1. Themes For The Week
– September readings to show low headline inflation in UK (tuesday) and US (thursday). In the US this will keep rate-hike-uncertainty at high levels, especially with the manufacturing conditions expected to remain weak while retail sales (wednesday) are expected to be strong. USD still a sell on rallies for now (especially vs. Comm-Dolls) but the USD’s fate is as data-dependant as the Fed is.
The Fedspeak calendar is also filled as Lockhart, Evans and Brainard all speak on Monday. On
Tuesday and Thursday we hear from Bullard again (no shift in tone expected). Finally on Thursday we wrap up with Dudley and Mester.
– UK labour market appears to be continuing to tighten, but the BoE is ignoring this for the time being, and is focusing instead on inflation. Gbp is weak on the crosses which look easier to play than the major at current levels.
– ZEW (Tuesday) & Industrial Production (Wednesday) to provide further evidence thateuro area economic activity has slowed; the Volkswagen fraud will have impacted this figure no doubt. Euro is not exciting for the time being. We’ll see if the spotlight rotates during the week.
– Chinese data will be watched closely (especially export data on Tuesday). Risk appetite will evidently be influenced by this piece of data, as will the Aussie. If Chinese data positively surprizes AND Crude continues to climb, CadJpy might be an astute place to look for opportunities.
– The third quarter earnings reporting period is upon us, but the EPS growth projection from S&P Capital IQ indicates third quarter EPS is expected to decline by 5.1%. Sure, equities have been dandy leading up to this, particularily because: historically, actual EPS growth has almost never been as bad as expected; most of the decline is led by the energy sector (which is slightly better than before); the August sell-off, Chinese matters and EM seem to be weighing less now with Vix back under 20. But definitely pay attention to earnings.
2. Charts in Line with these Themes
S&P Mini – caught at September highs..
earnings key for future direction.
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