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Good Morning: The Long & the Short of it and The Bigger Picture - 16 July 2019 - ADM ISI


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Ostwald, Marc
08:24 (6 minutes ago)

to Marc





- UK and US data very plentiful - UK Labour data, US Retail Sales, Production
and NAHB survey - ZEW; many Fed speakers including Powell; banks top US corp
earnings run; UK 2037 auction; summer volumes in markets

- UK jobs: modest employment growth, Unemployment Rate to hold at multi-
decade low, Wage growth seen holding at higher level

- US Retail Sales: modest m/m growth expected, set to confirm solid pace
of Q2 Personal Consumption

- US Industrial Production: marginal gain seen, autos to prop
manufacturing output, but overall activity to remain restrained

- US NAHB Housing index: seen unchanged, some upside risks given fall
in mortgage rates

- Audio preview:
https://www.mixcloud.com/MOstwaldADM/adm-isi-morning-call-16-july-2019/

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

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

UK labour market and a bumper pack of major US activity data dominate the day's statistical schedule, with the rather fatuous German ZEW survey also due, as the as expected overnight NZ Q2 CPI are digested. Fed speakers including chair Powell are plentiful, with ECB's Villeroy opening the run of central bankers, while banks will continue to dominate the US corporate earnings run, with the focus on Goldman Sachs, JP Morgan and Wells Fargo, with Johnson & Johnson topping the run of non-financials reporting, while the UK auctions its 2037 Gilt. The ZEW Current Situation index is expected to make a new cyclical low at 5.0, just breaching March's low of 5.5, which is unsurprising given a continued run of downbeat official and survey data, while the Expectations index is seen fractionally lower at -22.00, just above 2018's lows of 24.7 posted in July & October, and mirroring a flat performance for the DAX over the 4 past weeks.

** U.K. - May/June labour data **
- Mar-May Employment is expected to have risen by a modest 45K (prior 32K), with the Unemployment seen holding at its five decade low of 3.8%, both of which would confirm that the labour market remains tight, even if labour demand is well off the pace seen in Q4 2018 & Q1 2019. On the wages front, headline Average Weekly Earnings are seen unchanged at 3.1% y/y, though the ex-Bonus measure is forecast to pick up to 3.5% from 3.4%, despite labour surveys suggesting some weakness in labour demand and wage settlements closer to 2.5%. As with most incoming UK data, it is difficult to apportion how much any weakness is actually attributable to Brexit related uncertainty, let alone offer any soundly reasoned view on the medium-term outlook.

** U.S.A. - June Retail Sales & Industrial Production and July NAHB survey **
- Retail Sales take pride of place in the busy run of US data, with the consensus looking for 0.2% m/m headline, which would imply a very respectable 3-mth annualized pace of 4.0% (assuming no revisions), and by extension a solid contribution from Personal Consumption to Q2 GDP. Core sales measures are also expected to remain buoyant - ex-autos & gas 0.4% m/m and 'control group' 0.3% m/m. The picture in the industrial sector is unsurprisingly expected to be at best muted, with Industrial Production forecast at +0.1% m/m, while Manufacturing Output is projected to rise 0.3% m/m, following May & June readings of 0.2% and -0.5%. Last but not least, the NAHB survey is forecast to be unchanged at 64, though there is perhaps some upside risk given the fall in mortgage rates. Import Prices, Business Inventories & TIC Portfolio Flows are also due, but appear unlikely to distract market attention away from the aforementioned "first division" data.
 
Wow - what is next?

Maybe a ‘stay in your car and give me your shopping list mate, I will nip round and grab it for you’.... like a spin on home delivery, but you drive to the car park...

They carry you to the car.... Excellent service at Waitrose
 
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