Trading with point and figure

The Week Ahead - Preview: 23 to 27 April 2018

- It will be a busy week for statistics and surveys, above all in the US, Europe and Japan, while the ECB and BoJ policy meetings will top the central bank agenda. Both Merkel and Macron will be holding (separate) meetings with Trump, offering some distractions from the US/China trade tensions, the stand-off with Russia, Syria's tragedy, and the ostensible gridlock in forming a government in Italy. The US corporate earnings season gets into full gear, though there are a number of major companies reporting elsewhere. The US also tops the govt bond auction schedule, while Italy dominates Eurozone debt sales.

- Statistically the week is bifurcated between a deluge of survey to start the week, and a rash of key statistics in the second half of the week, above all advance Q1 GDP readings in Asia, Eurozone, UK and the USA, along with the end of month run of Japanese data, and French/Spanish provisional CPI. There is a rather familiar feel to forecasts for the 'flash PMIs' (Eurozone to edge down, US Manufacturing a tad weaker, Services steady), and Germany's Ifo (also seen lower), though the latter will look different with the previously separate Services Index now incorporated into the headline Business Climate (forecast 102.7 vs. March 103.2), while the UK has both CBI surveys. US Consumer Confidence is expected to drift down to 126.0 from March's 127.7 and a 17-yr high of 130.0 in February, as choppy equity markets, higher gasoline prices and modestly higher mortgage rates offset strong labour demand. Continued strength is seen in US Durables (headline 1.2% m/m, core 0.5%) and both Home Sales, but it will be the advance Q1 GDP reading which steals the show. The consensus looks for 2.0% SAAR headline with the Deflator little changed at 2.2%, while the core PCE Deflator is seen jumping to 2.5% from 1.9%, and Personal Consumption set to slow quite sharply (2.0%?) from Q4's 4.0%, with Net Exports set to deduct a further 0.7 ppts, but offset by a positive contribution from Business and Housing Investment, and indeed Inventories. The various regional Fed GDPnow Q1 estimates range from New York 2.9%, to Atlanta and St Louis both at 2.0%. It will be accompanied by the Q1 Employment Cost Index that is expected to edge back up to 0.7% from 0.6%. Meanwhile UK Q1 advance GDP is expected to be hit by bad weather effects and slowing Consumer Spending, easing to 0.3% q/q from 0.4% in Q4, but leaving the y/y rate unchanged at 1.4%, with the Index of Services seen 0.6%; PSNB budget data are also due. Across the Channel, there is likely to be considerable divergence, with Austria and Spain seen keeping pace with Q4 at 0.8% and 0.7% q/q respectively, but France set to slow to 0.4% from 0.7%, while Belgium should roughly match Q4's 0.5%; provisional Eurozone Q1 GDP is due on May 2. French and Spanish HICP are projected at an unchanged 1.7% y/y, and 1.2% y/y from 1.3% respectively, with German CPI due on 30 April. Over in Asia, Japan's April Tokyo CPI is seen holding at 0.8% and 0.5% y/y on core measures, but to dip to 0.8% on the headline metric, while Industrial Production is forecast to post 0.5% m/m rise after jumping 2.0% in February, though Retail Sales are projected to be flat m/m. Australian Q1 CPI is seen little changed vs Q4 on all measures, while South Korea's advance Q1 GDP should post a bounce from Q4's -0.2% q/q to 1.1%, but only edge up y/y to 2.9% , whereas Taiwan's provisional reading is seen slowing to 2.85% y/y.

- It would be tenuous to suggest that either the ECB or BoJ meetings are much anticipated, with both seen on hold and likely to stick to a near-term neutral view on policy. In terms of the ECB, markets will be hoping for some hints on whether QE will be halted at the end of Q3, or more likely tapered one last time in Q4; ECB speakers and sources have stressed that the uptick in inflation has been rather more tortuous than they had hoped, while at the same time stressing the need for the council to shift the parameters for its policy pronouncements away from liquidity measures, and rather more to rates. The expiry of the EUR 438 Bln total of LTROs on 26 September (https://www.ecb.europa.eu/mopo/implement/omo/html/index.en.html), and how and on what terms it is replaced, looks to be the key liquidity event at which it could offer some signals on its intentions, though no specific details on this will likely be offered until its June meeting. As for the BoJ, no changes in any policy parameters are anticipated, though its forecast update may push back modestly on when CPI gets to its 2.0% target. Sweden's Riksbank is also seen on hold, despite CPIF returning to its 2.0% target, with Ohlsson likely to remain a rather lonely hawk. Elsewhere Turkey's TCMB is expected to hike its Late Lending Rate by a further 100 bops to 13.75%, and is unlikely to be deterred by the now fading TRY recovery, while Hungary's MNB is likely to remain on hold, though deputy governor Nagy's comments last week on household lending being to sluggish does beg the question how the MNB might engineering an increase. The Rouble's sanctions related drop has put paid to prior expectations that Russia's Bank Rossi had room to cut rates further, even if the RUB's decline looks to have largely run its course, though still vulnerable to the threat of further measures, and by extension the central bank will be keen to keep a close eye on the short- to medium impact on inflation, which it now sees rising to its 4.0% target in fairly short order. Colombia's central bank is also expected to cut rates by a further 25 bps to 4.25%.

