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/articles/the-morning-track-new-stories/
We no longer believe in Goldilocks and buying-the-dip. Markets have changed to another story, where only the self-reliant win – call it Hansel and Gretel. The sugar house of beguilement has been lower rates and the witches are the central bankers as they offer promises of stability but the present volatility is the oven and we seem clearly headed into it with temperatures rising even more. The crumbs for finding the bull market home rest with earnings and the key is top-line and future outlooks for many of the 2018 high-flyers to hold so when they miss, its painful and scary. Positioning into month-end and expectations for a stronger US GDP in 3Q maybe key today as we look for stories to prevent a Black (or oven cooking) Friday. Technicians are having a field day but the trend followers are suffering this month as the reversal hurts the long-term followers and the story shift seems abrupt. Perhaps the mid-term elections in the US will be key, perhaps more earnings, per
haps it will be a kind turn in US/China trade talk hopes – as some see the push by Abe and Xi to play nice as a driver, but trading on hope is expecting to be saved by crumbs more than reality. The suspension of disbelief is needed to buy-the-dip here as many se it as catching a falling knife and filled with noise. The overnight news was light but important – with BOJ officials concerned about volatility – Bloomberg reported that some are pushing back on the talk of a creeping 0.2% 10Y break. This story didn’t do much to JPY, which still holds 112. The French and German consumer confidence stories are upbeat even as shares in both nations drop. The upticks will be watched against the US Michigan report later this morning. The contrast of mood stabilizing in a lower range in Europe while the US has a catch-up drop continues and with it is the divergence story that drove much of the 2018 price action. Risk in Europe is off, whether the US follows will rest on GD
P and earnings. The USD is bid and seems set for a 97 breakout on the index, EM is in a world of hurt again with KRW over 1140 leading in Asia, CNY watching for a 6.96 stop-loss USD buying fest for 7 barrier break and 7.05, ERU back to 1.13 barrier watch. However, the FX barometer that is flashing red for risk-off to get worse is AUD/JPY again – 78.50 break brings 75 next.
The Morning Track new-stories
- The Morning Track – New Stories? by Bob Savage/articles/the-morning-track-new-stories/
We no longer believe in Goldilocks and buying-the-dip. Markets have changed to another story, where only the self-reliant win – call it Hansel and Gretel. The sugar house of beguilement has been lower rates and the witches are the central bankers as they offer promises of stability but the present volatility is the oven and we seem clearly headed into it with temperatures rising even more. The crumbs for finding the bull market home rest with earnings and the key is top-line and future outlooks for many of the 2018 high-flyers to hold so when they miss, its painful and scary. Positioning into month-end and expectations for a stronger US GDP in 3Q maybe key today as we look for stories to prevent a Black (or oven cooking) Friday. Technicians are having a field day but the trend followers are suffering this month as the reversal hurts the long-term followers and the story shift seems abrupt. Perhaps the mid-term elections in the US will be key, perhaps more earnings, per
haps it will be a kind turn in US/China trade talk hopes – as some see the push by Abe and Xi to play nice as a driver, but trading on hope is expecting to be saved by crumbs more than reality. The suspension of disbelief is needed to buy-the-dip here as many se it as catching a falling knife and filled with noise. The overnight news was light but important – with BOJ officials concerned about volatility – Bloomberg reported that some are pushing back on the talk of a creeping 0.2% 10Y break. This story didn’t do much to JPY, which still holds 112. The French and German consumer confidence stories are upbeat even as shares in both nations drop. The upticks will be watched against the US Michigan report later this morning. The contrast of mood stabilizing in a lower range in Europe while the US has a catch-up drop continues and with it is the divergence story that drove much of the 2018 price action. Risk in Europe is off, whether the US follows will rest on GD
P and earnings. The USD is bid and seems set for a 97 breakout on the index, EM is in a world of hurt again with KRW over 1140 leading in Asia, CNY watching for a 6.96 stop-loss USD buying fest for 7 barrier break and 7.05, ERU back to 1.13 barrier watch. However, the FX barometer that is flashing red for risk-off to get worse is AUD/JPY again – 78.50 break brings 75 next.
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Robert Savage
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