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/articles/the-morning-track-avalanche/
When there is too much information to sift through and analyze, many search for the one or two stories to cling to and ignore the rest. This leaves fundamentals for the economists and machines grinding on the slopes of data – weaker medium term outlook clashes with risk-on return as safe-havens unwind. Winter sports may be the best analogy for the day as the FOMC minutes and US/China trade talks keep investors off the slopes. This isn’t a powder but an ice day. The avalanche of economic data has been dug through like a St. Bernard searching for hope and it shows a few survivors – as Europe sees German Services and French Manufacturing recover – but remains weak and growth elsewhere in the Eurozone suspect. Elsewhere, Australian jobs put some doubt about an the Westpac RBA easing call last night but AUD hurt with rumors that China has capped coal imports. The Japan and Australian flash PMI reports were lost in the snow of the US MOU leak with China talks. Negotia
tors are drawing up six memorandums of understanding on structural issues: forced technology transfer and cyber theft, intellectual property rights, services, currency, agriculture and non-tariff barriers to trade, according to news reports. The fear factor for investors maybe in the buying-of-rumors and selling-of-facts risks for any US/China agreement as the rest of the world appears set up for a weaker 1Q and beyond for growth. Throw in that the PBOC seems unlikely to cut until it has to and you have more growth doubts. The FOMC noted in its minutes that growth was the problem and reason for a pause leaving it data dependent, with only the balance sheet run-off plans shifting – sufficient to support the S&P500 but perhaps not the world. The ECB minutes today will have less impact but maybe just as key for the EUR which holds below the 1.1380 and 1.1535 resistance points but clearly looks bid at 1.1250 and so leans on the China recovery hopes and the brandy from the bark
ing dogs of the ECB to support the hopes for 1.1750 again.
The Morning Track avalanche
- The Morning Track – Avalanche by Bob Savage/articles/the-morning-track-avalanche/
When there is too much information to sift through and analyze, many search for the one or two stories to cling to and ignore the rest. This leaves fundamentals for the economists and machines grinding on the slopes of data – weaker medium term outlook clashes with risk-on return as safe-havens unwind. Winter sports may be the best analogy for the day as the FOMC minutes and US/China trade talks keep investors off the slopes. This isn’t a powder but an ice day. The avalanche of economic data has been dug through like a St. Bernard searching for hope and it shows a few survivors – as Europe sees German Services and French Manufacturing recover – but remains weak and growth elsewhere in the Eurozone suspect. Elsewhere, Australian jobs put some doubt about an the Westpac RBA easing call last night but AUD hurt with rumors that China has capped coal imports. The Japan and Australian flash PMI reports were lost in the snow of the US MOU leak with China talks. Negotia
tors are drawing up six memorandums of understanding on structural issues: forced technology transfer and cyber theft, intellectual property rights, services, currency, agriculture and non-tariff barriers to trade, according to news reports. The fear factor for investors maybe in the buying-of-rumors and selling-of-facts risks for any US/China agreement as the rest of the world appears set up for a weaker 1Q and beyond for growth. Throw in that the PBOC seems unlikely to cut until it has to and you have more growth doubts. The FOMC noted in its minutes that growth was the problem and reason for a pause leaving it data dependent, with only the balance sheet run-off plans shifting – sufficient to support the S&P500 but perhaps not the world. The ECB minutes today will have less impact but maybe just as key for the EUR which holds below the 1.1380 and 1.1535 resistance points but clearly looks bid at 1.1250 and so leans on the China recovery hopes and the brandy from the bark
ing dogs of the ECB to support the hopes for 1.1750 again.
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Robert Savage
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