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  • #201
  • Edited 9:49pm Aug 14, 2019 8:13pm | Edited 9:49pm
US Retail Sales - August Preview

  1. Core Retail Sales m/m
  2. Retail Sales m/m

Forecasts

  1. Core retail sales is expected to come in at 0.4%, unchanged from prior month.
  2. There is a divided consensus for those core retail sales estimates. While most economists are predicting a 0.4%, there are substantial forecasts at each interval, ranging from 0.2% to 0.6%.
  3. Those core retail sales forecasts are slightly skewed, showing more economists think the core number will come in stronger than expected. Not by much though.
  4. Retail sales is expected to show a slight tick down to 0.3% from 0.4% in the prior month.
  5. There is less division in the overall retail sales number, although there are substantial forecasts outside of the 0.3% consensus, ranging from 0.2% to 0.4%.

Risk Assessment

  1. It should be considered that this data will be released along with the Philly Fed Manufacturing Index and Empire State Manufacturing Index, both of which have had a heavier than normal impact in the recent two months, particularly on gold and precious metals.
  2. Retail data could trigger a risk on or off environment as market participants are looking to this data for signals reflecting US economic health.
  3. Data as expected or better will likely be USD positive, gold negative. Weaker than expected data will support gold prices and a corresponding drop in the USD.
  4. Weak enough data that triggers risk-off, or any degree of flight to quality, will be positive for gold.
  5. Both retail sales figures usually have revisions to the prior data. This can either exacerbate any initial move, or make any entries on the release of the data susceptible to whipsaws.

Possible Scenarios

  1. There is a greater risk of a larger reaction in the USD related to better than expected data. Interest rate expectations are skewed towards a very dovish Fed. The CME FedWatch is showing almost 75% probability of the fed lowering rates by at least 50 basis points over the next two meetings (Sept, Oct). Any data that shows the US economy does not need that much easing has the potential to trigger large moves higher in the USD and a corresponding drop in Gold as traders adjust rate expectations.
  2. There is a greater risk of a larger reaction in gold related to weaker than expected data. If this data triggers flight to quality, gold is at levels with little resistance and could see some follow through long after the release. Gold's downside risk has been and still is limited due to the current geopolitical environment. With that said, remember as the US dollar rises, gold prices will drop.
  3. The above two scenarios are dependent on the actual data deviating significantly from forecasts.

Recent impact on Gold and US dollar

July - Although both retail sales figures beat expectations, the downward revisions to the prior month's data caused the price movements to be somewhat limited

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June - The upward revisions to the prior month's data is what triggered the markets to react in favor of the USD as gold prices dropped.
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Overview
As seen by the charts posted above, this data will have impact either from the actual data deviating from forecasts, revisions to the priors, or both. The revisions make this release risky enough, but this upcoming retail sales data will be accompanied by other data that has shown to have the market's attention, Philly Fed and Empire Manufacturing. There is the potential for big moves across asset classes at release time, especially if all the US data is in sync relating to signaling what the current health of the US economy is looking like. However, it's very unlikely that four actual releases (and revisions) are all in unison. This data could present some very good trading opportunities, but it's best to wait until after the release to see where the market is going. Keep an eye out for any risk trades after release time, that's where the potential with the least amount of risk lies.

Good luck out there!
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  • #202
  • Aug 15, 2019 8:18am Aug 15, 2019 8:18am
Quoting EventsTrader
US Retail Sales - August Preview Core Retail Sales m/m Retail Sales m/m Forecasts Core retail sales is expected to come in at 0.4%, unchanged from prior month.
Looks like a nice beat of forecast, but tempered by unemployment data perhaps? Did have an immediate dip from results, but Gold is heading back up and USD is not taking off.
If in doubt, paddle out!
  • #203
  • Aug 15, 2019 9:57am Aug 15, 2019 9:57am
Quoting SurfsUp
{quote} Looks like a nice beat of forecast, but tempered by unemployment data perhaps? Did have an immediate dip from results, but Gold is heading back up and USD is not taking off.

Both Retail Sales and Core Retail sales were revised lower and FED has based their arguably hawkish outlook exactly on a strong consumer market. Another thing is that the surge is in online sales, and online sales are very volatile so they might have distorted the true number.

And also unemployment rose and the FED has emphasized many times that they find a strong labour market very important. If unemployment is rising this will lead to consumer purchasing power falling in the long run, so that's the problem.

