Dentalfloss
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Trading with point and figure
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Dentalfloss
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Dentalfloss
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Good Morning: The Long & the Short of it and The Bigger Picture - 10 July 2019 - ADM ISI
- Much busier day for data, but focus on Powell; digesting as expected
China CPI, lower than expected PPI; Australia Consumer Confidence fall,
as expected Norway core CPI; awaiting UK GDP and gamut of activity
indicators; FOMC Minutes, Bank of Canada rate decision and BoE speak;
US & Germany to sell 10-yr
- UK: GDP to rebound m/m, but slow q/q, other indicators to underline
Q2 GDP to be at best tepid; Non-Eu Trade deficit seen widening
- Powell/FOMC minutes: Powell faces major guidance challenge, likely to
stress domestic economy doing well, but plenty of risks from trade
tensions and weaker global growth; needs to mount robust defence of
Fed independence
- Bank of Canada: set to hold rates, likely to upgrade domestic outlook,
but highlight risks remain from trade tensions
- Audio preview:
https://www.mixcloud.com/MOstwaldADM/adm-isi-morning-call-10-july-2019/
- Attachments: Fed July 2019 Monetary Policy Report, UK Non-EU Trade
..........................................................................
********************
** EVENTS PREVIEW **
********************
And so markets get to the 'business part of the week' with a bumper pack of major data and the first of two days of much anticipated semi-annual testimony by Fed chair Powell to Congress. Statistically there are Chinese (Food price pressures remain, but non-food CPI pressures and PPI weak) and Norwegian CPI (core in line with forecasts) and PPI to digest, along with French (encouraging sharp rebound) and Italian Industrial Production, and ahead of the usual deluge of UK monthly activity data, while Brazil's IBGE IPCA inflation is the only major item for the Americas. Govt bond supply sees Germany and the US selling 10-yr; while the BoC rate decision, June FOMC minutes and some Fed and BoE speak also feature on the central bank schedule, with South Africa also looking to the parliamentary debate and vote on the Budget. But all of those face a high bar to distracting markets from the Powell testimony.
** U.K. - May GDP, Index of Services, Industrial Production & Trade Balance **
- Following on from the unsurprisingly poor BRC Retail Sales, attention turns to the array of business activity data headlined by May monthly GDP, which is projected at 0.3% m/m, but just 0.1% q/q in the 3 months to May, with the Index of Services seen expanding at a sluggish 0.1% m/m/ and q/q. As for the other sectors of the economy, Industrial Production (1.5% m/m) is expected to rebound from a sharp 2.7% m/m decline in April, while Construction Output is seen up just 0.1% m/m after -0.4% m/m in April, with the latest slide in the Construction PMI implying some downside risks. As has been well documented, the fall in the GBP has had no discernible impact on exports, and the goods deficit remains large, and is expected to remain so at £-12.55 Bln vs. April £-12.1 Bln. For the hardline Brexiteers, the fact remains that the non-EU Trade Balance on a rolling 12 month basis is close to its worst levels of the past 20 years - see attached report.
** U.S.A. - Powell testimony / June FOMC minutes **
- In principle, Powell's testimony and last Friday's Fed Monetary Policy Report should render the June FOMC minutes, even if the latter via way of the usual "all, many, some or a few" epithets, should offer some insight into the balance of opinions on the importance of the various risks to the economy (upside and down). Last week's monetary policy report (see attached PDF or go to: https://www.federalreserve.gov/publications/files/20190705_mprfullreport.pdf ) summarized the view on the economy as: "Most participants regarded the uncertainties around their forecasts for GDP growth, total inflation, and core inflation as broadly similar to the average of the past 20 years. About half of the participants viewed the level of uncertainty around their unemployment rate projections as being similar to the average of the past 20 years, and about the same number viewed uncertainty as higher. Participants’ assessments of risks to their outlooks for output growth and the unemployment rate shifted notably relative to their assessments in March. As a result, most participants viewed the risks for GDP growth as weighted to the downside and the risks for the unemployment rate as weighted to the upside. About half of participants viewed the risks to inflation as being broadly balanced, with a similar number viewing inflation risks as being weighted to the downside." In terms of the rate trajectory, it noted: "Nearly all participants lowered their projections for the appropriate level of the federal funds rate, relative to March, at some point in the forecast period. Although nearly half of the participants revised their projections for 2019 to levels 25 basis points or 50 basis points below the current level, the median projection for the federal funds rate for the end of 2019 was unchanged. The medians for the federal funds rate for 2020 and 2021 were 50 basis points and 25 basis points lower than in March, respectively." As observed yesterday, the challenge for Mr Powell is to find a way of deflating market rate cut expectations without prompting a sharp sell-off in equities, rates and credit - a challenge which one would have to observe is a rod that the FOMC has created to beat itself, which a little more circumspection might have avoided. There has of late, including Harker yesterday, been a number of Fed officials who have been at pains to emphasize that no July rate cut remains very much on the table. Also interest will be how stout a defence of the Fed's independence from political and other interference Mr Powell mounts, perhaps more so given the sacking of the Turkish central bank governor, and broader market discussions about politicians meddling in central bank policy formation (nothing new, but the volume on this is definitely louder at the moment).
