Dentalfloss
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Mornin folks
☕ ☕ ☕ ☕ ☕
💋 💋 🆒
☕ ☕ ☕ ☕ ☕
💋 💋 🆒
Trading with point and figure
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Dentalfloss
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DOW
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Dax
Dentalfloss
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Dentalfloss
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Good Morning: The Long & the Short of it and The Bigger Picture - 29 May 2019 - ADM ISI
- Modest day for data digesting French CPI setback, UK BRC Shop Price
rebound, and better than expected Sweden GDP; awaiting German jobs, US
Richmond Fed surveys, ECB speakers and BoC rate decision; German 5-yr
and US 7-yr T-note & 2-yr FRN
- France CPI confirms April spike purely a function of Easter timing,
pressure mounts on ECB
- Canada: BoC on hold for rest of year, very focussed on external factors,
market views on 2020 rate trajectory very bifurcated
- China: PBOC mounts Baoshang Bank fall-out limitation, but fear of
contagion likely to remain
- US Agri: flooding taking record toll on planting season, finally some
respite for beleaguered grains and softs prices?
- Charts: Corn future & US Planting progress by year
- Audio preview;
https://www.mixcloud.com/MOstwaldADM/adm-isi-morning-call-29-may-2019/
..........................................................................
********************
** EVENTS PREVIEW **
********************
As is the case with much of the week, the day's schedule of data is anything but overwhelming, though the French CPI confirms that the spike higher in CPI in April was all about Easter effects, rather than signalling some emerging upward pressure, even if the strength of non-financial credit growth (second largest since 2009) seen in yesterday's M3 data does offer some solace for a rather policy beleaguered ECB. On the 'to digest' list are UK BRC Shop Prices, while ahead lie the normally very market insensitive German labour data, along with the Richmond Fed's Manufacturing Index. Outside of the usual risks of unscheduled political tape bombs or Tweets (as per Trump's US 'not ready' for a trade deal with China), the other items of note will be the day's busy run of ECB speakers and an expected no change rate decision from the Bank of Canada, while digesting the huge net CNY 250 Bln China PBOC liquidity injection overnight as it seeks to shore up confidence following the collapse of Baoshang Bank. In auction terms, Germany sells 5-yr and the US offers 2-yr FRNs and 5-yr T-Notes. In market terms, the iron grip of politics on market sentiment was amply demonstrated by the dismissal of another jump in US Consumer Confidence, which also saw a fresh cyclical high (36.3 vs. 33.2) in the Labour Differential ('jobs plentiful' minus 'hard to get') - at some stage markets' selective vision about incoming macro news, and an ostensible hubris that economies will follow markets lead will prove to be their Achilles heel. The other items worthy of note are the huge PBOC liquidity injection operation (net of maturing reverse repos CNY 250 Bln) as the central banks looks to ensure sufficient money market liquidity in the wake of the Baoshang Bank collapse, with the PBOC looking to guarantee minimum debt recovery levels in a tiered fashion, though also said to be imposing a 30% 'haircut' on the largest debts (> CNY 5 Bln). On the one hand a less 'hugger mugger' approach to bankruptcy and non-performing debt resolution is a welcome step forward, but with the elevated levels of non-financial corporate and municipal debt, there will be concerns about a contagion effect, and all the more so given the obvious drag on the economy from trade tensions, and extant overcapacity issues. The other item of note is that US Corn and Soy areas still needing to be planted as of 26 May stood at a record 99 Mln acres, smashing the previous record of 70.1 Mln acres back in 1995, and helping to squeeze Corn prices even harder (recall that there was a record net short just a month ago). The point is that after a very torrid period over the past 12 to 18 months for grains, seeds and soft commodities, in most cases due to burgeoning surpluses in recent years, the tide may be changing direction, and see some upward pressure on consumer prices, which would be also allied with the increasing of risk pass through from trade tension related price rises.