On top of that, the main focus for gold pricing right now is the trade war and it's development, it has a MUCH larger impact then any of these data news.

This is why the USD didn't skyrocket as it perhaps should have.
Through the light of enlightenment, darkness unveils the path of truth.
  • #204
  • Edited Aug 16, 2019 11:38pm Aug 15, 2019 6:59pm | Edited Aug 16, 2019 11:38pm
Quoting SurfsUp
Did have an immediate dip from results, but Gold is heading back up and USD is not taking off.
Quoting Vorenzd
Another thing is that the surge is in online sales, and online sales are very volatile so they might have distorted the true number.
This was a key factor in why the market didn't take the way better than expected number as it has in the past. Amazon Prime Day is the reason why it came in so strong, and since that's a one-off event (yearly), it didn't accurately reflect the health of consumer spending. Gold has limited downside risk because it's being supported by all the geopolitical turmoil. But I would have expected a bigger move from the data we saw earlier.

Quoting SurfsUp
{quote} Looks like a nice beat of forecast, but tempered by unemployment data perhaps?
Your participation in the thread is great! The previews aren't guides to trading. We're just out here trying to help, hoping they provide some insight and to generate discussion so we can collectively, get a better handle on the markets. There's still an open slot for being a thread leader! Vorenzd and I welcome everybody's feedback.
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  • #205
  • Aug 20, 2019 2:44pm Aug 20, 2019 2:44pm
FOMC Meeting Minutes • Wednesday 21.8.2019.

On July 31, the Federal Open Market Committee (FOMC) cut the federal funds rate 25 bps to 2.00%-2.25%, and decided to end the reduction in its balance sheet in August... But, lower rates in the future are not necessarily preordained. Kansas City Fed President George and Boston Fed President Rosengren dissented from the rate cut decision, as voting members of the FOMC would have preferred to keep rates on hold.

I suspect the minutes from the July policy meeting may disclose additional non-voting members who would have preferred no action as well. The Fed’s decision to cut rates in July was widely expected among analysts, but was likely contested among FOMC members.

On top of that allow me to quote FED's Rosengren from yesterday:
1. "It is not clear that now is the time to encourage people to take on more debt, which could intensify a crisis"
2. "Just because other countries are weak does not mean the US should be easing"

The S&P 500 index has fallen based on this hawkishness from FED. FOMC meeting minutes might reveal that Rosengren is not the only one with an opinion like this and that other members might agree with him, if this happens this would cause S&P500 to fall significantly and it would give gold a solid potential to rise.

A tight labor market and below target inflation do not necessarily warrant rate cuts, causing the need for an “insurance” cut to be debatable.

The minutes will provide further insight into the Fed’s decision and perhaps shine some light on how it may be interpreting the more recent economic turmoil.

I expect the Fed to cut rates 25 bps in September.
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  • #206
  • Aug 20, 2019 6:45pm Aug 20, 2019 6:45pm
Quoting Vorenzd
FOMC Meeting Minutes • Wednesday 21.8.2019. On July 31, the Federal Open Market Committee (FOMC) cut the federal funds rate 25 bps to 2.00%-2.25%, and decided to end the reduction in its balance sheet in August... But, lower rates in the future are not necessarily preordained. Kansas City Fed President George and Boston Fed President Rosengren dissented from the rate cut decision, as voting members of the FOMC would have preferred to keep rates on hold. I suspect the minutes from the July policy meeting may disclose additional non-voting members...
Great post
  • #207
  • Aug 20, 2019 7:15pm Aug 20, 2019 7:15pm
Quoting Vorenzd
I expect the Fed to cut rates 25 bps in September.
I agree. Today the probabilities shifted from 95% for a 25 basis point cut in September to 98.1%. The surprise was earlier in the day there was a 5% chance of a 50 basis point rate cut. Now, the market is pricing in a 1.9% chance rates remain unchanged.

I expect the Fed to make up for the last meeting and get market expectations fully in line prior to the September meeting. They've almost fully accomplished that, two and a half weeks before the Fed's blackout period begins Sept 7th.
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  • #208
  • Aug 20, 2019 7:38pm Aug 20, 2019 7:38pm
FOMC Meeting Minutes - August Preview

  1. FOMC Meeting Minutes

Notes:

  1. see Vorenzd's analysis here: https://www.metalsmine.com/showthrea...7#post12453047

Recent impact on Gold and the USD (showing charts of GC, USD/JPY, and EUR/USD)

July

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May

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April

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Trading opportunities
As displayed by the charts above, there is ample trading opportunity with minimal risk as long as any entries are taken with patience and caution. Wait until a trend emerges and if history is any indicator, there should be some significant follow through. Tight stops. Good luck!!

