Dentalfloss
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time for tea and biscuits
Trading with point and figure
- Thread starter Dentalfloss
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Dentalfloss
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will we rally....a bit ..??
Dentalfloss
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"BoE concedes some ground, but supposedly neutral bias more a rhetorical deception; Court ruling a blessing in disguise?"
1) The decision - Unsurprisingly and as expected Base Rate was held at 0.25% and the total GIlt APF (QE) at £435 Bln and the £10 Bln Corporate bond programme. Surprisingly the vote was unanimous, though "For Kristin Forbes and Ian McCafferty, who had opposed the increase in gilt purchases in August, the current outlook still did not fully warrant the additional stimulus generated by the increase in the size of the gilt purchase programme. However, given the potential costs to the economy of reversing the programme underway, they would not vote against the continuation of that programme. For Kristin Forbes, these arguments also applied to the corporate bond purchase programme."
2) More significantly the MPC shifted to a neutral policy bias "In light of the developments of the past three months, all MPC members agreed that that the guidance it had issued following its August meeting regarding the likelihood of a further cut in Bank Rate had expired. As the Committee had noted earlier in the year, the future path of monetary policy would depend on the evolution of the prospects for demand, supply, the exchange rate, and therefore inflation. Monetary policy could respond, in either direction, to changes to the economic outlook as they unfolded to ensure a sustainable return of inflation to the 2% target."
3) They noted: "The net result of the developments since the August Inflation Report, and particularly the depreciation of sterling, had adversely affected the trade-off between the outlook for inflation and real activity that the MPC was required by its Remit to balance."
Adding: "The impact of sterling’s depreciation on CPI inflation would ultimately prove temporary and, in the Committee’s judgement, attempting to offset it fully with tighter monetary policy would be excessively costly in terms of foregone output and employment growth. However, there were limits to the extent to which above-target inflation could be tolerated. These limits depended, for example, on the cause of the inflation overshoot, the extent of second-round effects on inflation expectations and domestic costs, and the scale of the shortfall in economic activity below potential."
4) Forecast revisions:
a) CPI 2017 2.7% y/y vs. prior 2.0%, 2018 2.7% y/y vs. prior 2.4%, 2019 seen at 2.5%
b) GDP 2017 1.4% y/y vs. prior 0.8%, 2018 1.5% y/y vs. prior 1.8%
These are best described as being less divorced from likely outcomes than in August, though the risks in terms of the outlook CPI look to be far above 2.7% for 2017, and to a slightly smaller extent for 2018. One might suggest that they can be construed as a rough guide as to how much of an inflation overshoot the BoE is likely to tolerate, before it would be forced to think about tightening policy. Eminently, the latter would be much less of a trigger, if growth were to slow in a more marked fashion, and / or Unemployment to rise, than current projections assume, as Carney underlined. It seems safe to opine that prior experience, above all the 2008-2011 period, suggests that the MPC may suggest that policy could move in either direction depending on how the inflation picture evolves. But in reality they will be quicker to respond to any weakness in growth or a rise in unemployment by easing policy, than they will be to tighten policy in the event of a clear overshoot. This is the asymmetric bias to central bank policy which BIS Claudio Borio has frequently referred (see various speeches here: http://www.bis.org/author/claudio_borio.htm). Eminently this still represents a significant revision to the outlook from August, but really does little to change an overall uncertain outlook in the medium to long-term, or indeed the likelihood that there was always likely to be little major immediate impact on the economy, until Brexit negotiations get under way. Perhaps the more so, given that sluggish business investment was in evidence long before the referendum, and is evident in most developed economies.
Nov MPC minutes:
http://www.bankofengland.co.uk/publications/minutes/Documents/mpc/pdf/2016/nov.pdf
Q4 BoE Inflation Report:
http://www.bankofengland.co.uk/publications/Documents/inflationreport/2016/nov.pdf
5) High Court rules Article 50 trigger does require a parliamentary vote.
