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maybe
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needs to stay above the line on pullback
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gettin there
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Dax in support
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yes sir
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out
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got negative about 30 mins ago
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DAX gone negative about 3 hours ago
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FTSE more resilient
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Good Morning: The Long & the Short of it and The Bigger Picture - 7 March 2019 - ADM ISI
Inbox
x
Ostwald, Marc
09:01 (1 hour ago)
to Marc
- ECB meeting in focus on ostensibly busy day for data: digesting Fed Beige
Book, mixed Australia Trade and Retail Sales, awaiting China FX reserves,
US Claims, Consumer Credit, Mexico CPI & Fed's Brainard; auctions in
France & Spain
- Fed Beige Book highlights manufacturing drag on activity, but also
broad based though still quite modest wage pressures
- US: KC Fed paper hints at fairly swift end to Fed balance sheet
programme, though Williams comments suggest later rather than sooner
- ECB set to cut forecasts for growth and inflation, offer rationale
for new round of TLTROs, but divisions on council may delay details,
and perhaps postpone rates guidance revision (push back)
- US Trade data: over excited commentary on wide deficit rather myopic,
given much of data already published (therefore median forecast poor)
- Morning Call audio file:
https://www.mixcloud.com/MOstwaldAD...-7-march-2019-daily-macro-and-market-preview/
..........................................................................
********************
** EVENTS PREVIEW **
********************
A much busier schedule of data awaits, even if the majority of it is either final readings or unlikely to be that markets sensitive, with pride of place going to the ECB council meeting and press conference. Statistically there are the Australian Retail Sales and Trade data to digest, while ahead lies South Africa's Current Account, US weekly jobless claims, Consumer Credit and final Q4 Non-farm Productivity, and Mexican CPI, while tonight sees revised Q4 GDP in Japan along with monthly current account. Outside of the ECB. Peru's central bank also holds a policy meeting, with Riksbank's Ingves and Fed's Brainard topping the central bank speaker list, while France and Spain both hold multi-maturity govt bond auctions. The overarching themes are very clear - Brexit, US/China trade talks progress and the threat of US Auto tariffs, the latter implying that US/EU trade tensions are a rather larger cloud than the bilateral trade relationship with China.
** Eurozone - ECB council meeting **
- While policy rates are seen on hold, the key questions for today's meeting are how the ECB tweaks its balance of risks on the economy, and the extent to which it revises its forecasts. The OECD forecasts yesterday were fairly drastic (Eurozone 2019 1.0% y/y vs. prior 1.8%), and the latest CPI data (Headline 1.4% y/y, core 1.0% y/y) and imply a substantial reduction relative to ECB December staff projections of 2019 for GDP of 1.7%, and 2019 CPI of 1.7% and core CPI 1.4%. As such the forecast reduction should allow the ECB to announce a new round of 'targeted' LTROs, the big question being how it will tweak the terms so that it is not locked into a rate regime that constricts its room for manoeuvre in the medium-term, and it may well be that the exact details are not announced today, but rather at the April or June meeting. By extension, it would seem likely that it should also push back on its guidance on an initial rate hike, currently 'no sooner than H2 2019, though the chatter emanating from the usual 'ECB sources' suggests that the council is quite deeply divided on this topic, with the hawks probably wanting to postpone any decision on a change in guidance to April, possibly even June. As such there is some risk that the message from today's meeting will be rather confused, and disappointed.
