by Kim | Oct 29, 2018
The macro review for w/c 22 October 2018 – Fed speakers addressed whether it is time for a pause in interest rate increases given current market volatility, some weaker earnings outlook going into 2019 and weaker housing/auto sales. Fed outlook was always for more ‘moderate’ growth going into 2019, especially as fiscal stimulus waned. Unless employment and inflation indicators turn lower than forecasts, Fed unlikely to change course. Yet, the probabilities for another rate hike in Dec have fallen over the last week.
Most data this week pointed to continued strength in US economy, but some ongoing weakness in housing and weaker private investment figures in the GDP report. Chicago Fed National Activity Index has the economy still expanding above the historical average. Prelim PMI’s for Oct indicated improved momentum, especially in the domestic economy, but ‘export activity stagnating’. Durable goods remained strong on the back of defense and non-defense transport manufacturing – ex transport, new orders grew by a much small 0.1%. US Q3 GDP growth slowed somewhat – weakness in net export growth and private fixed investment was offset by growth in inventories and continued growth in personal consumption expenditure. Of note was the slowdown in the growth of the core PCE price index for Q3 – slowing from +2.2% in Q2 to +1.6% in Q3 (annualised rates of growth).
Weakness in some Eurozone data appears to be persisting, with the notable slow-down in Eurozone and German prelim PMI’s. Watching for confirmation in ‘hard data’. For example, Eurozone and German industrial production (reported two weeks ago for Aug) showed declines had stabilized.
The ECB kept rates on hold – no change to policy measures. Draghi see’s current European data reflecting ‘weaker momentum, not a downturn’ and weakness likely to be transitory.
Japan prelim manufacturing PMI showed a solid improvement, especially with new export orders growing for the first time since May.
The Bank of Canada increased its overnight rate to 1.75%.
More detail covered in the full review of last week – use the links on the contents page to navigate to different country sections. Download here (hit the back button on your browser to return to the site);
Weekly Macro Review 22Oct2018
The outlook for w/c 29 October 2018 – The US Treasury will settle approx. $281b in ST bills and notes this week (notes were auctioned last week), raising approx. $37b in new money. Its also month end and $23.8b in securities on the Fed balance sheet will mature – there will be no re-investment of principal payments this month.
Several major economic releases this week and central bank decisions;
BoJ and BoE interest rate decisions
Key economic reports;
US – PCE price index, employment cost index, employment report, house price index, ISM manufacturing survey
Europe – Q3 GDP, prelim CPI (Oct), German retail sales
Australia – CPI Q3, retail sales and private sector credit
Manufacturing PMI’s – UK, US, Eurozone and Germany
Brexit remains an unknown – looking for stalled negotiations to recommence this week
Further detail and a calendar of key releases is provided in the full briefing document – download it here (hit the back button on your browser to return to the site);
Weekly Macro Brief 29Oct2018
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
by Mars Capital Partners | Oct 29, 2018
Last week saw a continuation of the bear market trend with no evidence of a tradable low. The market will need to turn higher early this week to maintain bullish near term momentum divergence. What we have from a big picture perspective: a potentially completed 5 wave rally from the 2009 and 2016 lows momentum […]
by Kim | Oct 22, 2018
The macro review for w/c 15 October 2018 – There was no agreement on Brexit at the EC meeting and not enough progress had been made on the withdrawal agreement to schedule an additional EC meeting for November. This leaves timings and options very tight.
US data remained solid; retail sales were lower than expected because of a fall in one category – growth in most categories rebounded. Industrial production continued to grow at a constant pace. Growth in job openings continues to accelerate while growth in hires remains constant.
The key point from the FOMC minutes was the discussion around the expectation that interest rates may need to become ‘modestly’ restrictive for a period – to be decided though within the context of continued good US economic performance.
CPI’s in the Eurozone, UK and Japan continued to be influenced by higher energy prices. Annual Euro area CPI grew at 2.1% in Sep but ex energy was 1.3%. In the UK, CPI-H annual growth slowed to 2.2% – but ex energy/food/alcohol/tobacco CPI growth was lower at +1.8%. In Japan, CPI ex fresh food grew at +1% (annual), but ex fresh food and energy grew at a lower annual rate of +0.4%.
UK data was mixed; retail sales missed in Sep. The UK labour market remains resilient, but latest quarter data points to some weakness with employment declining in the quarter.
