Trading with point and figure

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Careful
pulling back for a pop or a retrace

 

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and dump
excellent stuff

 

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Good Morning: The Long & the Short of it and The Bigger Picture - 21 April 2020 - ADM ISI

Inbox

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Ostwald, Marc

09:04 (1 hour ago)

to Marc

- Oil markets vying with Coronavirus news to hold markets captive; digesting
bad Sth Korea Exports and better than expected UK Labour data, awaiting
German ZEW survey and US Existing Home Sales; UK parliament reconvenes;
govt debt sales in UK and Germany

- Oil: the reality of demand/supply dynamics and the constraints on
storage capacity leave oil prices in a deep trough

- UK labour data: better than expected outturn resurrect questions on
Claimant Count methodology, and outlook nevertheless grim

- US Existing Home Sales: expected to drop from 13-yr high, plenty of
downside risk

- Tables/Charts: WTI and Brent futures contract tables; ZEW Current
Conditions

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

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

A slightly busier day for statistics awaits, with overnight trade data from South Korea and Thailand and UK labour data along with the policy / economy update from RBA's Lowe to digest, while ahead lies the German ZEW survey, Canadaian Retail Sales and US Existing Home Sales. The UK with 2025 & 2054 Gilt sales and Germany with a 2-yr feature on the govt bond auctions, while the earnings schedule has Lloyds Bank in the UK, with the US looking to Coca Cola, HCA Healthcare, Netflix, Snap & Texas Instruments. Oil markets appear to be trying to give Coronavirus a big run for their money in terms of headlines, after the the theatrics on WTI futures as the contract rolled from May to June, even if the underlying downdraft in oil prices was obviously very real, with storage constraints now fully in view, as the demand outlook continues to plummet. Perhaps the simplest observation on this is, that oil, unlike equities and credit, is not backstopped by the Fed and other central banks, and therefore prices can do nothing other than 'face the music' of the short to medium term economic outlook. (see contract tables for WTI and Brent attached)

In terms of the run of data, the collapse in South Korea April 1-20 Exports and Imports is probably rather more instructive than the unexpected rise in Thailand's March trade volumes. Meanwhile there will be many that view RBA governor Lowe's estimate that Australia's economy will contract by 10.0% as optimistic, particularly given the lingering impact of the devastating forest fires in late 2019/early 2020, given that rebuilding will take rather longer due to the Covid-19 constraints on the economy. The UK labour data was considerably better than expected, above all the more 'current' Claimant Count rise of just 12.1K against a forecast of 175.1K, above all given the anecdotal evidence from Universal Credit applications, though the latter are a broad based measure of claims for Social Security which extend well beyond Unemployment. It does resurrect long held doubts about the methodology behind this measure. Be that as it may the is rise in March Employment was also stronger than expected at 175K vs. a forecast of 100K, while the slowdown in Average Earnings had been anticipated even before Covid-19 impacts the data. While welcome, there is little doubt that these will nevertheless deteriorate in coming months.

Germany's ZEW survey is worthless at the best of times, even if always markets sensitive. As is typical for this very rear view mirror measures, the 'Expectations' component is seen rebounding very modestly to -42.0 from -49.5, which as ever reflects the rebound in the DAX. However the slightly more relevant Current Conditions measure is forecast to collapse to -77.5 from March's -43.1, though still above the 2002/03 & 2009 lows of -96.1 and -92.8, which probably offer some hints on downside risks today and in coming months. US Existing Home Sales for March are also due, and are seen down by 9.0% m/m from a 13-yr high of 5.77 Mln in February to a a still robust 5.25 Mln, though the risks are clearly and emphatically to the downside of the consensus.

Finally another highly recommended from Chris Tinker 'The economic consequences of the peace' (echoing KM Keynes) on the subject of the total destruction of term and risk premia in asset prices (largely due to central banks policies now and over the past 10 years), and the profound implications on how asset prices will be formed in future, and by extension investment and ROI returns. https://www.linkedin.com/pulse/econ...s-tinker/?trackingId=BFueYOxESdi+jKSgP+gwVA==

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

 

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Fib supp..??

 

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Nope