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Good Morning: The Long & the Short of it and The Bigger Picture - 15 March 2019 - ADM ISI


Ostwald, Marc
08:33 (1 hour ago)

to Marc

- NZ atrocity casts long shadow; digesting Brexit votes, as expected
BOJ 'hold' and China Premier Li speech and property prices; looking
ahead to ECB Rehn speech, US Industrial Production, NY Fed and
Michigan Sentiment surveys, Canada Manufacturing Sales

- Brexit: prospect of and risks associated with lengthy Article 50
extension may just get May's Withdrawal Agreement over the line at the
third time of asking

- US Industrial Production: Utilities seen pacing rebound from Jan drop,
but manufacturing only seen eking out marginal recovery

- Morning Call audio file:



What a very sad world we live in, the barbaric atrocity that has happened in Christchuch, New Zealand is a reminder that there are no havens from the hate that is poisoning the world and humanity, my thoughts and prayers go out to the families of the many victims.

While the Brexit drama remains as 'work in progress', there will at least be some respite from the endless parliamentary voting, and the abject spectacle of a country mired in a profound and dysfunctional constitutional crisis. Elsewhere there are China Property Prices and EU Car Registrations to digest along with a BoJ policy meeting which saw no changes in policy parameters as expected. Ahead lie Polish CPI (seen ticking higher to 1.2% y/y from 0.9%, but still way below the NBP's 2.5% target), US Industrial Production, NY Fed Manufacturing survey, JOLTS Job Openings & prov. Michigan Sentiment, while Canada looks to Manufacturing Sales, with some central bank speak from ECB's Rehn and BoE's Held. Overall a relatively undemanding schedule, which puts the focus on next week's run of more Brexit votes ahead of the week ending EU summit, the FOMC meeting, a busy run of UK data (inflation, jobs, wages and Retail Sales), a glut of surveys including 'flash PMIs' and Canadian CPI & Retail Sales. On the Brexit front, what yesterday's votes once again underscore is that parliament continues to eschew any responsibility for the Brexit process. However the question remains what precisely PM May will have to offer as a rationale for the proposed extension to Article 50 when she goes to next week's summit, barring a still seemingly unlikely approval by parliament of the extant Withdrawal Agreement, when it is voted on for a third time next week. Our central scenario is that the noises from Brussels will be that they would prefer a much longer Article 50 extension (say 21 months?) and this may be just enough to persuade both the DUP and the ERG to back Mrs May's deal, primarily out of fear that a long extension might result in either a new referendum, or perhaps even a revocation of Article 50, which they would want to avoid at all costs.

** U.S.A. - Feb Industrial Production, March NY Fed Manufacturing **
- Industrial Production is predicted to bounce 0.4% m/m, after falling 0.6%, though much of this is expected to be paced by a weather related rise in Utilities output, with Manufacturing Output seen posting a dead cat 0.1% m/m gain after dropping 0.9% m/m in January. Survey evidence seems unlikely to be much of a guide, given that Output rose sharply in December, when the ISM Manufacturing Production sub-index dropped sharply, while rebounding above its November level, when official data posted that drop. As has oft been observed, the NY Fed survey is a rather poor proxy for national trends, but is expected to edge up to 10.0 from 8.8.