Trading with point and figure

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No break of uptrend ...as yet.....CARE

 

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Yazza really want to see 11950 as rez on the bounce

 

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change reversal to 3

 

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a quickie from our line

 

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Dax an uptrend keeling over ya just dont know at this point if its a new downtrend or a pullback

 

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Dow

 

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Dow in rez

 

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close up

 

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no signal to sell ...as yet

 

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comin off the boil

 

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our line became support

 

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ditto

 

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Dow
we really need that trendline as rez

 

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Dax updated

 

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Dow updated

 

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Good Morning: The Long & the Short of it and The Bigger Picture - 6 June 2019 - ADM ISI

Inbox

x

Ostwald, Marc

08:57 (20 minutes ago)

to Marc

- Digesting German Factory Orders, India rate cut, Fed Beige Book; looking
ahead to ECB meeting, final Eurozone GDP, US & Canada Trade Balance and
US weekly claims; some Fed speakers, St Petersburg Forum; French and
Spanish auctions

- Germany Orders: better than expected, but certainly not out of the woods

- India rates cut as expected, further cuts likely in H2, RBI moves to
improve transmission mechanism, focus shifting to fiscal measurs and
structural reforms

- Fed Beige Book something of a wake up call for overblown market rate
expectations

- ECB: focus on forecasts and TLTRO II details, rates guidance likely to
be unrevised

- South Africa: Current Account expected to add to gloom after very poor
Q1 GDP

- Audio preview
https://www.mixcloud.com/MOstwaldADM/adm-isi-morning-call-6-june-2019/

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

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

The ECB and India RBI policy meetings seem likely to take pride of place for today's proceedings, with a modest data schedule featuring German Factory Orders along with Trade data from Australia, Canada and USA, the latter also has weekly jobless claims and final Q1 Non-farm Productivity. Outside of the policy meetings, there are numerous central bank speakers (Kuroda and Carney warming the plate overnight for today's Fed speakers, while China's President Xi makes the keynote speech at the annual St Petersburg Forum, and Trump meets with Macron. Spain and France both hold multi-maturity govt bond sales. South Africa's Q1 Current Account is also due, and is expected to see a sharp deterioration to ZAR -149 Bln from Q4's slightly better than expected ZAR -110 Bln, above all in terms of the more meaningful Current Account a a % of GDP metric, which is seen at -3.3% vs. -2.2% in Q4, and follows the much sharper than expected GDP contraction of 3.2% q/q (vs. forecast -1.7%), which left the ZAR reeling. Overnight news on US/Mexico trade and migration issues was obviously not good, and for Mexico the added blow came via a Fitch ratings downgrade, and a ratings outlook downgrade from Moody's. Last but certainly not least China's PBOC CNY 500 Bn 1-yr liquidity injection (net addition 37 Bln) underlines that it does not expect that liquidity issues related to the collapse of Baoshang Bank will be resolved in any great hurry. Amid the rather overblown market expectations on Fed rates over the next year, yesterday's Fed Beige Book leaned quite heavily against the very gloomy Wall St narrative on the economy, encapsulated in the very first line of the report: "Economic activity expanded at a modest pace overall from April through mid-May, a slight improvement over the previous period. Almost all Districts reported some growth, and a few saw moderate gains in activity." See: https://www.federalreserve.gov/monetarypolicy/beigebook201906.htm

** Germany - April Factory Orders **
- The modestly better than expected (0.3% m/m vs. f'cast flat) reading for April, following from the upwardly revised 0.8% m/m, is certainly a welcome break from the barrage of bad news about the German manufacturing sector, and could possibly signal that the contraction is troughing. However, due to the very sharp contractions in January (-2.1%) and February (-4.0%), the 3-mth/3-mth trend rate continued to deteriorate to -4.4% from -4.1%, and per se underlines that it would be premature to suggest that a recovery may not be far off, above all given the weakness in sector surveys. Indeed if the BDI's (Germany Industry Federation) barrage of heavily critical comments about the Merkel govt's economic policies yesterday are anything to go by, then there is not a lot of 'light at the end of the tunnel'.

** Eurozone - ECB meeting **
- The ECB meeting will provide updates on its economic forecasts (March forecast summary here: https://www.ecb.europa.eu/pub/pdf/other/ecb.projections201903_ecbstaff~14271a62b5.en.pdf ) and is also expected to offer details on the new TLTRO programme, due to start in September. While recent French and Italian data have offered some welcome upside surprises, Germany and Italy continue to give plenty of reason for concern in terms of the growth outlook, and the picture on inflation offers no sign that a move up to the ECB's target of 'just below 2.0%' is a realistic prospect anytime soon, leaving the ECB with a quandary. Markets may be discounting the chance of a (totally meaningless) 10 bps rate cut by early 2020, but the ECB's guidance is not expected to be revised from no rate hikes before the end of 2019. But they will continue to emphasize that the risks to the outlook are clearly to the downside, above all due to external trade tensions. It seems likely that they will try and avoid any meaningful downward revisions to the staff forecasts, with the better Q1 GDP outturn and a new cyclical low for the Unemployment Rate (7.6%, still high, but not that far from the pre-GFC low of 7.0%), and doubtless argue that the May inflation fall was transitory due to Easter timing effects, to justify not responding in policy terms. The ECB's rhetoric has 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. It may also cite a new cyclical low for the Unemployment Rate (7.6%, still high but not that far from the pre-GFC low of 7.0%).

** India - RBI rate decision **
- As expected the RBI cut its key rates by 25 bps, and also shifted its policy stance from neutral to accommodative, which allied with its downward revisions to its growth forecasts, and the fact that CPI is expected to remain substantially below its 4.0% target will give it scope to cut rates further in H2. The move to set up a 'liquidity committee' is welcome, and one might say not before time, given that the monetary transmission mechanism is clearly not functioning well, and market liquidity continues to be heavily impaired. It underlines that while the RBI's rate cuts are intended to help boost investment in conjunction with current and future fiscal measures, it needs to do far more to ensure that these are passed on to the non-financial sector, even if one would have to add that the government needs to do a lot more to improve demand, above all in terms of still all too numerous structural headwinds.

 

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general veiw

 

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sellers in with na chance