- Corporate Earnings are very plentiful in the US, with Monday bringing Alphabet (Google), Halliburton, Hasbro & Kimberly-Clark. The pace picks up on Tuesday, which sees 3M, Amgen, Caterpillar, Coca-Cola, Eli Lilly, Freeport-McMoRan, Harley-Davidson, Lockheed Martin, United Technologies & Verizon. Highlights for Wednesday include AMD, AT&T, Boeing, Dr Pepper, eBay, Facebook, Ford, General Dynamics, Hess, Northrop-Grumman, Twitter, Viacom & Visa. Thursday brings Altria, Amazon, ConocoPhillips, Domino's Pizza, DR Horton, Hershey, GM, Intel, KKR, Mattel, Microsoft, Newmont Mining, Pepsico, Raytheon, Starbucks, Time Warner, Union Pacific, UPS, Valero Energy and Western Digital. Friday concludes with Charter Comms, Chevron, Colgate-Palmolive, LyondellBasell Industries and Phillips 66.
Elsewhere Philips and UBS feature on Monday, Akzo Nobel, Banco Santander, Chubb , Iberdrola, Puma, SAP and Volvo on Tuesday. Wednesday has Credit Suisse, GlaxoSmithKline, Linde, Lloyds Banking, Nordea, Norsk Hydro, Statoil and Whitbread. Asia muscles in on Thursday with Bank of China, Nomura & Samsung, while Europe looks to Barclays, Deutsche Bank, Fiat Chrysler, KPN, Lufthansa, Nokia, Orange, Telefonica, Total & Volkswagen. Friday has Honda Motor and Sony, with the focus in Europe on Airbus, BBVA, Diamler, Eni, RBS and Sanofi.

- Govt bond supply is plentiful thanks to the US, which offers $116 Bln of 3, 6 & 1-yr bills and probably $45 Bln of 1-mth bills (t.b.c. Monday), to accompany $17 Bln of2-yr Treasury FRN and a total $81 bln of 2, 5 & 7-yr Treasury Notes. The UK has £750 Mln of 3-yr I-L Gilts, while the Eurozone is dominated by Italy with EUR 3.75 Bln of CTZs & BTPei, and as yet to be specified volume (ca EUR 6-7 Bln) of 3, 7 and long-dated BTPs. Belgium offers EUR 3.4 Bln of 6, 10, 30 & 40-yr OLOs, Germany EUR 4.0 Bln of 2-yr and Finland 1.0 Bln of 10-yr.


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

Marc Ostwald
Strategist
ADM Investor Services International
 
SPX into the open
its now in a supp area...will it hold
AAPl...earnings May1st/Iphone sales....rumour...lol

2dgte2b.png
 
from Marc Ostwald


- Modest data schedule to start the week, focus on G7 flash PMIs and
US Existing Home Sales; Macron / Trump meeting, ECB Coeure speech
also in view along with US Corporate Earnings

- Eurozone PMIs: France mixed but slightly better than forecast, Germany
and Eurozone seen dipping again; trade fears overriding anecdotal
evidence of strength (e.g. VDMA forecast upgrade)

- US PMIs: Manufacturing seen dipping form 3-yr high, Services expected
to be unchanged at solid level

- US Existing Home Sales: expected to sustain February, would probably
be higher if not for low levels of inventories

- Week Ahead: major data towards end of week, surveys dominate start,
ECB and BoJ meetings, deluge of US corporate earnings along with
US Treasury Bill and Note auctions

- Charts: US 10-yr Yield, WIT Oil Future, Asia Oil Demand & Singapore
Refinery Margins

