Corporate America is using its profits to buyback shares instead of investing in capex, innovation and the platform for the next generation of profitable ventures.
Archives of “September 2019” month
rssTrump tweets about tariffs and Fed
More of the same from Trump
Another tweet, just the regular stuff.
“China is eating the Tariffs.” Billions pouring into USA. Targeted Patriot Farmers getting massive Dollars from the incoming Tariffs! Good Jobs Numbers, No Inflation(Fed). China having worst year in decades. Talks happening, good for all!
CFTC commitment of traders: EUR shorts increase by 10K this week
Forex futures positioning data among non-commercial traders for the week ending September 3, 2019
- EUR short 49K vs 39K short last week. Shorts increased by 10K
- GBP short 85K vs 89K short last week. Shorts trimmed by 4K
- JPY long 28K vs 34K short last week. Longs trimmed by 6K
- CHF short 6k vs 4k short last week. Shorts increased by 2K
- AUD short 59k vs 61k short last week. Shorts trimmed by 2K
- NZD short 31K vs 26K short last week. Shorts increased by 5K
- CAD long 5K vs 11K long last week. Longs trimmed by 6K
- Prior week
US major indices ending the day with mixed results
Dow and S&P rise for the 3rd straight day. Dow, S&P and NASDAQ up for the 2nd straight week
The final bell for the week has rung at the NYSE and the major indices are ending the week with gains. This is the 2nd straight week of gains for the Dow, S&P, and NASDAQ indices.
On the day:
- The S&P rose 2.73 points or 0.09% at 2978.72
- The NASDAQ index fell -13.75 points or -0.17% at 8103.07
- The Dow Rose 69.31 points or 0.26% at 26797.46.
For the week, the S&P led the charge:
- S&P index, +1.85%
- NASDAQ index, +1.63%
- Dow, +1.65%
Below is a % change look (high, low and close) for the North American and major European indices. Most traded above and below the 0% line (Canada’s TSX/S&P index was mostly lower).
What we learned from Powell in Zurich: Six takeaways
Powell offered some hints if you read between the lines
There is no real headline from Powell’s visit to Switzerland. He repeated the Fed’s refrain that it will act as appropriate to sustain the expansion. That’s something any Fed Chairman could have said any time in history and it wouldn’t change the picture.
However there was more between the lines than it appeared:
1) No recession
The Fed said it wasn’t forecasting a recession. I don’t know why this is news but it’s something that markets reacted to. Gold, in particular, came under some pressure and fell to $1510. There is no recession in the data.
2) Moderate growth, doesn’t want inflation slipping
The Beige Book called growth modest but he said moderate, which is arguably better. More important was a comment that the Fed’s strategy is to avoid CPI expectations slipping with inflation bouncing around 1.5-2.0%
3) Change in tone on inflation
I think this is important. Powell talked about how the relationship between economic tightness and inflation has faded. He also highlighted that inflation is especially well anchored. This is an important long-term shift because it suggests that even if the trade war ends, the Fed now realizes that it doesn’t need to keep rates as high.
4) Geopolitical risks and data
This is mostly a nod to the trade war, which is entirely the reason that they’re cutting. He highlighted Brexit as well but that’s nothing new. Hong Kong was also something he noted but that’s hardly something that’s affecting the US.
5) A bit of humility
Powell highlighted that central banks don’t have much experience working through trade disputes. The subtext there is that they might be overreacting but that it’s the proper thing to do in terms of risk management.
6) No pushback
Powell knows that a cut is fully priced in. The central bank goes into the blackout period this weekend and this was the final word. He didn’t push bank against the market, which is an acknowledgement that a cut is coming. He also didn’t push towards 50 bps. I think a 25 bps move is a done deal now and the market reaction should be all about how he tees up the Oct 20 meeting. Another cut is 66% priced in then, which I think is on the high side… but it’s a long ways away.
Thought For A Day
European equity close: Modest moves but to the upside but a great week
Closing changes for the main bourses:
- UK FTSE 100 +0.1%
- French CAC +0.1%
- German DAX +0.5%
- Italy MIB +0.1%
- Spain IBEX -0.1%
On the week:
- UK FTSE 100 +1.0%
- French CAC +2.2%
- German DAX +2.1%
- Italy MIB +3.0%
- Spain IBEX -1.9%
The story this week was lower political risk in the UK and Italy.
August non-farm payrolls +130K vs +160K expected
Highlights of the August 2019 non-farm payrolls report:
- Prior was +164K (revised to +159K)
- Estimates ranged from +110K to +232K
- Two month net revision -20K
- Unemployment rate 3.7% vs 3.7% expected (prior 3.7%)
- Participation rate 63.2% vs 63.0% prior
- Avg hourly earnings +0.4% vs +0.3% exp
- Avg hourly earnings +3.2% y/y vs +3.0% exp
- Prior avg hourly earnings 3.2% (revised to 3.3%)
- Avg weekly hours 34.4 vs 34.4 exp
- Private payrolls +96K vs +150K exp
- Manufacturing +3K vs +5K expected
- U6 underemployment 7.2% vs 7.0% prior
This isn’t such a bad number. The two tick rise in participation combined with steady unemployment is a good sign and the rise in wage growth is good sign.
The average over the past three months is +156K so this is a decent number, albeit a bit soft on the private side and census hiring added 25K jobs so that saved it from being even softer.
Gold bounces from $1500 in a strong rebound
Buyers step in at the figure
Non-farm payrolls were just weak enough to keep the market comfortable with the idea of two more Fed rate cuts this year.
In turn, gold has jumped $20 in a sharp reversal higher to end a two-day rout.
In my view, there is an unceasing and growing appetite to buy gold from fund managers and retail. We’re still in the early innings. There was certainly a flush out of some weak hands yesterday but the bounce today — especially if it lasts through the close — is a great sign.
Ultimately, what matters is that we’re in a global easing cycle. Today’s 50 bps RRR cut from China underscores that. Undoubtedly there will be an ebb and flow but until it ends, gold will have a tailwind.
Eurozone Q2 final GDP +0.2% vs +0.2% q/q second estimate
Latest data released by Eurostat – 6 September 2019
- Final GDP +1.2% vs +1.1% y/y second estimate
The secondary reading can be found here. No change to the quarterly estimate with only a minor upwards tweak to the annual reading. The details see that household consumption grew by 0.2% on the quarter relative to the 0.4% growth posted in Q1.
It still shows that euro area growth is still hanging on modestly as sluggish economic conditions continue to weigh on the region.