Dentalfloss
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If supp holds.?
Trading with point and figure
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Dentalfloss
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Dentalfloss
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Dentalfloss
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Dentalfloss
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Dentalfloss
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Dow into the open
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stopped out
excellent run
excellent run
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And dump
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Good Morning: The Long & the Short of it and The Bigger Picture - 5 August 2019 - ADM ISI
- Services PMI dominate data schedule, but totally overshadowed by US/China
trade tensions escalation: CNY slide, Trump comments and China call to
stop US food imports
- Week Ahead: busy week for UK, China and Japan data; US PPI; awaiting
Fed speakers, RBA and RBNZ rate decisions; plenty of Corporate earnings
- Charts:
USD/CNY spot & 1-yr NDF; CNY/JPY; GBP/USD; WTI, Corn, Soybean, Cotton, Iron Ore, VIX
- Audio preview:
https://www.mixcloud.com/MOstwaldADM/adm-isi-morning-call-5-august-2019/
..........................................................................
********************
** EVENTS PREVIEW **
********************
A sharp escalation in China/US trade tensions (CNY slide, China ban on US farm imports) is putting all other news to the sword across all asset classes, taking a particularly heavy toll on grains and cotton (FX, grains & cotton charts attached, N.B, there is no o/n market in livestock futures), with oil doing slightly better than the rest of the pack due to Gulf tensions.
Otherwise, Services PMIs kick off the week, and are expected to echo G7 'flash' readings in suggesting that services are at most seeing a marginal impact from manufacturing sector woes, above all in Germany. While the UK Services PMI remains low by historical standards, it is still expected to sustain June's bounce to 50.2, and as such better than either Manufacturing or Construction. The overnight run from Asia was rather mixed, featuring a modest dip in China, a very sharp rebound in India, a downward revision in Japan, and a totally bizarre divergence in Australia where the AIG measure literally collapsed to 43.9 from 52.2, while the final CBA PMI reading was revised up to 52.3 from a flash reading of 51.9.
RECAP - Week Ahead Preview
The summer holiday season is often called the "silly season", as media editors scrabble around for stories to fill broadcast hours or newspaper column inches, but this is certainly not the case this year. Last week proved to be another ample demonstration that the US President's Twitter feed is sadly "primus inter pares" as a market mover, all too frequently riding roughshod over incoming data and/or central bank policy news and views. As such Trade and broader geopolitical tensions and Brexit related news will continue to the rule the roost. Eminently this only serves to remind financially repressed markets that monetary policy is really not some form of panacea, but rather a salve, whose efficacy is very short-lived, if the political fraternity are a) unwilling to take short-term unpopular decisions, and b) indulge in self-righteous polarization narrative which tramples over any form of debate or negotiation. Be that as it may, there is a mixed bag in terms of economic data, with the US only having PPI and JOLTS Job Openings, with both the UK and Japan looking to provisional Q2 GDP, with the UK also having the monthly run of Industrial Production, Index of Services, Trade, Construction Output, as well as BRC Sales and RICS House Prices; Japan also awaiting Labour Cash Earnings and Current Account. China has CPI, PPI, Trade and possibly monetary and lending aggregates, while Monday has the run of Services PMIs/ISM. Germany looks to Orders, Production and Trade, the latter two are also due in France. In central bank terms the RBA and RBNZ will be in focus along with Fed speakers. There are plenty more corporate earnings, and the US also sells $84 Bln of new 3, 10 & 30-yr, though it is T-Bill Sales volumes which require careful attention, a $6 Bln increase in 3 & 6 mth has been announced, and the shorter dated T-Bill volumes will also likely see hefty increases, as the Treasury rebuilds its Cash Balance at the Fed following passage of the US Budget and debt ceiling bill. Commodity and energy markets will continue to remain hostage to US/China trade tensions, associated fears about the global economic outlook, with oil having the additional wild card of ongoing Persian Gulf tensions. The resource sector will also be casting an eye in the direction of the annual "Diggers and Dealers" conference in Kalgoorlie.