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

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

The week gets off to a relatively quiet start in terms of statistics, with the focus on the run of G7 flash PMIs (Japan edging higher, supported by domestic new orders and despite a dip in export demand) ahead of US Exsiting Home Sales. In event terms, Macron heads for a meeting with Trump, while ECB's Coeure offers his perspective on Eurozone reforms, while the corporate earnings schedule has Alphabet (Google), Halliburton, Hasbro & Kimberly-Clark. The US Treasury market gets ready to take down a total of $229 Bln of Bills and bonds, and will likely fashion a further concession for the volume, with all eyes on whether that prompts a test and break of the psychologically important 3.0% level, though the 'pain trade' threshold for investors is probably around the 3.25%/3.30% level. There is a rather familiar feel to forecasts for the 'flash PMIs' (Eurozone readings to edge down, US Manufacturing a tad weaker after hitting a 3-yr high in March, Services seen steady), belying the usual level of agnositicism. The key question to be answered is how much this reflects fear over trade sanctions / wars, and the extent to which it is geneuinely reflective of a significant drop in actual Order flows, in so far as the PMIs are notoriously sensitive to psychological factors (as best exemplified by teh wild swings in the UK in the period immeditaly surrounding the Brexit referendum). In that respect, it is notable in terms of the German Manufacturing PMI that the German VDMA (Engineering trade association) has today raised its 2018 Output forecast to 5.0% y/y vs. prior 3.0%, suggesting that actual business levels are rather better than surveys imply.
As for US Existing Home Sales, these are expected to be little changed at a very robust 5.55 Mln SAAR pace, and would probably be rather stronger if it were not for the major headwinds posed by super low levels of inventories (just 3.4 months, just above the record low of 3.2 Mln seen in December).


RECAP: The Week Ahead - 23 to 27 April 2018

- It will be a busy week for statistics and surveys, above all in the US, Europe and Japan, while the ECB and BoJ policy meetings will top the central bank agenda. Both Merkel and Macron will be holding (separate) meetings with Trump, offering some distractions from the US/China trade tensions, the stand-off with Russia, Syria's tragedy, and the ostensible gridlock in forming a government in Italy. The US corporate earnings season gets into full gear, though there are a number of major companies reporting elsewhere. The US also tops the govt bond auction schedule, while Italy dominates Eurozone debt sales.

- Statistically the week is bifurcated between a deluge of survey to start the week, and a rash of key statistics in the second half of the week, above all advance Q1 GDP readings in Asia, Eurozone, UK and the USA, along with the end of month run of Japanese data, and French/Spanish provisional CPI. Germany's Ifo (also seen lower), though the latter will look different with the previously separate Services Index now incorporated into the headline Business Climate (forecast 102.7 vs. March 103.2), while the UK has both CBI surveys. US Consumer Confidence is expected to drift down to 126.0 from March's 127.7 and a 17-yr high of 130.0 in February, as choppy equity markets, higher gasoline prices and modestly higher mortgage rates offset strong labour demand. Continued strength is seen in US Durables (headline 1.2% m/m, core 0.5%) and both Home Sales, but it will be the advance Q1 GDP reading which steals the show. The consensus looks for 2.0% SAAR headline with the Deflator little changed at 2.2%, while the core PCE Deflator is seen jumping to 2.5% from 1.9%, and Personal Consumption set to slow quite sharply (2.0%?) from Q4's 4.0%, with Net Exports set to deduct a further 0.7 ppts, but offset by a positive contribution from Business and Housing Investment, and indeed Inventories. The various regional Fed GDPnow Q1 estimates range from New York 2.9%, to Atlanta and St Louis both at 2.0%. It will be accompanied by the Q1 Employment Cost Index that is expected to edge back up to 0.7% from 0.6%. Meanwhile UK Q1 advance GDP is expected to be hit by bad weather effects and slowing Consumer Spending, easing to 0.3% q/q from 0.4% in Q4, but leaving the y/y rate unchanged at 1.4%, with the Index of Services seen 0.6%; PSNB budget data are also due. Across the Channel, there is likely to be considerable divergence, with Austria and Spain seen keeping pace with Q4 at 0.8% and 0.7% q/q respectively, but France set to slow to 0.4% from 0.7%, while Belgium should roughly match Q4's 0.5%; provisional Eurozone Q1 GDP is due on May 2. French and Spanish HICP are projected at an unchanged 1.7% y/y, and 1.2% y/y from 1.3% respectively, with German CPI due on 30 April. Over in Asia, Japan's April Tokyo CPI is seen holding at 0.8% and 0.5% y/y on core measures, but to dip to 0.8% on the headline metric, while Industrial Production is forecast to post 0.5% m/m rise after jumping 2.0% in February, though Retail Sales are projected to be flat m/m. Australian Q1 CPI is seen little changed vs Q4 on all measures, while South Korea's advance Q1 GDP should post a bounce from Q4's -0.2% q/q to 1.1%, but only edge up y/y to 2.9% , whereas Taiwan's provisional reading is seen slowing to 2.85% y/y.

