Trading with point and figure

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Our fib got bought

 

[inzimam]

fib support broken, now what?

 

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fib support broken, now what?

Its in supp

 

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Mornin folks ☕ ☕ ☕ ☕ ☕ 🤪🤪🤪🤪🤪💋💋💋💋💋🤪🤪🤪🤪

 

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Dax into the open
Will it get support.?#

 

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Dow in supp

 

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Dolllar in rez
that does not mean it will egt sold

 

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Naz 100
Will our supp area hold...if it gets tested

 

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Cable.....Nasty stuff

 

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We aint Cissies....we can take it

 

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SPX in rez

 

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UJ in rez

 

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Good Morning: The Long & the Short of it and The Bigger Picture - 29 July 2019 - ADM ISI

Ostwald, Marc

08:31 (18 minutes ago)

to Marc

- Digesting China Industrial Profits, Japan Retail Sales & Spanish HICP,
awaiting UK Monetary & Credit aggregates, US Dallas Fed Manufacturing;
plenty of corporate earnings; markets in pre-Fed, BoJ and US/China
trade talks vigil

- UK Lending data: consumer credit growth to continue slow in y/y terms;
mortgage lending strength far more to do with equity withdrawal to
subsidize pensions or children getting on housing ladder

- Dallas Fed Manufacturing: rebound expected, but still seen negative,
some upside risk

- Audio preview:
https://www.mixcloud.com/MOstwaldADM/adm-isi-morning-call-29-july-2019/

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

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

A relatively quiet start to the busy week ahead has the slightly better than expected Japan Retail Sales to digest, along with Saturday's unsurprisingly poor China Industrial Profits. Ahead lie the first of this week's national and Eurozone CPI readings from Spain, with HICP seen holding at a 2 1/2 year low of just 0.6%, and thus reinforcing ECB easing expectations, but even if weaker than forecast, it would not alter what the ECB is expected to do, though it would probably give a further fillip to longer dated bonds, even if political uncertainty remains a key consideration for Spanish Bonos. The UK has its Consumer Credit and Mortgage Lending & Approvals, which will likely continue to see a slower pace of credit growth, while Mortgage Lending should remain relatively robust, even if heavily paced by pensioners taking out equity withdrawal or retirement mortgages, and/or the bank of Mum and Dad helping their children buy homes. The US looks to the Dallas Fed Manufacturing survey, which is forecast to recover from a sharp slide to -12.1 in June, but remain in negative territory at -5.0; given the June slide was due to fears on US/Mexico trade tariffs, and the fact that the Dallas Fed region is particularly sensitive to that, the rebound may be stronger. However markets have a summery volume feel to them, and look to be digging in for a pre-FOMC vigil, while awaiting news on US/China trade talks.


RECAP - Week Ahead Preview

The northern hemisphere may be moving into peak holiday season, but the week ahead is brimming with major central bank meetings, major economic data and it will also be the peak week for US, European and Asian corporate earnings. The much anticipated Fed rate cut will be bookended by BoJ and BoE policy meetings. Statistically the USA tops the schedule with Personal Income/PCE, Consumer Confidence, Auto Sales and the week ending labour data. The Euro area has the first round of provisional Q2 GDP and July CPI (Eurozone and national), while Japan has Industrial Production, Retail Sales and Unemployment, Australia looks to Q2 CPI, Canada to monthly GDP and Trade, and the UK awaits monetary & credit aggregates and the usual end of month run of surveys, with Thursday delivering what looks likely to be a rather dismal run of Manufacturing PMIs around the world. If that were not enough to keep markets busy, there is the first face to face meeting of US and Chinese trade officials since talks broke down in early May, while newly anointed UK PM Johnson's Conservative is expected to see his wafer thin majority (including the DUP) eroded further with a resounding defeat at the hands of the Liberal Democrats expected in the Brecon & Radnorshire by-election, despite weekend opinion polls showing a marked 7 ppt bounce for the Conservatives in national opinion polls. Commodity and Energy markets will remain fixated on high levels of tensions in the Persian Gulf, and continued bouts of extreme weather (heat, rain) across much of the northern hemisphere. However many grains, softs and indeed energy markets continue to view these as unlikely to disrupt supply sufficiently to create a more protracted shortage, above all given concerns about a weak/weaker demand outlook due to a slowing global economy.

