Bad loans explode in Turkey !
Archives of “November 2019” month
rssIn the main economies of the world, the dividend yield is higher than that offered by state bonds.
Moody’s cut German banking outlook to negative from stable as profitability weakens
Deposits are proving to be costly for German banks
Moody’s just revised their outlook for the German banking industry to ‘negative’ from ‘stable’, as they expect German banks’ profitability and overall creditworthiness to weaken in a low interest rate environment.
It’s not exactly blockbuster news but again, it just reaffirms the fact that Germany is resigned to some troubling times ahead as the economy continues to slow down further. In that regard, the lack of fixed income alternatives is also hurting banks.
Average tenure time of the 10 largest ETFs. (April 2017)
What yield might Japan’s 50 year bond return?
50 year yield via Bloomberg
If Japan do go ahead with a 50 year bond yield, what might that offer investors? Let’s look at Swiss and UK bonds.
In Switzerland bond investors who extend from 30 year bonds to 50 year bonds will receive an extra 7bps.
In the UK 50 year bonds earn 9bps less than 30 year bonds.
For Japan, the 40 year bonds currently offer a 3 bps yield more then 30 year bonds, which would indicate that a 50 year Japanese bond should offer even more of a return. So, the short term indication would be for a higher 50 year yield if JGB is sold.
China commerce ministry says rumours about possible disagreements in trade talks are not accurate
Risk trades get a bit more of a lift to start the session
- US, China trade teams will continue close communications
- Says will strive to reach “Phase One” deal with the US
The context of the situation is that when they were asked about possible disagreements in trade talks, they said that the “outside rumours were not accurate”.
USD/JPY gains a bit more ground to just above 108.60 now with Treasury yields pretty much flat across the curve currently.
China remarks earlier offer only a bit-part reprieve to markets
No follow through optimism after the China remarks earlier
US futures stay 0.2% lower on the session, down by 5.5 points after the brief spike higher on the China remarks in the past hour.
As mentioned earlier, China may be playing down the disagreements they are having with the US on trade, but it is more of the case that they are not wanting markets to get too carried away in thinking that talks are on the verge of a breakdown.
They continue to keep mum on any progress that is being made and that continues to send ominous signals on how things are playing out at the moment.
Major currencies remain little changed across the board and so far, there isn’t any good reason to go chasing all too much because traders could easily get jerked around by the next set of headlines once again.
A month ago the market was pricing in a 27% probability of a 4th rate cut in December. Today: 0% probability of a cut w/ 3% chance of a hike.
Trump weighs exempting Apple from China tariffs
President Donald Trump said on Wednesday after touring a plant that assembles Apple computers that he was considering whether to exempt the U.S. company from tariffs on imports from China.
“We’re looking at that,” Trump said in answer to a reporter’s question about the tariffs, after touring a plant in Austin, Texas, with Apple Chief Executive Tim Cook that assembles the company’s Mac Pro desktop computers.
Cook, who has a strong relationship with Trump, has sought relief for Apple from the U.S. tariffs, which are part of a months-long tit-for-tat trade war between the world’s largest economies.
“The problem we have is you have Samsung. It’s a great company but it’s a competitor of Apple, and it’s not fair if, because we have a trade deal with Korea — we made a great trade deal with South Korea — but we have to treat Apple on a somewhat similar basis as we treat Samsung,” Trump said.
Apple announced in September it would make its new Mac Pro computers in Austin. The announcement came days after U.S. trade regulators approved 10 out of 15 requests for tariff exemptions filed by Apple amid a broader reprieve on levies on computer parts.
Earlier this month, Apple also asked the Trump administration to waive tariffs on Chinese-made Apple Watches, iPhone components and other consumer products.
Trump has made boosting the U.S. manufacturing sector one of the goals of his presidency, taking to Twitter to pressure U.S. companies into keeping jobs at home.
Earlier on Wednesday, Apple said it had started construction of a new campus in Austin that will employ 5,000 workers, with the capacity to grow to 15,000. It is expected to open in 2022.
The verbatim of Trump’s latest comments is another sign the deal is falling apart
Trump spoke in a Q&A at Apple headquarters
Keep in mind that Trump said earlier in his comments that they were considering exempting Apple from tariffs. To me, that alone says he is already a couple steps along in the process of adding tariffs, or at least strongly considering it.
The main headlines have been reported already but the last part is where the context matters.
Reporter: Will there be a trade deal in place before the end of the year?Trump: So, I can tell you this: China would much rather make a trade deal than me?Reporter: Then why haven’t they?Trump: Because I haven’t wanted to do it yet.Reporter: Why haven’t you wanted to do it.Trump: Because I don’t think they’re stepping up to the level that I wantReporter: I spoke earlier today with Mr Cook and he said another round of tariffs would be bad for business, it would be bad for the United States (interrupted by Trump)Trump: You know, here’s what I would say. What do you know? I put in tariffs and everyone said ‘Oh geez, you’re taking in hundreds of billions of dollars’ and everyone said ‘oh that’s going to be bad for the economy’. Well, as you just heard from Tim Cook, we have the strongest economy by far in the world and we’re taking in billions and billions. So we’ll see what happens.