- Central banks: there are no scheduled Fed speakers due to the purdah period ahead of the May 1-2 FOMC meeting. It would be tenuous to suggest that either the ECB or BoJ meetings are much anticipated, with both seen on hold and likely to stick to a near-term neutral view on policy. In terms of the ECB, markets will be hoping for some hints on whether QE will be halted at the end of Q3, or more likely tapered one last time in Q4; ECB speakers and sources have stressed that the uptick in inflation has been rather more tortuous than they had hoped, while at the same time stressing the need for the council to shift the parameters for its policy pronouncements away from liquidity measures, and rather more to rates. The expiry of the EUR 438 Bln total of LTROs on 26 September (https://www.ecb.europa.eu/mopo/implement/omo/html/index.en.html), and how and on what terms it is replaced, looks to be the key liquidity at which it could offer some signals on its intentions, though no specific details on this will likely be offered until its June meeting. As for the BoJ, no changes in any policy parameters are anticipated, though its forecast update may push back modestly on when CPI gets to its 2.0% target. Sweden's Riksbank is also seen on hold, despite CPIF returning to its 2.0% target, with Ohlsson likely to remain a rather lonely hawk. Elsewhere Turkey's TCMB is expected to hike its Late Lending Rate by a further 100 bops to 13.75%, and is unlikely to be deterred by the now fading TRY recovery, while Hungary's MNB is likely to remain on hold, though deputy governor Nagy's comments last week on household lending being to sluggish does beg the question how the MNB might engineering an increase. The Rouble's sanctions related drop has put paid to prior expectations that Russia's Bank Rossi had room to cut rates further, even if the RUB's decline looks to have largely run its course, though still vulnerable to the threat of further measures, and by extension the central bank will be keen to keep a close eye on the short- to medium impact on inflation, which it now sees rising to its 4.0% target in fairly short order. Colombia's central bank is also expected to cut rates by a further 25 bps to 4.25%.

- Corporate Earnings are very plentiful in the US, with Monday bringing Alphabet (Google), Halliburton, Hasbro & Kimberly-Clark. The pace picks up on Tuesday, which sees 3M, Amgen, Caterpillar, Coca-Cola, Eli Lilly, Freeport-McMoRan, Harley-Davidson, Lockheed Martin, United Technologies & Verizon. Highlights for Wednesday include AMD, AT&T, Boeing, Dr Pepper, eBay, Facebook, Ford, General Dynamics, Hess, Northrop-Grumman, Twitter, Viacom & Visa. Thursday brings Altria, Amazon, ConocoPhillips, Domino's Pizza, DR Horton, Hershey, GM, Intel, KKR, Mattel, Microsoft, Newmont Mining, Pepsico, Raytheon, Starbucks, Time Warner, Union Pacific, UPS, Valero Energy and Western Digital. Friday concludes with Charter Communications, Chevron, Colgate-Palmolive, LyondellBasell Industries and Phillips 66.
Elsewhere Philips and UBS feature on Monday, Akzo Nobel, Banco Santander, Chubb , Iberdrola, Puma, SAP and Volvo on Tuesday. Wednesday has Credit Suisse, GlaxoSmithKline, Linde, Lloyds Banking, Nordea, Norsk Hydro, Statoil and Whitbread. Asia muscles in on Thursday with Bank of China, Nomura & Samsung, while Europe looks to Barclays, Deutsche Bank, Fiat Chrysler, KPN, Lufthansa, Nokia, Orange, Telefonica, Total & Volkswagen. Friday has Honda Motor and Sony, with the focus in Europe on Airbus, BBVA, Daimler, Eni, RBS and Sanofi.

- Govt bond supply is plentiful thanks to the US, which offers $116 Bln of 3, 6 & 12-mth bills and probably $15-20 Bln of 1-mth bills (t.b.c. Monday), to accompany $17 Bln of 2-yr Treasury FRN and a total $81 bln of 2, 5 & 7-yr Treasury Notes; that implies a gross Treasury issuance toal of $229 Bln. The UK has £750 Mln of 3-yr I-L Gilts, while the Eurozone is dominated by Italy with EUR 3.75 Bln of CTZs & BTPei, and as yet to be specified volume (ca EUR 6-7 Bln) of 3, 7 and long-dated BTPs. Belgium offers EUR 3.4 Bln of 6, 10, 30 & 40-yr OLOs, Germany EUR 4.0 Bln of 2-yr and Finland 1.0 Bln of 10-yr.
 
Hi Dentist!

I'm well thanks. Just slowly getting back to trading after a little while off.

How are you?
 
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