Trading with point and figure

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A quick look at the Dax

 

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FTSE

 

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Gettin bought..a tad

 

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In rez

 

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supp holding...just

 

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sellers in with a chance

 

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Good Morning: The Long & the Short of it and The Bigger Picture - 27 May 2020 - ADM ISI

Inbox

x

Ostwald, Marc

08:33 (32 minutes ago)

to Marc

- Major day for key events and govt bond auctions, light day for data;
digesting French confidence surveys and China Industrial Profits;
awaiting EU Commission recovery fund proposals, Lagarde speech, Fed
Beige Book and Canada court ruling in Huawei CFO extradition case

- US/China tensions leaves CNY/CNH under pressure - chart

- France Confidence surveys rebound, but revisions raise the bar for
rebound even higher

- Charts: USD/CNY, USD/CNH, GSCI Commodity Price Index & US Consumer
Confidence Labour Differential

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

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

The events schedule dominates today's calendar, with little or no major data on offer, though there will again be plenty of govt bond supply, above all from Asia, and some central bank speakers. Aside from the ongoing US/China and China/India border tensions (which continue to pressure the CNY & CNH to test recent lows - see charts), there are: a) EU Commission proposal on the recovery fund to combat the economic effects of COVID-19; b) a speech by Lagarde following on from Villeroy's defiant comments over the weekend and on Monday on the ECB's policy options (even hinting at buying equities, and in effect trashing the 'capital key') & a 'sources' story suggesting the ECB is preparing for a scenario where the Bundesbank would be barred from participating in its PSPP QE programmes due to the Karslruhe ruling https://www.reuters.com/article/us-...-without-the-bundesbank-sources-idUSKBN2321M7 ); c) the Fed's Beige Book with some fresh insights into recovery expectations; and d) the British Colombia Supreme Court ruling on the extradition of Huawei CFO Meng. Markets will doubtless ignore any of the reality checks, in favour of heightened speculation about the Fed introducing / adding of 'yield curve control' at its June meeting, above all the implication that this would smother short to medium data rate volatility, and thereby offering an incentive for 'risk on' or carry trades. The fact that any benefits for the economy are at best marginal would be ignored, though for the Fed it should serve to optically ease financial conditions indices, even if in the current situation this does nothing to help businesses to survive in the current very hostile economic environment.

As part of that reality check, there have been the French INSEE confidence surveys, which did post a rebound, but from a far lower level (due to revisions) than previously reported, and prompting INSEE to revise down its projection for Q2 GDP to -20%. In optical percentage terms the simple point to bear in mind is this, this would imply a cumulative H1 contraction of -23.4%, and without making any assumptions about outturns in Q3 and Q4, this also would require a cumulative rebound of 30.5% to return to prior levels of GDP.

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

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In rez

 

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poss in mega rez