US Economy

5

Goldman doves up on Fed, lifts AUD

And so it begins, from Goldman which has been far too hawkish this cycle all along: Relative to the turmoil in the financial markets, the economic numbers have been remarkably stable recently. Admittedly, jobless claims have risen and November payrolls fell somewhat short of expectations. But a report showing 155k new jobs and a decline

1

US jobs preview

Via Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for November. The consensus is for an increase of 190,000 non-farm payroll jobs in November (with a range of estimates between 140,000 to 220,000), and for the unemployment rate to be unchanged at 3.7%. Last month, the BLS reported

3

What has Cold War 2.0 cost Trump’s stock market?

Via FTAlphaville: Just days after President Trump broke bread with Chinese president Xi Jinping in Buenos Aires and agreed to a ceasefire in the US-China trade war, Trump tweeted that his administration is working closely “on seeing whether or not a REAL deal with China is actually possible”. If not, the self-proclaimed “Tariff Man” warned that new

10

Is the Fed about to stop hiking rates?

Via Goldman: How Does Fed Policy React To Stock Market Declines? The equity market sell-off since the beginning of October has led to questions around whether the Fed will maintain its current path of rate hikes. Historically, the Fed appears to have responded with more accommodative policy after stock market sell-offs, on average (Exhibit 1). This

7

Why Trump tax cuts failed

From Paul Krugman: The answer, I’d argue, is that business decisions are a lot less sensitive to financial incentives — including tax rates — than conservatives claim. And appreciating that reality doesn’t just undermine the case for the Trump tax cut. It undermines Republican economic doctrine as a whole. About business decisions: It’s a dirty

3

Westpac: US wage inflation contained

Via Westpac: Nonfarm payrolls rebounded strongly in October following a disappointing September print – a consequence of Hurricane Florence’s disruption. October’s 250k gain leaves the three-month average at 218k, in line with the month-average for 2018, but ahead of 2017’s 182k. The unemployment rate was unchanged at 3.7% – a near 50-year low – as

0

US debt markets still solid despite equity ructions

Via Moody’s: Net Stock Buybacks and Net Borrowing Have Yet to Alarm Recent outsized advances by equity prices probably owe something to either actual or anticipated buybacks of common stock. Both the relative steadiness of corporate credit quality and ample amounts of corporate cash now improve the outlook for equity buybacks. In the Financial Accounts

17

Trump looks to MOAR tax cuts

Via Reuters: The White House and Republicans on the House of Representatives tax-writing committee vowed on Wednesday to take “swift action” next year on a 10 percent tax cut for middle-class Americans. In a joint statement, the White House and the House Ways and Means Committee’s Republican members said they would push the tax-cut legislation

3

What will US mid-terms do to markets?

Via Goldman: Allison Nathan: How do you expect the midterm elections to play out? Alec Phillips: It’s hard to argue with the consensus view that Republicans will hold the Senate and Democrats will win the House majority. Polling suggests the chances of the Democrats gaining the Senate majority have declined in recent weeks, but they appear to

1

President Trump rallies into the mid-terms

The latest polls show Mr Trump at post-election highs: Morgan Stanley mulls outcomes: Trade risk is a constant. On election night, focus on other variables. While much is made of election outcomes influencing markets by shifting trade policy, we think this is overstated. Even if Democrats take control, they have their fair share of trade

4

Trump boom to fade not bust

Via Westpac: The latest GDP report for the US showed their economy in strong form, with a 3.5% annualised gain in the three months to September following the June quarter’s 4.2% rise. For the year to date, growth is currently running at a 3.3% annualised pace, close to twice potential. In assessing the outlook for

0

US debt withstanding equity crunch

Via Moody’s: Financial Liquidity Withstands Equity Volatility for Now Higher interest rates and trade related frictions, including the effective tax hikes brought on by the imposition of tariffs, have lowered the market value of U.S. common stock by 8.1% from its current zenith of September 20, 2018. Thus far, systemic financial liquidity has yet to

17

US tech is no bubble

I am bemused by those endlessly calling US tech a bubble. It’s not. Goldman shows us why today: This is secular growth story as lowflation drives ever more technology productivity spending: Multiples are almost fantastically cheap for the growth: There are some dimensions of bubblyness in frontier firms and the new age FAANGS – such

40

MV Tampa sails into Trump’s lap

Via AFR: The Trump administration has intensified its claims “Middle Easterners” have hidden themselves in a caravan of thousands of Central American migrants marching towards the US border from Honduras through Mexico, in a move that analysts say will swing key Senate battlegrounds to the GOP. “It’s inconceivable that there would not be individuals from

3

Is the US housing market about to crash?

As interest rates rise the US housing market has begun to slow and stock prices of home builders have crashed: Is this the beginning of the end for the US expansion? Via BofAML: Home prices nationally, as measured by the S&P CoreLogic Case-Shiller index are running at 6.0% yoy as of the latest data in

20

Jacksonian Trump whacks Saudi with lettuce leaf

Via Bloomie: President Donald Trump said he’s immediately sending Secretary of State Michael Pompeo to Saudi Arabia to meet with King Salman bin Abdulaziz and suggested that “rogue killers” might be behind the disappearance of journalist Jamal Khashoggi in Turkey. Trump commented on Monday after he said the king, in a 20-minute phone call, offered

11

How high will US interest rates get?

Via Westpac: Though credit spreads in the US are off their lows, they have remained relatively impervious to the heightening global risks surrounding trade and geopolitics. This partly reflects the strength in the US economy which has continued to support corporate earnings. With credit spreads in the US and Australia tightly linked, our spreads have

4

US jobs boom will fizzle

More on the US jobs market from Westpac’s Elliot Clarke today: The US labour market delivered again in September, as strong employment growth continued and the unemployment rate fell to a new low dating back to 1969. Despite this strength however, the wages data did little to rebut Chair Powell’s message of recent weeks that

3

Previewing US jobs

It’s NFP day again. From Calculated Risk: On Friday at 8:30 AM ET, the BLS will release the employment report for September. The consensus is for an increase of 180,000 non-farm payroll jobs in September (with a range of estimates between 150,000 to 195,000), and for the unemployment rate to decline to 3.8%. The BLS

133

Chinese ‘sharp power’ crisis grows as US reveals global “hack”

Via Bloomie today: In 2015, Amazon.com Inc. began quietly evaluating a startup called Elemental Technologies, a potential acquisition to help with a major expansion of its streaming video service, known today as Amazon Prime Video. Based in Portland, Ore., Elemental made software for compressing massive video files and formatting them for different devices. Its technology

4

New NAFTA is good for North America, bad for Australia

Via the WSJ comes the detail: Automaking The new three-country pact would require auto makers to build a greater portion of a car in North America and with higher-wage workers to avoid duties when a car crosses borders. That would be a relative win for Detroit’s Big Three auto makers, which rely heavily on factories

3

Have US earnings peaked?

The Wall Street Journal suggests that they may have: I’m not seeing it yet in my data: I use Factset rather than the Bloomberg data used by the Wall Street Journal, and so maybe there is a timing issue. But Thomson Reuters data concur with Factset: Also, it is worth noting the fall in earnings in the