- As noted above, and also previously observed, incoming economic data has become subservient to markets' often very ephemeral, and perspective free narratives, either deployed as a tool for post hoc rationalization, or tossed away as inconvenient or apparently irrelevant. Thus US PPI will have to be well out of line with the consensus of 0.2% m/m on all measures, to leave headline and ex-Food & Energy unchanged at 1.7% and 2.3% respectively, while JOLTS Job Openings are seen marginally lower, but still very high at 7.27 Mln. Consumer Credit and Wholesales Inventories / Sales are also due.
Chinese data and surveys have yet to offer evidence that the huge volume of monetary stimulus, above all outsized municipal govt borrowing is doing much more than stabilize growth at lower levels, with rising Unemployment still the key threat. This week's CPI and PPI are expected to underline that while ASF and fruit prices continue to exercise upward pressure on Food Prices, non-food inflation remains very subdued, with CPI seen up 0.2% m/m for an unchanged 2.7% y/y, while PPI is forecast to slip back into deflation at -0.1% y/y (vs. June Flat). Unsurprisingly July Trade data are projected to show Exports continuing to contract, forecast -2.2% vs. July -1.3%, thanks to Trade tensions, though this is seen weighing even more sharply on Imports along with softer domestic demand, with a fall of 7.6% y/y (vs. June -7.3%) expected. Monetary and Lending aggregates may also be published.
It is perhaps ironic that the UK has by far the busiest run of major data, but rendered largely irrelevant by the Russian roulette Brexit negotiating stance of the Johnson cabinet. Be that as it may, the advance reading of UK Q2 GDP is forecast at flat q/q, with June monthly GDP and Index of Services expected at 0.1% m/m, which would see the y/y rate dip to 1.3% from 1.5%. It can be rationalized away as being a mean reversion after the boost from stockpiling in Q1; even if the persistent uncertainty related to Brexit offers little reason to expect a better outturn in Q3, particularly with Q3 Business Investment seen contracting 0.3% q/q. Monthly activity data have been very noisy during Q2, with April's sharp contractions in Industrial Production and Manufacturing Output due to earlier than normal seasonal retooling and maintenance closures, followed by a less pronounced bounce in May, with June readings seen marginally lower at -0.2% and -0.1% m/m respectively. Construction Output is also seen falling -0.5% m/m, which would be modest by comparison with the slide in the June Construction PMI, though the two series are by no means well correlated. As for Trade, the key metric remains the 3m/3m indications on Exports and Imports, but due to the stockpiling in Q1 and the weakness in the Eurozone, forecasters look for Exports to fall 1.6% q/q, and Imports to slide -8.8% q/q after a 6.8% q/q surge in Q1; the Non-EU Trade Balance is seen widening modestly to £-5.2 Bln. It will be recalled that June's BRC Retail Sales were the worst on record for June (Like for Like -1.6% y/y), but that the official Retail Sales posted a very robust 1.2% m/m, which presumably predicates the consensus for July BRC Sales to swing to a gain of 0.9% y/y. Last but not least, the RICS House Price Balance is forecast to edge up to +1 after an unexpectedly sharp rebound to -1 in June from -9. RICS noted in its June report that new buyer interest turned positive for the first time since Nov 2016, and newly agreed sales for the first time since Feb 2017; whether that persists is a matter for considerable debate, given a large array of other housing sector anecdotal evidence remains negative.
Germany's once much envied manufacturing sector is in recession, plagued by auto sector woes and persistent weakness in export orders due to ongoing global trade tensions, with no prospect of any near term recovery, emphasized by current Ifo and PMI readings, and a do nothing stance from the abjectly poor Merkel government, in economic policy terms. As such the projected 0.4% m/m rise in Factory Orders earns the moniker 'dead cat’ bounce, as it follows May's -2.2% m/m; a point likely to be emphasized by expectations of a -0.6% m/m for Industrial Production. A similar pattern is predicted for Exports, which are seen edging down 0.1%, after a modest 1.1% recovery in May from April's -3.4%, with June Imports seen up 0.5% m/m after falling 0.5% in May - all of which points to Trade (net exports) deducting from Q2 GDP (due 14 August). Of interest will be how this contrasts with France, where manufacturing has appeared a little more resilient.
