longs on GBP/USD.

Rory shares his thoughts on what this could mean for FOMC meeting on June 14th where

the fed are predicted to not increase interest rates given the favourable data

in the United States. Rory shares his thoughts of why oil prices moved higher

on Tuesday given the positive news from China regarding economic stimulus and

the affect this also has on metals such as copper.

Mike and Rory also discuss what the energy market is doing and the warnings that are

in place from OPEC regarding short selling speculation and how an increase in

energy prices, in particular oil could have a major effect on CPI data around

the world.

On Thursday, 15th June, Mike and Rory are also hosting a few drinks at a central

London location so be sure to join the app to find out more details of the free

event.

Keeping a journal while trading is very important as it will enable you to have a track record and analyse past performance.

In this episode, Mike and Rory discuss how they keep a journal and also demonstrate the importance of having one especially if you are approaching an employer with reference to your trading performance. Many people will not consider your trading experience without a track record or journal.

In the podcast, Mike and Rory talk about some of the most commonly used ratios and explain some of the features they would include in a trading journal. Rory mentions how having a P&L isn’t the only way to keep score. There are lots of other metrics needed in order to show where capital is correctly and incorrectly being allocated.

Mike also shares his thoughts around monitoring the assets you trade. Simply having a strong or weak Profit & Loss will not help if you can’t determine where you make your money.  Mike and Rory both agree if you have lots of losing trades you need to know what asset the losses come from and not to waste time “working on that asset” instead, focus on your strength and trade what you know.

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In this week’s Market podcast Mike and Rory discuss Fridays NFP number beating expectations by nearly double. The implications this has on the market short term and how they both predicted a higher number themselves, going into some detail around their process of why they came to this conclusion.

The pair also talk about how the higher-than-expected unemployment rate at 3.7% is a good thing for markets but also with the issues that it can have to the wider economy.

In the podcast, Rory mentions about the recent ISM PMI number lower than expected and the impact this has had. He also talks about the contradicting data being released versus what the market is doing. Rory reiterates his comments from last week about how this is a market of stocks and not a stock market. The importance of stock picking in a market like this is very important as Rory mentions how only a few large cap stocks have been holding up the entire market in comparison to the Russell 2000.

The blokes then look ahead of the data being released over the next 10 days which includes the federal reserve black out period, ISM services and the US Inflation figure to be released a day before the FOMC interest rate decision on June 14th.

For more analysis and to share your own ideas with one of the fastest growing trading communities, join our free app today app.twoblokestrading.com

In this episode, Mike and Rory talk about the importance of using leading indicators when trading. Rory mentions 3 of the latest that he has been looking at Including the ISM Manufacturing, ISM Services and the ESR report.

The ISM reports can give a great indication of how both the manufacturing side of the economy and the services are reacting. They give their own indication of prices and employment as Rory mentions how they can be used to predict the NFP report.

Mike talks about how traders heavily rely on the Non-Farm Payrolls report released on the first Friday of each month and shares his insights into how to trade it correctly.

The blokes then briefly mention how you can use leading indicators such as ISM to predict larger indicators such as GDP and remain 1 step ahead of the market.

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On this week’s episode Mike and Rory brace for impact as UK Core Inflation unexpectedly rises to 6.8% from an expected 6.2%. They both mention how the BOE, and the UK government are not in the right state of mind to be dealing with the higher levels of inflation that has been felt around the world, but most other countries have been able to cope with it just fine.

On the podcast, Rory mentions that the UK and BOE were not the only ones to signal dovish comments, RBNZ governor Adrian Orr and the committee said in a statement that they believe the job was done even though inflation levels are still at 6.7%.

On the episode, Mike also gives us his takings on the comments that were made by OPEC ministers regarding the caution behind speculative traders and what he thinks this means for energy markets.

To finish the podcast the blokes, talk over the economic calendar for next week discussing the US Non-Farm Payrolls and Employment report to be released on Friday 3rd June. For a more in-depth analysis of Mikes thoughts on OPEC and all other stories the blokes have covered, head over the app and join for free today.

On Thursday evening, 18th May, Two Blokes Trading hosted their first summer evening drinks at the Ship, in the heart of Fitzrovia, London. A group nearly 20 attended to share their ideas and trading journeys including FX traders from Nomura,  Risk and Compliance members working for Bank of America and many more! In this podcast Mike and Rory discuss how important this is as trading can often be a very lonely game.

Expanding your network is vital as learning from other people, sharing your thoughts and getting critical feedback is one of the only ways that you can develop your own trading skills. Mike talks about how important it is to develop your career that you must ask questions and often take the risk and step outside of your comfort zone to attended events such as the evening drinks ran by us.

Rory tells us how he learnt from his mentor by asking lots of questions, attending drinks nights and reaching out to people and asking them to question his ideas for some critical feedback.

The next drinks evening will be organised soon so stay tuned in the app and listen on to the podcast to find out the blokes’ top tips!

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