Archives of “September 2019” month

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Nikkei 225 closes higher by 0.54% at 21,199.57

  
Analysis, Global Indices

Tokyo’s main index closes just under the key daily moving averages

Nikkei 06-09

US-China trade talk hopes continue to give equities in the region a bit of a boost following solid gains posted by Wall St in overnight trading. That said, market sentiment overall today is more calm and measured with US futures only seen up by ~0.1% currently.

All eyes are on the US non-farm payrolls data later today as well as Fed chair Powell’s speech before the weekend kicks in. As such, expect markets to hold more steady in the European morning barring any trade headlines to temper with the mood.
USD/JPY is holding a tad higher at 107.00 currently with large expiries seen around 107.00-05 potentially a factor at play in trading today.

Brexit: What happens now?

  
  Analysis

Sterling buyers get more reprieve as the House of Lords strike a deal to let the Brexit delay bill pass

BoJo

Let’s recap some of the events from yesterday first again:

1. House of Lords end debate “early” at 0030 GMT as peers agree to let bill pass
2. Boris Johnson says he would rather “be dead in a ditch” than delay Brexit
Yeah, not as dramatic as what we saw on Wednesday but certainly still plenty of uncertainty still at play. At this stage, the Brexit delay bill looks set to be turned into law before 1600 GMT today and should gain royal assent thereafter.
Peers give up on trying to filibuster the bill so it looks like it’ll be smooth-sailing from hereon.
That will cement further hopes of avoiding a no-deal Brexit but remember, this is just the UK side of the equation. With no further solution to the backstop or a clear game plan, will the EU grant an extension as such?
Meanwhile, word on the street is that the government will try once again on Monday to seek a general election before 31 October. With the Brexit delay bill set to turn into law, will opposition lawmakers back their earlier rhetoric to support an election now?
If they don’t, we’re going to be stuck in a bit of a quagmire again as the UK government has to ask European leaders for an extension without a working majority and also with no clear plan/solution to end all of this mess.
But with Boris Johnson claiming that he’d rather “be dead in a ditch”, will we see him potentially resigning before all of this ends?
Avoiding a no-deal Brexit sounds good on paper but without a firm idea on how to find a compromise, it is merely kicking the can down the road perpetually at the expense of the domestic economy – which looks set for a recession now.
So, is a further delay really a good thing for the pound? I reckon on the balance of hopes of a second referendum, then maybe yes. But the longer this drags on, it’s akin to tearing off a band aid if anything else.
The quicker you do it, the better. The longer you take to rip it off, it just prolongs the agony and the pain suffered.

Ray Dalio dials back his recession forecast probability – 75% chance no recession this year or next

  
Analysis, Economy

Bloomberg with an overnight piece on the views of Bridgewater founder Ray Dalio

I double checked, even put new batteries in my abacus and yep, that’s a  75% chance of no recession.
I also did some Googling.
  • He was 35% chance of a recession back in February
  • 40% in August
(according to an admittedly non ccomprehensive search)
On his latest forecast of 25/75:
  • central bankers will be limited in addressing it
  • (it being a recession … I’d suggest ‘Return to Sender’ )
  • The Federal Reserve, European Central Bank and Bank of Japan “have to face the fact that when the next downturn comes there will not be the power to reverse it in the same way that existed before”
  • recommends the Fed cut interest rates slowly
More at the link above
Bloomberg with an overnight piece on the views of Bridgewater founder Ray Dalio

China survey of 500 big private companies … don’t mention the (trade) war

  
  Analysis

Caixin report on an annual survey of China’s top 500 private enterprises

  • businesses with annual turnover of more than 500 million yuan ($70 million),
  • by the All-China Federation of Industry and Commerce, a body backed by the government that seeks to represent the non-state sector
I found this of interest:
Rising labor costs were cited by private companies as their biggest obstacle for the fifth year running. The two other top difficulties to doing business were 
  • high taxes 
  • and expensive borrowing costs
the same problems highlighted in the 2017 report
No mention of the trade war? I’m surprised, but there you go. Caixin (may be gated)

Its nonfarm payroll day in the US – preview

  
Analysis, Economy

NFP report is due Friday, some comments from Goldman Sachs on what they expect

Estimate the headline nonfarm payrolls +150k
  • Our forecast reflects a 15-20k boost from Census canvassing activities, but a slower underlying pace of private-sector job gains in part reflecting the return of the trade war
Further forecasts:
  • unemployment rate unchanged at 3.7%.
  • average hourly earnings +0.2% m/m and 3.0% y/y

Iran has announced further scaling back of its commitments to the 2015 nuclear deal

  
Analysis, Politics
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Iran says lifts limitations on its research and development field

  • as part of further scaling back its commitments to the 2015 nuclear deal
  • Says will report details of it nuclear steps to UN Nuclear Agency

Item on Iranian Students News Agency (ISNA) via Reuters

Iran says lifts limitations on its research and development field 

China official comments on US trade war “bullying”

  
Analysis, Politics

Remarks from the China’s  ambassador to Australia are more reminiscent of what we are accustomed to rather then the current feel goods

China’s ambassador to Australia

  • says his country does not want a trade war with the United States
  • but Beijing is not scared of retaliating
  • US tariffs on Chinese goods “bullying”
  • “In the face of US trade bullying and extreme pressure, China’s position has always been rational and clear-cut” 
  • “We do not want a trade war, but are not afraid of fighting one.” 
He was writing, opinion piece, in the local Australian press on Thursday.

US stocks break out of recent ranges with a big move higher

  
Analysis, US Market
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Dow and S&P up for the 5th time in 6 trading days

The US major indices all broke above recent up and down trading ranges, and above their 50 day MAs as well.  The major pairs are each up over 1.30%. Big day for equities.

The final numbers are showing:

  • S&P index up 38.16 points or 1.30% to 2975.95. The day moving average is down at 2945.21.
  • NASDAQ index up 139.94 points or 1.75% at 8116.82. The 50 day moving average is down at 8047.98.
  • Dow is up 371.93 points or 1.41% at 26727.40. The 50 day moving average is down at 26563.34.
Apart from the UK’s FTSE which fell by -0.55% on the day on the back of a continuation of the upward momentum in the GBP, the other major indices traded above the 0.0% line for all of the day.   The biggest gainer was the Russell 2000 index of small cap stocks which rose by 1.86%. The NASDAQ composite index tacked on another 1.75% gain after rising by nearly 2% at the highs.
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