Via Bloomie: The U.S. dollar may be poised to decline, according to Goldman Sachs Group Inc. Comments from Federal Reserve Chairman Jerome Powell on Friday boosted the chances that the central bank will pause interest-rate increases, strategists at Goldman wrote in a note Saturday. Powell cited the events of 2016, when rates were kept unchanged through
From Calculated Risk: Note: The Employment report will be released as scheduled, and not postponed by the government shutdown. On Friday at 8:30 AM ET, the BLS will release the employment report for December. The consensus is for an increase of 180,000 non-farm payroll jobs in December (with a range of estimates between 160,000 to 200,000),
by Chris Becker Got to hand it to the GOP, they know how to spoil a party. After passing the biggest tax cuts in history, leading to a huge surge in the US stock market throughout 2018, 2019 looks to be the year of reckoning for the increasingly irrelevant party. The US federal government is
by Chris Becker As adult supervision returns to Congress (but not the Senate) on January 3rd, the US Government shutdown rolls on with news this morning that President Trump has invited the new Congressional leadership to the White House. From The Hill: Trump will host the leader and whip of each party from both chambers,
Via CNN: In a precautionary move, Treasury Secretary Steven Mnuchin spent Sunday on the phone speaking with the chief executives of some of the country’s largest banks to avoid yet another market whiplash when Wall Street opens Monday, according to a person familiar with the matter. The secretary, who has been visiting his children in
Via Ambrose Evans-Pritchard: Monetary tightening by central banks is like trying to pull a brick across a rough surface with elastic: nothing happens; still nothing happens; then it leaps up and hits you in the face. The US Federal Reserve’s Jerome Powell may have a broken nose after asserting stubbornly this week that he would
Here is the letter from Jim Mattis: Speaks for itself.
“No” is the short answer, via Calculated Risk: Last Friday, Professor Robert Shiller wrote in the NY Times: The Housing Boom Is Already Gigantic. How Long Can It Last? We are, once again, experiencing one of the greatest housing booms in United States history. How long this will last and where it is heading next are
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
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
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
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
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
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
DXY rebounded over the weekend but not that much as CNY takes off on trade hopes. EUR fell: AUD was wild, launching then crashing: Market positioning remain very short at -70k contracts though this data only suns to Wednesdays so does not include the recent short squeeze: Gold held up: Oil didn’t: Base metals were
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
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
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
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
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
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
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
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
Via the NYT comes Paul Volker: “We’re in a hell of a mess in every direction,” he said. “And it’s really bad. At least the military still has all the respect. But I don’t know, how can you run a democracy when nobody believes in the leadership of the country?” …“There is no force on
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
If I have to read one more these rubbish assessments of the decline of the USD I will be reaching for my revolver. Via Harry Sender at the FT: One consequence of the America First policies of US President Donald Trump will be to create a bipolar financial world, with China at one end and
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
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
And a million snowflakes cried out in the darkness, via Politico: CNN before love-making is not his idea of a turn-on. But she can hardly turn it off—engrossed as she is in the latest unnerving gyrations of Washington. Who else to blame but Donald Trump? A president who excites hot feelings in many quarters has
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