Unsurprisingly this is going to an Appeal hearing in the Supreme Court, earmarked for 5 to 8 December, though it is not immediately clear when the Supreme Court will deliver its ruling. Mrs May is eminently no stranger to protracted High or Supreme Court battles, as evidenced by her period as Home Secretary. Nevertheless this particular path, while unsurprising given the deep divisions nationally about Brexit, does serve to underline two specific points. Firstly Mrs May is more than well aware that the Conservative Party is as deeply divided as the country, and that either side will be more than willing to cut their noses off to spite their face, and per se she cannot rely on the party closing ranks and approving a parliamentary Brexit trigger. Secondly and perhaps rather more germane, little progress has been made in actually formulating a broad brush strategy on how the UK will approach the negotiations with the EU once Article 50 has been triggered, or indeed what its main objectives will be. Per se, even if she were assured that her party would close ranks in a parliamentary vote, her government is simply not sufficiently prepared. The court proceedings are in that respect a blessing in disguise, even if they do add a further element of uncertainty.
6) Markets - while the GBP has staged a further recovery, in the wake of the court ruling and the MPC meeting / press conference, the US election uncertainty related USD setback, and some unwinding of the large GBP short position ahead of the event risk presented by tomorrow's US labour data and next week's election have probably been contributing factors. A renewed uptick in Gilt yields also had a degree of inevitability as the BoE moves to a more neutral stance, with the drop in breakeven inflation rates perhaps counterintuitive, when one considers the BoE's willingness to tolerate somewhat higher inflation for a protracted period. On the other hand much of the rise in breakeven inflation rates was related to the GBP's fall, and as such the setback is a natural corollary of the modest GBP recovery. That said 10-yr nominal Gilt yields at 1.22% and 30-yr at 1.89% imply a need for deeply negative real yields, which hardly fits with the BoE's GDP forecasts.
Finally - our quote of the day goes to Fitch ratings on QE and EMEA credit issuance:
"EMEA corporate issuance is poised to hit a new record in 2016, as abundant central bank liquidity and search-for-yield behaviour drive tighter spreads and yields to new lows. However, bond financing earmarked for capex continues to drop, raising doubts over QE's ability to revive growth, while concerns mount over the growing dislocation between market pricing and fundamentals - as reflected in the divergence between corporate debt levels and bond spreads."
This is a damning indictment of QE in reality - essentially what that says is that QE is just a ponzi scheme for financial markets, with no benefits for non-financial economy.
..........................................................................
Marc Ostwald
Strategist
ADM Investor Services International
1) The decision - Unsurprisingly and as expected Base Rate was held at 0.25% and the total GIlt APF (QE) at £435 Bln and the £10 Bln Corporate bond programme. Surprisingly the vote was unanimous, though "For Kristin Forbes and Ian McCafferty, who had opposed the increase in gilt purchases in August, the current outlook still did not fully warrant the additional stimulus generated by the increase in the size of the gilt purchase programme. However, given the potential costs to the economy of reversing the programme underway, they would not vote against the continuation of that programme. For Kristin Forbes, these arguments also applied to the corporate bond purchase programme."
2) More significantly the MPC shifted to a neutral policy bias "In light of the developments of the past three months, all MPC members agreed that that the guidance it had issued following its August meeting regarding the likelihood of a further cut in Bank Rate had expired. As the Committee had noted earlier in the year, the future path of monetary policy would depend on the evolution of the prospects for demand, supply, the exchange rate, and therefore inflation. Monetary policy could respond, in either direction, to changes to the economic outlook as they unfolded to ensure a sustainable return of inflation to the 2% target."
3) They noted: "The net result of the developments since the August Inflation Report, and particularly the depreciation of sterling, had adversely affected the trade-off between the outlook for inflation and real activity that the MPC was required by its Remit to balance."
