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MT GLOBAL MARKETS Momentum & Sentiment Recap as of 13Dec19 wk50

1/n

• busy RiskON week
• FED no-hikes-near-future
• ECB owl season & CSPP
• UK Boris victory lap "ORDER"
• Trump perma trade deal tweet
• 3 further CB rate cuts
• jobless claims jump?
• ZEW expectations!

2/n let's start with the most important theme this week: UK #GE2019 , where Lord Buckethead, Count Binface, Elmo and Nick the incredible Flying Brick, shadow minister for the abolition of gravity of the "Official Monster Raving Loony Party" stood against BoJo and Corbyn... LOLZ

3/n on a more serious note, since Boris Johnson took over as PM and the combination of FED 3x cuts, it was RiskON for little Britain. GBP soared, yields went up, Gilts fell,yldcurve steeper, Banks rallied,Cyclicals outperformed ahead of the election, but got another boost Friday.

4/n the second most relevant market mover was - drumroll - Trump Tweet #325 regarding a trade deal.

Algo-party for dumping short or long end rates futures and lift stocks... ONLY to retrace that with the more detailed tweet.

EPIC.

5/n US NFIB small business optimism improved and widened the existing gap to ISM.

meanwhile FED cuts, positive narrative, seasonality RiskON continues, bonds fell and curve supportive for financials

6/n XXL picture something on every macro radar: jump in US jobless claims, initial to 252k and 4wk avg to 224k. Let's hope this is not a trend change, which would be in line with the re-steepening theme of the yieldcurve. You can't trade this, but watch.

7/n FED reactive policy trying to be as supportive as possible, 3x25bp cuts and clearly on hold for a long time for hikes.Balance sheet grew +9% now via O/N & Term Repos and T-Bill buy program and is back to $4.1T,when they said "QT on autopilot" exactly 12mths ago with 9th hike.

8/n VIX is under control. every attempt to soar is being answered with renewed selling/shorting. steep contango curve remains the mode for now.

9/n we had the inaugural ECB presser with Madame “Owl” Lagarde, introducing with “I’m different, neither dove nor hawk, have my owl oops own style, don’t read too much between the lines”.

bien sur !

10/n Germany and Eurozone ZEW came out very strong, huge jump.

why ?

a) FED
b) 46 or so central bank cuts.
c) market RiskOn
d) they are analysts. economists.

anyways, EU ZEW roared from -1.0 to +11.2 , literally catching up with global market rebound. this time, they lagged

11/n RiskOn mirrored in all CDX/ITRAXX indices... of course CSPP helps too.

Main 13wk low
XO lowest since Jun2007
Fins both lowest since Mar2018
CDX IG/HY both lowest since Jan2018

12/n spurious overlay CDX NA IG YoY vs SPX YoY update wk50

13/n intentionally left blank after Friday 13th. ;-)

14/n last week Brazil, Russia and Turkey cut the rates, overall the 46th rate cuts I believe since market tanked 12months ago on too hawkish FED + trade war.

Global avg CB rate -80bp since.
Global M.PMI rebounds.
G7 avg yld rebounds.

15/n Global yields / curve scoreboard

7 central banks meeting, 4 x unchanged but dovish, 3 more cuts

Canada curve remains inverted and BoC is behind the "curve".

16/n global markets YTD overview

17/n update on seasonality for SPX, DAX and NIKKEI. Pattern is like average , but % performances one of the best years. = FED put.

18/n global markets momentum / trend / exhaustion scoreboard wk40

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