Trading with point and figure

Dentalfloss · Oct 24, 2019

Conundrum...Is the break above 12820 a fake.?

Dentalfloss · Oct 24, 2019

12880 first supp

Dentalfloss · Oct 24, 2019

Dentalfloss · Oct 24, 2019

were in

Dentalfloss · Oct 24, 2019

Dentalfloss · Oct 24, 2019

Squeeze

Dentalfloss · Oct 24, 2019

12820-12840 is decent supp area

Dentalfloss · Oct 24, 2019

Testing rez now

Dentalfloss · Oct 24, 2019

Good Morning: The Long & the Short of it and The Bigger Picture - 24 October 2019 - ADM ISI

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Ostwald, Marc

08:37 (15 minutes ago)

to Marc

- Much busier day for data, central banks and earnings; digesting Korea GDP,
Japan PMIs; awaiting Eurozone & US PMIs, US Durable Goods, Claims & New
Home Sales; Draghi ECB farewell accompanied by Riksbank, Norges Bank,
Bank Indonesia, Turkey TCMB & Ukraine NBU rate decisions; US 7-yr sale

- PMIs: marginal upticks expected in Eurozone, but risk upside following
France beat, US seen little changed

- US Durable Goods Orders: aircraft to continue to weigh on headline,
ex-Transport seen dipping after better than expected August, trend not
as depressed as ISM suggests

- ECB: Sept controversy and farewell likely to dominate press conference;
Schnabel nomination a signal of change under Lagarde?

- Norges Bank: likely to signal on hold for a protracted period, comments
on NOK weakness of interest

- Turkey: slightly less aggressive easing move as spread to real rates
narrows

- US money markets: NY Fed repo op increase underlines that tensions
clearly not dissipated

- Charts:
USD 3-mth FRA/OIS spread, Dec Euro$ vs. Jan Fed Funds Futures spread

- Audio preview:
https://www.mixcloud.com/MOstwaldADM/adm-isi-morning-call-24-october-2019/

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** EVENTS PREVIEW **
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If the first three days of the week have been something of a desert in terms of data and policy events, today's macro schedule looks to be something of a banquet, even if politics continues to be the prime source of directional moves or volatility spikes. G7 flash PMIs and US Durable Goods Orders top the data run, and follow on from the overnight provisional South Korea Q3 GDP, with US New Home Sales and KC Fed Manufacturing, along with Mexico's mid-month CPI and monthly GDP also due. On the central bank front Draghi's swansong as ECB tops a busy run of policy meetings, with no change seen in Norway and Sweden, but rate cuts expected in Turkey and Ukraine; BoE's Woods is the only notable speaker of the day. A bumper day for earnings has multiple points in terms of sector focus, with Daimler following on from Hyundai, Kia and Maruti Suzuki in Asia, with Europe also mulling over Astra Zeneca, BASF, Dassault, Equinor and STMicroelectronics, while the US will feature amongst others: 3M, Amazon, Capital One, Dow, Eastman Chemical, Intel, Northrop Grumann, Raytheon, Stanley Black & Decker, Twitter & Visa. The NY Fed's announcement yesterday that it will double the size of its daily repo operations to $120 Bln and increase the size of its term repo operations to 'at least $45 Bln serves as a reminder that the Fed is struggling to contain money market pressures, as can be seen in the two attached charts of the USD FRA/OIS spread (3-mth) and indeed the year end bridging spread between the Dec 2019 Euro$ and Jan 2020 Fed Funds contract - keep watching this space, money market bottlenecks will feed through into other asset classes, given that this determines the cost of financing the trillions of many margined derivative positions. NY Fed notice here: https://www.newyorkfed.org/markets/opolicy/operating_policy_191023

** G7 - October 'flash' PMIs **
- As is generally the case, forecasts see little change from the final September readings, with a marginal improvement seen in the Eurozone for both Manufacturing (46.0 vs. 45.7) and Services (51.9 vs. 51.6), while the respective US reading are seen at 50.9 from 51.1 and at 51.0 from 50.9. The slide in yesterday's French Manufacturing Confidence may prompt some to see some downside risks for the sector PMI, though it may have been playing 'catch-up' with last month's PMI drop, while a better than expected run of regional Fed surveys (most notably this week's Richmond Fed readings) impart a modest upside risk for the US PMIs, with the KC Fed also publishing its manufacturing survey today.

