The US dollar is mostly firmer against the major currencies but is confined to narrow ranges, and well-worn ranges at that, but the focus has shifted to the strong advance in equities. Yesterday, the Dow Jones Industrials finally rose through the psychologically-important 20k level, and the S&P 500 gapped higher to new record levels. The Nikkei and Topix gapped higher too, helping lead the MSCI Asia Pacific Index to a 1% gain and the third rise this week. It is at levels not seen since Q3 15. Note that Australian and Indian markets were closed for local holidays. European equities are following suit. The Dow Jones Stoxx 600 is ...
Crude oil prices continue to mark time in familiar territory. A larger-than-expected inventory build reported by the EIA applied a bit of selling pressure but failed to push prices out of recent ranges. The data showed stockpiles added 2.84 million barrels last week, much more than the 1.47mb gain projected by economists. Gold prices declined as US Treasury bond yields shot higher against a broadly risk-on backdrop, dampening demand for non-interest-bearing assets. Follow-through is hardly assured however as Trump-watching investors struggle to pin down a baseline narrative for the likely impact of on-coming fiscal policy changes. With t...
US economic growth is widely expected to decelerate in tomorrow’s “advance” GDP release for the fourth quarter after a strong increase in Q3. Most forecasters see output rising in the low-2% range, roughly unchanged from last month’s review and well below the robust 3.5% expansion in Q3 (based on the seasonally adjusted annual rate). The Wall Street Journal’s survey data for this month points to a 2.1% advance, based on the average forecast among economists. The current estimate is down slightly from last month’s average 2.3% prediction. The Journal’s average outlook matches the New York Fed’s Jan. 20 econometric forecast...
With global stock markets basking in the afterglow of Dow crossing 20,000 for the first time, on Thursday they propelled higher in sympathy with the US, as Asia and Europe are trading solidly in the green, as is the dollar which rebounded strongly off a 5 week low. Copper touched the highest price since November after reports of lower production. Global government bonds extended declines as France’s 10-year yield breached 1% for the first time in more than a year. Gold declined. The Dow had been flirting with 20,000 points for weeks so it brought widespread cheer when it broke through. It only topped 19,000 in November and this was the seco...
Another View On The Inflation Argument There is little evidence that current levels of inflation are stable. As I wrote in “Inflation: The Good & The Bad”, outside of just two areas, rent and health care, there remains a broader deflationary trend currently. Importantly, as I noted, there are two types of inflation: “Inflationary pressures can be representative of expanding economic strength if it is reflected in the stronger pricing of both imports and exports. Such increases in prices would suggest stronger consumptive demand, which is 2/3rds of economic growth, and increases in wages allowing for absorption of higher prices. Th...
Though recovering now, the US Dollar continues to be shaky and earlier struck a 7-week trough as concerns grow over a perceived protectionist stance by the US President. Yesterday, President Trump gave the green light to begin construction on a wall to separate the southern border of the United States and Mexico in an effort to stop illegal immigration. He also said he is ready to impose curbs to immigration protocols. Though the president has made a number of decisions perceived as “business friendly” his other plans have been nothing but divisive and are creating jitters in global markets. As reported at 10:15 am (GMT) in London, the US...
We examine the EIA Data this past week, and it is interesting what a difference a year makes psychologically speaking as we have more inventories in storage across the board yet we are almost double the oil price versus this time last year in $53 a barrel versus $26 a barrel. There is a lot of fantasy Land thinking going on in financial markets right now. Video length: 00:10:47...
Gold prices ended Wednesday’s session down $8.85 as a renewed appetite for riskier assets pushed market players to lock in profits and roll their funds into equities. The Dow Jones Industrial Average closed above 20000 for the first time, the S&P 500 rose 0.8% and the Nasdaq Composite gained 0.99% while the dollar index fell to a seven-week low. Apparently traders in the Forex market focused more on Donald Trump’s protectionist policies and the negative impact they could have on the greenback. Yesterday, the XAU/USD pair broke down below 1208/5 and tested the support at around the 1195 level as expected. Although this area where t...
Concluding weeks of speculation, overnight Johnson & Johnson (JNJ) announced it agreed to acquire Actelion Pharmaceuticals (ALIOF), Europe’s biggest biotech company, for $30 billion, or CHF280 per share, expanding the U.S. pharma giant’s portfolio of rare-disease treatments as its top-selling drug faces new competition. The deal, announced and agreed on Thursday by both companies, ends weeks of seesaw negotiations. J&J initially abandoned talks over price, only to resume them about a week later after the companies entered into exclusive negotiations. The deal is expected to close by Q2 2017. Shares in Swiss company Actelion surged...
Americans could save $1 trillion over 10 years by financing infrastructure through publicly-owned banks like the one that has long been operating in North Dakota. President-elect Donald Trump has promised to rebuild America’s airports, bridges, tunnels, roads and other infrastructure, something both Democrats and Republicans agree should be done. The country needs a full $3 trillion in infrastructure over the next decade. The $1 trillion plan revealed by Trump’s economic advisers relies heavily on public-private partnerships, and private equity firms are lining up for these plumbing investments. In the typical private equity water dea...