Archives of “September 11, 2019” day

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The Trump-Bolton rift may have been about easing Iran sanctions – report

  
Analysis, Crude

Oil drops

WTI crude fell another $1 after Bloomberg reported that Trump discussed easing Iran sanctions in order to restart talks. Bolton ‘forcefully’ argued against the move while Mnuchin supported it. Later in the day, Trump fired his national security advisor.
Trump may meet Iran’s Rouhani on the sidelines of the UN during the week of Sept 23.
WTI is down $1.27 on the day to $56.15. USD/CAD also ran to a session high, hitting 1.3197

Trump will meet with advisors today on cutting capital gains

  
  Analysis
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Trump to meet economic team today

Dow Jones reports that Trump will once again meet with advisors today on the topic of cutting capital gains taxes by indexing them to inflation. The move would be a massive boon to long-term investors but punch a huge hole in the deficit over time. It would also face court challenges from Congress.
The meeting will also focus on broader proposals to cut taxes, according to the report which cities unnamed sources.

German research institutes lower 2019 GDP forecast amid weakening economic outlook

  
Analysis, Economy

IfW and DIW slash their 2019 GDP forecasts for the German economy

Germany

  • IfW now sees German economy expanding by 0.4% this year (previously 0.6%)
  • Sees 2020 GDP at 1% (previously 1.6%)
  • Notes that German economy likely shrank by 0.3% in Q3
  • Therefore, falling into a technical recession
  • DIW now sees German economy expanding by 0.5% this year (previously 0.9%)
  • Sees 2020 GDP at 1.4% (previously 1.7%)
  • Further risk next year comes from no-deal Brexit
  • If that happens, it would slash a further 0.4% off 2020 economic growth
Looking at both the downgrades, it pretty much reaffirms the negative growth outlook seen in the German economy in the second-half of this year. A technical recession isn’t confirmed just yet but the signs and data released so far are suggestive of one.
Notably, DIW says that Germany needs a long-term government investment program to help lift economic confidence and the growth outlook. Yeah, that doesn’t look like one is coming any time soon after yesterday’s budget announcement.

The 3 reasons EUR has bottomed against the USD and yen

  
Analysis, Forex
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A quick snippet from Mizuho in Japan on the euro. Citing three reasons it has bottomed out:

  • European Central Bank’s easing options are limited
  • Brexit uncertainties a negative for GBP against EUR
  • Chatter of fiscal stimulus
On the ECB:
  • to hold back from restarting asset purchases on Thursday
  • likely to cut negative policy rate further, to -0.5%, but room for further cuts is limited
Forecast:
  • 1.15 possible by year-end
A quick snippet from Mizuho in Japan on the euro. Citing three reasons it has bottomed out:Last one for Dr. D

JP Morgan think progress in US-China talks is unlikely

  
  Analysis
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JP Morgan on the upcoming talks between the US and China.

  • We are more sceptical
  • still see risks to our growth outlook for 2H 2019 skewed to the downside
JPM that a deal could be struck at the ministerial level talks in mid-Oct and “activity get a cyclical bounce into year end”. But:
  • “Are either likely? No.”
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Based on what we have seen come out of US-China talks so far I find it difficult to disagree with JPM.

Time to dust off the ‘hawkish cut’ outlook – September FOMC to lift the USD

  
  Analysis
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Morgan Stanley expect the sept September meeting of the Federal Open Market Committee to cut

  • by 25bp
  • But the dot plot published alongside is unlikely to show more rate cuts for the balance of 2019 and into next
  • expects confusing dots reflecting diversity of views on the committee
More:
  • ” …. FOMC materials are likely to be insufficiently dovish to meet the market’s lofty expectations”
  • “USD is likely to outperform on the day, particularly against risk-sensitive currencies like high-yielding EM FX and the dollar bloc” 

US stocks flat amid tech slide, Treasury yields climb

  
Analysis, US Market

Wall Street closed mostly flat on Tuesday with a decline in tech shares weighing on stocks, as investors await updates on stimulus measures from major central banks in the coming days. The S&P 500 closed fractionally higher, erasing earlier losses in the final minutes of trading, as the tech sector fell 0.5 per cent and energy shares jumped 1.3 per cent Meanwhile, the Nasdaq Composite ticked about three points lower. Robust gains for Boeing and Caterpillar helped the Dow Jones Industrial Average notch a 0.3 per cent rise.

The decline in tech comes as investors reacted to Apple’s annual hardware event on Tuesday, where the company revealed details of its latest iPhone models and its upcoming TV+ streaming video service. Apple was up 1.2 per cent, but shares in Netflix and Roku suffered in response to a cheaper-than-expected price point for TV+. Investors sold off US government debt, sending yields higher. The yield on the benchmark 10-year Treasury note was up 11.8 basis points at 1.7402 per cent. Meanwhile, in Europe, the Stoxx 600 was up 0.1 per cent, the Xetra Dax was up 0.4 per cent, and the CAC 40 advanced 0.1 per cent. The European Central Bank is expected to cut interest rates and detail plans for stimulus measures when it concludes its meeting on Thursday. Next week, investors expect the Federal Reserve to deliver a 25 basis-point rate cut at its monetary policy meeting. In the UK, Boris Johnson lost his second attempt to hold a snap general election to break Britain’s Brexit impasse. While the prime minister has vowed not to delay Brexit beyond October 31, the anti-no-deal legislation agreed by parliament received royal assent from the Queen at her Balmoral castle retreat in Scotland on Monday. Sterling fluctuated and recently rose modestly to $1.2355, while the FTSE 100 close with a 0.4 per cent gain.

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