Trading with point and figure

he Week Ahead - Bullet point highlights: 24 to 28 April 2017

- Eminently much will depend on the outcome of and reaction to the first round of the French Presidential Election, which at the time of writing is anyone's guess. Assuming at least one of Macron or Fillon are in the second round, markets will likely move on to pastures new in terms of overarching themes, and there is a veritable deluge of major data to digest in the USA, Eurozone, UK and Japan, as well as ECB, BoJ and Riksbank policy meetings, as well as a very busy run of corporate earnings in the US and Europe.

- Statistically the focus will likely be on advance Q1 GDP readings in the US, UK, France, Spain and South Korea, with the US seen posting a modest 1.2% SAAR gain, the UK expected to slow to 0.4% q/q 2.1% y/y, France is also seen at 0.4% q/q but still very sluggish in y/y terms at 0.9%, while Spain is seen at a steady 0.6% q/q 2.7% y/y, and South Korea to pick up to 0.8% q/q 2.6% y/y, despite all is recent woes. Preliminary HICP readings in the Eurozone are expected to underline that the March drop was heavily influenced by Easter timing effects with Germany forecast to bounce to 1.9% y/y from 1.5%, Spain to 2.3% y/y from 2.1% and Eurozone to 1.8% y/y from 1.5%, with core CPI also seen rebounding to 1.0% y/y from 0.7%. By contrast Japanese CPI readings are forecast to remain low or negative, with March national CPI CPI seen unchanged at 0.3% y/y, with the ex-Food & Energy measure Flat y/y, and equivalent April Tokyo readings both seen at -0.2% y/y. Japan also sees monthly growth measures with Industrial Production seen dropping 0.8% m/m after a 2.0% jump in February, which would see the y/y rate accelerate to 4.0% from 3.2%. However personal consumption data will likely underline a very poor picture with Retail Sales seen at -0.3% m/m, though bouncing smartly in y/y terms due to base effects from 0.1% to 1.5%, while Overall Household Spending is forecast to post a more modest drop of -0.5% vs. February's woeful -3.8%. The US also has Durable Goods Orders, with reasonably solid gains seen across all measures for a 3rd consecutive month, while Consumer Confidence is seen remaining at historically very high levels at 123.5, though down m/m after the colossal surge to 125.6 in March; New and Pending Home Sales, Advance Goods Trade Balance and more regional Fed surveys are also due. The UK has PSNB, both CBI surveys and GfK Consumer Confidence, while Australia has Q1 CPI and Germany kicks off the week with the Ifo Business Climate.

- Central Banks: No changes in policy are expected from ECB, BoJ and Riksbank, while in the EM space Russia and Colombia are both seen cutting rates by a further 25 bps to 9.50% and 6.75% respectively, and Turkey's TCMB is again expected to edge its Late Liquidity Lending Rate up to 11.87% from 11.75%, but leave its main policy rate unchanged. In respect of the ECB, it is abundantly clear that the hawks are pushing ever harder for a further reduction in the pace of QE, and to outline an exit plan, and even the doves admit that a reduction will have to be at least considered later in the year. So once again (assuming the wheels do not fall off European markets in reaction to the French election), Draghi may be forced into sending some rather mixed signals about the policy outlook at the press conference. As for the BoJ, Kuroda only last week underlined that while the BoJ sees some upward momentum in Japanese growth metrics, 'no clear upward shift in price momentum' has been 'detected so far'; as such this week's meeting will likely emphasize that current policy settings will be maintained for some time. Sweden's Riksbank has some divisions on the policy outlook, but the majority are clearly not in the mood to completely remove the current commitment to ease policy further, if necessary, with many believing that the upturn in inflation may prove to be transient.

- Politics: Aside from France, campaigning for the UK election and the upcoming German state elections in NRW (14th May) and Schleswig-Holstein (7th May) will likely offer plenty of headlines. Meanwhile in the US, Congress needs to pass a $1.0 Trillion Omnibus bill that would expire on September 30 by Friday, when the current bill that has suspended the debt ceiling expires.

- Govt bond auctions: A busy week is in prospect with the US selling $88 Bln of 2, 5 & 7-yr Treasuries and $15 Bln of 2-yr Treasury FRN, the UK's DMO sells £800 Mln of 2046 Index-Linked, while 5 countries auction debt in the Eurozone - Italy, Belgium, Netherlands, Germany and Finland.

- Corporate Earnings: the flow of US Q1 corporate earnings picks up pace this week, with Alphabet (Google), Microsoft, Amazon, Twitter, Intel, AT&T, Caterpillar, Chevron, Coca Cola, McDonald's, Boeing, Ford, Colgate-Palmolive, Procter & Gamble all due, while financials feature heavily elsewhere - Credit Suisse, Barclays, Deutsche Bank, Lloyds Banking, Royal Bank of Scotland, Agricultural Bank of China, Bank of China, Industrial & Commercial Bank of China - with Bayer, Daimler, Fiat Chrysler, Novartis and Total among other names likely to attract attention.

- Commodities: There are a number of larger conferences this week covering a number of sectors. I will be speaking at the Platts Kingsman EU Sugar Seminar in Geneva on Tuesday morning, and many leading oil industry officials and luminaries will be at the International Oil Summit, while Platts will also hold the Global Power Markets Conference along with EU Biofuels and Grains seminars.

from Marc Ostwald
 
Dow looking a little congested, main action between 20500 and 20620.

rkms5c.jpg
 
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