Adding: "The impact of sterling’s depreciation on CPI inflation would ultimately prove temporary and, in the Committee’s judgement, attempting to offset it fully with tighter monetary policy would be excessively costly in terms of foregone output and employment growth. However, there were limits to the extent to which above-target inflation could be tolerated. These limits depended, for example, on the cause of the inflation overshoot, the extent of second-round effects on inflation expectations and domestic costs, and the scale of the shortfall in economic activity below potential."
4) Forecast revisions:
a) CPI 2017 2.7% y/y vs. prior 2.0%, 2018 2.7% y/y vs. prior 2.4%, 2019 seen at 2.5%
b) GDP 2017 1.4% y/y vs. prior 0.8%, 2018 1.5% y/y vs. prior 1.8%
These are best described as being less divorced from likely outcomes than in August, though the risks in terms of the outlook CPI look to be far above 2.7% for 2017, and to a slightly smaller extent for 2018. One might suggest that they can be construed as a rough guide as to how much of an inflation overshoot the BoE is likely to tolerate, before it would be forced to think about tightening policy. Eminently, the latter would be much less of a trigger, if growth were to slow in a more marked fashion, and / or Unemployment to rise, than current projections assume, as Carney underlined. It seems safe to opine that prior experience, above all the 2008-2011 period, suggests that the MPC may suggest that policy could move in either direction depending on how the inflation picture evolves. But in reality they will be quicker to respond to any weakness in growth or a rise in unemployment by easing policy, than they will be to tighten policy in the event of a clear overshoot. This is the asymmetric bias to central bank policy which BIS Claudio Borio has frequently referred (see various speeches here: http://www.bis.org/author/claudio_borio.htm). Eminently this still represents a significant revision to the outlook from August, but really does little to change an overall uncertain outlook in the medium to long-term, or indeed the likelihood that there was always likely to be little major immediate impact on the economy, until Brexit negotiations get under way. Perhaps the more so, given that sluggish business investment was in evidence long before the referendum, and is evident in most developed economies.
Nov MPC minutes:
http://www.bankofengland.co.uk/publications/minutes/Documents/mpc/pdf/2016/nov.pdf
Q4 BoE Inflation Report:
http://www.bankofengland.co.uk/publications/Documents/inflationreport/2016/nov.pdf
5) High Court rules Article 50 trigger does require a parliamentary vote.
Unsurprisingly this is going to an Appeal hearing in the Supreme Court, earmarked for 5 to 8 December, though it is not immediately clear when the Supreme Court will deliver its ruling. Mrs May is eminently no stranger to protracted High or Supreme Court battles, as evidenced by her period as Home Secretary. Nevertheless this particular path, while unsurprising given the deep divisions nationally about Brexit, does serve to underline two specific points. Firstly Mrs May is more than well aware that the Conservative Party is as deeply divided as the country, and that either side will be more than willing to cut their noses off to spite their face, and per se she cannot rely on the party closing ranks and approving a parliamentary Brexit trigger. Secondly and perhaps rather more germane, little progress has been made in actually formulating a broad brush strategy on how the UK will approach the negotiations with the EU once Article 50 has been triggered, or indeed what its main objectives will be. Per se, even if she were assured that her party would close ranks in a parliamentary vote, her government is simply not sufficiently prepared. The court proceedings are in that respect a blessing in disguise, even if they do add a further element of uncertainty.
6) Markets - while the GBP has staged a further recovery, in the wake of the court ruling and the MPC meeting / press conference, the US election uncertainty related USD setback, and some unwinding of the large GBP short position ahead of the event risk presented by tomorrow's US labour data and next week's election have probably been contributing factors. A renewed uptick in Gilt yields also had a degree of inevitability as the BoE moves to a more neutral stance, with the drop in breakeven inflation rates perhaps counterintuitive, when one considers the BoE's willingness to tolerate somewhat higher inflation for a protracted period. On the other hand much of the rise in breakeven inflation rates was related to the GBP's fall, and as such the setback is a natural corollary of the modest GBP recovery. That said 10-yr nominal Gilt yields at 1.22% and 30-yr at 1.89% imply a need for deeply negative real yields, which hardly fits with the BoE's GDP forecasts.
