Trading with point and figure

Dow in a pivot area

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Ostwald, Marc
06:49 (48 minutes ago)
to Marc

- Busy day for scheduled data and events, though Brexit, Italy and oil
likely to steal the limelight; China data, Japan & German GDP, Oz
Wages to digest, UK, Sweden & USA CPI and Europe national Q3 GDP
prov. GDP; Fed and ECB speak aplenty; German 30-yr sales; busier
day for Europe corporate earnings

- US CPI: average m/m increase expected; PPI suggests some upside risks

..........................................................................

********************
** EVENTS PREVIEW **
********************

Today will be the high water mark for the week in terms of scheduled data and events, even if the UK cabinet's discussion of the Brexit 'deal', Italy's budget drama and the oil market's meltdown will be the talking points and the headline grabbers in terms of market movers. In data terms, we start with the run of Japan and German Q3 prov. GDP and Chinese activity data to be digested, and then turn attention to the run of Q3 GDP readings from the Netherlands and major CEE economies, Swedish CPI, the full gamut of UK inflation indicators, Indian WPI and concluding with US CPI. In event terms, the Fed dominates the schedule via way of the Powell Kaplan discussion on the domestic and global economic outlook, and Quarles testimony on banking supervision and regulation to the House Financial Services Committee. A busier day for European rather than US Corporate Earnings is accompanied by an as ever modestly sized German 30-yr Bund auction, while rates are expected to be left unchanged at the central bank policy meeting in Thailand, following Sri Lanka's surprise rate hike, as the political crisis there weighs heavily on its already beleaguered currency.

** U.K. - October CPI, RPI, PPI **
- September's weaker than expected CPI was paced above all by Food, with a helping hand from Clothing, Household Goods and Transport. October CPI is seen up 0.2% m/m on headline and core, which would see y/y rates edge up to 2.0% and 2.5%, with food prices likely to rebound modestly, but clothing and household goods potentially acting as a restraint if BRC Shop Price data are a guide, with petrol prices little changed on the month. PPI Input is expected to moderate to 0.6% m/m but remain elevated in y/y terms at 9.6% (vs September's 10.3%, however PPI Output measure are expected to underline that pass through pressures remain very modest with both headline and core seen at 0.2% m/m, to leave y/y rates unchanged at 3.1% and 2.4% respectively.

** Europe - Q3 GDP & Sweden - October CPI **
- The German economy's stall during the summer does owe much to Auto sector woes related to adjusting production to meet tighter emissions curbs, as well as legacy issues due to the emissions cheating scandal (much of which remain unresolved), with a slowdown in Consumer Spending in the summer (despite robust wage growth), soft foreign demand due to trade tensions, offsetting the continued boom in the construction sector. The bulk of the remaining national Q3 GDP readings in the Eurozone along with Central and Eastern Europe are also due, with Poland seen posting another very robust 1.0% q/q and the Netherlands defying any chill winds from Germany with a very solid 0.6% q/q gain, which is also the consensus for Mainland GDP in Norway. Germany also has its meaningless, though market sensitive ZEW survey, and last but not least Swedish CPI is expected to hold above target on headline at 2.5% y/y and CPIF (core) 2.4%, continuing to put pressure on the Riksbank to finally start inching away from negative rates.

** U.S.A. - October CPI **
- In terms of CPI, forecasts look for a very "average" 0.2% m/m on headline and core that would see headline y/y pick up to 2.5% from 2.3%, and leave core unchanged at 2.2%. While retail gasoline prices fell modestly on the month according to EIA data, the pointers from PPI were less auspicious with energy and food posting substantial m/m rises of 2.7% and 1.0%, and the overall Personal Consumption PPI sub-index up 0.8%, implying some upside risks for CPI, even if falling healthcare prices should provide some offset, while airfares continue to exercise upward pressure.

from Marc Ostwald
 
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