EUR 8.46 For Business Accounts Only

The Morning Track stall-speed-2

- The Morning Track – Stall Speed by Bob Savage
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The more you turn the faster you have to move. This is the lesson for driving or flying and the physics maybe the best way to understand the risks for markets today as the ECB banks and the European economy nears stall speed. The flash PMI reports were worse than expected for Services and that matters given its not just about US/China trade fears anymore but domestic political problems and protests. The power of fear over greed remains in play even as equities float on hopes of a kind ECB Draghi as he balances sounding positive on the soft-patch being temporary and yet promises to use more easy money if he is wrong. The risk mood is mixed to positive and disregards the economics. The warnings of the White House economist Hasset on the US economy potentially having zero GDP in 1Q spooked but didn’t hold much power on markets yesterday. The delay to Trump’s State of the Union address due to the government shutdown maybe more important as politics power economic sentimen
t. The news flows from overnight were negative – Australia flash PMI lower, Japan lower, Europe lower. Markets mostly ignored this and the gloomier outlooks from the Bank of Korea. The Norges Bank didn’t flinch either as it still plans a March hike. The risk for a bigger turnabout of mood seems clearly linked to what Draghi says today – and how the markets digest it. The EUR is still stuck in a 1.13-1.15 prison but the EUR/JPY maybe more obvious a chart with 125 capping rallies and risk for a retesting of the flash crash lows from earlier in the play still more likely.