- The Fed belatedly pushed back quite hard on market expectations of a 50 bps rate cut, and the FOMC is expected to cut 25 bps to 2.0-2.25%, while hinting strongly that it may cut rates further in coming months 'if appropriate'. The dot plot will as ever the initial point of focus, with perhaps greater divergence (wider ranges) a fairly high probability, in so far as there are now very obvious and quite sharp divisions of opinion on the FOMC. There is a strong possibility of at least two dissenters (favouring no change) from Rosengren and George, and possibly even Quarles, though his fellow Fed board members may prevail upon him to go with the majority in favour of a cut, lest the scale of the dissent forces markets to re-price its Fed rate trajectory, which currently discounts 70 bps of rates by year end. The statement (June: https://www.federalreserve.gov/newsevents/pressreleases/monetary20190619a.htm
) will de facto have to acknowledge the relatively robust run of recent economic data, though probably voicing some concern about below target inflation. The question then is how to frame the wording on the outlook, doubtless placing a lot of emphasis on international / trade developments, given that too much pessimism on the outlook would prompt markets to discount a relatively aggressive rate trajectory, while an upbeat assessment may run the risk of markets pushing back, and per se, undermining the impact of this initial move on the term structure of the rates curve. In other words, the FOMC needs to keep the carrot of further easing dangled in front of markets, as there is little doubt that whatever the size of this easing cycle, it will be 'better to travel than arrive; liberal use of the word 'uncertainty' in the statement and press conference may well be the solution to this dilemma for the FOMC. The assumption is that the IOER rate cut will mirror the Funds rate cut, while there is some speculation that the FOMC may bring forward the timetable for ending its balance sheet reduction to this meeting, rather than stick to the current end date in September, though this is seen as largely technical. Given that very belated push back on the market rate trajectory, which has been criticized by some in markets, and the assumption that this will be framed as an 'insurance' cut, and the rather choppy reaction to the ECB meeting, markets would appear to be under-pricing the risk of some volatility around the meeting.

As for the BoJ and BoE, the consensus looks for no change from both, with the BoE's hands still firmly tied its back and to the mast of Brexit related uncertainty, though there will be interest in how the BoE might tweak its forecasts in the face of recent weaker data, notwithstanding the latest Retail Sales and Average Weekly Earnings. The BoJ in some ways faces a similar dilemma to the Fed, the domestic economy continues to perform relatively well despite the palpable weakness in Exports. It is expected to push back further on the timeline for CPI to get back to its 2.0% target, though this is nothing more than an acknowledgement of current data, and after such a protracted period of failure to get anywhere near the target, it borders on the totally meaningless. In light of the ECB decision to postpone announcing what measures it will undertake until September, the BoJ will doubtless feel less pressure to take immediate action, with BoJ 'sources' noting last week that there was no consensus on what action it could and/or should take. That said the BoJ and the government's long held fixation on the JPY, there is little doubt that Kuroda & Co will want to convey a dovish message, above all to avoid any impression that they are the least dovish of the G3 central banks. As with the Fed, there are quite strong divisions of opinion, and some concern not just about the impact of cutting rates on bank profitability, but above all that 'tinkering' with its forward guidance could well back fire, that is in so as markets have long been discounting the BoJ as being the last in line of the G3 central banks to tighten policy.

- On the statistical front, it has to be observed that while there is plenty of major data this week, most of it is likely to merely reaffirm what is already heavily discounted in markets, per se even 'better than expected' outturns may well be dismissed by markets with ... 'central bank x, y or z is still going to ease soon'. This form of Pavlovian market reaction in the face of a decade of financial repression, and the prospect of even more of the same, has a form of logic to it, but it is a learnt response in the face of the experience of the past 10 years, and the increasing lack of any critical and lateral thinking is likely sowing the seeds of the next crisis, even if that crisis may not be imminent. Be that as it may, the US kicks off with Personal Income / PCE, but as this is June data, it formed part of the Q2 GDP, above all that strength in PCE, at most there might be the odd "ooh" or "ah" at the PCE deflators, given that both headline and core are modestly below 2.,0%. Consumer Confidence is expected to rebound to 125.0 after a sharper than expected drop to 121.5 in June, and one would assume there should be a pick-up in the labour differential. Pending Home Sales are expected to signal that the dip in Existing & New Home Sales was not a signal on housing demand, with forecasters looking for 0.4% m/m following on from May's solid 1.1%. The two key items for the week would appear to be the jobs data Auto Sales, which after two unexpectedly strong months are seen dropping to a 16.9 Mln SAAR pace from 17.4 Mln, with some industry estimates suggesting an outturn as low as 16.6 Mln. As for the labour market report, the median looks for a very 'average' 170K after June's better than expected 224K, with the Unemployment Rate seen unchanged at 3.7%, and Average Hourly Earnings as ever forecast to rise 0.2% m/m, to edge the y/y rate up to 3.2% from 3.1% - if correct, this would be another labour report that has limited market impact. Q2 Employment Cost Index, Trade Balance and Construction Spending are also due.

