Trading with point and figure

- Digesting Japan Trade, China House Prices and ECB speak, awaiting G20
and UK Davis/EU Barnier meetings, with market attention on Fed, BOE
EU leaders meeting, and raft of major UK data

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

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

The day's calendar is very light outside of the overnight largely as expected Japan Trade data, the BCC's upgrade to its UK GDP forecast (in truth merely catching up with the consensus), and the G-20 and EU Barnier / UK Davis meetings. The latter may well prove to be critical in deciding whether there will be a move to approve Brexit and transition arrangements at the end of week EU leaders' meeting. The former looks likely to be very long on bi- and multi-lateral tensions, and as such looks unlikely to deliver much of substance, outside perhaps of some initiatives on crypto-currency regulation. Thus Europe and North America are likely to see subdued trading volumes as markets focus on the array of event risks due later in the week (as outlined below).

RECAP: The Week Ahead - preview : 19 to 23 March 2018

- Central banks and politics are likely to be the dominant features of the week ahead, though it will also be a busy week for first division UK statistics, with a reasonable volume of US data. In political terms, the EU leaders' meeting will decide on whether to approve the more detailed UK Brexit deal and the transition agreement, Italy's parliament reconvenes and will starting voting on Speakers for the Camera (lower house) and Senate, the latter being critical given the Senate Speaker is the 'alternative' head of state, and the week kicks off with the G20 meeting in Argentina. Govt bond supply and corporate earnings are relatively meagre, with quarter end flows also moving into view as the week progresses.

- Statistically the UK has CPI, RPI, PPI, ONS House Prices, Unemployment, Average Weekly Earnings, Retail Sales and PSNB. The question is whether these prove to be subordinate to the BoE MPC and the EU leaders' meeting on Brexit. CPI is forecast to post a 0.5% m/m rise, which would see the y/y drop to 2.8% from 3.0%, while RPI is seen up 0.7% m/m, which implies a drop in the y/y rate to 3.7% from 4.0% - both still well above target, but markets will be focussed on the decelerating trend - with food, energy and recreation & culture all seen contributing to that deceleration. The counterpoint will be an expected modest pick-up in Average Hourly Earnings (headline and ex-bonus) to 2.6% y/y from 2.5%, still leaving real earnings in negative territory, though seemingly headed for positive territory, perhaps as early as Q2. Retail Sales are also due and are seen posting a 0.4% m/m rise after a modest 0.1% m/m rise in January, which fits well with the profile of the various retail/consumer spending surveys that point to a weak contribution to Q1 GDP from personal consumption. G7 'flash' Manufacturing and Services PMIs are projected to show a further loss of momentum in the Eurozone, though in absolute terms still point to a solid pace of expansion, while the equivalent US measures are seen marginally higher; Germany's Ifo survey is also expected to dip, but remain above the prior 2007 and 2010 cyclical highs. US New and Existing Home Sales are also due, with the latter still very much subject to supply headwinds. However it will likely be the ever volatile Durable Goods Orders which attract most attention, particularly after the strong rebound in Industrial Production. Japan's National CPI data are expected to eke out small gains, while Australia's labour data are projected to show a solid 20K in gain in Employment, though it will be the full time employment measure that is most closely watched after a sharp (but likely seasonal) 49.8K drop in January. Canada rounds off the week with CPI and Retail Sales.

- The much anticipated FOMC meeting will be the focal point in central bank terms, given that the BoE MPC meeting is a non-inflation report meeting, with policy seen on hold. A further 25 bps US Fed Funds target hike to 1.50/1.75% is fully discounted, with the focus in the first instance on the infamous 'dot plot', which is expected to see a 'hawkish' shift to anticipate four rate hikes in total for 2018 (previously three), though it is the projections for 2019 (Dec 2.4-3.1) & 2020 (2.6-31), and for the longer run rate (Dec 2.8-3.0), which could prove decisive in market reaction. That is in so far as a steeper near-term rate trajectory, but say no change to 2020 and the longer-term ('neutral') rate would perhaps be greeted with some relief. Eminently any changes to the array of economic projections will also require attention (Dec FOMC projections attached). Thereafter attention turns to Powell's first post FOMC press conference move to centre stage, particularly after his semi-annual testimony eschewed the rather academic and often cautious tone adopted by Yellen and Bernanke. Of particular interest will be observations on financial conditions and current asset price valuations, as well as responses to questions on trade tariffs, as well as another looming deadline (next Friday 23rd March) for Congress to pass a spending bill, again likely to be a stop gap. Given that the BoE meeting concludes before the end of the EU leaders meeting, the MPC will probably avoid pre-judging outcomes, while leaving the door ajar for a May rate hike. There is some speculation that one or other MPC member might vote for a rate hike, though due to the political uncertainties, discretion might prove to be the part of valour. New Zealand's RBNZ is unanimously anticipated to hold rates at 1.75%, and unlikely to signal anything that would lean against market expectations that rates will remain on hold throughout this year. That is also likely to be the clear message from their counterparts across the Tasman Sea at Australia's RBA, when the minutes of its March meeting are published. In the EM space 25 bps rate cuts are expected in Russia and Brazil to 7.25% and 6.50% respectively, with Russia's Bank Rossi having offered a very strong hint in that direction on Friday. Recent comments from Brazilian BCB governor Goldfajn noting that inflation is "heading up toward target", and that it was fortunate inflation was starting 2018 below target, rather than above, as the BCB might "have to react", does suggest there is good reason to doubt whether the expected rate hike will materialize. Elsewhere rates are expected to be held in Chile, Indonesia, Morocco, Nigeria and the Philippines, despite inflation remaining well above target and rising in the latter.

- The US trade tariffs are likely to be a major talking point at the G20 meeting, as will US efforts to constrain and push back on China's investment and trade policies, though it is debatable how much support it will find. Cryptocurrency regulation will also be a key talking point. Sunday's Russian presidential elections are unsurprisingly expected to deliver another victory for Putin and his Russia first party, with the key point of focus remaining the elevated tensions with the West from the 'nerve agent' attack in the UK. For all that there have been some optimistic noises, above all from the UK govt, that the EU leaders meeting will endorse an agreement on the Brexit arrangements and a transition agreement, much will depend on whether a number of areas of disagreement can be resolved on Monday when Brexit secretary Davis meets with EU's Barnier. These include the still thorny Irish Border issue, acceptable parameters for UK trade discussions with other countries during the transition, and the rights of citizens during transition. In respect of the Irish border, it is worth noting that a UK parliamentary report concluded that a 'soft' 'invisible' border was not possible (see: https://www.irishtimes.com/news/wor...rth-is-not-possible-uk-report-finds-1.3428736 ).
from Marc Ostwald
 
catch a falling knife is easy


dont catch it.ie predict support
look for the first rez ona bounce
then reassess
 
tricky this morning
was not ready for falling knife
also not ready for strong GBP

went quite well....no complaints
a bit nerve racking at times....lol
 
in supp now

1zz6g5s.png
 
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