Trading with point and figure

dow updated
a pullback..so far

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** EVENTS PREVIEW **
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A busier schedule features UK and US inflation data, Germany's ZEW survey, US Industrial Production and Housing Starts, with the overnight August RBA meeting minutes and some Fed speaker from FOMC majority opinion bellwether Lockhart topping the policy side of the agenda. After last week's 'fail', the BoE's over 15 yr Gilt QE reverse auction will attract plenty of attention, and should in theory be aided in cover terms by the fact of tomorrow's £1.25 Bln 4.25% 2055 Gilt auction. The extent to which the summer holiday season in the northern hemisphere is thinning trading volumes was all too evident yesterday, and barring any 'shocks', this appears likely to be the case for the next 2 to 3 weeks. Be that as it may, it gives time to contemplate SF Fed's Williams' comments yesterday which proposed some relatively radical proposals for reshaping monetary policy, above all for far more co-ordination of monetary and fiscal policies. Nevertheless Williams looks to be primarily concerned about monetary policy operational constraints at the zero/lower bound for rates (tacitly rejecting the concept and efficacy of negative rates), rather than a root and branch reassessment of whether academic and policymaker perspectives on how economies work, given the hurricane of the technological revolution that is currently blowing through the world economy. It is nevertheless interesting in the context of the BoE sticking to policy settings and operational parameters, which Williams is clearly suggesting are not going to work, and should make for a rather more interesting discussions at this year's KC Fed Jackson Hole symposium that starts in 10 days. This comes along with overnight hints about how the BoJ's policy review might pan out, even if these are seemingly more of the re-arranging the deck chairs on the Titanic, in effect symptomatic of a strong local cultural bias to avoid the shame and disgrace of failure, thus involving a jettisoning of some of the seemingly unattainable targets that have been set. On that front, the LCP's estimate that the FTSE100 companies pensions deficit is set to balloon from £25 Bln to £63 Bln due to the slide in U.K. long-term rates does underline the need to review these arbitrary measures, which are based on highly debatable assumptions, aside from forcing pension fund asset allocations that only serve to reinforce an ever tightening noose on their returns.

** U.K. - July CPI, RPI & PPI **
- As previously noted, there is "much ado" about this week's "post Brexit" data (much of which is not actually post Brexit, especially the labour market data), with particular focus on Retail Sales, for which today's CPI data has, as ever, considerable implications. The expected -0.1% m/m on CPI is rather modest for a summer sales dictated fall, though perhaps justified by the combination of some evidence of 'front loaded' discounting in June CPI and the July BRC Shop Price readings highlighting notably lower levels of discounting in key areas such as Clothing, Furniture and Household goods. PPI will be rather more significant in indicating pipeline pressures from the weaker GBP, though softer energy prices may be a temporary restraint in Input terms, with forecasters seeing PPI Input up 1.0% m/m. By contrast PPI Output is still anticipated to be restrained at 0.2% m/m headline and just 0.1% m/m core, perhaps indicating that producers are unwilling to pass through rising costs due to concerns about demand, though it would be premature to extrapolate from today's data in terms of post-Brexit trends.

** U.S.A. - July CPI, Housing Starts, Industrial Production **
- Energy Prices are expected to rein in headline CPI (with gasoline pump prices having fallen some $0.20 on the month) to show a flat m/m reading, which would edge headline CPI down to 0.9% y/y; however core CPI is expected (as ever) to rise 0.2% m/m to leave y/y rate at 2.3%, with housing and healthcare continuing to be rather sticky, though airline fares should see some drag from energy prices, even if that correlation has broken down in recent months. The first of the August manufacturing surveys from the NY Fed proved to be disappointing though neither the NY or Philly surveys are particularly good proxies for the sector as a whole, with today's July Industrial Production being of rather greater significance. The latter is expected to sustain a recently improving trend with a 0.3% m/m, while Manufacturing Output is forecast to rise 0.2% m/m, which would be the first back to back m/m rises since March/April 2015, and by extension suggesting that the drag from the energy sector is now dissipating. Yesterday's NAHB Housing Market Index showed a typical seasonal, though modest rise to 60, which probably has few implications for today's often choppy Housing Starts data, which are seen slipping 0.8% m/m to a SAAR pace of 1.18 Mln, following a stronger than expected 4.8% m/m rise in June.


from Marc Ostwald
 
Didnt quite make it to 626-630 area, 31 is close enough though. Broken trend line (green) may now act as res, lets see.

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