** Canada - BoC rate decision **
- No change from the current 1.75% is expected today, nor at the early September meeting, and the odds on a Q4 rate cut no higher than a 1 in 5 chance, which given the run of solid activity, heightened inflation and in aggregate strong labour market data in recent weeks should come as no surprise. This is a forecast update meeting and there will be a press conference with Poloz and Wilkins thereafter, the question is how they phrase the balance of risks on the economic outlook: will they continue to stress the downside the risks from trade tensions and an overall weaker global economic outlook, which seems more than likely, but on the other hand, as noted above, the run of domestic data has improved quite markedly, and may prompt some modest upward tweaks to their forecasts, even if they retain a neutral accommodative stance, while not seeing a need for additional accommodation in the short-term, above all given above target inflation and a reasonable pace of wage growth."
| Inbox | x |
| 08:55 (18 minutes ago) |
|
- Much busier day for data, but focus on Powell; digesting as expected
China CPI, lower than expected PPI; Australia Consumer Confidence fall,
as expected Norway core CPI; awaiting UK GDP and gamut of activity
indicators; FOMC Minutes, Bank of Canada rate decision and BoE speak;
US & Germany to sell 10-yr
- UK: GDP to rebound m/m, but slow q/q, other indicators to underline
Q2 GDP to be at best tepid; Non-Eu Trade deficit seen widening
- Powell/FOMC minutes: Powell faces major guidance challenge, likely to
stress domestic economy doing well, but plenty of risks from trade
tensions and weaker global growth; needs to mount robust defence of
Fed independence
- Bank of Canada: set to hold rates, likely to upgrade domestic outlook,
but highlight risks remain from trade tensions
- Audio preview:
https://www.mixcloud.com/MOstwaldADM/adm-isi-morning-call-10-july-2019/
- Attachments: Fed July 2019 Monetary Policy Report, UK Non-EU Trade
..........................................................................
********************
** EVENTS PREVIEW **
********************
And so markets get to the 'business part of the week' with a bumper pack of major data and the first of two days of much anticipated semi-annual testimony by Fed chair Powell to Congress. Statistically there are Chinese (Food price pressures remain, but non-food CPI pressures and PPI weak) and Norwegian CPI (core in line with forecasts) and PPI to digest, along with French (encouraging sharp rebound) and Italian Industrial Production, and ahead of the usual deluge of UK monthly activity data, while Brazil's IBGE IPCA inflation is the only major item for the Americas. Govt bond supply sees Germany and the US selling 10-yr; while the BoC rate decision, June FOMC minutes and some Fed and BoE speak also feature on the central bank schedule, with South Africa also looking to the parliamentary debate and vote on the Budget. But all of those face a high bar to distracting markets from the Powell testimony.
