As get ready for the weekend scan I’m struck by the possible head fake of the S&P above the 200 day moving average which stopped me out of my speccy shorts. I’m also struck by the bid in Brent and oil in general
Let’s have a quick look and then you’ll get the pack on Sunday.
It’s one of those waiting days today. Waiting to see if the positive tone in Asian stocks and US night futures is replicated in the New York day session Tuesday. It’s hard to tell from here, yesterday’s strength faded.
Today we’ve heard there is an agreement in principle to avoid a US government shutdown on teh 15th. but we’re not sure if the President will agree. We’ve also heard him talk positively about a China trade deal at a stump Monday night.
Both those things helped sentiment. For stocks at least because there is a lot of red in commodity futures and USDJPY is a little higher again.
Back in October I opened the month doing this scan being bearish bonds – rates higher – but a week or so later I flipped 180 degrees and wrote to myself and my friends who got this note that markets were about to get a little funky and bonds had topped.
I’m not as troubled now as I was then because we know global growth is weaker now, we know the Fed has the markets back and is on pause, and we’ve had one heck of a flush out.
But my sense is a real note of caution through out the pack – something to think on upfront as you work through.
You’ll note the new sections on my current and prospective positions as well.
Short and sweet today before the HUGE Platinum scan tomorrow.
But what I see before is a risk of risk going off. Certainly we have a stall right now and how we end the week will be important in ow deep this retracement becomes. Will we have a shallow range of a decent pullback?
As the Tweet from Harald Malmgren I shared this morning showed – much is priced in.
What’s faster than a speeding bullet or a Powell Put turnaround?
The back flip that RBA governor seemed to do today in softening the market’s understanding of what the RBA REALLY meant yesterday with his statement after the Board meeting and decision to hold rates at 1.5%.
Although it was a back flip at all really was it. It was a clarification in the same manner that NY Fed President John William’s clarified Powell’s comments after the December 2018 FOMC press conference.
Indeed in this morning’s newsletter I said I thought that Governor Lowe would be “positive, but also more dovish than folks reckon after yesterday’s reaction to the statement”.
And that’s what we got, glass half full, but with equal waits of optimism and caution. And that is dovish if you think housing is going to weigh on the Australian economy.
So they aren’t going to cut in a hurry or unless necessary. Watch unemployment. This is a data dependent central bank – like the others.
Where as the US Federal Reserve has back away from a positive outlook on rates and the US economy in the past 6 weeks the RBA has shown today it’s made of stronger stuff.
Holding a stiff upper lip to the vagaries of the collapsing services PMI, dwelling approvals falling of a cliff, job ads falling for the first time in a year, and the monthly inflation gauge suggesting it will be a very long time before the inflation rate nudges back to 2% the RBA has instead signalled it is still holding to a view growth will be 3% and inflation will head back toward the top of its band.
The Fed put, strong non-farms, and a week without Chinese markets. It’s going to be another interesting 5 days.
But before we get there you will see there are some interesting setups and opportunities at the moment as we face the week ahead.
Just a quick note on timing and reports. This is smaller this week as I’ve taken some crosses and Indexes out due to time constraints and lack of opportunities in those markets. Also please note that I’m still on the road and won’t be home till Monday evening (doing this from Launceston today so I could get it to you on the weekend as promised). SO tomorrow’s platinum scan will be short and sweet.
Apologies for the lateness the last couple of days and I appreciate your patience. I left home at 9am this morning and got to Launceston in Tassie after three flights from Newcastle at about 5pmish.
I’ll be a bit fractured till next Tuesday when I get home.
Anyway, the fed was a much bigger deal than I thought it would be. That’s because the FOMC went more dovish than I expected and the body language of the Chair, Jerome Powell, was such that he was clearly under pressure – he did not breed confidence.