Dentalfloss
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stopped out on cable dump
excellent run
excellent run
Trading with point and figure
- Thread starter Dentalfloss
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Dentalfloss
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dump 1.0820 for a scalp
Dentalfloss
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ftse pumpin
Dentalfloss
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ftse..tight stop now
7140 some sort of pivot area
7140 some sort of pivot area
Dentalfloss
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stopped out on ftse
excellent run
excellent run
Dentalfloss
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eurusd dump
audusd dump
gold dump
for a few
audusd dump
gold dump
for a few
Dentalfloss
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dow over the last week
Dentalfloss
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19800 area was the base/green
Dentalfloss
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some detail
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thing is...we dont know if that horizontal supp/green is a bottom
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1) The decision - Unsurprisingly and as expected Base Rate was held at 0.25% and the total Gilt APF (QE) at £435 Bln, with the £11.6 Bln proceeds of the redemption of the 1.25% 2017 set to be reinvested in buybacks (£775 Mln each) starting February 6, in effect extending QE for 5 weeks. Perhaps more surprising was the decision to continue with £10 Bln Corporate bond programme (currently £5.76 Bln completed).
2) The forecast revisions had a number of surprises, as well as highlighting how badly wrong the BoE was in August 2016.
a) CPI: 2017 2.7% y/y vs. Nov 2.7% and August 2.0%
2018 2.56% y/y vs. Nov 2.7% and August 2.4%
2019 2.36% y/y vs. Nov 2.49%
b) GDP: 2017 2.0% y/y vs. Nov 1.4% y/y and August 0.8%
2018 1.6% y/y vs. Nov 1.5% y/y and August 1.8%
c) Unemployment Rate: 2017 4.9% vs. Nov 5.0%
2018 5.0% vs. Nov 5.5%
2019 5.0% vs. Nov 5.6%
* Equilibrium Unemployment Rate now seen at 4.5% vs. 5.0%
d) Avg Weekly Earnings: 2017 3.0% y/y vs. Nov 2.75%
2018 3.25% y/y vs. Nov 3.75%
2019 3.25% y/y vs. Nov 3.75%
To be very blunt these look so horribly manipulated, so as to justify the MPC taking no action. But starting with the CPI forecasts, the rationale for the changes according to Carney was 'partly due to 3.0% appreciation of Sterling, and market expectations of a rate rise'. Let us call this hogwash, and observe that IF the GBP falls between now and the May inflation report, there will be adjustments in the opposite direction. On GDP the sheer scale of the forecast change since August prompts only one reaction "you do not know what you are talking about", and the assumption that they will certainly be wrong yet again. Carney's rationale for the big miss was implicitly an admission that the MPC has not got the first clue about the drivers of UK Consumer Spending "The thing that we missed is the strength of consumer spending and consumer confidence associated with that, that has been present all the way through this process." “Pick up in unsecured consumer credit will cause FPC and PTA to look at underwriting standards”, but then added: “this is not a debt-fuelled consumer expansion in UK.” There are many who will beg to differ, though we would agree that the current pace of unsecured credit growth at 10.6% y/y is not sustainable, and that rising inflation and still relatively subdued wage growth will start to impinge on private consumption as the year progresses. It should be added that the lowering of the Equilibrium Unemployment Rate to 4.5% from 5.0% also smacks of a deliberate manipulation to convey the message that there is still considerable labour market slack, and by extension removing another argument for tightening policy.
3) GBP and Inflation - "Inflation is expected to increase further, peaking around 2.8 pct at the start of 2018, before falling gradually back to 2.4 pct in three years’ time. This overshoot is entirely because of sterling’s fall, which itself is the product of the market’s view of the consequences of Brexit." This is not correct, the fact is that Carney with his promise of aggressive monetary policy action at the August meeting, and the MPC's package of easing measures were a, if not the, key contributor to the GBP slide from 1.31 vs. the USD. In other words markets reacted to his / the MPC's very negative outlook. It is however true that the often spurious market, media and public debate around 'hard', 'soft', half-baked or whatever else Brexit has been the driver of GBP volatility since.
4) Should we attach any credibility to this?
