Dentalfloss
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7150 firts stop..then maybe 7180 on ftse
Trading with point and figure
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Dentalfloss
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MichaelJohnFX
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Add 11200ish on dax too
Dentalfloss
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- GBP collapse overnight casts long shadow over payrolls day; UK, German
and French Industrial Production, UK Trade, Japan wages likely to be
little more than data roadkill; plenty of Fed speakers and IMF/World
bank meetings
- UK: GBP collapse a wake-up call for Govt and BoE, breakeven inflation
rate since August looks to have been under-clubbed
- UK Industrial Production: sharp rebound in France and Germany suggests
upside risks to forecast of a dead cat like bounce
- US Payrolls: around average gain expected, Aug revision in focus,
anecdotal evidence rather mixed
- US Average Hourly Earnings may steal the show if forecast rebound
materializes
- Charts: UK 5 and 30 year breakeven inflation rates
..........................................................................
********************
** EVENTS PREVIEW **
********************
Well the idea was that today was going to be all about the US labour report, instead the GBP's opening meltdown in thin early Asian trading conditions puts Brexit UK front and central. Call it aberrant, a function of dysfunctional market liquidity conditions or what you like, but this is shock therapy for the May government and Mr Carney's unbridled hubris. Talk of another rate cut now looks so far-fetched and misplaced, and may at a flick of a switch turn to rates hike speculation. Foreign owners of Gilts and any other UK assets may well contemplate whether there is any merit in owning them, with long term investors now facing colossal costs in hedging future income/revenues thanks to the persistent volatility. Manufacturers will feel the pain of a jump in raw materials costs, and a more competitive currency may prove to be little more than a sop. As for the BOE, looking through the jump in inflation will be a huge challenge, which financial markets may well take a very dim view about. It would be pleasant to suggest that the sharp rise in breakeven inflation rates on Index-Linked Gilts (see attached charts) was prescient, but so much demand for this asset class is regulation driven, as to render that assertion tenuous. Indeed, breakevens should probably be anticipating a spike in RPI above 4.0%, but for those contemplating rushing into Index-Linked Gilts should remember that the decimation that will likely be meted out to conventional Gilts, where a 0.81% 10-yr yield and a 1.60% 30-yr yield look to be woefully inadequate given the prospective rise in inflation. One must also wonder how long the BoE will indeed be nominally independent, both in the wake of May's speech earlier in the week, and this Tweet from John Redwood "The Bank of England is not independent: Constitutionally the Bank is the creature of Parliament" as a link to a piece that concludes "maybe now it is time for Parliament to be more critical of its Bank, as its present policy of QE and ultra low rates is driving the pound down too much and undermining savers."
For all that the US labour report was meant to be the primary point of focus, there are plenty of other statistics, and a busy schedule of policy events to digest as well. Statistically the Japan Labour Cash Earnings and German Industrial Production featured overnight, while ahead lie French, Spanish & UK Industrial Production, with Trade and the NIESR's Q3 GDP estimate also due in the UK, along with Canadian Unemployment, US Wholesale Inventories and Consumer Credit and Brazilian IBGE inflation. In policy terms, the IMF / World Bank annual meetings get under way, and are likely to feature discussions about financial stability, with specific concerns about the Eurozone, as well as the need for governments to do more with fiscal policy, and via structural reforms. Fischer, Brainard, Mester and George will also make for a busy day of potentially sensitive Fed speak, particularly as it occurs after the labour report; though the various speakers positions are very familiar. A close eye will also be kept on Moody's ratings review for Italy (and perhaps even Saudi Arabia), the former is currently Baa2 with stable outlook.
** Germany, France. UK - Aug Industrial Production **
- Forecasts assume a divergence in manufacturing output between the UK and the Eurozone's two largest economies, which give something of a lie to the 'sterling gives UK exporters a boost', even if it has to be added that the German manufacturing sector has had a very lacklustre H1 2016, though outside of April, the UK's performance was no better, registering falls of -0.7%, -0.2% and -0.9% in May through July. Be that as it may, the sharp 2.5% m/m in German Industrial Production not only beta forecasts of 1.0%, but also more than reversed July's -1.5% m/m, and saw broad gains outside of construction, with Capital Goods Output up 4.7% m/m, thought his followed a 4.0% m/m fall in July. UK headline Industrial Production is seen eking out a small 0.1% m/m gain, predicated on the boost from the resource sector in July (due to oil fields coming on stream or back on stream after maintenance closures) proving to be a one-off, though Manufacturing Output is expected to post a more substantial rise of 0.4% m/m, following a large than expected -0.9% m/m in July. In truth, any boost from a weaker GBP, if it materializes, would more likely manifest itself in Q4.
