Trading with point and figure

lining up

o3dwz.png
 
Quieter day for data and events, digesting Singapore Exports and Malaysia
GDP, waiting Italy Industrial Orders and US Industrial Production, some
Fed and ECB speak, but all very much subordinate to political themes -
Brexit, Italy Budget, US/China Trade; thin Thanksgiving week ahead in
terms of data

- Brexit: in the cloud of fog over what happens next, May's tenacity stands
out, as does signal that GBP FX market is heavily hedged for Hard Brexit

- Credit: hefty outflows in US taxable bond funds continues, HY bonds
dragged back to reality, with IG credit also succumbing to flows

- China: most under-discussed topic of the year? The huge PBOC draining
Exercise (see table)

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

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

A rather more modest scheduled data and events calendar awaits, and as has been the case all week, will remain subordinated to political developments, be that Brexit, Italy budget or trade tensions, above all US/China, and of course OPEC+'s efforts to shore up oil prices after this week's sharp tumble. Having digested the Singapore Exports data, there is only Italian Industrial Orders in Europe, while US Industrial Production and the KC Fed survey along with Canada's Manufacturing Sales top the North American schedule. In event terms, there is more ECB speak from Draghi and Weidmann, with Chicago Fed's Evans (dove turned quasi hawk) the only Fed speaker. Next week's data schedule is quite sparse with US Housing data and Durable Goods accompanying flash PMIS and other surveys, while Canada has CPI and Retail Sales, in what will be a US Thanksgiving holiday thinned week. On the subject of market flows, a couple of trends demand considerable attention, firstly the shape widening in Credit spreads, perhaps most notably the cumulative $53.5 Bln outflow from US taxable bond funds during October, with last week's $1.2 Bln outflow sustaining that trend. As this unsurprisingly has taken a heavy toll on USD credit spreads, with two specific features a) the anomaly of HY spreads sharply outperforming EM spreads has been thrown under the bus, and b) the pressure that is now all too evident in IG spreads (see charts). In the category "I had no idea that this has been going on" is the news that year to date that China's PBOC has cumulatively drained CNY 1.25 Trln from its money markets this year (see attached table), which makes the tumble that Chinese stocks have taken over recent months wholly unsurprising, indeed one might argue that it might have been worse, above all given the exodus from foreign investors due to the CNY tumble vs. the USD. It is also little wonder that the authorities are now pulling out a lot of stops to reverse the very negative effects it has on credit availability. In terms of the Brexit drama, firstly the lack of a sharper move down in the GBP is probably testament to the fact that short GBP is a very crowded trade in terms of the options market, and is indeed the mirror image of what happened in oil prices earlier in the week. in that market specs have been focussed on the upside with options market chock full of positions expecting or rather hoping for a rally to $100, and little downside protection, with the move exacerbated by the fact that producer hedges only covered down to $60, and as such Tuesday's rout was a very unpleasant confluence of both spec and producer chasing the market lower. In terms of the actual politics, it has to be observed that Mrs May's stamina and tenacity goes way beyond the exemplary in the face of unbelievable pressure. However the question now is how the spineless fraternity of her Conservative party critics, whose noisy complaints are all too frequently exposed empty threats by their cowardice in taking action, want to play this. It is unclear whether there are the necessary 48 submissions to trigger a leadership challenge, with the perhaps obvious position that there is no obvious candidate to take over from May, and equally the obvious observation that they do not want to trigger a general election, which a politics weary public does not want either. Equally the 'deal' that is on the table does not look like it has any real support in parliament.


** U.S.A. - October Industrial Production **
- Industrial Production is forecast to rise 0.2% and Manufacturing Output 0.3% m/m, echoing the labour report's relatively flat average weekly hours data, and signalling a modest pace of growth relative to the heady pace seen over the summer. The wildcards here will be hurricane effects, and this could work in both directions, as a rebound following Florence might give a boost (above all in the mining, i.e. oil sector), though there could be some drag from Michael which hit the US in mid-October; utilities output should also support after a . Manufacturing surveys suggest a still strong pace of overall activity, though the drop in the ISM survey suggests there is little chance of an upside surprise, barring a seemingly unlikely spike in the auto assembly rate.


from Marc Ostwald
 
You must log in or register to reply here.

Similar threads

Michael Carr
  • Article
Equities Technical Analysis Testing Point & Figure Patterns
Replies
0
Views
3K
T2W Bot
T2W Bot
S
Point&Figure
2
Replies
39
Views
7K
subarashi
S
M
Point and Figure
Replies
2
Views
1K
Dentalfloss
Dentalfloss
A
Point and Figure box size for commodities
Replies
4
Views
4K
TWI
TWI
William Rafter
  • Article
Technical Analysis Point & Figure Gone High Tech
Replies
18
Views
8K
GruntnoWay
G
Top