Macro Digest: The Spain in rain falls mainly on the plains (Buy Gold)

Action:

 

Buy XAUUSD 1305.00 – stop 1280.00 offered

Target: 1365 (1400)

 

https://twitter.com/Steen_Jakobsen/status/1002108114978697216

 

Alternative strategy could be to wait for break of 1308.00 – the 200 SMA – where we suspect renewed fund will emerge considering positioning is at ten month low presently. (Ole S Hansen will update w his separate view shortly – (Twitter link below)

 

Why:

 

1.      If Spain also becomes an issue we will see contagion which should leave Gold the only real safe haven into world of ever more confirmation of slowing economic data (China RRR cut, Credit Impulse, Monetary Aggr, Central bank balances)

2.      Italy is slow burning fuse which will continue to play role with Iran and Turkey joining the magic cocktail of uncertainty

3.      US data has been very poor of late (plus our expected incoming slow-down)

4.      We think cycle top is in for US Treasury.  Fed Bullard's 1^st sign and how the position shift hurt old timers like Bill Gross indicates more pain is coming

 

Focus this pm will move to Spain and no-confidence vote on PM Rajoy (and later looking forward to Non-farm payroll tomorrow)

 

The vote will again depend on the Basque 5 votes, and after the "surprising support" for the budget last week (which was given after getting concession on pensions) it's very much up in the air.

 

https://www.ft.com/content/d1493cbc-6420-11e8-a39d-4df188287fff

 

The FT says there is political agreement to outst Rajoy, but little consensus on how:

 

Will the motion pass?

All the main opposition parties want Mr Rajoy to go following the Gürtel sentences — but there is little consensus on how. As a result, passing the motion on Friday is looking tricky.

 

There are just two ways that Mr Sánchez, who will be backed by the far-left Podemos party, can pull together enough votes to topple the government.

 

The first is winning the support of the liberal Ciudadanos party. The problem is that while Ciudadanos want Mr Rajoy out, this vote would put their rival Mr Sánchez in power.

 

Albert Rivera, Ciudadanos's leader, has said he will not support Friday's motion, saying that there should be a different vote over a neutral technocratic candidate who could quickly call new elections.

 

A solution would be an agreement to put Mr Sánchez in power with guarantees that he would call elections in a few months, although neither side is hopeful. The second option for Mr Sánchez is to seek support from smaller regional nationalist parties in Catalonia and the Basque country.

 

https://twitter.com/Steen_Jakobsen/status/1002088620205977600

 

 

Remember! All Saxo Research will come via Twitter – follow the below

 

https://twitter.com/SaxoStrats

 

https://twitter.com/petergarnry

https://twitter.com/johnjhardy

https://twitter.com/Ole_S_Hansen

https://twitter.com/Steen_Jakobsen

https://twitter.com/Dembik_Chris

https://twitter.com/Eleanor_Creagh

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

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