Antipodean Capital Macro Strategy Daily Nov 7 - Stocks await US mid term election results for direction. US data cycles are decelerating, but not yet enough to shake EPS estimates, which still look ok for ’19.

Today’s themes: More of the same. PMI’s are decelerating, but equity EPS still robust for now. That equals range bound stocks. In AU, the RBA yesterday was far more upbeat than many local analysts.

Macro: US: More evidence of data cycle deceleration, but still strong equity EPS are under-pinning stocks. Mid-term outcomes look neutral, but results are awaited. (Theme: Familiar themes again, with ISM data last night softening from recent highs. However the stocks rebound is not yet over, and downside was under-pinned by still solid EPS trends).

Macro: AU: The RBA decision and commentary yesterday was much more robust than many analyst views and recent data outcomes. (Theme: The RBA lowered forecasts for unemployment and elevated those for GDP and inflation yesterday. This contrasts with recent weakness in housing markets and the related follow through expected to weaken consumption. The RBA bias to still hike rates is under pinned by their forecast changes and is assisting the AUD and AU yields to rise).

Summary: US stock markets did little o/n awaiting US midterm election outcomes. US data was softer in terms of JOLTS, and while ISM Services data retreated, it was not as soft as expectations. This has kept US 10yr yields near their highs, and the USD supported, although we still sense weakness lies there. Commodity prices remained soft, with Oil down on the $61bbl handle.

New trades: None.
FX: Short EURSTG at .9010 risk .9150 target .84. Long AUDNZD 1.0750 target 1.12 stop 1.05. Short USD Index at 96.17 risk 97 target 94. Buy JPYKRW at 10.17/9.90 risk 9.60 target 13. Long GBP 1.2770 risk 1.27 target 1.33.
BONDS: Long 2 units ASX Banks 5yr CDS at 54bps, target 140. Long NZ 10s sell NZ 2s at 104bps risk 130bps target 50bps. Sold Portugal 10yr bought German Bund at 158bps, risk 110bps target 350bps.
EQUITIES: Long ASX All Ordinaries Top 100, Short ASX Small Ordinaries at 0.81x ratio. Long Dow Transports 10175 risk 9950 target 10750. Long Ashares at 2602 risk 2520 target 2800. Sell Homebuilders 755/800 risk 850 target 650.
COMMODITIES. Long Silver short Gold at 83.9x risk 87 target 65.