Trading with point and figure

Dax
an inkling of overbought
12620 is a pump or dump...testing it now

2yvjuhk.png
 
- Digesting Japan Trade data, US probes into China imports; awaiting UK
CPI/PPI, South Africa CPI, BoC rate decision and MPR, Fed Beige Book
and further rash of corporate earnings; Germany to sell 10-yr

- China RRR cut: clear signal that PBOC trying to offset deleveraging
and credit clampdown with offsetting measure to improve underlying
credit impulse

- UK CPI: Easter timing effects the wild card in expected no change
yr/yr rate; PPI seen underlining background pressures modest

- Bank of Canada: likely to stick to data / NAFTA dependent (non-)guidance;
direction of MPR forecast adjustments to call the tune for recently
firm CAD

- South Africa CPI: seen edging modestly higher, some pressure from price
hikes pre-empting VAT hike; petrol prices to drag one more time, but
reverse in April

- Charts: IIF Total Global Debt Growth; BoC rate probabilities, CAD TWI,
CAD 3-mth BA future, US/Canada 10 yr yield spread; HKD 3-mth HIBOR vs
US Fed Funds upper target; EUR/CHF; China 3 vs 10 yr yields; China New
Hog Farm Investment, China Pig Fed Prices and China Pig Farmers
'financial pain

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

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

The gamut of UK inflation data and the Bank of Canada policy meeting and accompanying Monetary Policy (MPR) report take top billing on today's macro' agenda, and are accompanied by the overnight Japan Trade, South African and New Zealand CPI, with US markets likely to be more sensitive to corporate earnings than the Fed's Beige Book. Companies reporting today include TSMC, Heineken and Temenos, with Wall Street eyeing Amex, Abbott Laboratories, Alcoa, Kinder Morgan and Morgan Stanley; meanwhile Germany holds a regular 10-yr Bund auction. There will inevitably be quite a lot of discussion after the unexpected (in timing terms) 100 bps cut in China PBoC's Reserve Requirement Ratio (to between 15 and 17% depending on the institution), though as discussed in yesterday's Q1 GDP & March activity data review, there is a very tricky path for the Chinese authorities' efforts to navigate in clamping down on debt and deleveraging, while at the same time not derailing the overall Credit impulse, particularly with fiscal stimulus being wound back. In truth, the PBOC (under new governor Yi Gang) is sticking to the policy reaction functions established under his predecessor, namely using rates to guide inflation, and Reserve Requirements to fine tune the availability and supply of credit, even if both have been effectively subordinated to fiscal policy in recent years (see also China 3yr/10 yr yield spread charts to see the positive impact of that RRR cut). Last but not last, the fact that the CHF is threatening to move back above its old 1.20 floor vs. the Euro would appear to be further proof of the current 'risk on' sentiment in markets, though it is more likely a function of flows out of the CHF from Russian oligarchs / interests - i.e. as ever another example of just much markets are currently fixated on flows, often with little macro justification.

** U.K. - March CPI, RPI & PPI **
- Yesterday's Average Weekly Earnings missed in headline terms at 2.8%, though the ex-bonus measure edged up as expected to 2.8%, and this in turn provides the context for today's CPI in terms of real wage trends. As previously noted, CPI is projected at 0.3% m/m, which would leave the y/y rate unchanged at 2.7%, and core CPI at an unchanged 2.5%. This could be construed as suggesting that the BoE needs to act now to sustain the recent downward momentum in inflation, but some care is required, in so far as data collection would have taken place in the week that fell two weeks ahead of the Easter holidays. Typically retailers hike prices in that week ahead of any bank holiday, largely for the purpose of being able to show steeper 'discounts' over the holiday 'sales' period; indeed with Easter falling very late in 2017 (April 16), timing effects may even result in an uptick. Though without sight of the April inflation data (not due until 23 May), it will be hard to make a judgement call. Airfares (likely to bump higher) may offer some insight into the extent of the Easter timing effects, while petrol prices should see a modest dip in m/m terms, but not as large as March 2017's -0.8% m/m. As for PPI, February's steep -1.1% m/m in Input Prices driven by Oil & Metals prices aided and abetted by a slightly firmer GBP is not expected to be repeated, above all thanks to modestly higher energy prices, with slightly adverse base effects expected to push the y/y rate up to 4.3% from 3.4%. But as Output Prices have demonstrated over the past year, the spillover from any pick-up in Inputs has been very muted, and headline Output PPI is seen up just 0.1% m/m, which would see the y/y rate dip to a subdued 2.3% from 2.6%. ONS House Prices continue to defy signals from other House Price measures and the RICS survey, and are expected to remain elevated 'and 'out of kilter' at 4.7% vs. January's 4.9%.

** South Africa - March CPI **
- After the recent slightly opportunistic 25 bps rate cut from the SARB to 6.50%, utilizing the beneficial effects of the ZAR strength bearing down on CPI during Q1, today's CPI are expected to some pressure on food and other prices (partly seasonal, and perhaps partly pre-empting the VAT hike) offset a drag from petrol prices (to be reversed in April). That said headline CPI is seen up 0.6% m/m and core 0.8%, which would leave y/y rates barely changed at 4.1% and 4.2% respectively, comfortably towards the lower end of the SARB's 3.0%-6.0% target range, though headed higher in coming months once the VAT hike is implemented. In truth, the outlook for the economy is, as the IMF suggested when it upgraded its 2018 (1.5% from 0.9%) and 2019 (1.7% from 1.6%) GDP forecasts yesterday, primarily contingent on what the new Ramaphosa govt delivers in the way of economic reforms.

** Canada - Bank of Canada rate decision and MPR **
- The Bank of Canada is seen holding its key policy rate at 1.25% when it meets this week, and indeed at the end of May, with a 25 bps hike to 1.50% seen in July, and a further hike to 1.75% by October. The BoC has underlined that the rate trajectory outlook remains fluid, being not only data dependent, but also on the outcome of NAFTA negotiations. February's core inflation uptick and rather better prospects for NAFTA renegotiations, though rather mixed signals on the property sector, may prompt some revisions to the accompanying Monetary Policy Report (MPR) forecasts, though Poloz and Wilkins are unlikely to stray far from the 'no specific guidance' on the policy outlook message that has been in place for some time.


from Marc Ostwald
 
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