Bad News is Very Bad

01.04.2019  Fri， Sunny， Air Perfect

Summary：苹果调降高高在上的今年一季度营收引发亚欧市场避险情绪，美国ISM大幅不及预期以及成分项显示的不利趋势进一步引发美股深度调整。今晚美联储前后三任主席汇聚一堂，集体受访。市场对Powell的要价已经从鸽派涨价到停止加息6个月，甚至减息。他要是真的表现得足够鸽派呢？

 

Euro  Session:

The risk-off sentiment triggered by Apple weighed on Asia bourses. A share outperformed in east Asia closing almost flat while Nikkei was still out for holidays. GOLD stepped up firmly as US stocks future nosedive again. The most likely sequence of events is that the initial JPY move was set in motion by broad risk-off sentiment but remained orderly and in line with other havens

 

EU stocks stepped into the sea of red again while most EGBs opened flat except BTPs were sold off again. EU says no further meeting on Brexit planned while UK parliament is back next week debating the withdrawal agreement. May declared she would be pushing EU27 for more clarifications on the backstop before Christmas, which triggered some fear for no deal Brexit weighing on GBP and UKK.

Economy data:

No

US Session:

Besides APPLE downgrade its own revenue target in Q1 2019, another big story overnight could be the ISM mfg declines more than expected with global growth concern rising. While still at a level indicative of growth, the substantial decline, particularly in new orders and production components, is reflective of the shadow over trade tension and renewed political administration.

 

US stocks traded all the New York Time attempted to recover from the lows that the equity futures made, but failed. SP down 2.48% and at the lows of the session following weak ISM headline. 2y bond traded to par with fed funds rate(first time since GFC). TY ended 6.6 bos at 2.55% and 5s30s steeper at 54.3 bps.

 

As to Fed, Kaplan (non-voter until 2020) made another offer that he favors taking no Fed rate hike action for the first couple quarters of this year and that the Fed should be vigilant in monitoring the balance sheet runoff.

 

The 116th Congress assumed office today and Nancy Pelosi won the leadership contest and was named speaker of the House. Speaker Pelosi said that the Mueller report will show whether or not an impeachment proceeding is needed. She noted that “we shouldn’t be impeaching for a political reason, and we shouldn’t avoid impeachment for a political reason.” On the partial government shutdown negotiations, Pelosi said Trump cannot persuade her on the wall.

 

Economy data:

9:15,ADP employment 271,000 vs 180,000, prior 179,000 revised down to 157,000

 

11:00, ISM manufacturing slid from 59.3 to 54.1 in December, a very large and unusual drop for the index. A drop of this magnitude has only been seen 4 times since 1980, three of which took place when the economy was in recession.

Key Data And Events Ahead:

 

UK nationwide house price increases, mortgage approvals, services PMI

ITA FRA CPI,  services PMI

DEU unemployment data, services PMI

EMU Markit services PMI

US Nonfarm payrolls

CAN employment data

Powell plus Bernanke and Yellen interviewed

Bostic , Barkin speaks

 

Comments: 

 

Crook said that most of the revenue shortfall to their guidance and over 100 percent of their year-over-year worldwide revenue decline occurred in Greater China.  Apple has its own problem, but the decisive trigger could be Huawei case that may have shifted public sentiments in China against the US which may have been neglected in the market. Regardless of the outcome of the trade talk, the tech war is still likely to intensify and escalate. With the inevitable uprising like HUAWEI, it`s very amateur to impose tariff on Apple or laptop or mobile phone or TV or something else. It’s been a tough year for asset managers in 2018, but if US realize the tariff could hurt mutually, 2019 could improve somewhat .

 

ISM is not surprising tom me just as it was well indicated by 5 local Fed survey. What`s dominated is nothing but the sentiment. Now the market was in deadly hope for Powell`s dovish hope tonight. Before this week, the market expectation was nothing but data dependent, while now it`s 6 months pause . I even heard some noise that Fed should cut as soon as March. By the fundamental of US economics, TY below 2.80% is already beyond my imagination. In my mind, If AHE(consensus 0.3% mom ) turns out as expected without too much missing out of NFP (consensus 180k, ADP was strong) plus his comments in Williams style or just like Kaplan last night , it could be a very rare chance to shot USTs and Gold as a intra-week deal.