In terms of the Fed's Beige Book https://www.federalreserve.gov/monetarypolicy/beigebook201903.htm , there has been a clear loss of momentum in economic activity with 'ten Districts reporting slight-to-moderate growth, and Philadelphia and St. Louis reporting flat economic conditions', though primarily in the manufacturing sector, where Trump's trade wars and the weakness in China and the Eurozone the key driver, while services activity was described as increasing at ' at a modest-to-moderate pace in most Districts, driven in part by growth in the professional, scientific, and technical services sub-sector." Inflation continues to be well contained: prices continued to increase at a modest-to-moderate pace, with several Districts noting faster growth for input prices than selling prices." But with the monthly labour report looming in the headlights, it is worth noting that "Wages continued to increase for both low- and high-skilled positions across the nation, and a majority of Districts reported moderately higher wages. In addition, contacts in about half of the Districts noted rising non-wage forms of employee compensation, including bonuses, relocation assistance, vacation time, and flexible work arrangements." Comments from Williams yesterday emphasized that given the pace of activity and subdued inflation, and the array of uncertainties, and despite a tight labour market, the current level of rates is neutral, and this is in effect the 'new normal', even if it presents a policy challenge in the event that the Fed needs to provide stimulus in the event of a downturn. It is also worth noting that there is a new KC Fed paper which notes that the Fed (as we know) if "considering when to stop reducing bank reserves and start building up its balance sheet again". Interestingly the paper pegs the likely level of bank reserves held at the Fed once the QT programme at $1.5 Trln, well above the $1.0-1.2 Trln level suggested by NY Fed's Williams, who indeed observed yesterday that he thought that this was rather too high. Be that as it may, the implication that QT could end in quite short order is worth bearing in mind.
As for the rest of the overnight news, there is still zero progress on solving the Irish border backstop issue as the 'meaningful vote' in parliament looms next Tuesday, with the UK govt cabinet already talking about a third vote, given another hefty defeat for May's withdrawal agreement seems likely .. at the current juncture. Australian data was mixed, with buoyant trade data more than offset by another set of weak Retail Sales, which confirmed that the prior month's pick-up was nothing more than a blip, and thus reinforcing market expectations of an RBA rate cut sometime in Q2 or Q3. There will probably be some disappointment that the China CNPC conference confirmed that the fiscal stimulus will be constrained and very much targeted at SMEs and the manufacturing sector. Last but not least, I have to confess to the furore around yesterday's US Trade data, given that the worse than expected outturn was primarily a function of bad forecasting, given that the bulk of the data was already published in the provisional Goods Trade Balance and preliminary Q4 GDP data. To be sure, it will make us all wary of Trump resorting to unilateral action on trade, and it does highlight that his initiatives on trade are not working (they were always going to provide more pain than gain), but this was still not fresh news.
Inbox
x
Ostwald, Marc
09:01 (1 hour ago)
to Marc
- ECB meeting in focus on ostensibly busy day for data: digesting Fed Beige
Book, mixed Australia Trade and Retail Sales, awaiting China FX reserves,
US Claims, Consumer Credit, Mexico CPI & Fed's Brainard; auctions in
France & Spain
- Fed Beige Book highlights manufacturing drag on activity, but also
broad based though still quite modest wage pressures
- US: KC Fed paper hints at fairly swift end to Fed balance sheet
programme, though Williams comments suggest later rather than sooner
- ECB set to cut forecasts for growth and inflation, offer rationale
for new round of TLTROs, but divisions on council may delay details,
and perhaps postpone rates guidance revision (push back)
- US Trade data: over excited commentary on wide deficit rather myopic,
given much of data already published (therefore median forecast poor)
- Morning Call audio file:
https://www.mixcloud.com/MOstwaldAD...-7-march-2019-daily-macro-and-market-preview/
..........................................................................
********************
** EVENTS PREVIEW **
********************
A much busier schedule of data awaits, even if the majority of it is either final readings or unlikely to be that markets sensitive, with pride of place going to the ECB council meeting and press conference. Statistically there are the Australian Retail Sales and Trade data to digest, while ahead lies South Africa's Current Account, US weekly jobless claims, Consumer Credit and final Q4 Non-farm Productivity, and Mexican CPI, while tonight sees revised Q4 GDP in Japan along with monthly current account. Outside of the ECB. Peru's central bank also holds a policy meeting, with Riksbank's Ingves and Fed's Brainard topping the central bank speaker list, while France and Spain both hold multi-maturity govt bond auctions. The overarching themes are very clear - Brexit, US/China trade talks progress and the threat of US Auto tariffs, the latter implying that US/EU trade tensions are a rather larger cloud than the bilateral trade relationship with China.