We must learn who is gold, and who is gold plated
EventsTrader Live All Time Return: 54.4%
  • #209
  • Aug 21, 2019 11:00am Aug 21, 2019 11:00am
Quoting EventsTrader
{quote} I agree. Today the probabilities shifted from 95% for a 25 basis point cut in September to 98.1%. The surprise was earlier in the day there was a 5% chance of a 50 basis point rate cut. Now, the market is pricing in a 1.9% chance rates remain unchanged. I expect the Fed to make up for the last meeting and get market expectations fully in line prior to the September meeting. They've almost fully accomplished that, two and a half weeks before the Fed's blackout period...
Yeah, however i'm anticipating that today's FOMC minutes might shift rate expectations more towards keeping the rates unchanged.

There is also a speech by Jerome Powell at Jackson Hole this Friday, for some reason it is widely expected to be a very dovish speech, but i doubt that it'll meet market expectations.

What i personally expect is that today we will see a rise in expectation for rates to stay unchanged and on friday i'm expecting the expectations to go back to the state at which they are today. (almost 100% for a 25bps cut).

However, i must say that i personally do not believe that there should be another cut. We've also got Powell who said that the July cut was not a start of an easing cycle and we have Rosengren heavily oposing a rate cut.

FOMC minutes will reveal more...
Through the light of enlightenment, darkness unveils the path of truth.
  • #210
  • Aug 21, 2019 2:42pm Aug 21, 2019 2:42pm
Quoting Vorenzd
{quote} Yeah, however i'm anticipating that today's FOMC minutes might shift rate expectations more towards keeping the rates unchanged. There is also a speech by Jerome Powell at Jackson Hole this Friday, for some reason it is widely expected to be a very dovish speech, but i doubt that it'll meet market expectations. What i personally expect is that today we will see a rise in expectation for rates to stay unchanged and on friday i'm expecting the expectations to go back to the state at which they are today. (almost 100% for a 25bps cut). However,...
When the dust settled, so far it looks like the markets have digested these FOMC minutes as favorable to the US dollar. While the Sept rate probabilities will stay around where they are, I think now it's about the October meeting. There was a pretty big shift today. Currently, rate cut forecasts for 50bp have dropped and the market is pricing in about a 31% chance that the Fed only cuts once through the Oct meeting.
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  • #211
  • Edited 3:07pm Aug 21, 2019 2:56pm | Edited 3:07pm
Quoting EventsTrader
{quote} When the dust settled, so far it looks like the markets have digested these FOMC minutes as favorable to the US dollar. While the Sept rate probabilities will stay around where they are, I think now it's about the October meeting. There was a pretty big shift today. Currently, rate cut forecasts for 50bp have dropped and the market is pricing in about a 31% chance that the Fed only cuts once through the Oct meeting. {image}
Hmm, this is actually surprising. I didn't see FOMC minutes as revealing in any way.

We will see what will happen with the rates, i think we'll get a good hint at Jackson Hole. As you've said, since September is nearly certain, the focus has mostly shifted to October.

Here's my opinion:

1. If FED does cut rates in september as it is expected there will most likely be more dissenters then in July.
2. A rate cut in october would mean that we are in an easing cycle, and Powell explicitly said that this rate cut was not the beggining of an easing cycle
3. FED would lose a lot of credibility if it cut rates by another 50bps this year... they'd lose their reputation as an independent organization (at least for the general public
4. The US economy would enter very risk waters if there was such a rate cut, especially if there is a recession in the next few years. FED's tactic has always been stock up ammo and use it only when needed.
5. FED cutting rates 75bps in 3 meetings might have the counter effect and cause investors to think that the economic situation is far worse then it actually is, we might see a surge in equity prices just to see them fall tremendously.

Because of these reasons any many more (which i'll be posting as time progresses) I currently believe that the chance of FED cutting rates in October (granted they cut in September) is 0%.

