Trading with point and figure

Dentalfloss · Jun 4, 2019

Dow in rez

Dentalfloss · Jun 4, 2019

stops tight

Dentalfloss · Jun 4, 2019

support.?

Dentalfloss · Jun 4, 2019

test the bears ..??

Dentalfloss · Jun 4, 2019

lookin like dollar could get bought
could be wrong

Dentalfloss · Jun 4, 2019

lined up

Dentalfloss · Jun 4, 2019

a few taken

Dentalfloss · Jun 4, 2019

Dentalfloss · Jun 4, 2019

Dax

Dentalfloss · Jun 4, 2019

Dentalfloss · Jun 4, 2019

Good Morning: The Long & the Short of it and The Bigger Picture - 4 June 2019 - ADM ISI

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Ostwald, Marc

08:44 (16 minutes ago)

to Marc

- Digesting expected RBA rate cut, soft Korea data, UK BRC sales slide,
awaiting Eurozone CPI and US Factory Orders; trade and politics to the
fore, as Italian coalition teeters on the brink of collapse; bond
auctions in Austria, Germany and UK

- US/G7 rates: rate cuts heavily discounted, but comparisons to 2007/08
totally misplaced given obvious lack of stress in money and credit
spreads, plenty of questions to be pondered

- Eurozone CPI: sharp setback well flagged and more than discounted

- Italy: Salvini up to his usual 'blame game' tricks

- Audio preview:
https://www.mixcloud.com/MOstwaldADM/adm-isi-morning-call-4-june-2019/

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

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

As a rule, the second working day of the month has a modest data calendar, but with the holiday Eurozone CPI, and Q1 readings on Australia Current and South African GDP, today's schedule is rather busier with very poor UK BRC Retail Sales, South Korea below forecast CPI and downward Q1 GDP revision, Swedish Industrial Production, UK Construction PMI and US Factory Goods Orders also featuring. As expected the RBA cut rates by 25 bps, and maintained an easing bias, with governor Lowe also speaking later this morning, with a busy schedule of leading Fed speakers (Powell, Williams, Brainard & Evans) above all being timely, given the volume of Fed easing over the next 12 months that markets are discounting (75 bps by April 2020), though it would be surprising if the Fed were to hint that it is ready to drop its 'patient' stance at the current juncture (we discount the comments from Bullard, whose views on the formation of monetary policy border on the laughable - believe me, I have had to listen to him as a key note speaker, and laughed all the way home). Otherwise there are Inflation-Linked Bond auctions in Germany (11-yr) & UK (5-yr) along with a conventional sale in Austria (10 & 15-yr). On markets, the current turmoil has some notable divergences, and lead/lags: a) Treasury bond volatility has risen far more sharply than the VIX, which is not unusual (see May 2018 and March 2019), but the divergence has been far sharper; b) typically a spike lower in US HY bonds tends to lead the S&P 500, but the latter has led the former in the current move. The latter may well owe a lot to the fact that the Credit spread widening owes far more to the spike down in Treasury yields, than a jump in Credit yields, which distinguishes it quite sharply with the Q4 debacle - it underlines that the overcrowded trade is 'long Treasuries/USD rates' in stark contrast to Q4, where the overcrowded trade was 'short Treasuries/USD rates'. Indeed the inversions that are being quoted on the US yield curve (various examples attached), many of which are their most extreme levels since 2007/08 need to be considered in light of the following a) in 2007/2008, the move was above all driven by a sharp rise in LIBOR rates, the opposite is true now, b) the Fed Funds rate was 5.25%, now it stands at 2.375%, so precisely what do markets think the real economy will reap in terms of a benefit from rate cuts?; c) at what point does the USD take a tumble on the narrowing rate differentials with other G7 and EM rates; d) and what about the current lunacy in Canada, where the whole of the GOC govt bond yield is below the BoC's official 1.75% rate?

** Eurozone - May CPI **
- In the wake of the various May national CPI readings last week, the Eurozone CPI measure is expected to add to the pressure on the ECB as Easter timing effects unwind, with a large drag from Services (air fares, holidays) expected to pull headline CPI all the way back to 1.3% y/y from 1.7%, and core to 0.9% from 1.3%. Given that the release has been so heavily delayed this month, this is not news and the bigger low inflation picture has been all too clear for some time. The only real issue is what message the ECB conveys on the economic and policy outlook on Thursday, even if markets will be sensitive to an upside or downside miss, though one adverse or positive trade / political headline would render it irrelevant in a blink of an eye. Indeed It appears that the Italian coalition government is on the point of collapse, with Lega leader Salvini clearly up to his usual tricks of making the situation for M5S in the coalition untenable, in an effort to force them to quit the coalition, and per se making them culpable for the coalition's failure. PM Conte certainly looks to have had more than enough of these shenanigans with his threat to quit yesterday.