Japan's Q2 GDP is forecast to eke out a modest 0.1% q/q (0.6% SAAR) after a very solid 0.6% in Q1, though this is expected to mask sharply divergent domestic and external demand trends, with Private Consumption seen up 0.6% q/q and Business Spending up 0.8% q/q, and a 0.5% q/q drag from net exports. Ahead of GDP, Household Spending for June is seen mean reverting with a -3.3% m/m +1.3% y/y, following an improbably strong 5.5% m/m 4.0% y/y in May. The persistent weakness in Labour Cash Earnings offers plenty of reason to doubt that Household Spending can really hold up going forward, with headline wages forecast to drop -0.8% y/y and -1.6% y/y in real terms, even if adverse base effects account for much of that expected deterioration. They nevertheless underline that a super tight labour market is having zero impact on wages.
Elsewhere, Canada is expected to see the Unemployment Rate hold at 5.5%, with Employment posting a more typical 12.5K gain after outsized gains earlier in the year, and Australia post another large A$ 6.0 Bln Trade surplus. Indonesian Q2 GDP is expected to post a solid 4.2% q/q recovery after surprisingly contracting 0.5% q/q in Q1, which would leave the y/y rate little changed at 5.1%.
- On the central bank front, there are a number of Fed speakers, with markets hoping for less discombobulating policy ‘guidance’ than was on offer at last week's Powell press conference. Elsewhere the RBA is expected to pause at 1.0% after two 25 bps cuts at the prior meetings, while this week's labour data (above all wages) are expected, along with the low Q2 CPI, to offer the RBNZ sufficient justification to cut rates 25 bps to a fresh low of 1.25%, though it may be more equivocal about the likelihood and / or timing of a further rate cut. In the EM space, Philippines' BSP is seen cutting rates a further 25 bps, with inflation continuing to drop back, and growth proving to be weaker than expected. Thailand's BoT is seen holding rates at 1.75%, though a cut is not off the table given govt and central bank protest about THB strength. Rates are seen on hold in Albania, Belarus, Mauritius, Peru, Romania and Serbia.
========================== ** THE DAY AHEAD ** ===========================
| Inbox | x |
| 08:41 (16 minutes ago) |
|
- Services PMI dominate data schedule, but totally overshadowed by US/China
trade tensions escalation: CNY slide, Trump comments and China call to
stop US food imports
- Week Ahead: busy week for UK, China and Japan data; US PPI; awaiting
Fed speakers, RBA and RBNZ rate decisions; plenty of Corporate earnings
- Charts:
USD/CNY spot & 1-yr NDF; CNY/JPY; GBP/USD; WTI, Corn, Soybean, Cotton, Iron Ore, VIX
- Audio preview:
https://www.mixcloud.com/MOstwaldADM/adm-isi-morning-call-5-august-2019/
..........................................................................
********************
** EVENTS PREVIEW **
********************
A sharp escalation in China/US trade tensions (CNY slide, China ban on US farm imports) is putting all other news to the sword across all asset classes, taking a particularly heavy toll on grains and cotton (FX, grains & cotton charts attached, N.B, there is no o/n market in livestock futures), with oil doing slightly better than the rest of the pack due to Gulf tensions.
Otherwise, Services PMIs kick off the week, and are expected to echo G7 'flash' readings in suggesting that services are at most seeing a marginal impact from manufacturing sector woes, above all in Germany. While the UK Services PMI remains low by historical standards, it is still expected to sustain June's bounce to 50.2, and as such better than either Manufacturing or Construction. The overnight run from Asia was rather mixed, featuring a modest dip in China, a very sharp rebound in India, a downward revision in Japan, and a totally bizarre divergence in Australia where the AIG measure literally collapsed to 43.9 from 52.2, while the final CBA PMI reading was revised up to 52.3 from a flash reading of 51.9.