Finally - our quote of the day goes to Fitch ratings on QE and EMEA credit issuance:
"EMEA corporate issuance is poised to hit a new record in 2016, as abundant central bank liquidity and search-for-yield behaviour drive tighter spreads and yields to new lows. However, bond financing earmarked for capex continues to drop, raising doubts over QE's ability to revive growth, while concerns mount over the growing dislocation between market pricing and fundamentals - as reflected in the divergence between corporate debt levels and bond spreads."
This is a damning indictment of QE in reality - essentially what that says is that QE is just a ponzi scheme for financial markets, with no benefits for non-financial economy.
..........................................................................
Marc Ostwald
Strategist
ADM Investor Services International
Dentalfloss
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SPX
Dentalfloss
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from the chart...could go either way
Dentalfloss
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a closer look
Dentalfloss
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bulls need to get bizzee and rip out that 2109 rez area
they will be watching the p/b from that
they will be watching the p/b from that
Dentalfloss
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mornin folks
Dentalfloss
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Dentalfloss
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morning Mr D - I'm still [largely] on a break from trading - but it looks like you still have everything well in hand!
we try hard on here..no messing...just pips only...nowt else needed
Dentalfloss
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Dentalfloss
Legendary member
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- 3,726
Dentalfloss
Legendary member
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Dentalfloss
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dax is in the buy zone
Dentalfloss
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into jeffre 6719 zone
finally
finally
Dentalfloss
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Dentalfloss
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Dentalfloss
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- Election likely to overshadow US Payrolls; Europe Services PMI, US /
Canada Trade, Canada jobs, Fed & ECB speak and corporate earnings
provide the accompaniment
- US Payrolls: seen around recent average; govt and manufacturing jobs
may provide a boost, Hurricane Matthew may drag modestly
- US Unemployment Rate seen slipping, focus on participation rate
- US Average Hourly Earnings: seen picking up mth/mth, but steady y/y
- Charts: VIX and MOV|E volatility indices
..........................................................................
********************
** EVENTS PREVIEW **
********************
It is US Payrolls day, though Tuesday's election may well keep the animal spirits associated with this statistical behemoth on a shortened leash. As a preamble, continental Europe sees Services PMIs, with the focus on whether Spain and Portugal match improvements seen in Manufacturing readings, and elsewhere in Services. The US and Canada also publish Trade data for September, with Canada also offering its labour report; but it is the first round of post FOMC meeting speakers - Brainard, Kapalan & Lockhart - which may be more eagerly awaited, even if they appear unlikely to offer any particular fresh insights ahead of Tuesday. The overnight RBA Monetary Policy Statement unsurprisingly confirmed that policy looks to be on hold for a protracted period, with the RBA sounding an upbeat outlook on the economic outlook. There will be some interest in the CSU party conference to see if there is scope for any rapprochement between Bavarian PM Seehofer and Chancellor on her asylum / refugee policy, given the former has been fiercely critical, and some of common ground needs to be established as next year's general elections comes into view.