** U.K. - May GDP, Index of Services, Industrial Production & Trade Balance **
- Following on from the unsurprisingly poor BRC Retail Sales, attention turns to the array of business activity data headlined by May monthly GDP, which is projected at 0.3% m/m, but just 0.1% q/q in the 3 months to May, with the Index of Services seen expanding at a sluggish 0.1% m/m/ and q/q. As for the other sectors of the economy, Industrial Production (1.5% m/m) is expected to rebound from a sharp 2.7% m/m decline in April, while Construction Output is seen up just 0.1% m/m after -0.4% m/m in April, with the latest slide in the Construction PMI implying some downside risks. As has been well documented, the fall in the GBP has had no discernible impact on exports, and the goods deficit remains large, and is expected to remain so at £-12.55 Bln vs. April £-12.1 Bln. For the hardline Brexiteers, the fact remains that the non-EU Trade Balance on a rolling 12 month basis is close to its worst levels of the past 20 years - see attached report.
** U.S.A. - Powell testimony / June FOMC minutes **
- In principle, Powell's testimony and last Friday's Fed Monetary Policy Report should render the June FOMC minutes, even if the latter via way of the usual "all, many, some or a few" epithets, should offer some insight into the balance of opinions on the importance of the various risks to the economy (upside and down). Last week's monetary policy report (see attached PDF or go to: https://www.federalreserve.gov/publications/files/20190705_mprfullreport.pdf ) summarized the view on the economy as: "Most participants regarded the uncertainties around their forecasts for GDP growth, total inflation, and core inflation as broadly similar to the average of the past 20 years. About half of the participants viewed the level of uncertainty around their unemployment rate projections as being similar to the average of the past 20 years, and about the same number viewed uncertainty as higher. Participants’ assessments of risks to their outlooks for output growth and the unemployment rate shifted notably relative to their assessments in March. As a result, most participants viewed the risks for GDP growth as weighted to the downside and the risks for the unemployment rate as weighted to the upside. About half of participants viewed the risks to inflation as being broadly balanced, with a similar number viewing inflation risks as being weighted to the downside." In terms of the rate trajectory, it noted: "Nearly all participants lowered their projections for the appropriate level of the federal funds rate, relative to March, at some point in the forecast period. Although nearly half of the participants revised their projections for 2019 to levels 25 basis points or 50 basis points below the current level, the median projection for the federal funds rate for the end of 2019 was unchanged. The medians for the federal funds rate for 2020 and 2021 were 50 basis points and 25 basis points lower than in March, respectively." As observed yesterday, the challenge for Mr Powell is to find a way of deflating market rate cut expectations without prompting a sharp sell-off in equities, rates and credit - a challenge which one would have to observe is a rod that the FOMC has created to beat itself, which a little more circumspection might have avoided. There has of late, including Harker yesterday, been a number of Fed officials who have been at pains to emphasize that no July rate cut remains very much on the table. Also interest will be how stout a defence of the Fed's independence from political and other interference Mr Powell mounts, perhaps more so given the sacking of the Turkish central bank governor, and broader market discussions about politicians meddling in central bank policy formation (nothing new, but the volume on this is definitely louder at the moment).
** Canada - BoC rate decision **
- No change from the current 1.75% is expected today, nor at the early September meeting, and the odds on a Q4 rate cut no higher than a 1 in 5 chance, which given the run of solid activity, heightened inflation and in aggregate strong labour market data in recent weeks should come as no surprise. This is a forecast update meeting and there will be a press conference with Poloz and Wilkins thereafter, the question is how they phrase the balance of risks on the economic outlook: will they continue to stress the downside the risks from trade tensions and an overall weaker global economic outlook, which seems more than likely, but on the other hand, as noted above, the run of domestic data has improved quite markedly, and may prompt some modest upward tweaks to their forecasts, even if they retain a neutral accommodative stance, while not seeing a need for additional accommodation in the short-term, above all given above target inflation and a reasonable pace of wage growth."
Dentalfloss
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DXY in supp
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Dentalfloss
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As we said 3K
Dentalfloss
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Dentalfloss
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Stops very tight
Dentalfloss
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Dentalfloss
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Out.. Not hanging around
Dentalfloss
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3K....and dump
Dentalfloss
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Dentalfloss
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SPX into FOMC
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DAX
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Dollar updated
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Bitcoin in supp.....will it hold.?
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OIL in a pivot area
Dentalfloss
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EURUSD in rez
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Will they trash the Dollar..?
