Trading with point and figure

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Dow close up

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buyers in with a chance

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ya needs to stay above the line

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updated

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upodated

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whacked em both

Dentalfloss · Mar 13, 2019

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

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Ostwald, Marc
08:41 (18 minutes ago)

to Marc

- Brexit farce bandwagon rolls on; otherwise digesting weak Japan Orders &
soft PPI, Oz Consumer Sentiment dive; waiting US PPI, Durable Goods &
Construction Spending; UK Spring Statement, ECB speakers, bond auctions
in Italy, Germany & USA

- UK: Spring Statement rendered meaningless by Brexit drama, focus on today's
vote on 'no deal' Brexit; speculation on length of potential Article 50
extension misses the point about purpose

- US PPI: very average m/m rise expected to leave y/y rates unchanged;
rebound in energy prices may pressure headline, Trade Services again
likely to be the key swing factor

- US Durable Goods Orders: headline seen pressured by aircraft, dead cat
bounce expected for key CapEx proxy; underlying trend seen well off
heady early/mid-2018 pace

- Morning Call audio file:
https://www.mixcloud.com/MOstwaldADM/adm-isi-morning-call-march-13/

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

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

The Brexit drama continues and via way of a supremely ironic amusement, the UK finance minister will today be issuing the UK Treasury's 'Spring (budget) Statement', which given the continued gridlock on Brexit would seem to be an award winning waste of time. Following yesterday's renewed resounding defeat for May's Withdrawal Agreement, today offers up the chance for parliament to vote to leave the EU with no deal. Outside of this, there are Japanese Machinery Orders (very weak) and PPI (still very low) to digest, ahead of US PPI (Feb), Durable Goods Orders & Construction Spending (both 'catch up' reports for January). There are a raft of ECB speakers, EU Ambassadors meet on Brexit, while the govt bond auction schedule has Italian 3, 7 & 19-yr BTPs, and 30-yr sales in Germany and the USA.

** U.K. - Brexit vote no. 2 **
- So with May's withdrawal agreement roundly defeated, the House of Commons now effectively takes control over the process, starting with a vote today on opting for a 'no deal' Brexit, which prior votes suggest that there is no majority for either (but 'never say never' applies'), though there are a large volumes of amendments being tabled on this, and close attention will need to be paid as to what is actually going to be voted on. The attention would then turn to the vote on extending Article 50 tomorrow. It would be rather foolish to assume this would be about 'how long' any extension might be, but what are the conditions which the EU sets, given that further negotiations are not on the table (and clearly futile given the glaring failures of the past 2 3/4 years. Therefore the choice on offer is likely to be a very simple on - either hold another referendum or unilaterally revoke Article 50. Be that as it may, it has to be observed that there appears to be no one in the UK parliament that has any courage, let alone gives any thought to the national interest, and the UK political system has been brutally exposed as being totally deficient, and in desperate need of radical reform.

** U.S.A. - February PPI, Jan Durable Goods Orders **
- A marginal miss on yesterday's core CPI serves to underline that the Fed continues to plenty of scope for 'patience', above all to focus on the growth outlook both domestically and internationally, today's PPI is vyer unlikely to unseat that. As with CPI, both headline and core are seen up 0.2% m/m, which as with CPI would leave headline and core y/y rates little changed at a very benign 1.9% and 2.6% respectively. The risk in terms of headline is that rebounding energy prices result in a higher outcome, though for both headline and core the key element as has been the case for some months will be what happens with the very volatile Trade Services component which spiked 0.8% m/m in January, and per se implying some risk of a mean reversion in February given the overhang from shutdown and the ongoing uncertainty about the US/China trade deal and the outlook for the global economy. Durable Goods are likely to see a further drag from aircraft with headline seen at -0.6% (and prospects looking very poor following the 737 Max tragedies and subsequent groundings in a number of countries), with the ex-Transport measure seen at a rather lacklustre +0.1% m/m, and Non-defence Capital Goods ex Aircraft little better at 0.2% m/m. This is however January data, and the risks look to be to the downside given 'shutdown' and despite the already reported weakness in December.