Chinese GDP growth slowed in Q3 to +1.6% versus +1.8% in Q2. The annual rate slowed to +6.5%.
There is more detail covered in the full review for last week – use the links in the contents page to navigate to different country sections. Download here (hit the back button on your browser to return to the site);
Weekly Macro Review 15Oct2018
The outlook for w/c 22 October 2018 – The US Treasury will auction approx. $276b in ST bills and notes this week. The bills will settle this week and the US Treasury will raise approx. $16b in new money (a moderate week).
Brexit negotiations will continue this week. There are several (contentious and likely unacceptable) options under consideration to break the current deadlock on the Irish border issue.
The key data releases this week;
US Q3 GDP and Durable Goods
Preliminary PMI’s for October
ECB and BoC interest rate decisions this week
Further detail and a calendar of key releases is provided in the full briefing document – download it here (hit the back button on your browser to return to the site);
Weekly Macro Brief 22Oct2018
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
by Mars Capital Partners | Oct 22, 2018
Last week we warned that any rally in the US equity indices off 50 week sma support was likely to be corrective (a-b-c) as the bigger picture trend remains down. The question is whether last week's rally was ALL of wave 2/B or merely the first leg of a larger corrective rally. Importantly, the weekly […]
by Kim | Oct 15, 2018
The macro review for w/c 8 October 2018 – Inflation reports in the US were somewhat mixed. Growth in producer prices in Aug was higher, due to transport and warehouse prices. The annual core PPI growth remains at its highest level of the last 12months at +2.9%. In September, consumer price growth was slower – with a lower impact from energy prices, but continued pressure from shelter. Annual growth in core CPI remained at 2.2%, while the headline CPI slowed to +2.3%.
An important speech by the NY Fed President/CEO and Vice Chairman of the FOMC – John Williams. The Fed will review its current framework for managing interest rates over the coming months. Will either continue using the current system or go back to the pre-crisis system – possible implications for the value of excess bank reserves held at the Fed. Also, re-iterated that the Fed is nearing the end of the normalization process – less role for forward guidance and a shift away from using the ‘neutral’ rate benchmark.
European industrial production rebounded in August. But within that, German industrial production continued to decline, albeit to a lesser degree than the prior month.
German CPI reached its highest level in seven years at +2.3% on the back of higher energy prices – core CPI growth remains lower at +1.5%.
Australian housing – new lending for housing continued to fall in Aug. This time, the decline included owner occupier housing credit, notably in the two key states of NSW and to a lesser degree Vic. This data is prior to the out-of-cycle mortgage rate hikes taken by several of the major banks back at the start of September. Auction clearance rates remain at their lows (NSW & Vic). The data suggests further falls in house/apartment prices.
Brexit – at this stage, no further progress has been made on resolving the key issues of the Brexit withdrawal agreement. Unless progress is made over the next few days, its not likely that an additional EC summit will be announced for November.
It now looks likely that US President Trump and Chinese President Xi will meet on the sidelines of the G20 in late November.
There is more detail covered in the full review for last week – use the links in the contents page to navigate to different country sections. Download here (hit the back button on your browser to return to the site);
Weekly Macro Review 08Oct2018
The outlook for w/c 15 October 2018 – The new 8 week bill will go to auction for the first time this week, slightly ahead of schedule. It will be a heavy week of treasury settlements. This week with the US Treasury will auction and settle approx. $154b in ST bills (the 4wk and 8wk are yet to be announced), raising approx. $21b in new money. The longer-term notes and bonds auctioned last week will settle on Monday 15 Oct – raising approx. $50b in new money. In all, $228b in auctions will settle this week, raising approx. $71b in new money (net new issuance).
The key releases this week;
US Retail Sales and FOMC minutes
Chinese data will be in focus – especially Q3 GDP growth and New Loans
The UK will be in the thick of it this week – the EC summit, CPI, PPI, Retail Sales and the Labour Market Survey. The EC summit is on 17-18 Oct and it will likely be announced on the 18 Oct whether enough progress has been made on the agreement to call an emergency EU meeting in November to finalize the Brexit deal. The next EC meeting will be December and it should be clear whether negotiations will/can get pushed out in time for an agreement to be finalized at the December meeting.
Further detail and a calendar of key releases is provided in the full briefing document – download it here (hit the back button on your browser to return to the site);
Weekly Macro Brief 15Oct2018
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
