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MT GLOBAL MARKETS Momentum and Sentiment as of 25Oct19 wk42 - thread 1/n

• "market hates uncertainty"
• VIX = uncertainty gauge plunging
• China trade phase 1 done ?
• no hard Brexit
• 4 CB's cut rates last wk
• FED to cut 25bp
• ciao Mario
• IFO/PMIs stablising ?

2/n Global Markets YTD (price performance not total return)

3/n Global Markets Momentum / Trend / Exhaust scores as of wk43

4/n Global Yields 2Y 10Y, Curves

• PBoC, ECB, RIKS, Norges, Hungary all unch
• Chile cut 25bp, Indonesia -25bp, Russia -50bp, Turkey slashed by250bp

• = global dovish central banks theme continues

• EU 10Y slightly wider again (potential Germany fiscal stimulus?)

5/n Global 10Y Govt bond yield heatmap wk43

6/n Credit spreads keep tightening in Europe = stock friendly

7/n European so often hawk-eyed financials , ITRAXX Sen & Subs also continue to grind tighter = stock friendly

8/n CDX North America CDS Indices also tighter = RiskOn continues

9/n "tongue-in-cheek" CDX v SPX YoY "model" update :

10/n VIX as <the> risk barometer fell below 13 and has now a steep contango curve = RiskOn for the moment

11/n VIX RiskON barometer and SPX is "millimeters" away from breaking the "China-trade-Damocles"-sword.

12/n seasonality / historically though, implied vola is relatively cheap, really depends how one "want" to read the markets...

13/n broad market SPX1500 new highs new lows index keeps surging

14/n NYA advance/decline market breadth indicator looks healthy too for the time being

15/n next week FED ... Oct/Nov/Dec FF futs reading a 3rd 25bp cut in 2019

16/n FED is now trying everything to support market, provide liquidity, reduce stress, lower funding costs (globally)...

• increased O/N repos
• have term repos
• started T-bill buy program
• will cut 25bp range 150-175
• will cut 30bp IOER

17/n German IFO shows first signs of stablising , hope on BREXIT deal, US-China deal, German fiscal stimuli... Bund yields continue to drift wider (rebound on this chart)

18/n DAX on the other hand, previously with this large "gap" vs business confidence, is also highly correlated of course to SPX, which is grinding towards new ATH. Momentum / price action is as relevant as reading other gauges.

19/n ... $TSLA was on the headlines during the week... bond spreads tanked (here on inverted scale) and stocks soared.

20/n ... VALE was also again on the headlines... although I thought the already won that reopen case ...

Iron ore squeeze and the followed plunge was a classic example of supply/demand issues, not too much to do with China's slowing growth rate.

21/n Turkish CBRT cut the repo more than market expected by 250bp to 14%. Bond yields 2Y and 10Y were already drifting lower and reflected investors confidence.

But USDTRY lira is still attached to war-headlines and always to Trump-sanctions-damocles sword.

22/n next week FED, BoC, NFP, European ESI, Global PMI, ISM mega week (for those who look at them).

What will be a key, if business surveys also rebound now with the potential China trade. There is still this unusual huge gap between Yields/ Yieldcurves / PMIs and stockmkt.

23/end with this, I conclude the weekend thread and wish you all the best for the rest of this Sunday and a good week ahead. cheers