"All members also agreed that, while the Committee needed to continue balancing the prospect of a period of above-target inflation with the support that monetary policy gave for activity and employment, there were limits to the degree to which above-target inflation could be tolerated. For some members, the risks around the trade-off embodied in the central projection meant they had moved a little closer to those limits."
Or indeed the assertion of a neutral policy bias in this?
"In judging the appropriate policy stance, the Committee would monitor closely the incoming evidence regarding these and other factors. For instance, if spending growth were to slow more abruptly than expected, there was scope for monetary policy to be loosened. If, on the other hand, pay growth were to pick up by more than anticipated, monetary policy might need to be tightened to a greater degree than the gently rising path implied by market yields. 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."
We would continue to argue that there remains a very, very strong asymmetric bias to the MPC easing rather than tightening policy, and this is where a key risk lies beyond the political narrative around Brexit. In other words if, as we expect, CPI inflation peaks at a much higher rate than the BoE is projecting, it may well become clear to markets that this assertion "As the Committee has previously noted, however, there are limits to the extent that above-target inflation can be tolerated" is merely rhetorical 'paying lip service' to their mandate, which will be circumvented by arguing that hiking rates would derail the economy. However assuming that GDP continues to be around 1.5-2.0%, markets will not be far less tolerant of this line of argumentation than they were in the dark days of 2009-2011, and would likely renew downward pressure on the GBP.
Equally, if CPI rises beyond 2.5% y/y and RPI breaches 3.5% y/y in coming months as is distinctly possible, then real (inflation adjusted) Gilt yields would implicitly drop into deeply negative territory. As a reminder 10-yr yr Gilt currently yields 1.38%, 30-yr 2.04% and 50-yr 1.86%, there is absolutely no 'protection' in those yields.
In passing, it is also worth noting that for all that the BoE has misread the UK economy, markets still appear to hang on and believe their every word, this may well come back to haunt them!
Feb 2017 MPC minutes:
http://www.bankofengland.co.uk/publications/minutes/Documents/mpc/pdf/2017/feb.pdf
Q1 2017 BoE Inflation Report:
http://www.bankofengland.co.uk/publications/Documents/inflationreport/2017/feb.pdf
and meanwhile the Brexit White Paper was also published:
"The United Kingdom’s exit from, and new partnership with, the European Union White Paper"
https://www.gov.uk/government/publi...rtnership-with-the-european-union-white-paper
..........................................................................
Marc Ostwald
Strategist
ADM Investor Services International
2) The forecast revisions had a number of surprises, as well as highlighting how badly wrong the BoE was in August 2016.
a) CPI: 2017 2.7% y/y vs. Nov 2.7% and August 2.0%
2018 2.56% y/y vs. Nov 2.7% and August 2.4%
2019 2.36% y/y vs. Nov 2.49%
b) GDP: 2017 2.0% y/y vs. Nov 1.4% y/y and August 0.8%
2018 1.6% y/y vs. Nov 1.5% y/y and August 1.8%
c) Unemployment Rate: 2017 4.9% vs. Nov 5.0%
2018 5.0% vs. Nov 5.5%
2019 5.0% vs. Nov 5.6%
* Equilibrium Unemployment Rate now seen at 4.5% vs. 5.0%
d) Avg Weekly Earnings: 2017 3.0% y/y vs. Nov 2.75%
2018 3.25% y/y vs. Nov 3.75%
2019 3.25% y/y vs. Nov 3.75%
To be very blunt these look so horribly manipulated, so as to justify the MPC taking no action. But starting with the CPI forecasts, the rationale for the changes according to Carney was 'partly due to 3.0% appreciation of Sterling, and market expectations of a rate rise'. Let us call this hogwash, and observe that IF the GBP falls between now and the May inflation report, there will be adjustments in the opposite direction. On GDP the sheer scale of the forecast change since August prompts only one reaction "you do not know what you are talking about", and the assumption that they will certainly be wrong yet again. Carney's rationale for the big miss was implicitly an admission that the MPC has not got the first clue about the drivers of UK Consumer Spending "The thing that we missed is the strength of consumer spending and consumer confidence associated with that, that has been present all the way through this process." “Pick up in unsecured consumer credit will cause FPC and PTA to look at underwriting standards”, but then added: “this is not a debt-fuelled consumer expansion in UK.” There are many who will beg to differ, though we would agree that the current pace of unsecured credit growth at 10.6% y/y is not sustainable, and that rising inflation and still relatively subdued wage growth will start to impinge on private consumption as the year progresses. It should be added that the lowering of the Equilibrium Unemployment Rate to 4.5% from 5.0% also smacks of a deliberate manipulation to convey the message that there is still considerable labour market slack, and by extension removing another argument for tightening policy.