** Canada - BoC rate decision **
- Having cut its growth forecasts at its last meeting, and offering a neutral rate outlook, having previously having a tightening bias, the BoC effectively acknowledged that with inflation seemingly locked around target, and more slack in the economy than a tight labour market would seem to suggest, and an array of external risks (above all US / China trade), it would be best served by adopting a similar 'patient' stance to the Fed. The housing sector remains the key domestic drag, even if the BoC appears to be at pains to try and suggest that the sector is through the worst of the headwinds, and Poloz has also implied that the problems for housing are due to structural headwinds, but the evidence suggests heavily indebted households are a bigger issue. Market opinions on the BoC rate outlook become quite heavily divergent once we move into 2020, (with most assuming no change in 2019), and roughly equally divided between a cut, no change and a hike by the end of 2020. On balance external factors appear more likely to push the BoC off the 'neutral' fence than domestic factors, barring a collapse in energy prices sending another shockwave through the domestic oil and gas sector.
| Inbox | x |
| 08:54 (18 minutes ago) |
|
- Modest day for data digesting French CPI setback, UK BRC Shop Price
rebound, and better than expected Sweden GDP; awaiting German jobs, US
Richmond Fed surveys, ECB speakers and BoC rate decision; German 5-yr
and US 7-yr T-note & 2-yr FRN
- France CPI confirms April spike purely a function of Easter timing,
pressure mounts on ECB
- Canada: BoC on hold for rest of year, very focussed on external factors,
market views on 2020 rate trajectory very bifurcated
- China: PBOC mounts Baoshang Bank fall-out limitation, but fear of
contagion likely to remain
- US Agri: flooding taking record toll on planting season, finally some
respite for beleaguered grains and softs prices?
- Charts: Corn future & US Planting progress by year
- Audio preview;
https://www.mixcloud.com/MOstwaldADM/adm-isi-morning-call-29-may-2019/
..........................................................................
********************
** EVENTS PREVIEW **
********************
As is the case with much of the week, the day's schedule of data is anything but overwhelming, though the French CPI confirms that the spike higher in CPI in April was all about Easter effects, rather than signalling some emerging upward pressure, even if the strength of non-financial credit growth (second largest since 2009) seen in yesterday's M3 data does offer some solace for a rather policy beleaguered ECB. On the 'to digest' list are UK BRC Shop Prices, while ahead lie the normally very market insensitive German labour data, along with the Richmond Fed's Manufacturing Index. Outside of the usual risks of unscheduled political tape bombs or Tweets (as per Trump's US 'not ready' for a trade deal with China), the other items of note will be the day's busy run of ECB speakers and an expected no change rate decision from the Bank of Canada, while digesting the huge net CNY 250 Bln China PBOC liquidity injection overnight as it seeks to shore up confidence following the collapse of Baoshang Bank. In auction terms, Germany sells 5-yr and the US offers 2-yr FRNs and 5-yr T-Notes. In market terms, the iron grip of politics on market sentiment was amply demonstrated by the dismissal of another jump in US Consumer Confidence, which also saw a fresh cyclical high (36.3 vs. 33.2) in the Labour Differential ('jobs plentiful' minus 'hard to get') - at some stage markets' selective vision about incoming macro news, and an ostensible hubris that economies will follow markets lead will prove to be their Achilles heel. The other items worthy of note are the huge PBOC liquidity injection operation (net of maturing reverse repos CNY 250 Bln) as the central banks looks to ensure sufficient money market liquidity in the wake of the Baoshang Bank collapse, with the PBOC looking to guarantee minimum debt recovery levels in a tiered fashion, though also said to be imposing a 30% 'haircut' on the largest debts (> CNY 5 Bln). On the one hand a less 'hugger mugger' approach to bankruptcy and non-performing debt resolution is a welcome step forward, but with the elevated levels of non-financial corporate and municipal debt, there will be concerns about a contagion effect, and all the more so given the obvious drag on the economy from trade tensions, and extant overcapacity issues. The other item of note is that US Corn and Soy areas still needing to be planted as of 26 May stood at a record 99 Mln acres, smashing the previous record of 70.1 Mln acres back in 1995, and helping to squeeze Corn prices even harder (recall that there was a record net short just a month ago). The point is that after a very torrid period over the past 12 to 18 months for grains, seeds and soft commodities, in most cases due to burgeoning surpluses in recent years, the tide may be changing direction, and see some upward pressure on consumer prices, which would be also allied with the increasing of risk pass through from trade tension related price rises.
** Canada - BoC rate decision **
- Having cut its growth forecasts at its last meeting, and offering a neutral rate outlook, having previously having a tightening bias, the BoC effectively acknowledged that with inflation seemingly locked around target, and more slack in the economy than a tight labour market would seem to suggest, and an array of external risks (above all US / China trade), it would be best served by adopting a similar 'patient' stance to the Fed. The housing sector remains the key domestic drag, even if the BoC appears to be at pains to try and suggest that the sector is through the worst of the headwinds, and Poloz has also implied that the problems for housing are due to structural headwinds, but the evidence suggests heavily indebted households are a bigger issue. Market opinions on the BoC rate outlook become quite heavily divergent once we move into 2020, (with most assuming no change in 2019), and roughly equally divided between a cut, no change and a hike by the end of 2020. On balance external factors appear more likely to push the BoC off the 'neutral' fence than domestic factors, barring a collapse in energy prices sending another shockwave through the domestic oil and gas sector.
