Via the excellent Damien Boey at Credit Suisse: Overnight, bonds rallied strongly again, partly because of investor nervousness about geo-political risks and slowing growth. Within the stock market, bond proxies and quality exposures outperformed again, while value stocks underperformed. Yet interestingly, we are actually seeing the forward-looking economic data improve: Both the New York and
Via Michael Pettis: On July 31, 2019, U.S. Senators Tammy Baldwin and Josh Hawley submitted a bill “to establish a national goal and mechanism to achieve a trade-balancing exchange rate for the United States dollar, to impose a market access charge on certain purchases of United States assets, and for other purposes.” According to an earlier memo that further
Via Morgan Stanley: Don’t Blame the Fed or Trade – It’s the Fundamentals Rarely has the adage “Don’t fight the Fed” been more apropos than over the past 18 months. In 2018, the Federal Reserve’s aggressive tightening contributed to a bear market for most stocks, while this year’s equally aggressive dovish pivot has resulted in
From the IEA: Source: U.S. Energy Information Administration, Annual Electric Generator Report and Preliminary Monthly Electric Generator Inventory Between 2010 and the first quarter of 2019, U.S. power companies announced the retirement of more than 546 coal-fired power units, totaling about 102 gigawatts (GW) of generating capacity. Plant owners intend to retire another 17 GW of coal-fired capacity by
Via the excellent Damien Boey at Credit Suisse: Bond and money market investors, as well as the Fed, have been keeping tabs on debt ceiling negotiations. Officially, the fear has been that if legislation were to not change, the US government would “run out of money” by September, causing shutdown and “default”. The official narrative
By Damien Boey at Credit Suisse: Over the past few days, we have witnessed some very confusing signals from Fed officials: Vice Chair Clarida suggested that the Fed should not wait until things get so bad to have a dramatic series of rate cuts. These comments followed and potentially reinforced dovish comments from the New
by Chris Becker Stock markets are renowned for pricing in promises but failing to deliver on accuracy. With US markets now at record highs, with the Dow Jones breaking through the 27000 point barrier last night as the S&P500 hovers at a near doubling of its GFC low, and a Federal Reserve hell bent
by Chris Becker The latest inflation figures from the US may have thrown a spanner in the works of an easing Fed, upsetting bond markets overnight. More from CNBC: U.S. underlying consumer prices increased by the most in nearly 1-1/2 years in June amid solid gains in the costs of a range of goods and services,
Damien Boye at Credit Suisse has his take on the Powell Put overnight: Overnight, Fed Chair Powell delivered the dovishness the market was looking for, but had not fully priced in. He suggested that: Many FOMC members were talking about cutting rates in June. The dip in inflation may not be so transitory, as initially
by Chris Becker And there we have it. The United States Federal Reserve is transmitting loud and clear that it intends to cut rates to support the US and therefore global economy. In his testimony to the US Congress overnight, the Fed Chief Jerome Powell reiterated the central banks concern with the global economy, particularly
by Chris Becker Fed Chairman Powell is testifying before Congress tonight AEDT on the state of the US economy and invariably, markets will hang on his words surrounding further interest rate cuts. At the moment, the probability of a cut at the July meeting remains at 100%, with a 94% chance of being lowered by
by Chris Becker There are three indicators currently weighing on higher probability of a US recession, probably in early 2020. First, buried in Friday night’s unemployment print was the “unemployed for over 26 weeks (6 months) indicator, remaining stuck at a cyclical low: Interestingly, it has taken large rounds of rate cuts, huge tax cuts
Via Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for June. The consensus is for an increase of 165,000 non-farm payroll jobs in June, and for the unemployment rate to be unchanged at 3.6%. Last month, the BLS reported 75,000 jobs added in May. Here is a summary
El Trumpo on the steamroller again last night: “China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA. We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games – as they have for many
Thanks to Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for May. The consensus is for an increase of 180,000 non-farm payroll jobs in April, and for the unemployment rate to increase to 3.7%. Last month, the BLS reported 263,000 jobs added in April. Here is a summary
Via Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for April. The consensus is for an increase of 180,000 non-farm payroll jobs in April, and for the unemployment rate to be unchanged at 3.8%. Last month, the BLS reported 196,000 jobs added in March. Here is a summary
Via Elliot Clarke at Westpac first: The April/ May FOMC meeting saw the Committee hold firm to their constructive but cautious view of the economic outlook. That inflation’s underperformance of the 2.0%yr medium-term target was highlighted in the decision statement initially supported market pricing of rate cuts in late-2019 and 2020. However, in the press
Via the FT: Joe Biden took his newly cash flush presidential campaign to Pittsburgh on Monday, making the case in his first speech as a candidate that he would fight for American workers and not corporate bosses. “This country wasn’t built by Wall Street bankers, CEOs, or hedge fund managers. It was built by you,” Mr
Via Tim Duy at FedWatch: The Federal Reserve quickly switched gears between December 2018 and March 2019 as policy became “patient” and the two rate hikes projected for 2019 fell to zero. The backdrop for the shift was stumbling markets, softer growth data, and falling inflation. Fed officials find the turnaround of inflation particularly worrisome.