** U.S.A. - September Labour report **
- The consensus forecast for headline payrolls looks for a rise of 172K rise (Aug +151K), which is very close to the 6-month average of 175K. while Private Payrolls are seen up 150K (Aug +126K), rather higher than the 6-month average of 150K (though excluding May's -1K, this rises to 181K). As previously noted, August Payrolls have been revised up by between 23K and 80K in recent years, and as such this will have a heightened market sensitivity, given that it imparts an asymmetric skew to expectations. As ever the anecdotal evidence has been mixed, Jobless Claims for survey week were a very low 251K, but national and regional employment indices have been on balance rather sluggish. The Unemployment Rate is expected to be unchanged at 4.9% for a fourth consecutive month (having posted an aberrant looking cyclical low of 4.7% in May), though it will as ever be more important to look at the details on the change in the size of the workforce relative to employment and unemployment gains/losses. However, barring a very sharp divergence relative to forecasts (and net of revisions), the key items in today's report may well be Average Hourly Earnings, which after a weaker than expected 0.1% m/m 2.4% y/y in August are seen bouncing back 0.3% m/m for a 2.6% y/y, just short of July's seven year high of 2.7%. The Average Workweek will also be important, with a modest uptick to 34.4 from a 31-month low of 34.3 in August expected, paced one assumes by a reversal of the steep 0.6% m/m drop in Manufacturing Hours, which would also fit with the rebound in the Manufacturing ISM. While the more hawkish FOMC members would argue that the November meeting is 'live', today's report would have to be universally strong for markets to attach a significant probability to that; even if a November hike would certainly help to dispel the notion, even accusation, that the Fed has become very politicized.
from Marc Ostwald
and French Industrial Production, UK Trade, Japan wages likely to be
little more than data roadkill; plenty of Fed speakers and IMF/World
bank meetings
- UK: GBP collapse a wake-up call for Govt and BoE, breakeven inflation
rate since August looks to have been under-clubbed
- UK Industrial Production: sharp rebound in France and Germany suggests
upside risks to forecast of a dead cat like bounce
- US Payrolls: around average gain expected, Aug revision in focus,
anecdotal evidence rather mixed
- US Average Hourly Earnings may steal the show if forecast rebound
materializes
- Charts: UK 5 and 30 year breakeven inflation rates
..........................................................................
********************
** EVENTS PREVIEW **
********************
Well the idea was that today was going to be all about the US labour report, instead the GBP's opening meltdown in thin early Asian trading conditions puts Brexit UK front and central. Call it aberrant, a function of dysfunctional market liquidity conditions or what you like, but this is shock therapy for the May government and Mr Carney's unbridled hubris. Talk of another rate cut now looks so far-fetched and misplaced, and may at a flick of a switch turn to rates hike speculation. Foreign owners of Gilts and any other UK assets may well contemplate whether there is any merit in owning them, with long term investors now facing colossal costs in hedging future income/revenues thanks to the persistent volatility. Manufacturers will feel the pain of a jump in raw materials costs, and a more competitive currency may prove to be little more than a sop. As for the BOE, looking through the jump in inflation will be a huge challenge, which financial markets may well take a very dim view about. It would be pleasant to suggest that the sharp rise in breakeven inflation rates on Index-Linked Gilts (see attached charts) was prescient, but so much demand for this asset class is regulation driven, as to render that assertion tenuous. Indeed, breakevens should probably be anticipating a spike in RPI above 4.0%, but for those contemplating rushing into Index-Linked Gilts should remember that the decimation that will likely be meted out to conventional Gilts, where a 0.81% 10-yr yield and a 1.60% 30-yr yield look to be woefully inadequate given the prospective rise in inflation. One must also wonder how long the BoE will indeed be nominally independent, both in the wake of May's speech earlier in the week, and this Tweet from John Redwood "The Bank of England is not independent: Constitutionally the Bank is the creature of Parliament" as a link to a piece that concludes "maybe now it is time for Parliament to be more critical of its Bank, as its present policy of QE and ultra low rates is driving the pound down too much and undermining savers."