At the moment I don't believe we will see 150-175 basis point rate level before Q4 2020 unless data starts to severely disapoint.
Through the light of enlightenment, darkness unveils the path of truth.
  • #212
  • Aug 25, 2019 12:44pm Aug 25, 2019 12:44pm
US- durable goods would be released on Monday 01:30 pm (GMT +1).
(Im new to this thread guys)
  • #213
  • Aug 25, 2019 3:28pm Aug 25, 2019 3:28pm
Quoting Vorenzd
{quote} Hmm, this is actually surprising. I didn't see FOMC minutes as revealing in any way. We will see what will happen with the rates, i think we'll get a good hint at Jackson Hole. As you've said, since September is nearly certain, the focus has mostly shifted to October. Here's my opinion: 1. If FED does cut rates in september as it is expected there will most likely be more dissenters then in July. 2. A rate cut in october would mean that we are in an easing cycle, and Powell explicitly said that this rate cut was not the beggining of an easing...
Central Bankers can’t save the world economy as major political shocks are turning into economic shocks. Ending the political uncertainty would have much greater impact than cutting interest rates, Jackson Hole conference
  • #214
  • Aug 25, 2019 3:31pm Aug 25, 2019 3:31pm
White House says Trump regrets not raising tariffs on China higher
  • #215
  • Aug 26, 2019 6:19am Aug 26, 2019 6:19am
Durable Goods Orders • Monday 26.8.2019.

The FOMC identified “the deceleration in economic activity in recent quarters, particularly in business fixed investment and manufacturing” [emphasis ours] as one of the three primary reasons it cut rates in July.

The ubiquitous trade policy uncertainty and
slowing global growth environment have sucked almost all momentum out of the manufacturing sector, particularly in regards to new capital spending and investment.

Core durable goods orders have trended down since mid-2018, with most measures on any sort of moving average basis in negative territory.

Manufacturing PMIs are solidly negative across many developed economies, while at 51.2 the U.S. ISM index is at its lowest level in nearly three years.

I expect orders to eke out a small gain in July, but manufacturing is otherwise still on life support.

I also get a second look on Thursday at Q2 GDP, when business fixed investment declined for the first time since 2015.

Previous: 1.9%

Personal opinion: 0.7%

Consensus: 1.3%


----‐------------------------------------------------


Quoting Spirit4eva
US- durable goods would be released on Monday 01:30 pm (GMT +1). (Im new to this thread guys)

Welcome bud !
Through the light of enlightenment, darkness unveils the path of truth.
  • #216
  • Aug 26, 2019 7:39pm Aug 26, 2019 7:39pm
Quoting Vorenzd
Durable Goods Orders • Monday 26.8.2019. The FOMC identified “the deceleration in economic activity in recent quarters, particularly in business fixed investment and manufacturing” [emphasis ours] as one of the three primary reasons it cut rates in July. The ubiquitous trade policy uncertainty and slowing global growth environment have sucked almost all momentum out of the manufacturing sector, particularly in regards to new capital spending and investment. Core durable goods orders have trended down since mid-2018, with most measures on any sort...
It was a dud because the core number came in lower while overall was stronger than expected. As always great insight here. Thanks for the preview.
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  • #217
  • Aug 26, 2019 7:40pm Aug 26, 2019 7:40pm
Quoting Unitedgold
{quote}Central Bankers can’t save the world economy as major political shocks are turning into economic shocks. Ending the political uncertainty would have much greater impact than cutting interest rates, Jackson Hole conference
You might be right, but how do you plan to trade it?
We must learn who is gold, and who is gold plated
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  • #218
  • Aug 26, 2019 7:43pm Aug 26, 2019 7:43pm
Quoting Vorenzd
{quote} Hmm, this is actually surprising. I didn't see FOMC minutes as revealing in any way.
Same. I'm starting to think a divided Fed might increasingly become the norm. Either way, I don't see any world in which the Fed disappoints a fully priced in rate cut less than two weeks out. Today the market's aligned on the upcoming FOMC meeting:
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After than, I'm still in the minority in thinking another rate cut isn't a certainty at all. It's almost 62% priced in as of today:
Attached Image (click to enlarge)
Click to Enlarge Name: SNAG-1.png Size: 50 KB
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  • #219
  • Aug 26, 2019 8:19pm Aug 26, 2019 8:19pm
Quoting EventsTrader
{image} After than, I'm still in the minority in thinking another rate cut isn't a certainty at all. It's almost 62% priced in as of today: {image}
Given the present state of global trade, I'm thinking the Fed eventually gets to 0%.
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #220
  • Aug 26, 2019 8:29pm Aug 26, 2019 8:29pm
Quoting Ef5
{quote} Given the present state of global trade, I'm thinking the Fed eventually gets to 0%.
The key is defining 'eventually.'
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