Macro Monday Week 47: Alibaba, Flash PMIs & FOMC Mins

Macro 2 minutes to read

Kay Van-Petersen

Global Macro Strategist

Summary:  So wk ahead from macro perspective will be on Flash PMIs, as well as mins across the board from RBA, ECB & the FOMC. Also countdown for Alibaba listing in HK, which should be next Tues (Nov 26 & yes, Saxo will have shares & CFDs ready to go from day one). Geopolitics is on the same themes: US / CH Phase One Deal almost done (risk to the downside? Long rumour / short fact?), HK heating up, Impeach Investigation cont. Rate decisions SA, ID & HK.


(Note that these are solely the views & opinions of KVP & do not constitute any trade or investment recommendations)

2019-Nov-18

 

A  replay of the call is available HERE

 

Macro Monday Week 47: Alibaba, Flash PMIs & FOMC Mins...


So week ahead from macro perspective will be on Flash PMIs, as well as minutes across the board from RBA, ECB & the Fed. Worth keeping a look out to the countdown for Alibaba listing in HK, which should be next Tues (Nov 26 & yes, Saxo will have shares & CFDs ready to go from day one) 

On same breath, Geopolitics globally is on the same themes: US / CH Phase One Deal almost done (risk to the downside? – Is this going to be the classic buy the rumour, sell the fact?), HK heating up, Trump Impeachment Investigation continue, etc.

Once again KVP is reflagging the very low vol environment, suggesting that option premiums are cheap, whilst equity indices YTD performance is phenomenal! I.e. for KVP picking up some downside here on 4 – 6 – 12m put options, just makes rationale sense.  

S&P 500: +25% DAX: +21% Nikkei: +18% CSI-300: +27% ASX: +16%

Meanwhile VIX is basically making lower lows over the last month

VIX: 12.05, -53%

 

Wishing everyone a great wk ahead, keep in mind that back end of next wk is Thanksgiving in the US


Namaste

-KVP

 

-

 

Summary of Prior Week:

  • GeoPolitics: HK heating up… with pictures & video from over the wkd looking like a Hollywood dystopian movie. Meanwhile US impeachment show continues to play on

    Trump speech calling for neg. rates & going after Fed again

    Powell Testimony: US economy is the star economy. Cont. to have base case of reasonable growth. Risks remain the same, sluggish global growth, trade developments & low CPI

    Current Fed = Sidelines

  • RBNZ Surprises: for the second time this year, this time on the non-dovish side, as it keep s rates at 1.00% rather than deliver the 25bp cut that was widely expected by markets, kiwi bulls have an absolute field day/wk. KVP feels more upside to follow, i.e. NZDCAD
  • EQ: Asia struggled for the wk, HSI clear & logical underperformer at c. -5%. US & most EZ indexes though still powered ahead

  • FI: Big reversal from previous wk, USTs yields lower by about 10bp to these 1.83 lvls
  • FX: -0.36% on DXY to 97.99, with quite interesting lvls around JPY, CNY & GBP
  • CMD: Gold & Silver lagging big pullback in USTs, likely bulls still licking their wounds, post previous big sell-off. Nickel clear
  • Vol: Again just amazing, how little vol we are getting. -5.3% for the wk to close at 12.05

     

    COT Report: [@Ole_S_Hansen]

  • 4wk up, 3 wk dwn, now reversing to 1wk build-up of USD with a +18% increase to $14.4bn ($12.3bn)
  • Continue to see shorts increasing in the JPY contracts +32%
  • Pullback in the CAD long trend, as we get a reduction -22% last wk
  • Big addition to AUD shorts +52% to -41k (-27k)
  • Now, its wk 5 of commodity net-long expansionWe finally see the CoT capturing the capitulation in Gold & Silver longs from a few wks back

 

Week Ahead

Key Focus:

  • US / CH | FOMC Mins | SARB & ID Rate Decisions | Flash PMIs | Hong Kong

Central Banks (SGT):

  • SARB 6.50% e/p (21) ID 5.00% e/p (21) HK 1.02% p (19)

FOMC Speakers (SGT):

  • Williams

 

Other (SGT):

  • Worth noting back end of next wk, will be Thanksgiving weekend in the US (Thu Nov 28), BoC’s Wilkins Speaking, Buba’s Weidmann

Econ Data:

  • US: Building Permits, Housing Starts, Philly Fed Mfg. Index, CB Leading Index, Existing Home Sales, Flash PMIs, UoM, FOMC minutes @ 03:00 SGT (14:00 ET)
  • AU: RBA minutes, MI Leading Index, Flash PMIs
  • NZ: PPI & Milk auction, Credit Card Spending
  • CH: Data light wk
  • EZ: ECB Minutes, Flash PMIs, ECB Financial Stability Report
  • UK: House Prices, Public Sector Net Borrowing
  • CA: CPI, ADP, BoC Financial System Review, Retail Sales

 

Chartography & Price Action

  • We look at different levels on the HSI, which clocked c. -5% last wk – KVP continues to think that 25,000 (-5%) is still higher delta than say 27,500 from these c. 26,400 lvl (-4%)
  • FX we take a look at some of the interesting levels on USDCNH around the 7.00 lvl – likely the best barometer of a US/CH phase one deal
  • Plus we look at a lot of Kiwi crosses including AUDNZD, NZDCAD, NZDUSD, EURNZD as KVP feels there is a lot more upside on Kiwi in general

Disclaimer

Saxo Capital Markets (Australia) Pty Ltd prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Combined Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Pty Ltd.
Level 25, 2 Park Street
NSW 2000
Sydney
Australia

Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Pty Ltd ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Combined Financial Services Guide & Product Disclosure Statement to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as CFDs and Margin FX products may result in your losses surpassing your initial deposits. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.
Please click here to view our full disclaimer.