Via the FT: Bernie Sanders, the Vermont senator who fought Hillary Clinton for the Democratic nomination in 2016, led the field of 18 Democrats in the first quarter of the year by raising $18m, according to the Federal Election Commission. He was followed by Kamala Harris, the California senator, who raised $12m in the first
Via The Guardian: At every turn they clapped and cheered, enamored with the candidate’s prescriptions for universal healthcare, a humane attitude toward immigrants and the rejection of climate change denialism. Bernie Sanders was the candidate, and the people clapping and cheering were audience members who turned out in Bethlehem, Pennsylvania, for a televised town hall on
Like Australia for instance: Sen. Bernie Sanders campaigns in Oskaloosa, IA: “If you open the borders, there’s a lot of poverty in this world, and you’re going to have people from all over the world. And I don’t think that’s something that we can do at this point. Can’t do it.” pic.twitter.com/INF9GopzIe — The Hill
Via Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for March. The consensus is for an increase of 170,000 non-farm payroll jobs in March, and for the unemployment rate to be unchanged at 3.8%. Last month, the BLS reported 20,000 jobs added in February. Here is a summary
Via FTAlphaville: For most of 2018, US assets were exceptional. Thanks to a hefty dose of fiscal stimulus from the Trump administration, the economy surged at a time when growth elsewhere was slowing down. And when the Fed moved to further tighten monetary policy — as the likes of the ECB and BOJ held firm —
Via S&P: Fed Will Cut Rates If 10-Year Yield Breaks Under 2.4% The Treasury bond market was stunned by the drop in the Federal Open Market Committee’s “dot chart” projection for year-end 2019 fed funds’ midpoint from the 2.875% of December 2018’s projection to 2.375% as of March 2019’s projection. Moreover, the FOMC formally announced
The Economist tackles MMT today: That perspective is not always clear; there is no canonical mmt model. But there are some central ideas. A government that prints and borrows in its own currency cannot be forced to default, since it can always create money to pay creditors. New money can also pay for government spending;
Via Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for February. The consensus is for an increase of 178,000 non-farm payroll jobs in February, and for the unemployment rate to decline to 3.9%. Last month, the BLS reported 304,000 jobs added in January. Here is a summary of
Via Reuters: “People are underestimating how quickly Europe is slowing,” El-Erian said. The International Monetary Fund revised down its forecast for euro zone growth to 1.6 percent in January from 1.9 percent three months prior, but El-Erian thinks even the lowered outlook is overly optimistic. El-Erian, the former chief executive of Pimco, the bond investment
Go Bernie! What an immense relief to see a candidate that understands being “left” and winning elections is about addressing class politics NOT identity politics.
Via Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for January. The consensus is for an increase of 158,000 non-farm payroll jobs in January (with a range of estimates between 140,000 to 183,000), and for the unemployment rate to be unchanged at 3.9%. Last month, the BLS reported