RECAP - Week Ahead Preview
The summer holiday season is often called the "silly season", as media editors scrabble around for stories to fill broadcast hours or newspaper column inches, but this is certainly not the case this year. Last week proved to be another ample demonstration that the US President's Twitter feed is sadly "primus inter pares" as a market mover, all too frequently riding roughshod over incoming data and/or central bank policy news and views. As such Trade and broader geopolitical tensions and Brexit related news will continue to the rule the roost. Eminently this only serves to remind financially repressed markets that monetary policy is really not some form of panacea, but rather a salve, whose efficacy is very short-lived, if the political fraternity are a) unwilling to take short-term unpopular decisions, and b) indulge in self-righteous polarization narrative which tramples over any form of debate or negotiation. Be that as it may, there is a mixed bag in terms of economic data, with the US only having PPI and JOLTS Job Openings, with both the UK and Japan looking to provisional Q2 GDP, with the UK also having the monthly run of Industrial Production, Index of Services, Trade, Construction Output, as well as BRC Sales and RICS House Prices; Japan also awaiting Labour Cash Earnings and Current Account. China has CPI, PPI, Trade and possibly monetary and lending aggregates, while Monday has the run of Services PMIs/ISM. Germany looks to Orders, Production and Trade, the latter two are also due in France. In central bank terms the RBA and RBNZ will be in focus along with Fed speakers. There are plenty more corporate earnings, and the US also sells $84 Bln of new 3, 10 & 30-yr, though it is T-Bill Sales volumes which require careful attention, a $6 Bln increase in 3 & 6 mth has been announced, and the shorter dated T-Bill volumes will also likely see hefty increases, as the Treasury rebuilds its Cash Balance at the Fed following passage of the US Budget and debt ceiling bill. Commodity and energy markets will continue to remain hostage to US/China trade tensions, associated fears about the global economic outlook, with oil having the additional wild card of ongoing Persian Gulf tensions. The resource sector will also be casting an eye in the direction of the annual "Diggers and Dealers" conference in Kalgoorlie.
- As noted above, and also previously observed, incoming economic data has become subservient to markets' often very ephemeral, and perspective free narratives, either deployed as a tool for post hoc rationalization, or tossed away as inconvenient or apparently irrelevant. Thus US PPI will have to be well out of line with the consensus of 0.2% m/m on all measures, to leave headline and ex-Food & Energy unchanged at 1.7% and 2.3% respectively, while JOLTS Job Openings are seen marginally lower, but still very high at 7.27 Mln. Consumer Credit and Wholesales Inventories / Sales are also due.
Chinese data and surveys have yet to offer evidence that the huge volume of monetary stimulus, above all outsized municipal govt borrowing is doing much more than stabilize growth at lower levels, with rising Unemployment still the key threat. This week's CPI and PPI are expected to underline that while ASF and fruit prices continue to exercise upward pressure on Food Prices, non-food inflation remains very subdued, with CPI seen up 0.2% m/m for an unchanged 2.7% y/y, while PPI is forecast to slip back into deflation at -0.1% y/y (vs. June Flat). Unsurprisingly July Trade data are projected to show Exports continuing to contract, forecast -2.2% vs. July -1.3%, thanks to Trade tensions, though this is seen weighing even more sharply on Imports along with softer domestic demand, with a fall of 7.6% y/y (vs. June -7.3%) expected. Monetary and Lending aggregates may also be published.
It is perhaps ironic that the UK has by far the busiest run of major data, but rendered largely irrelevant by the Russian roulette Brexit negotiating stance of the Johnson cabinet. Be that as it may, the advance reading of UK Q2 GDP is forecast at flat q/q, with June monthly GDP and Index of Services expected at 0.1% m/m, which would see the y/y rate dip to 1.3% from 1.5%. It can be rationalized away as being a mean reversion after the boost from stockpiling in Q1; even if the persistent uncertainty related to Brexit offers little reason to expect a better outturn in Q3, particularly with Q3 Business Investment seen contracting 0.3% q/q. Monthly activity data have been very noisy during Q2, with April's sharp contractions in Industrial Production and Manufacturing Output due to earlier than normal seasonal retooling and maintenance closures, followed by a less pronounced bounce in May, with June readings seen marginally lower at -0.2% and -0.1% m/m respectively. Construction Output is also seen falling -0.5% m/m, which would be modest by comparison with the slide in the June Construction PMI, though the two series are by no means well correlated. As for Trade, the key metric remains the 3m/3m indications on Exports and Imports, but due to the stockpiling in Q1 and the weakness in the Eurozone, forecasters look for Exports to fall 1.6% q/q, and Imports to slide -8.8% q/q after a 6.8% q/q surge in Q1; the Non-EU Trade Balance is seen widening modestly to £-5.2 Bln. It will be recalled that June's BRC Retail Sales were the worst on record for June (Like for Like -1.6% y/y), but that the official Retail Sales posted a very robust 1.2% m/m, which presumably predicates the consensus for July BRC Sales to swing to a gain of 0.9% y/y. Last but not least, the RICS House Price Balance is forecast to edge up to +1 after an unexpectedly sharp rebound to -1 in June from -9. RICS noted in its June report that new buyer interest turned positive for the first time since Nov 2016, and newly agreed sales for the first time since Feb 2017; whether that persists is a matter for considerable debate, given a large array of other housing sector anecdotal evidence remains negative.