Dentalfloss
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will supp hold..?
Dentalfloss
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Ditto
Dentalfloss
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bad bounce off 11900/aqua
Dentalfloss
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buyers in with a chance
Dentalfloss
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Mornin folks ☕ ☕ ☕ ☕ ☕ ☕ 🆒 🆒 🆒 🆒 🆒
☕ ☕ ☕ ☕ ☕ ☕ 🆒 🆒 🆒 🆒 🆒
Dentalfloss
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dax into the open
Dentalfloss
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Dax in one of our supp areas
will it hold.?
will it hold.?
Dentalfloss
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close up
Dentalfloss
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Dentalfloss
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poss buyers comin in
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11780-11820 firsts rez area
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last 48 hours
trends marked
trends marked
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Dow .that loks to be the obvious pivot area
Dentalfloss
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lets see
Dentalfloss
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Good Morning: The Long & the Short of it and The Bigger Picture - 31 May 2019 - ADM ISI
- Trump Mexico tariff threat likely to subordinate busy month end rush of
data; China NBS PMIs, Japan CPI, Production and Retail Sales, UK surveys
and German Retail Sales to digest; ahead lie UK Credit, German CPI, India
& Canada Q1 GDP, US PCE and Chicago PMI: ECB and Fed speakers
- German CPI set to echo France and Spain with sharp y/y retreat, leaving
ECB in a quandary
- US Personal Income/PCE; focus on deflators
- India Q1 GDP: set to slow to lowest in 2 years, adverse base effects
and financial sector woes weighing, may well prompt RBI to cut rates
next week
- Canada Q1 GDP: still sluggish with marginal improvement on Q4 seen, March
monthly data to suggest economy regaining traction
- Audio preview:
https://www.mixcloud.com/MOstwaldADM/adm-isi-morning-call-31-may-2019/
..........................................................................
********************
** EVENTS PREVIEW **
********************
It's month end and as often happens, there is a rush of data after an otherwise relatively modest week for statistics. In terms of the overnight run, the focus is on China's NBS PMIs (soft and below forecasts), Japan's Tokyo CPI (below forecasts, Industrial Production (still sluggish but better than expected) and Retail Sales (beloe forecasts and still weak), the UK surveys (mixed) and the as ever highly erratic German Retail Sales. Ahead lie UK Consumer Credit and Mortgage Lending, German provisional CPI, Indian and Canadian Q1 GDP, US Personal Income / PCE and the Chicago PMI. In central bank terms the Bank of Korea left rates unchanged and and Sri Lanka's CBSL cut rates as expected by 50 bps in the wake of the recent atrocities, and BanColombia is expected to follow suit, while ECB's Visco and Fed's Bostic and Williams feature on the central bank speakers' list. Eminently Trump's threat to impose a 5% tariff on imports from Mexico to solve illegal immigration will be the overriding influence, a very foolish move to use trade tariffs to solve this kind of problem, and one which will send shockwaves (above all for the auto sector) around the world, and raises a lot of doubbts about whether the USMCA will be ratified. In terms of month end positioning, there should in theory be some rebalancing from bonds to equities, and it should be added that with so much discounted across the Treasury curve in terms of Fed policy easing, that the key vulnerability is better economic news or a still seemingly unlikely positive turn for US/China trade talks. That said the latest weekly Lipper fund flow data underline that risk is very much "off", with credit (all classes) and equity funds seeing very large outflows. Next week's schedule offers the usual start of month run of PMIs around the world, US labour data, German Factory Orders along with an expected RBA rate cut, and an ECB meeting, which updates its economic forecasts and is expected to offer details on the new TLTRO programme that is due to start in September, and of course there will also be Trump's state visit to the UK.
