Trading with point and figure

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gettin a tad nasty

 

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Dax gettin close to a trend break

 

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will it hold.?

 

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Good Morning: The Long & the Short of it and The Bigger Picture - 15 April 2020 - ADM ISI

Inbox

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Ostwald, Marc

08:34 (51 minutes ago)

to Marc

- Digesting China rate cut, France Retail Sales & Oz Consumer Sentiment
slides; focus on US Retail Sales, Industrial Production, NY Fed & NAHB
surveys; IEA Oil market report, Bank of Canada; more Q1 earnings,
IMF/World Bank meetings

- US Retail Sales: steep decline seen led by autos, gasoline & clothing,
some offset from stockpiling..... but outlook key

- US Industrial Production: surveys send very mixed signals, may be better
than expected, but still down, and outlook implies further fall

- Fed Beige Book: corporate expectations on recovery likely key component

- Charts: US Redbook Retail Sales sand GasBuddy Gasoline prices

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

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

While news on the spread of Covid-19 remains the primary point of focus (even if market spin on the newsflow continues to err sharply to the side of Monsieur Pangloss), there will also be a goodly volume of 'current' data out of the US, with Retail Sales accompanied by Industrial Production and the NY Fed Manufacturing & NAHB Housing Market surveys, along with the Fed's Beige Book. Inflation data is due from Sweden & Poland, and Trade from Indonesia & India, while Canada has Existing Home Sales. The IEA publishes its latest Oil Market Report, though whether it will incorporate the latest oil production "deal" in its estimates is unknown. The Bank of Canada is seen holding rates, though it may announce other / further 'unconventional' measures to support the flow of credit, and the functioning of domestic capital markets, and the Spring IMF/World Bank meetings will continue. Govt bond supply comes via two UK auctions (2029 & 2037) and Germany also holding an "off the run" 2044 Bund auction. A closer eye also needs to be kept on US politics, as what had been a consensus at a domestic level (i.e. between state governments and the White House) appears to be breaking down, with potential consequences for this year's elections, though there is a lot of economic and political water to traverse in the interim period, which will have a major bearing on the outcome - but ultimately it is jobs and Clinton's dog-eared mantra of 'it's the economy, stupid' which decides the result.

** U.S.A. - March Retail Sales & Industrial Production, April NAHB Housing Index **
- The question on Retail Sales is: how bad, and where specifically? At the headline level, we know that Auto Sales fell off a cliff from 16.74 Mln SAAR pace in February to a 10-yr low of 11.372 Mln in March, and this along with the steep decline in gasoline prices (-10.5% m/m, also see GasBuddy gasoline price) and volumes dictates consensus forecasts of -8.0% m/m headline and -5.0% m/m ex-Autos. Once again survey ranges are enormous - headline flat to -24.0% m/m, ex-Autos +0.7% to -22.6% m/m. At the core level, the biggest drag is likely to be clothing where prices dropped a record -10.5% m/m, though airfares posted an even larger fall of -12.6% m/m. Stockpiling and panic buying of foods and basic household goods should provide some offset, as can be seen in the spike in the charts on Redbook Discount Store Sales. Just those underline that this could be anywhere in the range of forecasts, and the bigger question is how much weaker will they get, and for how long. The issue in that respect is how much spending will be permanently lost, and what will be the consequences for consumers/workers losing that income, and for businesses of the lost spending/revenues. As for Industrial Production, a median of -4.0% m/m masks a range of +2.0% to -10.0%, with the regional and ISM manufacturing surveys showing enormous divergence from the total collapse in the Dallas Fed to the better than expected ISM and Richmond Fed surveys. Here the question is probably more a case of how much worse will the situation get, for which the NY Fed April survey will provide some evidence, with the consensus looking for a further fall to -35.0 from the much weaker than expected -21.7 in March. The NAHB Housing Index is a more complex read, the sector was in very good health, buoyed above all by super low mortgage rates, but buyer traffic has presumably collapsed, above all due to movement restrictions, and an accompanying sharp slide in MBA Purchase Index to 185.9 last week from 280.7 in the first week of March. The consensus looks for a drop to 55 from what was a still very buoyant 72 in March, with the risks on balance suggesting a better than expected outturn, but the likelihood of further falls in coming months. The Fed's Beige Book will above all be useful in terms of gauging whether businesses believe in the 'sharp rebound' in H2 2020 being peddled by many financial market commentators and political pundits (Motley Crew? Ed.), and even the IMF with its forecast of -3.0% y/y global GDP in 2020, and a 6.0% y/y rebound in 2021

 

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bad bounce

 

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