The G7 'flash' Manufacturing PMIs were universally downbeat, even very gloomy in Germany's case, and there seems little reason to expect anything different from the readings worldwide this week. The first batch of advance Q2 GDP from the Eurozone are expected to confirm that the French economy is performing considerably better than Germany and Italy, with the consensus looking for 0.3% q/q 1.4% y/y, while Italy is forecast to contract 0.1% both in q/q and y/y terms. The question is whether the likes of Austria, Belgium and Sweden continue to defy Germany's woes, as would appear likely to be the case. Eurozone and national CPI readings are projected to confirm the ECB's assessment that it does not like what it is seeing, with Eurozone CPI forecast at 1.1% y/y headline and 1.0% core, both 0.1 ppt lower than June, and per se reaffirming that the ECB will ease policy at its September meeting, even if it is dubious that this will actually boost inflation going forward.

Elsewhere the usual end of month rush of activity data in Japan kicks off with Retail Sales, which are seen down 0.3% m/m after a 0.4% gain in May, which would drag the y/y rate back to a weak 0.2% (vs. May 1.3%), though the profile of the Household Spending data has been considerably better for much of the year. Industrial Production defied expectations of a drag from weak exports in May with a 2.0% m/m jump, but are forecast to see a reactive setback of -1.8% m/m in June, which would see the y/y rate little changed at -2.0% (May -2.1%). Unsurprisingly the Unemployment Rate is projected to remain very low at 2.4%, and the Jobs to Applicant Ratio to indicate a very tight labour market at 1.62. However the fact remains that this is still not exercising any upward pressure on Wages, which remain negative in inflation adjusted terms. Australia's RBA has been cutting rates, and is likely to cut at least one more time, with this week's Q2 CPI expected to confirm that inflation on both headline and core well below its 2.0-3.0% target (headline & Trimmed Mean 1.5% y/y, Weighted Median 1.2%). In Canada, the focus will be on May monthly GDP which is expected to rise by just 0.1% m/m, after solid gains of 0.3% and 0.5% in April & March, and follows a run of recent data that has suggested the economy has lost momentum after the early spring bump higher, and in turn offers some justification for the caution in evidence at the July BoC meeting.

- In the EM central bank space, Brazil's BCB is expected to restart its easing cycle with a 25 bps rate cut to a record low of 6.25%, predicated on inflation remaining subdued, and a strong possibility that Q2 GDP will affirm that the economy has slipped into recession. There are also rate decisions in Armenia, Malawi and Moldova, with rates likely to be kept unchanged, and following on from last week’s 425 bps rate cut Turkey’s TCMB will published its latest Inflation Report.

- A busy week for government bond supply in the Euro area, with up to EUR 23.5 Bln being sold in Germany, France, Italy and Spain; however this is dwarfed by ca. EUR 48 Bln of redemptions and coupon payments in Italy and Spain.

- As noted above, this will be the peak week for corporate earnings, with the avalanche of reports including amongst others in highlight terms, and by sector:

TECH: AMD, Apple, Baidu, GoDaddy, Nintendo, Qualcomm, Siemens, Sony, Spotify, Square.

FINANCIAL: Barclays, BNP Paribas, Credit Suisse, Itau Unibanco, Mastercard, MetLife, Nomura, RBS, Swiss Re, Sun Life

AUTOS: BMW, Ferrari, Fiat Chrysler, GM, Honda, Mazda, Toyota

PHARMA: Amgen, Bayer, Eli Lilly, Gilead, Merck, Pfizer, Sanofi

COMMODITIES: ADM, BP, Bunge, ConocoPhillips, Occidental, Petrobras, Rio Tinto, Shell, Vale

CONSUMER: Beyond Meat, Colgate-Palmolive, Kraft Heinz, Molson Coors, Yum! Brands

========================== ** THE DAY AHEAD ** ===========================

 

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OIL

 

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IN rez

 

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flying

 

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