** Germany - May CPI **
- Following on from the sharper than expected post Easter corrections to French and Spanish CPI, today's German HICP is forecast to post a modest 0.3% m/m rise, which would see the y/y rate slide back to the 1.4% seen in March from April's 2.1%, with Tuesday's pan Eurozone CPI likely to drop back to 1.3%/1.4%, if forecasts for today's German reading prove to be correct, with the drag from Services on French core CPI, implying a setback in Eurozone core CPI to 1.1% y/y. As such, this would appear to leave the ECB in a quandary, particularly with the oft cited 5yr/5yr market based measure of inflation expectations back down at the lows of 2016, in so far as it would seem to behove the ECB to respond in policy terms. However the ECB's rhetoric is leaning quite heavily against taking action, outside of the fresh round of TLTROs being planned for September, which are primarily to plug the potentially sharp liquidity drain from maturing TLTROs, in other words a technical move rather than a policy move. It would in any case represent a rather embarrassing case of backtracking from the decision to end QE last December, and implicitly suggest that the ECB and its staff misread the economic tea leaves. It is possible that the ECB takes a leaf out of the Bundesbank's playbook of yesteryear to distract from 'inconvenient' inflation data, by highlighting monetary data, above all that second strongest jump since 2009 in Private Sector Credit to Non-financial Corporates, to offer some optimism on the H2 outlook and as a justification for not taking any action.
** U.S.A. - April Personal Income / PCE **
- Following on from yesterday's Q1 GDP revision, above all the relatively sharp downward revision to the annualized core PCE Deflator to 1.0% from 1.3%, today's April data are expected to show a 0.3% m/m rise in Income, and a modest 0.2% m/m rise in PCE, though this does follow a jump of 0.9% m/m in spending in March. But it will be the deflators which garner most attention with headline seen up 0.3% m/m to edge the y/y rate to 1.6%, while core is forecast to post a very average 0.2% m/m for an unchanged 1.6% y/y. Inevitably anything in line or below forecasts on the latter will reinforce markets view on the Fed rate trajectory, though for the time being the Fed will stick to its 'patient' stance, and argue that the current dip in inflation will prove to be transitory.
** India - Q1 GDP **
- Today's GDP will to an extent weigh in the equation of whether the RBI will cut its repo rate by a further 25 bps to 5.75% when it meets next week, above all predicated on another sub-target (4.0%) CPI reading in April of 2.92% y/y. The consensus see GDP slowing to just 6.3% y/y from Q4's 6.6%, and thus see India deposed from its position as the fastest growing major economy (China Q1 GDP 6.4%), with the GVA measure seen slowing to just 6.0% y/y, and in both cases hampered by adverse base effects, along with the lagged effects of tight monetary policy in 2019, and tight financial sector liquidity conditions pressuring corporate credit rates in the wake of the various banking sector woes.
** Canada - Q1 GDP **
- Today's Q1 GDP is only expected to improve marginally to 0.7% SAAR after a very lacklustre 0.4% SAAR in Q4, though the March monthly GDP reading is expected to signal that the economy regained some traction late in the quarter, with the consensus looking for 0.4% after February's -0.1%, the latter having been a function of adverse weather effects and output cuts in the oil sector. It would give some credence to the BoC's optimism on the domestic economic outlook, even if its current neutral policy is predicated on headwinds from global trade tensions.
| Inbox | x |
| 08:38 (1 minute ago) |
|
- Trump Mexico tariff threat likely to subordinate busy month end rush of
data; China NBS PMIs, Japan CPI, Production and Retail Sales, UK surveys
and German Retail Sales to digest; ahead lie UK Credit, German CPI, India
& Canada Q1 GDP, US PCE and Chicago PMI: ECB and Fed speakers
- German CPI set to echo France and Spain with sharp y/y retreat, leaving
ECB in a quandary
- US Personal Income/PCE; focus on deflators
- India Q1 GDP: set to slow to lowest in 2 years, adverse base effects
and financial sector woes weighing, may well prompt RBI to cut rates
next week
- Canada Q1 GDP: still sluggish with marginal improvement on Q4 seen, March
monthly data to suggest economy regaining traction
- Audio preview:
https://www.mixcloud.com/MOstwaldADM/adm-isi-morning-call-31-may-2019/
..........................................................................