** U.S.A. - Durable Goods Orders **
- Durable Goods Orders are forecast to fall across the board - headline -0.6% m/m vs. Sep 0.2%, ex-Transport -0.1% vs. 0.5% and Non-defence Capital Goods ex-Aircraft Orders -0.1% vs. -0.4%, in principle echoing the Manufacturing ISM. Following solid gains in August, New Home Sales are expected to -0.8% m/m vs. August +7.0%.

** Eurozone - ECB meeting **
- Unsurprisingly no policy changes are expected with the focus on Draghi's final press conference as ECB president, following on from the controversy of the prior meeting's easing package. No new policy guidance will be signalled either given the handover to Lagarde, and the fact that the new round of QE is only just about to start. There will inevitably be a goodly volume of questions about the hefty divisions among ECB policymakers, but Draghi will doubtless pay lip service to many, and merely say that Lagarde and the council will continue to provide comprehensive guidance, and adjust and review policy as appropriate. There may also be some questions about OeNB's Holzmann's suggestion that the inflation target should be cut to 1.5% or perhaps lower, but again Draghi will inevitably underline that this will be up to Lagarde and the ECB council to decide once the review has been conducted. Indeed the most interesting development this week was the German government to nominate Isabel Schnabel to the ECB Counil to replace Lautenschlaeger. Schnabel has served on the govt economic advisory council of the 'Six Wise Men', and is notable for her ability to engage in debate, eschewing the very dogmatic German view of inflation and government debt. She may be replacing Lautenschlaeger, but in fact will be a more than worthy replacement for the always thoughtful Benoit Coeure, who also leaves the ECB shortly.

** Sweden & Norway - Riksbank & Norges Bank **
- The Riksbank (Sweden) and Norges Bank (Norway) rate meetings are expected to deliver no change in policy rates (-0.25% and 1.50% respectively), though there will likely be some changes to their forward guidance, above all in the case of Sweden, where recent leading economic data are pointing to a sharp slowdown in activity, even if Riksbank speakers have recently been at pains to 'bat' away recession talk, and the Swedish stats office has suggested the jump in the unemployment rate is 'suspect'. After a run of four rate hikes in just over a year, Norges Bank is seen reaffirming its September guidance that rates are unlikely to rise again any time soon, with incoming data broadly in line with its September forecasts, though a relatively sharp fall in the NOK above all against the EUR and SEK, as bullish NOK positions have been cut and prompted some hefty NOK outflows, eminently not helped by weak oil prices, does leave the central bank with something of a headache, even if it is generally at pains to emphasize that it does not target the NOK, or only in so far as sharp moves impact the inflation outlook.

** Turkey & Ukraine - TCMB & NBU rate decisions **
- Turkey's TCMB faces its perennial dilemma of facing off political pressure for further easing, which would to a large extent be justified by still high levels of 'real' interest rates, against the persistent threat from political woes to the Turkish Lira, but is expected to ease by a less aggressive 100 bps to 15.50%. Ukraine's NBU is seen cutting rates a further 50 bps to 16.0%, bringing it cumulative rate cut total to 400 bps. With inflation very subdued thanks to low energy prices, the UAH steady and agricultural output and exports very robust, and tensions with Russia ebbing somewhat, there remains scope for plenty more policy easing, with NBU governor Rozhkova confirming on the sidelines of the IMF/World Bank meeting that the NBU is looking to cut rates to 9.0% by the end of 2020, but adding the caveat that the pace of rate cuts remains uncertain due to internal and external risks, but clearly helped by low or easing policy rates in the developed world.

========================== ** THE DAY AHEAD ** ===========================

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** TODAY'S EVENTS **
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