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Everything in moderation, including moderation. The extremes of markets are the stuff alpha is made from, emotional roller coasters eventually end like this week, but the results speak for themselves. Facts and your PnL can’t be ignored. The good news was China shares bounced back up while the bad is China GDP was lower along with industrial production, but FAI and retail sales were better than feared. The good news is driven by the China vice premier Liu hosting a joint group interview, where he listed detailed plans to revive an economy straining
under growing protectionism pressures, weak consumption and declining investment. The PBOC also promised in another press conference to lend money to the private sector that has been squeezed significantly in the reform push over the last 12-months. More spending, easier money – both put the focus on the CNY to hold together – and leave some doubters about the ability of China to spend its way out of the present crisis. For traders this means a boost up in commodities and in commodity currencies – particularly AUD, NZD and CAD – and a modest uptick for EM FX, ignoring rates and all else. The other stories for today that distract from moderation on this Friday are wrapped around oil and the US problem with Khashoggi leaving the Saudis facing some consequences and making the Iran sanctions look less easy to absorb. Oil will be watching WTI $70 for the week as this is the key pivot for the 3Q upmove. Similarly, Brexit and Italy just won’t go away as dark clouds over r
isk-taking. But as in all things in markets the micro beats the macro (at least since 2009), the main story will be about earnings and the ability for the S&P500 to diversify away from the rest of the world. The risk mood seems better than the US close but still very mixed with the key difference being China and for that keep an eye on the CNH for a breakout over 6.95.
The Morning Track moderation-4
- The Morning Track - Moderation by Bob Savage/articles/the-morning-track-moderation-4/
Everything in moderation, including moderation. The extremes of markets are the stuff alpha is made from, emotional roller coasters eventually end like this week, but the results speak for themselves. Facts and your PnL can’t be ignored. The good news was China shares bounced back up while the bad is China GDP was lower along with industrial production, but FAI and retail sales were better than feared. The good news is driven by the China vice premier Liu hosting a joint group interview, where he listed detailed plans to revive an economy straining
under growing protectionism pressures, weak consumption and declining investment. The PBOC also promised in another press conference to lend money to the private sector that has been squeezed significantly in the reform push over the last 12-months. More spending, easier money – both put the focus on the CNY to hold together – and leave some doubters about the ability of China to spend its way out of the present crisis. For traders this means a boost up in commodities and in commodity currencies – particularly AUD, NZD and CAD – and a modest uptick for EM FX, ignoring rates and all else. The other stories for today that distract from moderation on this Friday are wrapped around oil and the US problem with Khashoggi leaving the Saudis facing some consequences and making the Iran sanctions look less easy to absorb. Oil will be watching WTI $70 for the week as this is the key pivot for the 3Q upmove. Similarly, Brexit and Italy just won’t go away as dark clouds over r
isk-taking. But as in all things in markets the micro beats the macro (at least since 2009), the main story will be about earnings and the ability for the S&P500 to diversify away from the rest of the world. The risk mood seems better than the US close but still very mixed with the key difference being China and for that keep an eye on the CNH for a breakout over 6.95.
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Robert Savage
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