Trading with point and figure

Dentalfloss · Feb 12, 2019

no sell signal

Dentalfloss · Feb 13, 2019

Mornin folks

Dentalfloss · Feb 13, 2019

Good Morning: The Long & the Short of it and The Bigger Picture - 13 February 2019 - ADM ISI

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Ostwald, Marc
07:46 (42 minutes ago)

to Marc

` Digesting less dovish than expected RBNZ and poor Korea labour data,
awaiting Riksbank, US and UK CPI; plenty of Fed speakers, corporate
earnings and govt bond auctions

- UK CPI: seasonal factors could see an outlier, but underlying picture
still points to well contained inflation; same picture for PPI

- US CPI: energy prices and base effects to drive headline CPI down, but
Services set to sustain core CPI marginally above Fed target

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** EVENTS PREVIEW **
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A much busier day await on all fronts - data, events and corporate earnings - with UK and US CPI accompanying the poor overnight South Korea labour data, while tonight brings the preliminary Japanese Q4 GDP. In central bank terms there are numerous Fed and ECB speakers, with rate decisions in New Zealand and Sweden. The Eurozone also sees a rash of govt bond auctions - German off the run 30-yr Bund, Italy 3 & 7-yr BTPs and Portugal offers 10 & 15-yr. In terms of corporate earnings Akzo Nobel, Heineken and Thyssenkrupp will be among the headline makers, while across the pond AIG, Cisco, Hilton, MGM Resorts and Wyndham Hotels are likely to feature. Politics will of course continue to cast a long shadow, with the meeting on forming an Alliance against Iran, and the NATO defence ministers meeting offering some distractions from Brexit, trade tensions and US Govt shutdown threat, even if on the latter and on US/China trade negotiations the flow of news has been better in recent days, even if both situations remain very fluid.

** U.K. - January CPI, RPI & PPI **
- As is well documented January CPI and RPI are heavily influenced by seasonal factors - retail discounting and the usual and very large unwind of the spike in airfares and holiday prices at Christmas. Be that as it may CPI is seen at target at 2.0% y/y after 2.1% in December, with core unchanged at 1.9% y/y, while PPI Input and Output are seen little changed vs. December and overall very well contained. But with the BoE downgrading its GDP forecasts last week, a move which that was more than justified by Monday's rather abject run of monthly and quarterly activity data, any miss relative to forecasts is unlikely to have a major impact on UK rate expectations. Indeed yesterday's letter from the Lords (https://www.parliament.uk/documents/lords-committees/economic-affairs/LF and NM to UKSA 110219.pdf ) to the ONS about the RPI miscalculation maqy well be more of a talking point, above all for those looking to escape the tentacles of the ongoing parliamentary gridlock on Brexit, which continues to be a case of no one want to take ownership or leadership, and as such the fog around likely outcomes remains very thick.

** U.S.A. - January CPI **
- US CPI is unsurprisingly expected to continue to see downward pressure on headline (forecast 0.1%/1.5%) from energy prices, while core CPI is seen at a very average 0.2% m/m that would edge the y/y rate down to 2.1%. Of particular interest will be the contrast between non-energy goods and services CPI, with the Services ex-Energy standing at 2.9% y/y in December, to an extent a function of the gentle upward creep in Average Hourly Earnings (last 3.2% y/y), and by extension emphasizing that the Fed may be in a patient rate pause and data dependent, the next move in rates is still likely to be up.

** Sweden / New Zealand - Central bank policy meetings **
- The RBNZ has spent recent months highlighting the possibility that the next move in NZ rates could be lower, and a weak set of Q4 labour market readings last week appeared to re-emphasize that view. As expected RBNZ held rates at 1.75%, and while it highlighted downside risks to growth, it did not offer, as some had hoped, a clear signnal that the next move on rates will be lower. As for Sweden's Riksbank which embarked on a very low rate hike trajectory in December, rates are seen on hold at this meeting and is expected to deliver just one 25 bps rate hike (to 0.0%) in Q3 during 2019. While Ingves & co have tried to stress that Riksbank policy can diverge from ECB policy, the run of recent data has left the Swedish economic surprise index down in the dumps, i.e. very much echoing the run of Eurozone data.