Trading with point and figure

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bulls need to keep it above 11900

 

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our line got dumped...tight t=stop

 

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whack

 

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and bounce

 

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Dow
bounce lookin a tad vulnerable

 

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scalps off our line

 

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dow over last 24 hours

 

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supp area marked

25293-25323 area

 

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Dow testing rez

 

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Good Morning: The Long & the Short of it and The Bigger Picture - 5 June 2019 - ADM ISI

Ostwald, Marc

08:50 (7 minutes ago)

to Marc

- Services PMIs dominate data schedule, US ADP Employment and Canada
Q1 Productivity also due; plenty of Fed and other central bank
speakers, Fed Beige Book, Putin-Xi meeting; politics and trade
still to the fore

- Services PMIs: Asia readings echo flash G7 readings signalling loss
of momentum, though underlying activity levels still reasonable;
downside risks for UK

- US ADP Employment; very average 185K expected, any strength likely to
be dismissed by markets as a 'lagging indicator'

- Powell speech signals greater Fed room for manoeuvre ... in either
direction, clearly focussed on tail risks; financial conditions
continue to argue against pre-emtive Fed move

- Audio preview
https://www.mixcloud.com/MOstwaldADM/adm-isi-morning-call-5-june-2019/

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

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

It's world Services PMIs/ISM day, with the overnight Australia Q1 GDP, UK New Car Registrations and US ADP Private Employment also on the statistical schedule. In event terms there are numerous central bank speakers, the Fed's Beige Book, while Poland's NBP is seen holding rates at 1.50%, where they have been since March 2015, and little reason to adjust rates near term given the uptick in headline CPI (though core remains very low), solid growth and record low Unemployment. Politics will remain the key influence, with an eye needing to be kept the meeting of the doyens of the SCO (Shanghai Cooperation Organisation) - Xi and Putin, as well as continued internal govt tensions in Italy, as well as latest threat of an EU move to sanction Italy fiscal policy.

** World - May Services PMIs **
- In some senses today's run of Services PMIs are perhaps more important than Monday's Manufacturing ones, purely by dint of the fact that in most countries (leaving aside UK and Italy), the Services sector still signals a reasonably solid pace of expansion, albeit clearly slower than in a number of cases. If as appeared to be the case with the G7 flash readings, there are signs that trade tensions and manufacturing sector woes are spreading to Services, this would obviously exacerbate global growth concerns. The Asia readings (China, India & to a lesser extent Japan) all point to a loss of momentum, and as flagged in the flash readings, Eurozone readings are likely to point in the same direction, with the very weak UK Manufacturing & Construction PMIs suggesting an already soft Services PMI in the UK may well miss forecasts of a marginal bounce to 50.6 from April's 50.4, while the US Non-Manufacturing ISM is seen edging down from a 20-month low of 55.5 in April and March's 56.1 to 55.4, not per se weak, but still well off the pace seen for most of the past 18 months.

** U.S.A. - May ADP Employment / Fed Beige Book / Powell **
- While this week's labour official labour report is expected to show that labour demand remains robust, while wage growth is solid at 3.2% y/y, but not indicating any major pressures from an ostensibly tight labour market, there is little doubt that the market mantra will be 'labour data are a lagging indicator'. Thus even if today's ADP Employment were to beat expectations of a very 'average' 175K, it is still unlikely to dent market rate expectations in any meaningful way. The Beige Book will be scrutinized for signals on how much trade tensions are starting to weigh on business and consumer sentiment, and follows an April Beige Book (https://www.federalreserve.gov/monetarypolicy/beigebook201904.htm ) which noted that the economy was growing at "a slight-to-moderate pace", which was expected to sustained "in the months ahead". It also noted that 'reports on consumer spending were mixed but suggested sluggish sales for both general retailers and auto dealers', while describing manufacturing activity as 'favorable' despite trade related uncertainty, and agricultural conditions as 'weak', to a large extent due to weather effects. The risks look to be to the downside, if the run of recent surveys is any guide. So what of Powell's speech, which markets have spun as 'dovish' thanks to the addition of the observation that "we will act as appropriate to sustain the expansion" (which actually operates in both directions in policy terms). The more notable aspect, and again all too easy for markets to spin in a dovish direction, was this run of observations:

"Today, central banks publicly share a large and ever-increasing amount of information about policy. But policymakers and commentators inside and outside central banks sometimes question whether all of the transparency adds up to effective communication. The FOMC's famous dot plot is one example. A focus on the median forecast amounts to emphasizing what the typical FOMC participant would do if things go as expected. But we have been living in times characterized by large, frequent, unexpected changes in the underlying structure of the economy. In this environment, the most important policy message may be about how the central bank will respond to the unexpected rather than what it will do if there are no surprises. Unfortunately, at times the dot plot has distracted attention from the more important topic of how the FOMC will react to unexpected economic developments. In times of high uncertainty, the median dot might best be thought of as the least unlikely outcome."

Per se the message from Powell is that he and the FOMC are very much focussed on tail risks for the economy and financial conditions, and in the latter respect, I would reiterate the point made yesterday, that in contrast to the 2007/2008 period, there are no signs of dislocation in financial markets, volatility has been largely confined to the bond market, and given that last week saw a record $19.9 Bln outflow from US ETFs, the sell-off in markets was very well contained. It should be added that if US rate differentials continue to narrow both with G7 countries and EM, then this is likely to put some pressure on the USD, and a weaker USD would in fact serve to loosen financial conditions. In other words, the Fed is not under the sort of pressure to react, or indeed act pre-emptively that is currently discounted by markets. That is not to say that the situation will not deteriorate, but rather that markets need to bear in mind that they are way ahead of the curve, and with more than $14.0 Trln of QE still floating around the world, current conditions are a far cry from 2007/08, and financial repression remains the everyday lived reality for fund managers and other investors.

 

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and dump

 

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bounce from our supp area into rez

 

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Mornin folks ☕ ☕ ☕ ☕ 💋 💋 💋 💋 💋 ⭐⭐⭐

 

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A quick look at Dax

 

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afreas to watch..if it dumps

 

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Dax over the last week