Archives of “June 2019” month

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ICYMI – India’s new retaliatory tariffs on the US

  
  Analysis

An ICYMI on another trade war escalation this time US-India.

  • A new set of Indian tariffs on 28 US products kicked in on Sunday
  • New Delhi says the higher duties are in retaliation for US tariffs on steel and aluminum imposed last year
The further background to this is India has a big surplus in trade with the US for goods. And a smaller surplus in services. The new tariffs are seen as small and symbolic. but they could raise the ire of you-know-who (tweeter in chief).

Mexican President says Mexico could win trade war with the Uited States

  
Analysis, Politics

Mexico’s president Lopez Obrador says the country could win trade war with the US

  • But that would be a pyrrhic victory it does not seek
—
A Pyrrhic victory is a victory that inflicts such a devastating toll on the victor that it is tantamount to defeat. Someone who wins a Pyrrhic victory has also taken a heavy toll that negates any true sense of achievement. 
Thanks Wikipedia ….

GBP/USD sits at six-month low with CPI to come

  
Analysis, Forex

UK CPI is due Tuesday

UK CPI is due Tuesday
Cable is down only 50 pips today but the decline is doubly disappointing because it comes after a sharp fall on Friday and because it broke through the May 31 support level. That’s an area that should have provided some decent support ahead of the FOMC meeting.
Instead, cable is already breaking down with little support now separating it from the January flash-crash low of 1.2441.
The main hurdle ahead of the FOMC decision is the UK CPI report on Tuesday at 0830 GMT. The consensus is for a 0.3% m/m and 2.0% y/y rise. A miss to the downside would further wound the BOE hawks and compound the pain from last week’s poor GDP and industrial production numbers.

Overnight -US stocks drift higher as investors eye central banks

  
Analysis, US Market

Wall Street drifted higher following cautious trade across global markets, as investors kept their sights on a string of central bank meetings coming later this week.

Gains in energy and real estate shares helped the S&P 500 climb 0.1 per cent on Monday in New York, with materials and utilities the benchmark’s main laggards.

The technology sector also gave US stocks a boost. The tech-heavy Nasdaq Composite rose 0.6 per cent, aided by gains of more than 4 per cent for Tesla and Facebook.

Deutsche was the top performer on Frankfurt’s Xetra Dax 30, with shares in the company up 1.4 per cent against a slip of 0.1 per cent for the overall index. The Europe-wide Stoxx 600 was 0.1 per cent softer, while the index tracking its banks was up 0.1 per cent.

London’s FTSE 100 advanced 0.2 per cent and the CAC 40 in Paris rose 0.4 per cent.

Attention was turning to a significant roster of central bank meetings scheduled for this week, that are due to test perceptions of the dovish stance taken recently by a series of global monetary policymakers. (more…)

Morgan Stanley says Fed could cut to near-zero in a year

  
Analysis, Economy, Forex

Morgan Stanley on the Fed

  • US-China trade tensions may lead to Fed to lower US rates near zero by Spring 2020
  • US-China tensions may tip US economy into recession in 2020, ‘depending on policy support’
  • US-China trade relations may knock S&P 500 down towards 2400, 10-year yields to 1.75% this year
  • Dollar initially higher against risk-sensitive currencies on trade war, but lower later
These comments are all conditional but point to an ugly outcome if it all goes badly. The question I always ask is: what’s a trade war? Are we in one now, or do we need 25% tariffs on everything and retaliation? There’s also plenty of gray area in between.
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