Trading with point and figure

DAX in a supp area

1 month of data

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- Digesting Japan labour market and consumption data, awaiting German/
Spanish CPI, UK monetary aggregates, EC Confidence surveys ahead of
US revised Q3 GDP, CS House Prices and Consumer Confidence; Fed speak
and Italian BTP auctions also on tap

- Germany CPI: energy price base effects being held in check by food price
falls near term, focus on core CPI indicators

- Renzi indulging in 'old school Italian politics' brinkmanship ?

- US Q3 GDP: Private Consumption expected to pace marginal upward revision,
Trade and Inventories likely to be the wild cards

- US Consumer Confidence: post-election rebound expected

- Chart: fund flows heatmap via Deutsche Bank

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

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

As the OPEC production 'deal' hangs by a very thin thread, without ever having really had any concrete details on how a cap, let alone cut, might work in terms of specific countries, the day's data schedule will find its focal points in provisional Spanish and German CPI along with US revised Q3 GDP and Consumer Confidence; Swedish Q3 GDP, UK Consumer Credit and Mortgage Lending and the EC's monthly confidence surveys are also due. Fed speak features Dudley and Powell, though it will as ever be interesting to see what the ever thoughtful Claudio Borio from the has to say when he speaks at the UK Houses of Parliament. Ahead of Sunday's referendum, Italy also conducts its usual 3, 10 yr & CCT (FRN) sales, for which a substantial concession has been carved out, above all in spread terms to Bunds; the latter serves as a reminder that in contrast to the Brexit and US presidential votes, 'No' is clearly quite heavily discounted, and per se Yes would be the surprise outcome. The latter does not obviate the point that Italy's public sector debt and banking sector woes are huge, and "yes" would not make them any better. Oil prices will also look to tonight's API inventories data, with Crude stocks expected to have risen 900K bbls, Distillates 1.1 Mln and Gasoline 1.3 Mln. Last but not least politics continues to rule the roost with South Korea's President Park leaving it up to Parliament to decide her future, Brazil's leftist party looking to impeach President Temer, South Africa's President Zuma has survived yet another no confidence vote, and perhaps most significantly emergent chatter that Italian PM Renzi is considering resigning even if he were to win the referendum vote and is also considering forming a new government in the wake of the vote. Whether the latter reflects internal party/govt brinkmanship remains to be seen, but it imparts a certain irony in that either outcome may well lead to a general election, for which neither the centre right or centre left parties are well positioned, and raises very large questions about whether the hugely beleaguered Italian banking sector will be able to raise any significant volume of capital in the near term.

** Germany / Spain - November prov. CPI **
- Forecasts for German and Spanish CPI assumed that the pick-up to what are still very low levels of HICP in recent months would suffer a setback in Spain (0.4% y/y vs. Oct 0.5%), and edge up very fractionally in Germany (0.8% y/y vs. Oct 0.7%). Spanish CPI has in fact turned out higher than expected at 0.3% m/m for an unchanged 0.7% y/y, while the often not reliable pointer from Saxony's state CPI at flat m/m is marginally below the forecast for the national reading at +0.1% m/m. While Energy price base effects continue to unwind their large drag over recent years (last -0.9% y/y vs prior -3.0%), this has been heftily offset by a sharp deceleration in Food Prices (last 0.4% y/y vs. Sept 0.7% and August 1.3%), and Services CPI has remained very steady at 1.1% y/y. Per se, it is also unsurprising that there has been no discernible upward pressure in core CPI, and it will be these components which will require close scrutiny in today's readings. In passing, it is worth noting Mr Draghi's rather ambiguous pointer for the December 8 meeting, that "will assess various options to preserve a very substantial degree of accommodation needed to bring inflation to target", which implies a cut in the overall volume on a longer time scale is very much on the table (as suggested by Stournaras). However his cautious phrasing probably owes as much to wanting to see what fall-out there might be from the Italian referendum, and more than likely what happens to oil prices in the wake of the OPEC meeting.

** U.S.A. - Q3 revised GDP / Nov Consumer Confidence **
- If today's first revision of US Q3 GDP is to have much of a market impact, it will need to be substantially wide of the expected 3.0% SAAR vs. the advance reading of 2.9%, the latter being predicated on an upward revision to Personal Consumption to 2.3% from a preliminary 2.1% (as implied by Retail Sales revision). The wild cards will be the potential for a revision to the large 0.83 ppt contribution from Net Exports, and the high probability that there will be a not insubstantial revision to Inventories, which added 0.61 ppt to the advance GDP reading. November Consumer Confidence is projected to rebound to 101.5, after a relatively fall from a 20-month of 103.5 in September to 98.6 in October, echoing and probably predicated by a similarly sharp upmove in the often not well correlated Michigan Confidence measure. As ever with the labour report looming on Friday, the Labour Differential will be closely watched after slippping to a 3 month low of 2.2 in October from a post GFC cyclical high of 5.3 in September.

from Marc Ostwald
 
SPX
same data...change inputs
a shallow trend...no break as yet

needs to see red horizontals as rez on a bounce..imho
scalp shorts only uneless red is rez..imho

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