For all that the US labour report was meant to be the primary point of focus, there are plenty of other statistics, and a busy schedule of policy events to digest as well. Statistically the Japan Labour Cash Earnings and German Industrial Production featured overnight, while ahead lie French, Spanish & UK Industrial Production, with Trade and the NIESR's Q3 GDP estimate also due in the UK, along with Canadian Unemployment, US Wholesale Inventories and Consumer Credit and Brazilian IBGE inflation. In policy terms, the IMF / World Bank annual meetings get under way, and are likely to feature discussions about financial stability, with specific concerns about the Eurozone, as well as the need for governments to do more with fiscal policy, and via structural reforms. Fischer, Brainard, Mester and George will also make for a busy day of potentially sensitive Fed speak, particularly as it occurs after the labour report; though the various speakers positions are very familiar. A close eye will also be kept on Moody's ratings review for Italy (and perhaps even Saudi Arabia), the former is currently Baa2 with stable outlook.
** Germany, France. UK - Aug Industrial Production **
- Forecasts assume a divergence in manufacturing output between the UK and the Eurozone's two largest economies, which give something of a lie to the 'sterling gives UK exporters a boost', even if it has to be added that the German manufacturing sector has had a very lacklustre H1 2016, though outside of April, the UK's performance was no better, registering falls of -0.7%, -0.2% and -0.9% in May through July. Be that as it may, the sharp 2.5% m/m in German Industrial Production not only beta forecasts of 1.0%, but also more than reversed July's -1.5% m/m, and saw broad gains outside of construction, with Capital Goods Output up 4.7% m/m, thought his followed a 4.0% m/m fall in July. UK headline Industrial Production is seen eking out a small 0.1% m/m gain, predicated on the boost from the resource sector in July (due to oil fields coming on stream or back on stream after maintenance closures) proving to be a one-off, though Manufacturing Output is expected to post a more substantial rise of 0.4% m/m, following a large than expected -0.9% m/m in July. In truth, any boost from a weaker GBP, if it materializes, would more likely manifest itself in Q4.
** U.S.A. - September Labour report **
- The consensus forecast for headline payrolls looks for a rise of 172K rise (Aug +151K), which is very close to the 6-month average of 175K. while Private Payrolls are seen up 150K (Aug +126K), rather higher than the 6-month average of 150K (though excluding May's -1K, this rises to 181K). As previously noted, August Payrolls have been revised up by between 23K and 80K in recent years, and as such this will have a heightened market sensitivity, given that it imparts an asymmetric skew to expectations. As ever the anecdotal evidence has been mixed, Jobless Claims for survey week were a very low 251K, but national and regional employment indices have been on balance rather sluggish. The Unemployment Rate is expected to be unchanged at 4.9% for a fourth consecutive month (having posted an aberrant looking cyclical low of 4.7% in May), though it will as ever be more important to look at the details on the change in the size of the workforce relative to employment and unemployment gains/losses. However, barring a very sharp divergence relative to forecasts (and net of revisions), the key items in today's report may well be Average Hourly Earnings, which after a weaker than expected 0.1% m/m 2.4% y/y in August are seen bouncing back 0.3% m/m for a 2.6% y/y, just short of July's seven year high of 2.7%. The Average Workweek will also be important, with a modest uptick to 34.4 from a 31-month low of 34.3 in August expected, paced one assumes by a reversal of the steep 0.6% m/m drop in Manufacturing Hours, which would also fit with the rebound in the Manufacturing ISM. While the more hawkish FOMC members would argue that the November meeting is 'live', today's report would have to be universally strong for markets to attach a significant probability to that; even if a November hike would certainly help to dispel the notion, even accusation, that the Fed has become very politicized.
from Marc Ostwald
Dentalfloss
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gbp collapse....not sure what knock on for index
ftse... seems to be up atm.... could be in for another daft day (both ways).
Dentalfloss
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bulls in...excellent...as we said preopen
spx was gonna fly
spx was gonna fly
Dentalfloss
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1.2500 ..the new rez on cable
130.00 on gbpjpy
130.00 on gbpjpy
Atilla
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FTSE100 ends up being positive as more companies earning abroad.
FTSE250 - 350s probably down as raising import prices and making UK assets not so desirable imo.
Companies earning abroad are key imo.
FTSE may well reach 7500 by xmas.
Dentalfloss
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ftse pumpin nicely
Dentalfloss
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:smart::smart::smart::smart::smart:
FTSE100 ends up being positive as more companies earning abroad.
FTSE250 - 350s probably down as raising import prices and making UK assets not so desirable imo.
Companies earning abroad are key imo.
FTSE may well reach 7500 by xmas.
1000hrs ish rip....
Dentalfloss
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Dentalfloss
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GBp should be a buy from today...lets see
Dentalfloss
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Dentalfloss
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1.2440 rez area
1.2266 supp area...there now
will it hold..??
1.2266 supp area...there now
will it hold..??
Last edited:
Dentalfloss
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