Dentalfloss
Legendary member
- Messages
- 63,404
- Likes
- 3,726
Good Morning: The Long & the Short of it and The Bigger Picture - 24 January 2019 - ADM ISI
Inbox
x
Ostwald, Marc
08:32 (7 minutes ago)
to Marc
- Digesting poor Japan Manufacturing PMI, very mixed French PMIs, downbeat
Bank of Korea, awaiting rest of flash PMIs, ECB, Norges Bank, US Claims
and corporate earnings; France to auction mix of OATs
- PMIs: Japan slide confirms China contagion effect, Euro area PMIs
sensitive ahead of ECB; US govt shutdown may heighten interest in US PMIs
- Norges Bank: non-forecast meeting statement expected to affirm likelihood
of March rate hike
- ECB: very delicate balancing act for ECB between acknowledging weaker
data and avoiding pushing back on already sharply lower market rate
trajectory
- Next Wednesday:
https://www.iod.com/events-community/events/event-details/eventdateid/12965
** Please note that due to holidays, there will be no morning note tomorrow
Or on Monday 28th **
..........................................................................
********************
** EVENTS PREVIEW **
********************
If there is to be some disruption to the overarching influences of US/China Trade, China economic fears, US govt shutdown and Brexit this week, then today's busier run of central bank meetings, first and foremost the ECB, but also Norges Bank, along with the run of statistics and surveys - Australian labour data, 'flash' PMIs, US jobless claims and tonight's Japan Tokyo CPI - will need to spring some surprises. On the corporate earnings front Bristol Myers Squibb, Freeport McMoran, Intel, Norfolk Southern and Starbucks are likely to be among the highlights, while France offers medium-dated conventional OATs and a mix of OATeis.
** World - January 'flash' PMIs **
- The Japan flash manufacturing PMI fall to 50.0, primarily due to a shapr fall in export Orders from an already weak 49.1 to 46.1 echoes much of the anecdotal evidence that has been on offer out of Asia over the past fortnight, and underlines just how integrated the rest of Asia has become into China's economy, and per se obviously sends a poor signal. ICYMI you missed this link on Tuesday, this is the evidence at a more micro level: https://wolfstreet.com/2019/01/19/bottom-falls-out-of-demand-in-china-in-many-sectors/ . The remainder of the G7 flash PMIs are for the most part seen little changed vs December, though there is expected to be a modest recovery in French PMIs after a steep fall in December - Manufacturing 50.0 vs. 49.7, Services 50.5 vs. 49.0, which would align these rather more with the national confidence measures. There will be relatively keen interest in the US PMIs, even if they have proven to be deficient relative to the ISM surveys, and indeed regional surveys, but given a dearth of official activity due to the government shutdown, any inputs gain rather more prominence. Forecasts look for a further dip in Manufacturing to 53.5 from December's 53.8, which would be the weakest since mid-2017, while the Services measure is seen at 54.0 from 54.4, that would be the lowest reading since March 2018, though above the 2018 low of 53.3.
** Eurozone - ECB meeting **
- The ECB council will likely try to find some form of statement wording that acknowledges the weaker economic data and the headwinds to global growth, while suggesting that these have been in line with its forecasts, thus obviating the immediate need to change its guidance on the balance of risks to its outlook being balanced, and per se come under pressure to adjust policy. However the narrative around this at the press conference will probably suggest that retaining such a balance of risks assessment is at best tenuous. The council does not as yet have to change its rates guidance from the current 'not before H2 2019', though there must be some risks that the doves will try and push back on the trajectory, even if this would normally accompany a fresh set of staff forecasts (due at the next meeting in March). The press conference will doubtless see some questions on the TLTRO expiry later in the year, even if the council does not seem to be that keen in taking any decisions (i.e. offering guidance) on what action it could or may take, There will doubtless be questions on Italy, as well as German banks, and above all on the pressure the ECB is putting for stronger NPL provisioning; inevitably there will also be questions on Brexit.
** Norway - Norges Bank meeting **
- Norges Bank is expected to keep rates unchanged at 0.75%, but remain on course for a further rate 25 bps hike to 1.0% March, with a further move seen in September, though an increasingly uncertain global outlook and oil price developments may prompt some fine tuning of its overall rate trajectory as the year progresses. That said, incoming activity data has been broadly in line with the central bank's forecasts, and underlying inflation remains a shade above its 2.0% target, which should serve to steel its resolve to gradually tighten policy.