3) GBP and Inflation - "Inflation is expected to increase further, peaking around 2.8 pct at the start of 2018, before falling gradually back to 2.4 pct in three years’ time. This overshoot is entirely because of sterling’s fall, which itself is the product of the market’s view of the consequences of Brexit." This is not correct, the fact is that Carney with his promise of aggressive monetary policy action at the August meeting, and the MPC's package of easing measures were a, if not the, key contributor to the GBP slide from 1.31 vs. the USD. In other words markets reacted to his / the MPC's very negative outlook. It is however true that the often spurious market, media and public debate around 'hard', 'soft', half-baked or whatever else Brexit has been the driver of GBP volatility since.
4) Should we attach any credibility to this?
"All members also agreed that, while the Committee needed to continue balancing the prospect of a period of above-target inflation with the support that monetary policy gave for activity and employment, there were limits to the degree to which above-target inflation could be tolerated. For some members, the risks around the trade-off embodied in the central projection meant they had moved a little closer to those limits."
Or indeed the assertion of a neutral policy bias in this?
"In judging the appropriate policy stance, the Committee would monitor closely the incoming evidence regarding these and other factors. For instance, if spending growth were to slow more abruptly than expected, there was scope for monetary policy to be loosened. If, on the other hand, pay growth were to pick up by more than anticipated, monetary policy might need to be tightened to a greater degree than the gently rising path implied by market yields. 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."
We would continue to argue that there remains a very, very strong asymmetric bias to the MPC easing rather than tightening policy, and this is where a key risk lies beyond the political narrative around Brexit. In other words if, as we expect, CPI inflation peaks at a much higher rate than the BoE is projecting, it may well become clear to markets that this assertion "As the Committee has previously noted, however, there are limits to the extent that above-target inflation can be tolerated" is merely rhetorical 'paying lip service' to their mandate, which will be circumvented by arguing that hiking rates would derail the economy. However assuming that GDP continues to be around 1.5-2.0%, markets will not be far less tolerant of this line of argumentation than they were in the dark days of 2009-2011, and would likely renew downward pressure on the GBP.
Equally, if CPI rises beyond 2.5% y/y and RPI breaches 3.5% y/y in coming months as is distinctly possible, then real (inflation adjusted) Gilt yields would implicitly drop into deeply negative territory. As a reminder 10-yr yr Gilt currently yields 1.38%, 30-yr 2.04% and 50-yr 1.86%, there is absolutely no 'protection' in those yields.
In passing, it is also worth noting that for all that the BoE has misread the UK economy, markets still appear to hang on and believe their every word, this may well come back to haunt them!
Feb 2017 MPC minutes:
http://www.bankofengland.co.uk/publications/minutes/Documents/mpc/pdf/2017/feb.pdf
Q1 2017 BoE Inflation Report:
http://www.bankofengland.co.uk/publications/Documents/inflationreport/2017/feb.pdf
and meanwhile the Brexit White Paper was also published:
"The United Kingdom’s exit from, and new partnership with, the European Union White Paper"
https://www.gov.uk/government/publi...rtnership-with-the-european-union-white-paper
..........................................................................
Marc Ostwald
Strategist
ADM Investor Services International
Dentalfloss
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pump our 19877...excellent
Moneylender
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Dow @ 19850 again. Plenty of pips today
Dentalfloss
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Dentalfloss
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mornin folks
get out of bed and lets get pipping...
get out of bed and lets get pipping...
Dentalfloss
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DAX
2 weeks of data
interesting
2 weeks of data
interesting
Dentalfloss
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the fake we showed
pulled back into supp
now unsure about direction..lol
pulled back into supp
now unsure about direction..lol