********************
** EVENTS PREVIEW **
********************
It's month end and as often happens, there is a rush of data after an otherwise relatively modest week for statistics. In terms of the overnight run, the focus is on China's NBS PMIs (soft and below forecasts), Japan's Tokyo CPI (below forecasts, Industrial Production (still sluggish but better than expected) and Retail Sales (beloe forecasts and still weak), the UK surveys (mixed) and the as ever highly erratic German Retail Sales. Ahead lie UK Consumer Credit and Mortgage Lending, German provisional CPI, Indian and Canadian Q1 GDP, US Personal Income / PCE and the Chicago PMI. In central bank terms the Bank of Korea left rates unchanged and and Sri Lanka's CBSL cut rates as expected by 50 bps in the wake of the recent atrocities, and BanColombia is expected to follow suit, while ECB's Visco and Fed's Bostic and Williams feature on the central bank speakers' list. Eminently Trump's threat to impose a 5% tariff on imports from Mexico to solve illegal immigration will be the overriding influence, a very foolish move to use trade tariffs to solve this kind of problem, and one which will send shockwaves (above all for the auto sector) around the world, and raises a lot of doubbts about whether the USMCA will be ratified. In terms of month end positioning, there should in theory be some rebalancing from bonds to equities, and it should be added that with so much discounted across the Treasury curve in terms of Fed policy easing, that the key vulnerability is better economic news or a still seemingly unlikely positive turn for US/China trade talks. That said the latest weekly Lipper fund flow data underline that risk is very much "off", with credit (all classes) and equity funds seeing very large outflows. Next week's schedule offers the usual start of month run of PMIs around the world, US labour data, German Factory Orders along with an expected RBA rate cut, and an ECB meeting, which updates its economic forecasts and is expected to offer details on the new TLTRO programme that is due to start in September, and of course there will also be Trump's state visit to the UK.
** Germany - May CPI **
- Following on from the sharper than expected post Easter corrections to French and Spanish CPI, today's German HICP is forecast to post a modest 0.3% m/m rise, which would see the y/y rate slide back to the 1.4% seen in March from April's 2.1%, with Tuesday's pan Eurozone CPI likely to drop back to 1.3%/1.4%, if forecasts for today's German reading prove to be correct, with the drag from Services on French core CPI, implying a setback in Eurozone core CPI to 1.1% y/y. As such, this would appear to leave the ECB in a quandary, particularly with the oft cited 5yr/5yr market based measure of inflation expectations back down at the lows of 2016, in so far as it would seem to behove the ECB to respond in policy terms. However the ECB's rhetoric is leaning quite heavily against taking action, outside of the fresh round of TLTROs being planned for September, which are primarily to plug the potentially sharp liquidity drain from maturing TLTROs, in other words a technical move rather than a policy move. It would in any case represent a rather embarrassing case of backtracking from the decision to end QE last December, and implicitly suggest that the ECB and its staff misread the economic tea leaves. It is possible that the ECB takes a leaf out of the Bundesbank's playbook of yesteryear to distract from 'inconvenient' inflation data, by highlighting monetary data, above all that second strongest jump since 2009 in Private Sector Credit to Non-financial Corporates, to offer some optimism on the H2 outlook and as a justification for not taking any action.
** U.S.A. - April Personal Income / PCE **
- Following on from yesterday's Q1 GDP revision, above all the relatively sharp downward revision to the annualized core PCE Deflator to 1.0% from 1.3%, today's April data are expected to show a 0.3% m/m rise in Income, and a modest 0.2% m/m rise in PCE, though this does follow a jump of 0.9% m/m in spending in March. But it will be the deflators which garner most attention with headline seen up 0.3% m/m to edge the y/y rate to 1.6%, while core is forecast to post a very average 0.2% m/m for an unchanged 1.6% y/y. Inevitably anything in line or below forecasts on the latter will reinforce markets view on the Fed rate trajectory, though for the time being the Fed will stick to its 'patient' stance, and argue that the current dip in inflation will prove to be transitory.
** India - Q1 GDP **
- Today's GDP will to an extent weigh in the equation of whether the RBI will cut its repo rate by a further 25 bps to 5.75% when it meets next week, above all predicated on another sub-target (4.0%) CPI reading in April of 2.92% y/y. The consensus see GDP slowing to just 6.3% y/y from Q4's 6.6%, and thus see India deposed from its position as the fastest growing major economy (China Q1 GDP 6.4%), with the GVA measure seen slowing to just 6.0% y/y, and in both cases hampered by adverse base effects, along with the lagged effects of tight monetary policy in 2019, and tight financial sector liquidity conditions pressuring corporate credit rates in the wake of the various banking sector woes.
** Canada - Q1 GDP **
- Today's Q1 GDP is only expected to improve marginally to 0.7% SAAR after a very lacklustre 0.4% SAAR in Q4, though the March monthly GDP reading is expected to signal that the economy regained some traction late in the quarter, with the consensus looking for 0.4% after February's -0.1%, the latter having been a function of adverse weather effects and output cuts in the oil sector. It would give some credence to the BoC's optimism on the domestic economic outlook, even if its current neutral policy is predicated on headwinds from global trade tensions.