Inbox
x
Ostwald, Marc
08:32 (7 minutes ago)
to Marc
- Digesting poor Japan Manufacturing PMI, very mixed French PMIs, downbeat
Bank of Korea, awaiting rest of flash PMIs, ECB, Norges Bank, US Claims
and corporate earnings; France to auction mix of OATs
- PMIs: Japan slide confirms China contagion effect, Euro area PMIs
sensitive ahead of ECB; US govt shutdown may heighten interest in US PMIs
- Norges Bank: non-forecast meeting statement expected to affirm likelihood
of March rate hike
- ECB: very delicate balancing act for ECB between acknowledging weaker
data and avoiding pushing back on already sharply lower market rate
trajectory
- Next Wednesday:
https://www.iod.com/events-community/events/event-details/eventdateid/12965
** Please note that due to holidays, there will be no morning note tomorrow
Or on Monday 28th **
..........................................................................
********************
** EVENTS PREVIEW **
********************
If there is to be some disruption to the overarching influences of US/China Trade, China economic fears, US govt shutdown and Brexit this week, then today's busier run of central bank meetings, first and foremost the ECB, but also Norges Bank, along with the run of statistics and surveys - Australian labour data, 'flash' PMIs, US jobless claims and tonight's Japan Tokyo CPI - will need to spring some surprises. On the corporate earnings front Bristol Myers Squibb, Freeport McMoran, Intel, Norfolk Southern and Starbucks are likely to be among the highlights, while France offers medium-dated conventional OATs and a mix of OATeis.
** World - January 'flash' PMIs **
- The Japan flash manufacturing PMI fall to 50.0, primarily due to a shapr fall in export Orders from an already weak 49.1 to 46.1 echoes much of the anecdotal evidence that has been on offer out of Asia over the past fortnight, and underlines just how integrated the rest of Asia has become into China's economy, and per se obviously sends a poor signal. ICYMI you missed this link on Tuesday, this is the evidence at a more micro level: https://wolfstreet.com/2019/01/19/bottom-falls-out-of-demand-in-china-in-many-sectors/ . The remainder of the G7 flash PMIs are for the most part seen little changed vs December, though there is expected to be a modest recovery in French PMIs after a steep fall in December - Manufacturing 50.0 vs. 49.7, Services 50.5 vs. 49.0, which would align these rather more with the national confidence measures. There will be relatively keen interest in the US PMIs, even if they have proven to be deficient relative to the ISM surveys, and indeed regional surveys, but given a dearth of official activity due to the government shutdown, any inputs gain rather more prominence. Forecasts look for a further dip in Manufacturing to 53.5 from December's 53.8, which would be the weakest since mid-2017, while the Services measure is seen at 54.0 from 54.4, that would be the lowest reading since March 2018, though above the 2018 low of 53.3.
** Eurozone - ECB meeting **
- The ECB council will likely try to find some form of statement wording that acknowledges the weaker economic data and the headwinds to global growth, while suggesting that these have been in line with its forecasts, thus obviating the immediate need to change its guidance on the balance of risks to its outlook being balanced, and per se come under pressure to adjust policy. However the narrative around this at the press conference will probably suggest that retaining such a balance of risks assessment is at best tenuous. The council does not as yet have to change its rates guidance from the current 'not before H2 2019', though there must be some risks that the doves will try and push back on the trajectory, even if this would normally accompany a fresh set of staff forecasts (due at the next meeting in March). The press conference will doubtless see some questions on the TLTRO expiry later in the year, even if the council does not seem to be that keen in taking any decisions (i.e. offering guidance) on what action it could or may take, There will doubtless be questions on Italy, as well as German banks, and above all on the pressure the ECB is putting for stronger NPL provisioning; inevitably there will also be questions on Brexit.
** Norway - Norges Bank meeting **
- Norges Bank is expected to keep rates unchanged at 0.75%, but remain on course for a further rate 25 bps hike to 1.0% March, with a further move seen in September, though an increasingly uncertain global outlook and oil price developments may prompt some fine tuning of its overall rate trajectory as the year progresses. That said, incoming activity data has been broadly in line with the central bank's forecasts, and underlying inflation remains a shade above its 2.0% target, which should serve to steel its resolve to gradually tighten policy.