ps：美联储通过调节短期利率水平以实现通胀和经济活动的平衡，致力于实现长期的就业最大化和通胀稳定两大工作目标。他的理论最底层实际上非常简单，大学宏观经济学都学过，就是两个模型，一个是菲利普斯曲线，再一个就是投资储蓄模型（IS model）。前者本意描述的是给定产出缺口下的通胀水平，而所谓的产出缺口就是实际产出和一个虚无缥缈的潜在产出之间的差值，即用到最后一个人工和最后一分钱资本投入时候的产出水平。经济向好，产出缺口可以为正值，还可以很大；反之则反是。但是度量这个产出缺口很难啊，聪明的经济学博士们就用失业率和自然失业率之间的差值替代，但是方向就变了，即经济向好，这个差值可以为负值，还可以负得很多。IS 模型则是从总需求的角度阐述经济体特征，即在一定利率水平下投资和储蓄之间分配关系对最终产出的影响。如果把这个产出用失业率缺口（就是实际失业率与自然失业率的差值）替代，我们就很容易看到美联储这位央妈关于政策利率选择对于经济和就业的影响。从一个方面说，就是提高政策利率缺口——即政策利率与自然利率的差值——就会压制总体需求，推高视野率缺口。反之则反是。

如果事情这么简单，美联储就啥事别干了，毕竟那里可能是这个星球上经济学博士最密集的地方。这里面最关键的就是究竟如何选择菲利普曲线上的每一点，如何做到逐步推进经济增长和通胀的平衡呢。为此，这里面又牵涉到一个新的模型叫做损失方程（loss function），定义函数损失L为通货膨胀长期政策目标之间偏差的平方与实际失业率与自然失业率之间偏差的平方之和的一半，就是将上面这个图3d化，增加一个变量，等于横轴的平方加上竖轴的平方和的一般。说起来真绕口，看下面图就行了。

将这个锥形投影到上上图的平面上，取不同利率水平下的菲利普斯曲线与之相切的点，并连接起来，你就得到了Fed心目中的最优经济产出水平。上面这个图显然是一种理想情况，即通胀偏离度和失业偏离度不一样的。如果一位委员认为通胀更重要，或者失业更重要，他心目中的圆锥体就会变得扁一些，投影在平面的时候就是个椭圆形，最优产出曲线的斜率就会发生变化，也就产生了我们长期以来跌跌不休的鹰派和鸽派。再往后就是考察这个圆锥体是不是存在跳跃变化，是不是有偏误，是不是正圆，总之各种变化会导致不同的优化曲线。原文链接在此https://www.federalreserve.gov/econres/feds/f`iles/2018089pap.pdf， 推荐功力深厚的读者深度阅读~~

另，月亮的背面，真棒！

个人微信zhangke8639，欢迎同业交换名片。公众号更新速度快一点儿....排版也好一点点儿....

近期重要时间点：

1月4日，Powell，Bernanke and Yellen集体采访，主持人为NYT的Neil Irwin

2月8日，美国政府关门考验

3月21日，EU 峰会

3月29日，脱欧谈判截止

5月23-26日，欧洲议会选举

6月4-5日，FED研讨会,议题为“策略，工具以及沟通实践”

Appendix：his t overnight

0103  1218  Sadly, there can be no REAL Border Security without the Wall!

0103  2240  “MAGA list: 205 ‘historic results’ help Trump make case for 2020 re-election” https://t.co/vtqnUwdhjB

0103  2245  The Shutdown is only because of the 2020 Presidential Election. The Democrats know they can’t win based on all of the achievements of “Trump,” so they are going all out on the desperately needed Wall and Border Security - and Presidential Harassment. For them, strictly politics!

0103  2255  The United States Treasury has taken in MANY billions of dollars from the Tariffs we are charging China and other countries that have not treated us fairly. In the meantime we are doing well in various Trade Negotiations currently going on. At some point this had to be done!

0104  0145  The RNC has a great Chairwoman in Ronna McDaniel and the @GOP has never been stronger. We achieved historic wins with her help last year! #MAGA??

0104  0925  Michael Pillsbury interviewed by @cvpayne: “They have the motive of making the President look bad – instead of President Trump being portrayed as a HERO. The first President to take China on, it’s 20 years overdue....

....President Trump deserves a lot of credit, but again, you have the anti-Trump people who are not going to give him a lot of credit.”

Disclaimer：This material was prepared in private name and out of pernaonal hobby,definitely based upon facts and robust analysis with delicate consideration of highly professionality.But with no means to conduct any trade , and before using the contents of this note in any internal or external communication, please ensure you are comfortable and fully aware this could not be sufficient enough as any action base.

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