Weekly Game Plan 4 Feb 194th February 2019
Over the weekend, China PMIs came out softer than expected but with China closed for the Lunar New Year we might not get much of a reaction. But it’s certainly not a great sign, given the market’s focus on growth measures after the FOMC came out and admitted conditions are tense. Risk sentiment could be impacted by the data especially after US/China trade talks didn’t really produce tangible results and the March 1 deadline for further tariff increases draws near.
Themes for the Week:
- Bank Of England: the Bank is expected to keep rates on hold amidst Brexit uncertainty, and perhaps start discussing contingency plans for a Hard Brexit.
- RBA decision: the markets are pricing in a rate cut by the end of 2019 but 1/3 of analysts still believe the next move will be up. I’d side with the markets’ expectations here. So we might get some dovishness from Lowe. We also get Lowe on Wednesday and the RBA SOMP will be released on Friday.
- Wall Street will continue to focus on US earnings with close to 20% of the S&P 500 reporting in the week ahead – with Alphabet, Twitter and Disney the names in the spotlight.
- Fedspeak: the markets will also be eager to hear any further detail from Powell & Co. regarding their assessment of current conditions.
Data in the Week Ahead:
- Trump delivers his State of the Union speech before a joint session of Congress on Tuesday night at 9pmET
- Canada Employment (Wilkins noted that the BoC expects a rebound in economic growth in Q2 and faster wage gains)
- UK PMIs (should be more influential now that the market is focused on growth measures)
- AU Retail Sales
- NZD Employment
On the Radar:
Into last week’s close, US stocks started to look more attractive although we are approaching influential resistance above. Timid longs in Dow could be attempted. Crude Oil also closed strongly last week on the Venezuela issues and remains volatile but biased up. In FX, CAD is the leader and I like it vs. Eur, Jpy and Usd. Aud will be interesting after the RBA, and the Pound after the BOE.
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