Dentalfloss
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tad overbought
Trading with point and figure
- Thread starter Dentalfloss
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Dentalfloss
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Dentalfloss
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Overbought
C
cantagril
....and stopped out earlier......after yesterday's lurch down, I've got a stop in at +1...which will get hit shortly, no doubt
Bonjour, Your Largeness
Dentalfloss
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Dentalfloss
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And to you....and stopped out earlier...
Bonjour, Your Largeness
Dentalfloss
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Good Morning: The Long & the Short of it and The Bigger Picture - 19 March 2020 - ADM ISI
- Deluge of fresh central bank measures to digest; US Philly Fed Manufacturing
the only data point of note; auctions in France, Spain, UK and USA; govt
fiscal, law & order other legislative measures also in focus
..........................................................................
********************
** EVENTS PREVIEW **
********************
Statistics remain largely more than a passing reminder of what was, though today's Philly Fed Manufacturing will offer an a further indication on Manufacturing after Monday's slide in the NY Fed survey. However with a high proportion of refiners in the region, it is vulnerable to a 'double whammy' given the ongoing oil price war/collapse. Otherwise there are another array of emergency central bank measures to digest: the RBA cutting rates a further 25 bps to 0.25% and launching QE with Yield Curve Control (targeting 0.25% on the 3-yr ACGB). The ECB is topping up its APP QE programme to the tune of EUR 750 Bln until the end of the year (taking the overall total to EUR 1.08 Trln, or EUR 114 Bln /month, though it will conduct operations flexibly in terms of both amount and mix of govt, semi-govt and corporate debt). Finally the Fed launched yet another programme that aims to provide liquidity to Money Market Funds). Switzerland's SNB is expected to hold while stressing that it stands ready to intervene (aggressively) in FX markets to head off unwanted CHF strength. In the EM space, Indonesia cut rats 25 bps as expected, the Philippines will likely follow, with South Africa's SARB is seen cutting rates by 50 bps to 5.75%. Thus far, the all too obvious observation is that all these measures are not really having an impact in terms of stabilizing markets, which are providing the most extreme example of Gresham's Law, as positions in 'good assets' (e.g. govt bonds) are liquidating positions to cover losses elsewhere, and with the stark reality of the USD shortage in offshore markets being brutally demonstrated by the USD rally against all currencies. Against that backdrop, France and Spain conducting multi-maturity auctions, with the UK selling 5-yr and the US selling 10-yr TIPS.
ECB notice: https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html
NY Fed: https://www.federalreserve.gov/newsevents/pressreleases/monetary20200318a.htm
========================== ** THE DAY AHEAD ** ===========================
| Inbox | x |
| 08:41 (1 minute ago) |
|
- Deluge of fresh central bank measures to digest; US Philly Fed Manufacturing
the only data point of note; auctions in France, Spain, UK and USA; govt
fiscal, law & order other legislative measures also in focus
..........................................................................
********************
** EVENTS PREVIEW **
********************
Statistics remain largely more than a passing reminder of what was, though today's Philly Fed Manufacturing will offer an a further indication on Manufacturing after Monday's slide in the NY Fed survey. However with a high proportion of refiners in the region, it is vulnerable to a 'double whammy' given the ongoing oil price war/collapse. Otherwise there are another array of emergency central bank measures to digest: the RBA cutting rates a further 25 bps to 0.25% and launching QE with Yield Curve Control (targeting 0.25% on the 3-yr ACGB). The ECB is topping up its APP QE programme to the tune of EUR 750 Bln until the end of the year (taking the overall total to EUR 1.08 Trln, or EUR 114 Bln /month, though it will conduct operations flexibly in terms of both amount and mix of govt, semi-govt and corporate debt). Finally the Fed launched yet another programme that aims to provide liquidity to Money Market Funds). Switzerland's SNB is expected to hold while stressing that it stands ready to intervene (aggressively) in FX markets to head off unwanted CHF strength. In the EM space, Indonesia cut rats 25 bps as expected, the Philippines will likely follow, with South Africa's SARB is seen cutting rates by 50 bps to 5.75%. Thus far, the all too obvious observation is that all these measures are not really having an impact in terms of stabilizing markets, which are providing the most extreme example of Gresham's Law, as positions in 'good assets' (e.g. govt bonds) are liquidating positions to cover losses elsewhere, and with the stark reality of the USD shortage in offshore markets being brutally demonstrated by the USD rally against all currencies. Against that backdrop, France and Spain conducting multi-maturity auctions, with the UK selling 5-yr and the US selling 10-yr TIPS.
