Creating the Future
Archives of “July 9, 2019” day
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Japan machine tool orders -38%, -27.3% last.
European shares end mostly in the red
German Dax down -0.85%
The European major stock indices are closed and the provisional closes by pointing mostly to the downside:
- German DAX, -0.85%
- France’s CAC, -0.3%
- UK’s FTSE, -0.1%
- Spain’s Ibex, -0.1%
- Italy’s FTSE MIB, -0.41%
Over the last 24 hours, BASF, the large German chemical company gave an earnings warning blaming what weakness and US-China trade war. They do not see the situation improving in the 2nd half of 2019. The German economy saw factory orders fall on Friday. Daimler cut its profit outlook for the 3rd time in a year. Deutsche Bank announced yesterday that it would cut 18,000 jobs globally in a restructuring play to save the bank.
In the European debt market, the benchmark 10 year yields are ending the session mixed with German, France and UK rates higher, while the riskier Spain, Italy and Portugal yields saw investor demand (lower yields).
Powell does not comment on monetary policy or the economy in opening remarks
Gives opening remarks at Boston Fed conference
- stress tests most evolved to avoid complacency
Chair Powell’s main event(s) this week will be on Capitol Hill on both Wednesday and Thursday as he testifies to US lawmakers. That is where the rubber will meet the road.
Later today, the Fed’s
- Bostic is due to deliver opening remarks at the Official Monetary and Financial Institutions Forum Meeting, in St. Louis at 10:10 AM ET/1410 GMT
- Quarles speaks on stress tests in Boston (not sure can expect much there). That starts at 2 PM ET/1800 GMT
- Fed’s Bostic will be speaking at Washington University in St. Louis at 2:20 PM ET/1820 GMT. He will be do an “armchair chat” and not speak from text.
Feds Kudlow: Fed should look at price indicators not job indicators
Speaking at a CNBC event
- Price level stability and a steady dollar is what the Fed should aim for
- The Fed has room to reverse the summer rate hike
- The management of the Fed has not been too far from what he expected over the last year
- There is no effort to remove Fed’s Powell (PS WH Conway just commented that Trump is not firing Powell although he has the power)
- Trump is worried about other currencies being too weak
- Trump concerned about deliberate currencies weakening
- Trump believe both he and Xi want a trade deal
- India tariffs on American products no longer acceptable
- China expected to move on agricultural purchases even as trade talks move forward
- US team has asked repeatedly for change in Chinese laws, but resistance mounted on either side
- relaxed US government restrictions for Huawei will help company, will be in place for limited time period.
- no time limits on talks with China
Kudlow is dancing around and not really going very far.
Lagarde set to be confirmed as ECB president in October as ministers sign off on appointment
Europe’s finance ministers give Lagarde the green light
Not that this was unexpected as it is mere formality more than anything else, but this just confirms Lagarde’s appointment and prevents any potential complications. Now with the Economic and Financial Affairs Council adopting a formal recommendation, her nomination will go to the ECB governing council and European parliament for consultation but neither will be able to block her.
As such, Lagarde will be confirmed in October to succeed Draghi beginning from 1 November.
Stocks have never been this expensive for how low interest rates are. This data goes back to 1881! Yet another flaw in the bullish thesis.
AUD/USD falls to two-week low amid poor data and firmer US dollar
AUD/USD falls to its lowest level since 24 June
The pair is hitting a fresh low of 0.6936 on the day now as the aussie is dragged lower by poor business confidence data earlier and some notable strength in the greenback in the past hour of trading during the European morning.
That’s the lowest level the pair has traded since 24 June as sellers continue to stay in near-term control and are looking for a move towards 0.6900 ahead of Fed chair Powell’s testimony tomorrow and on Thursday.
Dollar continues to hold firmer in trading today
The greenback extends gains against the rest of the major currencies bloc
Cable is now hitting fresh lows of 1.2461 as price falls below key support around 1.2480 highlighted earlier in the session. Of note, EUR/USD is on the verge of falling below the 1.1200 handle as well as price trades at three-week lows.
The greenback is finding some fresh bids as it also advances against the likes of the aussie, kiwi and loonie.
It looks like the market is positioning itself expecting Fed chair Powell to reaffirm expectations of less aggressive easing in tomorrow’s testimony and that is something that traders should consider ahead of the event in case Powell doesn’t deliver.