** Eurozone - ECB council meeting **
- While policy rates are seen on hold, the key questions for today's meeting are how the ECB tweaks its balance of risks on the economy, and the extent to which it revises its forecasts. The OECD forecasts yesterday were fairly drastic (Eurozone 2019 1.0% y/y vs. prior 1.8%), and the latest CPI data (Headline 1.4% y/y, core 1.0% y/y) and imply a substantial reduction relative to ECB December staff projections of 2019 for GDP of 1.7%, and 2019 CPI of 1.7% and core CPI 1.4%. As such the forecast reduction should allow the ECB to announce a new round of 'targeted' LTROs, the big question being how it will tweak the terms so that it is not locked into a rate regime that constricts its room for manoeuvre in the medium-term, and it may well be that the exact details are not announced today, but rather at the April or June meeting. By extension, it would seem likely that it should also push back on its guidance on an initial rate hike, currently 'no sooner than H2 2019, though the chatter emanating from the usual 'ECB sources' suggests that the council is quite deeply divided on this topic, with the hawks probably wanting to postpone any decision on a change in guidance to April, possibly even June. As such there is some risk that the message from today's meeting will be rather confused, and disappointed.
In terms of the Fed's Beige Book https://www.federalreserve.gov/monetarypolicy/beigebook201903.htm , there has been a clear loss of momentum in economic activity with 'ten Districts reporting slight-to-moderate growth, and Philadelphia and St. Louis reporting flat economic conditions', though primarily in the manufacturing sector, where Trump's trade wars and the weakness in China and the Eurozone the key driver, while services activity was described as increasing at ' at a modest-to-moderate pace in most Districts, driven in part by growth in the professional, scientific, and technical services sub-sector." Inflation continues to be well contained: prices continued to increase at a modest-to-moderate pace, with several Districts noting faster growth for input prices than selling prices." But with the monthly labour report looming in the headlights, it is worth noting that "Wages continued to increase for both low- and high-skilled positions across the nation, and a majority of Districts reported moderately higher wages. In addition, contacts in about half of the Districts noted rising non-wage forms of employee compensation, including bonuses, relocation assistance, vacation time, and flexible work arrangements." Comments from Williams yesterday emphasized that given the pace of activity and subdued inflation, and the array of uncertainties, and despite a tight labour market, the current level of rates is neutral, and this is in effect the 'new normal', even if it presents a policy challenge in the event that the Fed needs to provide stimulus in the event of a downturn. It is also worth noting that there is a new KC Fed paper which notes that the Fed (as we know) if "considering when to stop reducing bank reserves and start building up its balance sheet again". Interestingly the paper pegs the likely level of bank reserves held at the Fed once the QT programme at $1.5 Trln, well above the $1.0-1.2 Trln level suggested by NY Fed's Williams, who indeed observed yesterday that he thought that this was rather too high. Be that as it may, the implication that QT could end in quite short order is worth bearing in mind.
As for the rest of the overnight news, there is still zero progress on solving the Irish border backstop issue as the 'meaningful vote' in parliament looms next Tuesday, with the UK govt cabinet already talking about a third vote, given another hefty defeat for May's withdrawal agreement seems likely .. at the current juncture. Australian data was mixed, with buoyant trade data more than offset by another set of weak Retail Sales, which confirmed that the prior month's pick-up was nothing more than a blip, and thus reinforcing market expectations of an RBA rate cut sometime in Q2 or Q3. There will probably be some disappointment that the China CNPC conference confirmed that the fiscal stimulus will be constrained and very much targeted at SMEs and the manufacturing sector. Last but not least, I have to confess to the furore around yesterday's US Trade data, given that the worse than expected outturn was primarily a function of bad forecasting, given that the bulk of the data was already published in the provisional Goods Trade Balance and preliminary Q4 GDP data. To be sure, it will make us all wary of Trump resorting to unilateral action on trade, and it does highlight that his initiatives on trade are not working (they were always going to provide more pain than gain), but this was still not fresh news.
Dentalfloss
Legendary member
- Messages
- 63,404
- Likes
- 3,726
Dentalfloss
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- Messages
- 63,404
- Likes
- 3,726
kinto our 25700 rez area