ECB notice: https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html
NY Fed: https://www.federalreserve.gov/newsevents/pressreleases/monetary20200318a.htm
========================== ** THE DAY AHEAD ** ===========================
Dentalfloss
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10 ticks per bar
Dentalfloss
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Dentalfloss
Legendary member
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- 3,726
Dentalfloss
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Dentalfloss
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price movement is aimless ..so far
Dentalfloss
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Bluntly, this is going to cost more than a few trillion dollars. It will have unpleasant financial consequences for a very long time. So did World War II. But acting quickly will cut that cost in terms of life and spending. The consequence of not dealing with it financially, let alone medically, will be a depression and an unacceptable loss of life and economic support for millions of people.
From John Mauldin
From John Mauldin
Dentalfloss
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Lookin like taxes will need to rise to pay for the trillions in bailout
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And it will cost trillions even if we get it sorted early on
Dentalfloss
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Dentalfloss
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Dentalfloss
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Mornin folks 🤣 🤣 🤣 🤓 🤓 🤪 🤪 🤪 🤪 😜 😜
😜 😜
Dentalfloss
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Good Morning: The Long & the Short of it and The Bigger Picture - 20 March 2020 - ADM ISI
- Friday book squaring? UK PSNB and UK Treasury plans to prop up UK plc,
US Existing Home Sales and Russia monetary policy meeting the items of
note to distract from Coronavirus induced uncertainty and volatility
- Monetary vs fiscal policy and the USD shortage - some thoughts
..........................................................................
********************
** EVENTS PREVIEW **
********************
Tempestuous, sceptical and above all volatile remain the watchwords in markets, and while the latest barrage of easing and market support measures from the Fed, ECB, BoE, RBA and a raft of EM central banks offered some respite yesterday, it remains the fact that fiscal measures remain key. Today's data points of any note are the UK PSNB, which will underline that the starting point for the UK's proposed fiscal boost is not a good one as markets await today's details of a 'massive rescue package' for UK plc (not withstanding record low base rate after yesterday's cut, a reminder that debt service costs eventually become irrelevant when the debt principle is overwhelming, the UK is not there yet, but ...), along with US Existing Home Sales, which are forecast to remain robust with a 0.9% m/m increase to a very solid 5.51 Mln SAAR pace. The oil price collapse and the accompanying RUB meltdown has put paid to expectations of a further rate cut, and there is perhaps some risk even of Russia joining some other CIS countries in hiking rates, though governor Nabiullina will more likely put this on the table as a future option in her press conference). The lesson from last Friday's price action is that any recovery rallies in risk assets today may owe more to weekend position squaring, rather than any semblance of confidence returning to markets. The key anecdotal items globally in the near-term will be those relating to the rising wave of layoffs.
