Trading with point and figure

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Ya needs to see that trendline as rez

 

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testing support

 

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DAX into the open

 

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rejigged the fib a tad

 

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our lines workin a treat

 

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in our 12557 area..poss supp

 

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out

 

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Good Morning: The Long & the Short of it and The Bigger Picture - 25 July 2019 - ADM ISI

Ostwald, Marc

08:50 (20 minutes ago)

to Marc

- ECB meeting in focus on busier day for data: Germany Ifo, UK CBI
Retailing and US Durable Orders, Goods Trade Balance, Wholesale
Inventories, Jobless Claims & KC Fed Manufacturing; Turkey rate
decision and very busy run of corporate earnings; US sells 7-yr

- Ifo: 'whisper' estimate to the downside of consensus following Mfg PMI,
Construction likely to be key balancing item

- ECB expected to lay out "stimulus" plans, perhaps deliver depo rate cut,
hint at QE restart in Q4

- Turkey: TCMB seen cutting fairly aggressively, delicate balance between
'pleasing' Erdogan, and leaving TRY hostage to fortune

- US Durables: aircraft orders seen recovering, core measures expected to
scratch out modest rise; Shipments in focus ahead of tomorrow's Q2 GDP

- Audio preview:
https://www.mixcloud.com/MOstwaldADM/adm-isi-morning-call-25-july-2019/

- Charts/Tables: Turkish Lira/USD spot; ECB & Fed rate probabilities

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

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

If the first three days of the week were thin on major data and events, today swings the pendulum to the other end of the scale. The ECB meeting takes pride of place, as to an extent does the Turkish TCMB meetings. Statistically Tthere is the South Korea provisional Q2 GDP to digest ahead of the German Ifo and UK CBI Retailing surveys, while the US has Durable Goods, advance Goods Trade Balance, weekly jobless claims, Wholesale Inventories and the KC Fed Manufacturing survey, andBrazil will also release its Current Account. In terms of earnings, Europe has rather more in the way of heavyweights reporting than the USA, following on from Nissan and Tata Motors in Asia. For Europe: highlights include AngloAmerican, Anheuser InBev, AstraZaneca, BASF, Carrefour, Diageo, Equinor, JC Decaux, Nokia, Orange, Roche, Saint-Gobain, STMicroelectronices, Telefonica, Total, Unilever, Vivendi & Volkswagen. In the US: 3M. Alphabet, Amazon.com, Hershey, Intel, Raytheon. Starbucks, with Mexico's Cemex also due. Rounding off this week's funding exercise, the US sells $32 Bln of 7-yr.

** Germany - July Ifo Business Climate **
- Yesterday's Manufacturing PMI made for desultory reading, with a fresh cyclical low at 43.1 after edging up to 45.0 in June, though Services continued to show no sign of contagion at a very robust 55.4. Interestingly the VDMA (Federation of machinery manufacturers) noted this week that while external demand was very poor, there was no spillover into employment, with most members still complaining of chronic skills shortages. Be that as it may, risks will be seen as skewed to the downside of a projected slip to 97.2 headline (June 97.4), with the Construction sector likely to be the key balancing item between Services strength and the Manufacturing recession. Anecdotal evidence suggests a sharp slowdown in Construction after a protracted period of strength. Any acute weakness will only serve to amplify expectations about the ECB meeting. That said it should be more than crystal clear to the federal government that it needs to take immediate fiscal action to boost the economy, even if pigs flying looks a more likely outcome under this economically completely misguided Merkel govt, which has to bear much of the blame for the current weakness.

** Eurozone - ECB council meeting **
- The run of surveys this week offer plenty of grounds for the ECB to argue that the downside economic risks it has warned about are crystalizing, and therefore it is / will be taking action as it previously suggested.. The question is what action, particularly as this is not a staff forecast update meeting? The consensus is, at the very least, looking for a clear signal that it will be cutting rates in September (e.g. by adjusting the statement (June version: https://www.ecb.europa.eu/press/pr/date/2019/html/ecb.mp190606~1876cad9a5.en.html to say that rates will remain at current levels OR LOWER), and perhaps a hint of restarting its QE programme, with some speculating that it might even cut rates 10 bps at this meeting (38% probability, see attached). Some further specifics on the TLTRO3 are likely, and there is a good deal of speculation about how it might 'tier' the deposit rate to 'mitigate' the impact on banks' net interest margins (as the SNB has done, though that task is more complex for the ECB). As previously observed, precisely what the economic benefit of a series of 'salami' style rate cuts, or even more QE would be (the speculation following the Spiegel article currently favouring November as a start date) appears to be the talking point that markets are totally oblivious to. One can certainly expect Draghi to emphasize that the onus cannot fall on the ECB alone, and that governments need to implement much more in the way of structural reforms, and where fiscally viable increase spending (yes, that means you, Germany... and not you, Italy). But that refrain has been peddled by Draghi, Trichet and Duisenberg for 20 years, and the results of government inaction are all too evident. Nevertheless it was interesting to note the comments from UBS CEO Ermotti earlier in the week: “I am not sure going deeper into negative territory or using QE is the way to get out of the problem. Cutting rates to infinity hasn’t proven to be the solution. Need more structural solutions. It’s for the politicians.”

** Turkey - TCMB rate decision **
- After Erdogan ousted the previous TCMB governor for not cutting rates, the new incumbent is expected to bow to that political pressure, having indicated in his first speech that rates would from now on be set based on 'real' rates. Given that June CPI fell dramatically to 15.7% y/y and core CPI to 14.9% y/y, the market seems to be being a little conservative in looking for a 250 bps rate cut to 21.50%, and something of the order of 300-400 bps looks to be rather more probable. However the TCMB will be aware that a much sharper than expected cut could well put the TRY under renewed pressure, even if the ‘reach for yield’ that is evident at the current juncture is of epic proportions. The TRY also remains vulnerable to any sanctions that the US might impose related to Turkey's purchase of Russian S400 missiles, and indeed the continued failure to find a way to deal with the high level of NPLs at Turkey's banks.

** U.S.A. - June Durable Goods Orders / advance Goods Trade Balance **
- Durable Goods Orders are released ahead of GDP, with the shipments component perhaps prompting some last minute GDP forecast adjustments, along with the advance Goods Trade Balance. Be that as it may Orders are seen rebounding 0.8% m/m after an aircraft driven -1.3% m/m in May, while the ex-Transport and Non-defence Capital Goods ex-Aircraft measures are projected to rise 0.2%, after rising 0.4% and 0.5% m/m in May. The advance Goods Trade deficit is seen narrowing to $-72.4 Bln from May's auto imports bloated $-74.5 Bln, serving as a reminder of the pain being felt in the Agri sector by trade tensions with China (and exacerbated by the run of very bad weather), as well as the fact that while energy component of the deficit has improved markedly, the non-energy deficit has widened.

 

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should be in supp

 

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excellent stuff

 

[inzimam]

Bigger fall than i saw coming...whats the next s upport on dax?

 

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Mornin folks ☕ ☕ ☕ ☕ ☕ ☕ 🤞🤞🤞🤞🤪🤪🤪

 

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That was a hot one ..yesterday