Hi Folks.
Well, we are now officially in the Warsh era of US Federal Reserve. My friend Taylor sent me a summary of the latest meeting, prepared by Graham Summers, where Warsh sat as Fed Head for the first time, and it was quite an eye-opener. The short version: He's shutting down 50 years of the idea that Fed Members are Rock Stars and trying to take the Fed back into the era where they just do their work and otherwise shut the hell up. My interpretation: not a lot of Fed Speak moving forward. He also noted the state of Financial Reports (aka the news numbers this Forecast reviews each week) as being "garbage", a designation Summers heartily agreed with.
Now, not to humble brag or anything, but a week ago, 3 days prior to the Fed meetings, on these very pages, I recounted a brief moment in my life traveling to garbage dumps with my grandfather, and noted my review of last week's numbers brought that memory vividly to mind.
I don't have enough of an ego to claim that great minds think alike.
But I am open to the idea that some or all of us belong to a Hive Mind.
Anyway, it shall be interesting to see what becomes of all of this.
Now on with the show.
SUNDAY: Only one report for the evening: the lowly New Zealand Credit Card Spending y/y number. For the last few weeks I have been revisiting (meaning looking at the charts) some of the lesser numbers to see if they have possibly morphed into something worth watching. So far, garbage numbers have remained garbage numbers, with no signs of improvement. Then along comes this turd of a number, which has routinely clocked in with single digit results. The last 3 months were 19, 7, and 15. Still not trade-worthy, but for 2 of the last 3 months the results were respectable at a minimum. So going forward, there is actually a New Zealand number I am going to start tracking more closely, something I would have bet money against happening a week ago.
MONDAY: Asian/London Session: The session starts at 8:30 a.m. with the Canadian CPI in all its variations (5 in all). This one has been a little schizo, sometimes posting 40 pips and other times posting 8. Since I try to maintain focus on the more recent price action, the last 3 months have given us 17, 9, and 25 pips. Not exactly the 40 pip powerhouse it once was, but last month finally showed some signs of life. Not really enough to get me excited about placing a trade, so Pass for now and hope that things pick up North of the (my) Border going forward. The rest of the session is a great big nothingburger, but Australia and Japan post their versions of the Flash Manufacturing and Services PMI at 7:00 and 8:30 p.m. accordingly, so at least we know we have those numbers to look forward to in the next session.
USA Session: Still hungover from the Juneteenth celebrations, the USA cannot find the energy or the data to post a single number today. Lightweights.
TUESDAY: Asian/London Session: We start with the Bank of Japan Core CPI y/y number, and as noted frequently over the last couple of years, there are CPI numbers worth trading (USD and GBP) and CPI numbers you should ignore (Everyone Else). Given the size of their economy and the interest in the JPY as a trading vehicle, you'd think this one would be with the first group. But posting results of 12, 16, and 6 pips over the last 3 months tells us they are in that second group for a reason. Pass. Then we get to the string of Flash numbers: France at 3:15, Germany at 3:30, Eurozone at 4:00, and Great Britain at 4:30 a.m. Trend = Trade, No Trend = No Trade. Some Fed Speak out of Canada at 9:00, and Britain at 9:55 and 1:30. The Bank of Japan's Summary of their previous Interest Rate meeting drops at 7:50 p.m., and we close with Australia at 9:30 and their CPI numbers. Much like Canada, they tend to throw in a decent number once in a while but typically stay below my 20 pip line, with the last 3 months of 26, 12, and 8 pips as results going a long way to back up my claim. Pass for now as well.
USA Session: 4 numbers and they should have been trashed and another vacation day taken. Yet here we are. The ADP Weekly Unemployment number at 8:15 which has been universally ignored by everyone since its inception a number of months ago. Our version of the Flash numbers drop at 9:45 and these too are ignored by traders, who typically are rewarded for their discernment by the ISM versions dropping 15 minutes later. But today this is not the case. No ISM numbers riding to the rescue today (or even this week!). So amazingly enough, these numbers might just overperform simply because there is nothing before or after on the calendar worth trading. So maybe keep an eye on these two today. They may end up being the only game in town. The 10:00 Richmond Manufacturing Index isn't going to do much for price action, and the 4:30 API Weekly Statistical Bulletin for Oil Traders simply is not tradeable.
WEDNESDAY: Asian/London Session: It's all Fed Speak (not US Fed Speak but from pretty much everywhere else) and a couple of dumpster level numbers for the entire session, until we get to 9:30 p.m. and the Australian Employment Change number (think NFP but with a Victoria Bitter in hand). Unfortunately, that is where the resemblance ends, as this one has posted 6, 5, and 15 pips in the last three months of releases. That makes Passing easier.
USA Session: Yet another session of hot garbage not likely to inspire anyone to hit a Buy or Sell button. Current Account at 8:30, New Home Sales at 10:00, Crude Oil at 10:30 (possibly an interesting day for Oil traders as the Iranian situation has been temporarily permanently resolved...that means it is settled until Iran starts flying drones into tankers once again, or something equally stupid, and the over/under on that one is 3 days...EDITOR'S NOTE: As of late Saturday morning, Iran closed the Straits of Hormuz over some slight, real or imagined...if you took the Under, step to the window and collect your winnings). But you trade what you see, not what you think you should be seeing, so I expect today's oil number might actually generate some serious price swings no matter how it turns out. And the last entry is a floating Bank Stress Test results report, and I'm not going to say what I really think about this one because most of you have email filters that will spot a plethora of offending words and phrases and block the entire Forecast.
THURSDAY: Asian/London Session: Three non-essential numbers out of Germany and Great Britain which can be ignored, followed by the late session Japanese Tokyo Core CPI y/y, which is another in a long line of numbers that look like they should matter, but the results of 16, 14, and 6 over the last 3 months just go to show that looks can be deceiving.
USA Session: A ton of 8:30 a.m. numbers but the only 2 worth watching are the Core PCE and the Final GDP q/q. It's no secret the Fed has used the PCE number as its primary inflation gauge, but that might change with Warsh in charge, given his lack of appreciation for the current batch of economic numbers the Fed (and everyone else) rely upon to make decisions. And the last 3 results of 11, 13, and 15 may mean the bloom was already falling off the rose prior to his arrival, at least among traders. As for the Final GDP, it usually generates less than the Preliminary number, as the surprise/shock value is gone by then. And the last three results of 41, 11, and 11 pips tends to back that up (and don't let that 41 throw you off...the actual number came in a full half of a percentage point better than expected which caused traders to lose their minds for a bit...we're not expecting that to happen today, but always be ready, just in case). After that we get NatGas at 10:30 and Fed Speak at 3:40 and 6:30 p.m.
FRIDAY: Asian/London Session: I normally would not mention this one: German Retail Sales is listed as dropping at any time between June 26th and July 2nd. An absolutely worthless calendar entry, what with no specific date or time given. But it's the only entry on the calendar for the day. So give serious thought to taking the day off, A/L Session News Traders. You have absolutely nothing to work with today.
USA Session: And honestly, I could pretty much say the same thing for the lineup scheduled to greet US Session traders today. 8:30? Goods Trade Balance and Preliminary Wholesale Inventories, a number that has never moved price around, not even a little. 10:00 a.m.? Revised UofM Consumer Sentiment and Inflation Expectations. The last 3 months have seen 12, 16, and 16 pips in response to this pair dropping. Not terrible but also not really worth the risk on a Friday late morning session. And we close out with not one, but two "tentative" reports: Fed Monetary Policy Report and Treasury Currency Report. Tentative = Automatic Pass.
And that's all the news (and opinion) fit to print. See you back here next week.
Jeff
