Here is this week's Game Plan:
Firstly, remember that Monday is a holiday in North America. Over the weejend, Trump received an update on trade talks with China which were "very productive." Talks will continue in the coming week in Washington. Also, UK PM May is to hold Brexit talks with EC President Juncker this week.
Themes for the Week Ahead:
- Risk Appetite: last week's risk rally was based on US/China trade talks and the dovish shift in the FED and other central banks. These factors will remain at top of mind this week, since US/China trade talks continue and the Fed will release the Minutes from their recent meeting. However, the mood will sour quickly if the Minutes and/or Trade Talks show anything different from expectations.
- Earnings, Slowdown, Recession? Analysts are still looking for a deeper correction in stocks and have taken their cue from Ed Yardeni's Boom/Bust indicator which is pointing at lower stock prices in the short term.
- More on Growth: U.S. and euro zone "flash" PMI data is released this week as the market focuses more and more on growth issues worldwide.
- Turmoil in Spain: PM Sanchez has called snap elections for April 28 and opinion polls show no single party would win enough votes to govern. Coalition scenarios point to lengthy negotiations between various parties - potentially including the far-right Vox.
- RBA Minutes
- UK Employment
- EU ZEW and IFO
- FOMC Minutes
- AU Employment
- CAD Retail Sales
I still have a long bias on equities, although we are approaching key levels on US indices. I also have a long bias on Crude Oil. In FX, the Euro remains rather week and the best option is EurNzd short for now. If the risk-on theme continues, NzdJpy will be a decent candidate.
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