While not wanting to bang the same drum incessantly, let me recap some points that I have been trying to make since Europe/USA went into crisis mode:
a) Monetary policy (rates or 'unconventional) is of no use in terms of boosting economies when confronted by a supply shock, as is the case with Covid-19. It is even less useful when we have been at super low, zero or even negative for so long. The fact is that we have had a point lesson in how minimal the impact of 'trickle down' monetary policy is over the past 10 years, above all in the Eurozone; this should be obvious to any layperson, let alone economist or policymaker. It's also too slow, and as Eurozone and Japan demonstrate, you can cut, but you probably won't be able to hike, or remove other 'stimulus'... on in other words this is a debt trap. Former BIS boss Caruana summed things up nicely 5 years ago: '"The Americans were quite aggressive in forcing recognition of losses and there was a very rapid recapitalisation of the banks. This is why it was successful. The role of quantitative easing is an open question." He added: "Policy does not lean against the booms, but eases aggressively and persistently during busts. This induces a downward bias in interest rates and an upward bias in debt levels, which in turn makes it hard to raise rates without damaging the economy - a debt trap." "Systemic financial crises do not become less frequent or intense, private and public debts continue to grow, the economy fails to climb onto a stronger sustainable path, and monetary and fiscal policies run out of ammunition. Over time, policies lose their effectiveness and may end up fostering the very conditions they seek to prevent". How apt do his observations appear now, above all the point that it was the speed with which the US administration forced post GFC balance sheet reconciliation. By contrast obviously the Euro area governments, above all Germany and France, opted to 'kick the can', with devastating effects in 2011/12.
b) So what about fiscal & other measures: who needs to be bailed out / helped due to Covid19 - a lot of industries and services sectors which have very slim margins, and who are dependent on a constant stream of revenue to sustain adequate cash flows to run their businesses - true of airlines, hotel, restaurants, bars, most shops, and other service sector companies . They tend also to have little in the way of balance sheet cash (say in comparison to a Google (Alphabet), Amazon, Microsoft or Apple) to service their liabilities, and little in the way of less liquid (non-inventory) assets, and are generally considered to be high risk from a lenders perspective, and quite often have a lot of low paid, low benefits staff with insecure employment tenure. So in this situation, offering them loans (the govt guarantee is not worth a fig to them) as per the UK Treasury plan looks to very unwise. By contrast tax breaks, e.g. on employer NI, Corp Tax, VAT or Business Rates, and outright cash support to ensure that they keep their layoffs to a minimum and to preserve them as going concerns, and ready to go once the worst is over and social movement / economic restrictions are lifted. The revenue that they lose during shutdown will not be recouped, it's gone, so a pile of extra debt is the wrong route. Eminently there is a serious concern that cash handouts (above all the route France is going down) will encourage even more of an entitlement culture - with all the hallmarks of socialism - so there are some very difficult choices to make, and ensuring that sunsetting clauses are in place even more important.
b)USD shortage: The broadening of the Fed's swap lines with other central banks offers some relief, but does not overcome issues related to credit quality and indeed counterparty risk (in EM and the non-financial sector), or the fact that this exposes the downside of the USD being the world's FX reserve currency, trade payment and as a consequence the primary funding, and by extension liability currency. A collapsing oil price and collapsing trade volumes are a very toxic combination, and the lack of any visibility on when the spread of the Coronavirus might peak suggests that the situation is unlikely to ease significantly anytime soon. It also highlights rising refinancing risks in the corporate bond sector, in very much the same vein as the GFC, and it is this that central banks and governments need to try and mitigate as much as possible, though the key risk is that enable further corporate zombification.
| Inbox | x |
| 09:04 (39 minutes ago) |
|
- Friday book squaring? UK PSNB and UK Treasury plans to prop up UK plc,
US Existing Home Sales and Russia monetary policy meeting the items of
note to distract from Coronavirus induced uncertainty and volatility
- Monetary vs fiscal policy and the USD shortage - some thoughts
..........................................................................
********************
** EVENTS PREVIEW **
********************
Tempestuous, sceptical and above all volatile remain the watchwords in markets, and while the latest barrage of easing and market support measures from the Fed, ECB, BoE, RBA and a raft of EM central banks offered some respite yesterday, it remains the fact that fiscal measures remain key. Today's data points of any note are the UK PSNB, which will underline that the starting point for the UK's proposed fiscal boost is not a good one as markets await today's details of a 'massive rescue package' for UK plc (not withstanding record low base rate after yesterday's cut, a reminder that debt service costs eventually become irrelevant when the debt principle is overwhelming, the UK is not there yet, but ...), along with US Existing Home Sales, which are forecast to remain robust with a 0.9% m/m increase to a very solid 5.51 Mln SAAR pace. The oil price collapse and the accompanying RUB meltdown has put paid to expectations of a further rate cut, and there is perhaps some risk even of Russia joining some other CIS countries in hiking rates, though governor Nabiullina will more likely put this on the table as a future option in her press conference). The lesson from last Friday's price action is that any recovery rallies in risk assets today may owe more to weekend position squaring, rather than any semblance of confidence returning to markets. The key anecdotal items globally in the near-term will be those relating to the rising wave of layoffs.
