Trading with point and figure

Dentalfloss · Feb 8, 2019

OIL
bulls need to get it into the trendline

Dentalfloss · Feb 8, 2019

Cable

Dentalfloss · Feb 8, 2019

lining up

Dentalfloss · Feb 8, 2019

Dentalfloss · Feb 8, 2019

lined up

Dentalfloss · Feb 8, 2019

Dow
havin a poke into rez

Dentalfloss · Feb 8, 2019

Good Morning: The Long & the Short of it and The Bigger Picture - 8 February 2019 - ADM ISI

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Ostwald, Marc
08:47 (14 minutes ago)

to Marc

- Digesting disappointing run of data from Japan, stronger than expected
German Trade, solid bounce in French Output and RBA's dovish SOMP;
awaiting Canada jobs, Russia rate decision and Fed speak from Daly;
BUT US / China trade talks news ruling the roost

- Liquidity still ruling the roost

- Canada labour report: modest gain in Employment, weak wage growth and
uptick in Unemployment rate expected

- Russia rates: no change expected, though an outside chance, with
Nabiullina set to sustain hawkish rhetoric as CPI climbs

- Chart: JPM EMBI spreads vs. Citi Global Money Supply proxy

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** EVENTS PREVIEW **
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The day's schedule is not bereft of highlights, but whether much of this has a material impact on markets, outside of German Trade and the delayed USDA World Agricultural Supply and Demand Estimates (WASDE) report is debatable. Statistically, the Japan Wages, Household Spending (both missing forecasts by some margin) & Current Account and Norwegian GDP will need to be digested along with French & Italian Industrial Production, with Canadian labour data the highlight of the afternoon. There is a smattering of Fed speak via those unsurprisingly very dovish overnight comments from Bullard, and this afternoon's speech by SF Fed's Daly, while a rate decision is due in Russia. Next week brings not only more debate on Brexit in the UK parliament, but a a very busy run of data from the US, China and the UK, as well as German Q4 GDP. However all of this seems to be rather moot given that the souring tone in risk asset market yesterday was clearly driven by the news that the Trump-Xi meeting on trade relations will not happen before the current 'truce' is due to end on March 1, thus implying the imposition of a further round of tariffs. But in all of this, the actual driver of risk asset prices remains liquidity. A cursory look at the attached chart comparing the Citi Global Money Supply Proxy with the JPM EMBI spread (generally a good proxy for risk assets), highlights how strongly they are inversely correlated, with the sharp widening in the EMBI last year that contraction in Money Supply, and vice versa this year, as the end of year Fed and start of year PBOC liquidity injections gave a strong boost to money supply and liquidity..... however the impact of that liquidity boost is starting to roll off now.

** Canada - January Unemployment **
Canada's labour data are projected to show a modest 5K rise in Employment, which follows a very tepid 9.3K in December (with full-time jobs falling 19K), and this is expected to see the Unemployment Rate edge up to 5.7%, while wage growth is forecast to stay very subdued at 1.6% y/y vs. prior 1.5%, i.e. negative in real terms. Little wonder the that.. the Bank of Canada does not really need a Fed 'pause' or 'patience' as a justification for not hikign rates any further in the near term.

** Russia - Bank Rossi rate decision **
- After a surprise rate hike to 7.75% at its last meeting Russia's Bank Rossi is seen on hold, but Nabiullina will likely strike a relatively hawkish tone, above all given the rise in Household Inflation Expectations (10.4% vs prior 10.2%), the upward pressure from the sales tax hike and the weak RUB (overall in 2018). With December CPI already above target at 4.3% y/y, January at 5.0% and forecasters looking for a end of Q1 peak around 6.0%, a further rate hike cannot be completely ruled out, though it can probably wait until March.