Amplify Weekly Strategy 26th - 30th November 2018

CALENDAR HIGHLIGHTS

Monday: JN Flash Manufacturing PMI, GE Ifo Business Climate, ECB's Draghi, BoE's Carney speak

Tuesday: JN BoJ Core CPI, OPEC-JMMC Meeting, US HPI, Consumer Confidence, Weekly API Inventories, Fed's Clarida, Bostic to speak

Wednesday: RBNZ Financial Stability Report, UK BRC Shop Price Index, Bank Stress Test Results, BoE Financial Stability Report, EU M3 Money Supply, GE 10-yr govt bond auction, Gfk Consumer Climate, US Prelim GDP, Goods Trade Balance, Prelim Wholesales Inventories, New Homes Sales, Richmond Fed Manufacturing Index, Weekly DoE Inventories, Fed's Powell speaks

Thursday: JN Retail Sales, GE Prelim CPI, Unemployment Change, French Consumer spending, Prelim GDP, SP Flash CPI, ECB Financial Stability Review, UK M4 Money Supply, Mortgage Approvals, IT govt bond auction, US Core PCE Price Index, Personal Spending/Income, Weekly Jobless Claims, Pending Home Sales, FOMC Minutes

Friday: JN Unemployment Rate, Prelim Industrial Production, CN Manufacturing/Non-Manufacturing PMI, UK Gfk Consumer Confidence, Nationwide HPI, G20 Meeting, GE Import Prices, Retail Sales, FR Prelim CPI, IT Unemployment Rate, Prelim CPI, EU CPI Flash Estimate, CA GDP, US Chicago PMI, Fed's Williams speaks

Saturday: G20 Leaders Summit in Argentina

Further hurdles for May to overcome...

Over the weekend, EU leaders approved the agreement with the UK's withdrawal plans allowing Theresa May to bring the deal back to the House of Commons for parliamentary approval in the coming weeks. The timeline that is currently in play is December 12th, one day before the official EU summit is due to begin.

Up until that date you can expect plenty of commanding commentary from the PM about the "delivery of the people's will" as she attempts to rally the public and opposition to the current deal. With this in mind, I would anticipate further large bouts of volatility and agree with ING's view (below) that MP's will not approve the deal until the last minute when the prospect of a 'no deal' causes a short-term collapse of the GBP forcing MP's to vote through the proposal on the second attempt which would likely involve an extension of Article 50.

Will OPEC counteract the recent fall in oil...

WTI and Brent crude have seen seven straight weeks of price declines and the big question this week is will OPEC and non-OPEC producers’ step in to counteract the sharp decline.

On Tuesday, OPEC and the JMMC meet to discuss current compliance with the existing deal and Saudi and Russian officials will meet with US President Trump while attending the G20 summit in Argentina which commences on Friday. Just this morning Saudi daily oil output was reported to have surpassed a record 11mln bpd and this weekend Trump tweeted that the recent fall in prices was like a big tax cut for consumers.

As such, I see no let-up in the rate of US production meaning that without psychical action on the supply side led by the Saudi's the price of oil could remain under sustained pressure and a break of the psychological $50 handle opens up the prospect of a drop to the lows in Q3 2016 and summer of 2017 at $42.

BTP's start the week on the front-foot...

Italian assets have responded positively to the latest news from Reuters that the coalition government is discussing reducing next year's budget target to 2.0%-2.1% of GDP from the current 2.4% in order to avoid a disciplinary procedure from Brussels, according to sources.

The news comes as welcome relief for European assets as Italy has remained one of the big threats to stability in the region. Meanwhile on the economic data front, Friday's release of the flash CPI estimate will be of interest in how inflationary conditions have been impacted by declining energy prices, a key component to the ECB's thinking on its exit of expansive monetary policy.

Powell pause...

The Fed Chair speaks on Wednesday and will be one of the key events for the week. His recent expression of concern over the global growth situation has prompted a pick-up in speculation of the Fed having to re-access their rate path in 2019.

Any confirmation of this belief could provide a pivotal turning point to the struggling equity market which aside from a plethora of macro concerns has been affected at the core by the belief of rising interest rates in the US. In our minds, the speech supersedes the release of the FOMC minutes due Thursday evening.

Amplify's head of trading, Piers Curran, delivered the market briefing earlier this morning giving his view on the week ahead. You can access the via Trading-Live.com or via our YouTube channel HERE.

Have a good week ahead.

Regards,

Anthony