While not wanting to bang the same drum incessantly, let me recap some points that I have been trying to make since Europe/USA went into crisis mode:
a) Monetary policy (rates or 'unconventional) is of no use in terms of boosting economies when confronted by a supply shock, as is the case with Covid-19. It is even less useful when we have been at super low, zero or even negative for so long. The fact is that we have had a point lesson in how minimal the impact of 'trickle down' monetary policy is over the past 10 years, above all in the Eurozone; this should be obvious to any layperson, let alone economist or policymaker. It's also too slow, and as Eurozone and Japan demonstrate, you can cut, but you probably won't be able to hike, or remove other 'stimulus'... on in other words this is a debt trap. Former BIS boss Caruana summed things up nicely 5 years ago: '"The Americans were quite aggressive in forcing recognition of losses and there was a very rapid recapitalisation of the banks. This is why it was successful. The role of quantitative easing is an open question." He added: "Policy does not lean against the booms, but eases aggressively and persistently during busts. This induces a downward bias in interest rates and an upward bias in debt levels, which in turn makes it hard to raise rates without damaging the economy - a debt trap." "Systemic financial crises do not become less frequent or intense, private and public debts continue to grow, the economy fails to climb onto a stronger sustainable path, and monetary and fiscal policies run out of ammunition. Over time, policies lose their effectiveness and may end up fostering the very conditions they seek to prevent". How apt do his observations appear now, above all the point that it was the speed with which the US administration forced post GFC balance sheet reconciliation. By contrast obviously the Euro area governments, above all Germany and France, opted to 'kick the can', with devastating effects in 2011/12.
b) So what about fiscal & other measures: who needs to be bailed out / helped due to Covid19 - a lot of industries and services sectors which have very slim margins, and who are dependent on a constant stream of revenue to sustain adequate cash flows to run their businesses - true of airlines, hotel, restaurants, bars, most shops, and other service sector companies . They tend also to have little in the way of balance sheet cash (say in comparison to a Google (Alphabet), Amazon, Microsoft or Apple) to service their liabilities, and little in the way of less liquid (non-inventory) assets, and are generally considered to be high risk from a lenders perspective, and quite often have a lot of low paid, low benefits staff with insecure employment tenure. So in this situation, offering them loans (the govt guarantee is not worth a fig to them) as per the UK Treasury plan looks to very unwise. By contrast tax breaks, e.g. on employer NI, Corp Tax, VAT or Business Rates, and outright cash support to ensure that they keep their layoffs to a minimum and to preserve them as going concerns, and ready to go once the worst is over and social movement / economic restrictions are lifted. The revenue that they lose during shutdown will not be recouped, it's gone, so a pile of extra debt is the wrong route. Eminently there is a serious concern that cash handouts (above all the route France is going down) will encourage even more of an entitlement culture - with all the hallmarks of socialism - so there are some very difficult choices to make, and ensuring that sunsetting clauses are in place even more important.
b)USD shortage: The broadening of the Fed's swap lines with other central banks offers some relief, but does not overcome issues related to credit quality and indeed counterparty risk (in EM and the non-financial sector), or the fact that this exposes the downside of the USD being the world's FX reserve currency, trade payment and as a consequence the primary funding, and by extension liability currency. A collapsing oil price and collapsing trade volumes are a very toxic combination, and the lack of any visibility on when the spread of the Coronavirus might peak suggests that the situation is unlikely to ease significantly anytime soon. It also highlights rising refinancing risks in the corporate bond sector, in very much the same vein as the GFC, and it is this that central banks and governments need to try and mitigate as much as possible, though the key risk is that enable further corporate zombification.
Dentalfloss
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