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

(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...

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

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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