Trading with point and figure

** Please note that there will be no updates next week due to holidays,
updates will gradually resume after the Easter break **

==================

- Trade tensions and politics riding roughshod over data and monetary
policy considerations; Americas dominate data calendar: US Durable, New
Home Sales; Canada CPI, Retail Sales; Mexico GDP, Brazil inflation; EU
leaders meeting, Russia rate decision and Fed speakers

- Russia rates: typical Nabiullina caution may restrict cut to 25 bps,
despite solid RUB, low CPI and soft Retail Sales

- US Durable Goods Orders: aircraft to lead bounce back from seemingly
anomalous January across the board drop; surveys suggest upside risk

- US New Home Sales: solid rebound seen after January slide, vindicated
by larger than expected Existing Home Sales bounce

- Canada CPI: seen around target on headline and core, NAFTA negotiations
more material to BoC rate outlook

- Charts: China US bilateral Trade, US Goods Imports from China by category,
VIX, S&P500 vs US 10 yr yield & Junk Bond ETF, US IG and HY bond OAS
spread, JPM EMBI spread
..........................................................................

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

So to end the week the schedule is very light on data and events in the UK and Europe, but rather busier in the Americas, where statistically there are US Durable Goods Orders & New Home Sales, Canadian CPI & Retail Sales, Brazil IPCA BGE inflation and Mexican monthly GDP. On the central bank front Russia's Bank Rossi holds a policy meeting, while in the US there are the first post-FOMC gaggle of Fed speakers. Politics and trade tensions will eminently continue to cast a long shadow, though the fear attaching theretofore appears to be deeply visceral (if understandable), and rather short on any form of rational identification of specifics. At least US Congress managed to pass the $1.3 Trln Spending Bill, thus kicking the debt ceiling problem into the long grass for six months, and as observed previously, perhaps allowing the US Treasury to ease up on its recently rapid build-up of its Cash balance at the US Federal Reserve, by extension a source of pressure on the LIBOR/OIS spread. That said, the spending hawks in Congress may make passing other legislation that much more difficult, as a consequence. Looking ahead to next week's Easter holiday shortened week, which kicks off with clocks moving forward in Europe, quarter end flows will likely be the dominant feature, with a relatively light data schedule seeing preliminary March national CPI data in the Eurozone, an array of surveys including US Consumer Confidence, along with US Personal Income / PCE and Pending Home Sales, Canada has monthly GDP, while Japan has Toyko CPI, Retail Sales and Industrial Production, and the UK looks the Index of Services and the latest monetary and credit aggregates. China also launches its INE Crude Oil futures on Monday 26th March (Blbg TK: SCPA <Cmdty>, Reuters Ticker ISCc1), which will be very closely watched, see https://www.reuters.com/article/us-...e-or-dazzle-for-foreign-traders-idUSKBN1GY0S1 and https://www.reuters.com/article/chi...i-oil-with-crude-futures-launch-idUSL3N1R32KY
for some 'explainers' via Reuters.

** Russia - Bank Rossi rate decision **
- For all the obvious geo-political tensions with Russia, these will have no influence on today's central bank rate decision, where a rate cut has been very heavily flagged, though it may turn out to be 50 bps rather than the anticipated 25 bps to 7.25%. That said, governor Nabiullina does by now have a very long track record of always erring on the side of caution. The argument for a 50 bps cut is strong, with February CPI at 2.2% y/y remaining very subdued and far below the 4.0% target, the RUB remaining strong, while Retail Sales were much weaker than expected at 1.8% y/y (vs. Jan 2.8%), and all the more surprising given that Real Wages (admittedly volatile) smashed forecasts of 6.0% y/y, coming in at 9.7%. That said the lack of any genuine credit impulse from changes in interest rates in Russia is also more than well documented, and while Nabiullina has made a lot of progress in cleaning up Russia's banking system, there is still a long road ahead. The latter point being underlined by talk of an additional $17 Bn (RUB 1.0 Trln) being pumped into prop up bank balance sheets, which could be more than easily realized by a modest liquidation of FX Reserves, which stood in Feb at $453.6 Bln vs. Dec 2017 $436.7 Bln and Dec 2016 $377.7 Bln.

** U.S.A. - Feb Durable Goods / New Home Sales **
- As the most recent (and strong) Industrial Production data and continued strength in Manufacturing surveys (e.g. yesterday's Markit Manufacturing PMI matching a 3-yr high of 55.7), January's unexpectedly sharp drop in headline (-3.6% m/m), and weak core Durable Goods Orders (ex-Transport & Non-Def. Cap Goods both -0.3% m/m) were probably an aberration. February's readings are projected to show a transport led rebound of 1.6% m/m in headline, with the ex-Transport measure seen at 0.5% m/m and the capex proxy that is Non-defence Cap Goods ex-Aircraft up by 0.9% m/m, and if those surveys are correct, then the risks may be to the upside. January's New Home Sales dive (-7.8% m/m) was even more emphatic than Existing Home Sales (-3.2%), and with the latter posting a better than expected 3.0% m/m rebound for February, today's Feb New Home Sales may beat the expected +4.0% m/m, though the often substantive revisions will as ever be the wild card.

** Canada - Feb CPI, January Retail Sales **
- It is debatable whether today's CPI and Retail Sales will prove to be little more than statistical roadkill for the CAD that has been on a largely NAFTA and trade tariffs roller coaster, aided and abetted by the BOC's rather fluid signalling (or lack thereof) on the rate trajectory. December's much weaker than expected Retail Sales (headline -0.8% m/m, ex-Auto -1.8% m/m) were one of a number of kicks in the teeth for the CAD, even if they were in truth peripheral to trade related concerns, with January readings seen rebounding 1.1% and 0.8% m/m respectively. Canada's CPI data is in very neutral territory, and forecasts assume a marginal uptick to 1.9% y/y for headline, with core measures likely to be at similar levels.


from Marc Ostwald
 
Dow in 50% area

se9078.png
 
You must log in or register to reply here.

Similar threads

Michael Carr
  • Article
Equities Technical Analysis Testing Point & Figure Patterns
Replies
0
Views
4K
T2W Bot
T2W Bot
S
Point&Figure
2
Replies
39
Views
7K
subarashi
S
M
Point and Figure
Replies
2
Views
1K
Dentalfloss
Dentalfloss
A
Point and Figure box size for commodities
Replies
4
Views
4K
TWI
TWI
William Rafter
  • Article
Technical Analysis Point & Figure Gone High Tech
Replies
18
Views
9K
GruntnoWay
G
Top