** U.S.A. - October labour report / Sept Trade Balance **
- Consensus forecasts for Payrolls have the appearance of being ever more agnostic every month, often pitched very close to the 6-month average (current 169K), as is the case with this month's +175K. In the detail govt payrolls are expected to turn positive (unsurprising given the election), with Private Payrolls seen little changed at 170K from Sept +167K, but Manufacturing is once again expected to act as small drag (-5K), though sector surveys imply scope for a modest gain. In broader anecdotal terms, there has been the confusing ADP report, in so far as a sharp upward revision to September was out of kilter with the official data, while the October print undershot forecasts, meanwhile Claims have been in a tight range for a very protracted period. The one outlier influence could be a modest drag from Hurricane Matthew. But overall this would suggest another ho-hum headline reading, which would then put the focus on an expected dip back to 4.9% in the Unemployment Rate, though much depends on how the current strength of the labour market continues to bring back so-called 'discourage' workers back into the labour force, as was evident during Q4. Last but certainly not least, a pickup to a 0.3% m/m pace is forecast for Average Hourly Earnings, which would see the y/y rate unchanged at 2.6%, while Average Weekly Hours are seen unchanged at 34.4. As for the Trade Balance, the projected narrowing to $-38.0 Bln is effectively an extrapolation from last week's solid net exports contribution to Q3 GDP, though the GDP measure was an estimate, and is therefore subject to revision, with a particularly close eye in the details set to be kept in on that surge in soy exports
from Marc Ostwald
Canada Trade, Canada jobs, Fed & ECB speak and corporate earnings
provide the accompaniment
- US Payrolls: seen around recent average; govt and manufacturing jobs
may provide a boost, Hurricane Matthew may drag modestly
- US Unemployment Rate seen slipping, focus on participation rate
- US Average Hourly Earnings: seen picking up mth/mth, but steady y/y
- Charts: VIX and MOV|E volatility indices
..........................................................................
********************
** EVENTS PREVIEW **
********************
It is US Payrolls day, though Tuesday's election may well keep the animal spirits associated with this statistical behemoth on a shortened leash. As a preamble, continental Europe sees Services PMIs, with the focus on whether Spain and Portugal match improvements seen in Manufacturing readings, and elsewhere in Services. The US and Canada also publish Trade data for September, with Canada also offering its labour report; but it is the first round of post FOMC meeting speakers - Brainard, Kapalan & Lockhart - which may be more eagerly awaited, even if they appear unlikely to offer any particular fresh insights ahead of Tuesday. The overnight RBA Monetary Policy Statement unsurprisingly confirmed that policy looks to be on hold for a protracted period, with the RBA sounding an upbeat outlook on the economic outlook. There will be some interest in the CSU party conference to see if there is scope for any rapprochement between Bavarian PM Seehofer and Chancellor on her asylum / refugee policy, given the former has been fiercely critical, and some of common ground needs to be established as next year's general elections comes into view.
** U.S.A. - October labour report / Sept Trade Balance **
- Consensus forecasts for Payrolls have the appearance of being ever more agnostic every month, often pitched very close to the 6-month average (current 169K), as is the case with this month's +175K. In the detail govt payrolls are expected to turn positive (unsurprising given the election), with Private Payrolls seen little changed at 170K from Sept +167K, but Manufacturing is once again expected to act as small drag (-5K), though sector surveys imply scope for a modest gain. In broader anecdotal terms, there has been the confusing ADP report, in so far as a sharp upward revision to September was out of kilter with the official data, while the October print undershot forecasts, meanwhile Claims have been in a tight range for a very protracted period. The one outlier influence could be a modest drag from Hurricane Matthew. But overall this would suggest another ho-hum headline reading, which would then put the focus on an expected dip back to 4.9% in the Unemployment Rate, though much depends on how the current strength of the labour market continues to bring back so-called 'discourage' workers back into the labour force, as was evident during Q4. Last but certainly not least, a pickup to a 0.3% m/m pace is forecast for Average Hourly Earnings, which would see the y/y rate unchanged at 2.6%, while Average Weekly Hours are seen unchanged at 34.4. As for the Trade Balance, the projected narrowing to $-38.0 Bln is effectively an extrapolation from last week's solid net exports contribution to Q3 GDP, though the GDP measure was an estimate, and is therefore subject to revision, with a particularly close eye in the details set to be kept in on that surge in soy exports
from Marc Ostwald
Dentalfloss
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care...those buy zones on ftse and dax...could be a trap