Germany's once much envied manufacturing sector is in recession, plagued by auto sector woes and persistent weakness in export orders due to ongoing global trade tensions, with no prospect of any near term recovery, emphasized by current Ifo and PMI readings, and a do nothing stance from the abjectly poor Merkel government, in economic policy terms. As such the projected 0.4% m/m rise in Factory Orders earns the moniker 'dead cat’ bounce, as it follows May's -2.2% m/m; a point likely to be emphasized by expectations of a -0.6% m/m for Industrial Production. A similar pattern is predicted for Exports, which are seen edging down 0.1%, after a modest 1.1% recovery in May from April's -3.4%, with June Imports seen up 0.5% m/m after falling 0.5% in May - all of which points to Trade (net exports) deducting from Q2 GDP (due 14 August). Of interest will be how this contrasts with France, where manufacturing has appeared a little more resilient.
Japan's Q2 GDP is forecast to eke out a modest 0.1% q/q (0.6% SAAR) after a very solid 0.6% in Q1, though this is expected to mask sharply divergent domestic and external demand trends, with Private Consumption seen up 0.6% q/q and Business Spending up 0.8% q/q, and a 0.5% q/q drag from net exports. Ahead of GDP, Household Spending for June is seen mean reverting with a -3.3% m/m +1.3% y/y, following an improbably strong 5.5% m/m 4.0% y/y in May. The persistent weakness in Labour Cash Earnings offers plenty of reason to doubt that Household Spending can really hold up going forward, with headline wages forecast to drop -0.8% y/y and -1.6% y/y in real terms, even if adverse base effects account for much of that expected deterioration. They nevertheless underline that a super tight labour market is having zero impact on wages.
Elsewhere, Canada is expected to see the Unemployment Rate hold at 5.5%, with Employment posting a more typical 12.5K gain after outsized gains earlier in the year, and Australia post another large A$ 6.0 Bln Trade surplus. Indonesian Q2 GDP is expected to post a solid 4.2% q/q recovery after surprisingly contracting 0.5% q/q in Q1, which would leave the y/y rate little changed at 5.1%.
- On the central bank front, there are a number of Fed speakers, with markets hoping for less discombobulating policy ‘guidance’ than was on offer at last week's Powell press conference. Elsewhere the RBA is expected to pause at 1.0% after two 25 bps cuts at the prior meetings, while this week's labour data (above all wages) are expected, along with the low Q2 CPI, to offer the RBNZ sufficient justification to cut rates 25 bps to a fresh low of 1.25%, though it may be more equivocal about the likelihood and / or timing of a further rate cut. In the EM space, Philippines' BSP is seen cutting rates a further 25 bps, with inflation continuing to drop back, and growth proving to be weaker than expected. Thailand's BoT is seen holding rates at 1.75%, though a cut is not off the table given govt and central bank protest about THB strength. Rates are seen on hold in Albania, Belarus, Mauritius, Peru, Romania and Serbia.
========================== ** THE DAY AHEAD ** ===========================
Dentalfloss
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No guarantees......lol
Dentalfloss
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Dentalfloss
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no real sign of any buying....as yet
Dentalfloss
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Dentalfloss
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Dentalfloss
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Levels...only a guide
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Nowt else
