Posted by on January 26, 2017 10:07 pm
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Categories: American people of German descent Atlanta Fed Auto Sales Bond Borrowing Costs Business Capital Markets Chicago Fed Chicago Fed Nat China Chrysler Climate change skepticism and denial Congress Continuing Claims Copper donald trump Economy Economy of Mexico Economy of the United States Equity Markets European Central Bank European Union federal reserve fixed Freddie Mac germany Greece Initial Jobless Claims International Monetary Fund Irish central bank Kansas City Fed Mexico Natural Gas New Home Sales NY Fed Politics of the United States Precious Metals recovery Repo Market S&P 500 The Apprentice the U.S. central bank Trade Balance United States US Federal Reserve Vigilantes Wholesale Inventories WWE Hall of Fame

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HEADLINES

  • Trump: We’ll have strong control over ‘monetary manipulation & devaluation’
  • Trump: Trade deals will be one-on-one; US will cut regulations
  • WH: Trump wants to pay for border wall via a border tax
  • Trump: US Trade with Mexico is ‘a once sided deal’
  • Mexico President cancels Trump meeting amid border wall feud
  • US Adv Goods Trade Balance (USD) (Dec): -65.0bn (est -65.3bn, prev -66.6bn)
  • US Wholesale Inventories (MoM) Dec, P: 1.0% (est 0.1% prev 1.0%)
  • US New Home Sales Change Dec: 536K (est 588K; rev prev 598K)
  • US Initial Jobless Claims (WoW) 21 Jan: 259K (est 247K rev prev 237K)
  • US Continuing Claims (WoW) 14 Jan: 2.100 Mln (est 2.040 Mln prev 2.059 Mln)
  • US Leading Index (MoM) Dec: 0.50% (est 0.50%; rev prev 0.10%)
  • US Chicago Fed Nat Index (Dec): 0.14 (est -0.05 rev prev -0.33)
  • US Kansas City Fed Mfg Index (Jan): 9 (est 8, prev rev to 9 from 11)
  • US Atlanta Fed GDPnow (26/Jan): 2.9% (prev 2.8% on 19/Jan)
  • ECB’s Weidmann: If infl rise sustainable, may need to withdraw stimulus
  • ECB’s Knot: Improved economy reduces the need for more stimulus
  • IMF: For sustained recovery of EZ infl, Germany must run above 2%
  • UK publishes bill to authorise Brexit
  • ECB’s Villeroy: UK’s free trade deal with EU difficult to achieve
  • US EIA Natural Gas Storage (BCF) Jan 20: -119 (est -117; prev -243)
  • J&J to pay $30 billion for Actelion

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COMMENTARY

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Mexico & Trump – a key call in emerging markets

President Trump’s anti-Mexico rhetoric has made Mexican assets one of the key calls in emerging market debt. I have just returned from a research trip to Mexico where I met with local economists, analysts, and corporate bond issuers. Below are a number of observations from my time there. Donald Trump won the election on a fairly protectionist rhetoric – with a special focus on Mexico – and the pressure to fulfil electoral promises (unlike most seasoned politicians) is therefore likely to see the implementation of some of the things he has proposed. Whilst the intentions are clear, the measures that he will implement to satisfy his electorate are more uncertain. Despite the symbolic nature, building a wall at the Southern border of the US would have a limited impact on the Mexican economy. However, other policies that Trump supports may have a significant impact on the economy and asset prices. (Bond Vigilantes)

When do rising yields become a headwind for equities?

Interestingly, on a very strong day for equities, the majority of e-mails that I fielded yesterday involved bonds. From sell-side sales traders, and from retail traders alike, either to ask what I thought, or to offer their own opinion, there seemed to be a theme. Traders want to know: “At what point do rising yields become a headwind for equities?” The answer is relatively complex. To this point, the rise in interest rates has been a market tailwind. The financial sector led the post-election “Trump Bump”, and then led equity markets sideways to slightly lower for a month. There is no doubt that higher rates are a good thing if you are invested in banks and consumer finance stocks. (The Street, continue)

US Q4 GDP Preview

US GDP in Q4 is forecast to print an annualised 2.2% QoQ. While the Fed’s December economic projections expect 2016 growth at 2.4%, there seems to be an interesting divergence between the Fed’s own econometric models, and the NY Fed’s GDP Nowcast tracking growth at 2.1% annualised, while the Atlanta Fed’s GDPnow is running at a clip of 2.9%. If uncertainty is evident in the models and forecasts for Q4, going ahead, it may become an even more tricky exercise. In Q4, the rate of GDP growth is seen easing from Q3 levels — which was the best rate in two years — on the back of the widening trade gap, with the dollar’s moves also providing some forecast risk. Until President Donald Trump’s policies are fully announced, this trade uncertainty will remain. “The future effects of trade on US output are rife with uncertainty with regards to the evolution of policy and the value of the dollar,” Moody’s analysts write. “But the underlying pace of consumer spending is holding firm, getting a lift from the recent upside surprise in auto sales.” Potentially offsetting the trade ‘wildcard’ is stock building, which is seen contributing to growth. (Livesquawk)

Top Fed forecaster BNP Paribas sees hikes in every quarter in 2018

The Federal Reserve is about to go rapid-fire on interest rates, boosting them in the second half of this year, and following that with a rise in every single quarter of 2018, according to BNP Paribas SA, which expects the tightening to strengthen the dollar and push gold down toward $1,000 an ounce. The U.S. central bank is seen raising borrowing costs later this year given the fiscally expansive policies proposed by Donald Trump, and the new president’s agenda may help to lift wages in 2018, hoisting labor costs, the bank said in a Jan. 25 report. BNP was the top gold and precious metals forecaster in the fourth quarter, according to data compiled by Bloomberg. (BBG)

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DATA

POLITICS/GEOPOLITICS

GOVT/CBANKS

BREXIT

C&E

FIXED INCOME

FOREX

EQUITIES

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