A river of drivel today surrounding Vice-President Mike Pence’s Aussie visit. Grovelling central is the AFR: US President Donald Trump’s “massive” tax reduction plan, details of which are expected on Thursday, will have direct benefits for Australia, Vice-President Mike Pence says. He met privately with the chief executives of Westfield, Macquarie Group, Lendlease and Austral
The USD took off Friday night: Commodity currencies were mixed, the Aussie weak: Gold reversed its Syrian gains: Brent a little too: Base metals were weak: Big miners soft: EM stocks too: High yield held up: US bonds were sold: European were bought big but spreads widened: Stocks were stable: The big news was US
The USD was firm last night: Commodity currencies too: And gold: Brent flamed out: Base metals were strong: Big miners stable: EM stocks are stuck: High yield too: US bonds were sold: European spreads stable: Stocks too: US data was good with the ADP printing way above expectations for a second month: Private sector employment
From the New Yorker: Trump’s first China summit may well push the White House off its game in more complicated ways. China occupies a prominent, but loosely defined, place in Trump’s world view. As a candidate, Trump rarely delivered a speech without accusing China of abusing the United States with unfair trade practices and by
Via MarketWatch: A record run for Tesla Inc. shares Monday tipped the electric-car maker to surpass Ford Motor Co. in market capitalization and become the No. 2 car company in the U.S. Tesla TSLA, +7.27% stock rose 7.3% to close at a record $298.52. The shares traded as high as $299, establishing a new intraday
Via The Australian: The US is “rapidly and dangerously” edging closer to taking military action against North Korea’s nuclear missile program, a former general close to President Trump says. Jack Keane, a four-star general who declined a role in the cabinet, said: “A pre-emptive strike against launch facilities, underground nuclear sites, artillery and rocket response
Pop over to view Jeremy Grantham at the WSJ for a cold shower if you’re concerned about US stocks being in a bubble. Below as well is a nice antidote the recent concern over US corporate lending, via Citi: The recent investor focus on decelerating C&I loan activity as a gauge for economic trends and
From CSIS:
Our Donald: Amid this: The Trump administration appears poised to cement China’s unfavorable status in trade cases, making Chinese goods eligible for higher U.S. tariffs well into the future. U.S. officials are preparing a review of China’s “market-economy status” under the World Trade Organization, according to official documents on the Commerce Department website. The review
DXY is back: Commodity currencies fell: Gold too: Brent rose as sell side permabulls pile in: Base metals fell: Big miners were mixed: EM stocks lifted: HY too, with oil: US bonds were sold: European spreads widened: And stocks rose, especially in Europe: Two events dominated the night. Reuters hosed off ECB tightening: European Central
From Westpac, some good material on the US consumer: Confidence is a key factor for the underlying health of the economy and its ability to adjust to changes in the stance of monetary policy. Simply it determines households’ willingness to consume and invest as well as firms’ investment and employment decisions. Following the election of President
Via Axios: The Trump administration is looking at driving tax reform and infrastructure concurrently, according to a White House source with direct knowledge. It’s a major strategic shift – infrastructure was likely going to be parked until next year – and is only possible because of last week’s healthcare debacle. President Trump feels burned by
A couple of interesting pieces of research today are important. First from Morgan Stanley: A sharp slowdown in US credit creation: Since October, bank lending in the US has slowed sharply. While higher debt issuance, lower M&A activity and new risk retention rules play a role, the slowdown could stoke concerns that a highly leveraged
Via Citi: It is more typical that bulls have to push back against bearish contentions, with charts showing a series of concerns that need to be addressed. The Fed’s actions, valuation, profit margins, tax policies, and a host of other issues are raised when investors attempt to smear the rally that has been in
Via Macquarie: We hold our base case (updated last week) for a total of three federal funds rate hikes in 2017. Shifts in the updated dot plot for the end-17 federal funds rate (Fig 1) illustrates that three FOMC participants shifted their assessment of appropriate policy in 2017 from two hikes to three hikes.
DXY took a sizable hit last night: Commodity currencies roared back: Gold too: Brent added: And base metals: Big miners rebounded: EM stocks soared: Even as high yield rolls with oil: US bonds were bid: European spreads were stable: And stocks took off: The Fed hiked rates: Information received since the Federal Open Market Committee
From Reuters: Jeffrey Gundlach, chief executive officer at DoubleLine Capital, said on Tuesday he expects the Federal Reserve to begin a campaign this month of “old school” sequential interest rate hikes until “something breaks,” such as a U.S. recession. Gundlach, who oversees more than $101 billion at Los Angeles-based DoubleLine, said U.S. economic data support
From Morgan Stanley: Bottom line: Our economists now expect the Fed to hike rates in March, but we think high yield EM currencies will be able to weather the rate hike, while the EUR should stay weak. The significant tightening of G3 vs USD cross currency basis since the start of the year suggests that
Via Goldman: 1. The USD is prone to a quick upside repricing if the FOMC were to hike the federal funds rate in March. Even though the market updated quickly the probability of a March hike, the pricing of the cumulative increase in the federal funds rate over the next 2 years has not changed
From Morgan Stanley: Our composite Capex Plans Index posted its fourth consecutive gain in February, climbing 1.7 points to 24.6—a post-recession high. While the recent surge in our index is promising, actual capital spending will depend largely on the evolving outlook for fiscal and regulatory policy. Our composite Capex Plans Indexgained ground for thefourth consecutive
Here’s the full text of the Trump speech: Remarks as prepared for delivery and released by the White House. TO THE CONGRESS OF THE UNITED STATES: Mr. Speaker, Mr. Vice President, Members of Congress, the First Lady of the United States, and Citizens of America: Tonight, as we mark the conclusion of our celebration of
If you’re up for salesmanship, the Donald is to speak to Congress shortly on his stunning plans…
According to Goldman the US does: 1. Since the US election, inflation in the major advanced economies has been repriced to the upside at the front end and long end of inflation curves, which are now relatively flat. Even though inflation break-evens have traded in a tight range since the beginning of the year, we
Donald Trump’s war on media, which is an extension of his war on perceived elites, ramped up on Friday night: Someone has probably already written this but I’m wondering today whether it was Donald Trump that uses Twitter or Twitter that uses Donald Trump? By this I do not only mean that our Donald outflanked
From Deutsche: Why Yellen’s replacement matters While most signs point to Trump and a Republican-led Congress wanting to replace Yellen as chair, she does offer some advantages to the new administration. Yellen runs the Fed smoothly, is well known to and understood by markets, and is inclined to be cautious about raising rates until inflation
