Archives of “Bloomberg L.P.” tag

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Ex-Fed New York President Dudley says the Fed is fighting the last war on inflation

  
  Analysis
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Says excess dovishness at the Federal Open Market Committee increases the risk of a major policy error at the Fed.

Bill Dudley is a past resident of the Federal Reserve Bank of New York (2009 to 2018) and is now at Princeton University’s Center for Economic Policy Studies.
Says Fed officials:
  • anticipate that inflation will fall back close to 2% in 2022 … even as supply chain disruptions, energy costs and rising rents threaten to make the current price surge bigger and longer lasting than expected. 
  • And they expect inflation to keep decelerating in 2023 and 2024
  • if inflation proves more persistent than anticipated and even accelerates as the economy pushes beyond full employment, they’ll have to tighten much more aggressively than they expect. 
  • The result could more resemble what happened from 2004 to 2006 – when the Fed raised its short-term interest-rate target by 4.25 percentage points, to 5.25% from 1%, with quarter-percentage-point increases in 17 consecutive policy-making meetings – than what they currently have pencilled in. 
Here is the link to the Bloomberg piece (may be gated)  for much more.
Dudley, Yellen and Fischer, all since departed from the Fed:
Says excess dovishness at the Federal Open Market Committee increases the risk of a major policy error at the Fed. 

Elon Musk is now the world’s richest person

  
  Analysis
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Elon Musk passes Jeff Bezos

Elon Musk passes Jeff Bezos
Shares of Tesla are up another 4.2% today and with that, Tesla CEO Elon Musk has passed Jeff Bezos to become the world’s richest person, according to Bloomberg calculations. His net worth is $188 billion dollars, about $1.5 billion more than Bezos.
In the past 12 months, Musk’s net worth has risen by more than $150 billion on a 750% rise in Tesla’s share price. He owns 20% of the company but also holds options that are now worth $42 billion.
The Tesla chart is breathtaking
Tesla musk
Tesla is now the world’s sixth-largest company.
It’s not just Musk, the 500 richest people in the world added 31% to their wealth last year, according to Bloomberg.

China reportedly said to expect record amount of US soybean purchases this year

  
  Analysis
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Bloomberg reports, citing people familiar with the matter

The report says that China is said to expect a record amount of US soybean purchases this year as “lower prices help to boost purchases pledged under the Phase One trade deal”.
Adding that the total imports from the US will probably reach about 40 million tonnes in 2020, which will be around 25% more than the 2017 level – the baseline year for the deal.
That said, one of the sources did provide a caveat in saying that despite the forecast and expectation, China’s imports will ultimately be decided by soybean prices and the impact of the virus pandemic i.e. no firm commitment.
I don’t think the report here is a coincidence after customs data yesterday showed that Chinese imports of US soybeans were unusually low in July this year, while imports of Brazil soybeans surged considerably.
For some context, China’s purchases of US farm goods up until July are at just ~27% of the target implied by the Phase One trade deal.
US China

Bank of Japan refuses trader requests to work from home

  
  Analysis
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Bloomberg had this piece up earlier (link for more), citing ‘people familiar:

  • The BOJ doesn’t allow home computers to connect to its network for conducting asset purchases and other market transactions
  • Three firms (at least) have asked the BOJ whether traders can participate in its operations from outside the office
  • BOJ-Net infrastructure is used for yen transactions daily, connected via dedicated cables to computers at dozens of financial firms so they can trade assets with the central bank or buy bonds from the government
  • BOJ is concerned about cybersecurity risk.
The hot new toy for summer probably won’t be keenly sought after amongst BOJ counterparties:
Bloomberg had this piece up earlier (link for more), citing 'people familiar:

Heads up: OPEC+ JMMC meeting scheduled to start at 1400 GMT on 19 August

  
  Analysis
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Bloomberg with the headline, citing OPEC on the matter

Just a heads up to the meeting later this week, in case we hear of how the compliance issue is going or any possible plans for future production cuts and what not.
The latest reports are suggesting that OPEC+ sees ~95% compliance to its production cuts in July and I reckon that is somewhat of a satisfactory figure, so there shouldn’t be too much complaints despite that being down from ~107% in June.

The never ending QE story

  
  Analysis
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Via Bloomberg

Via Bloomberg  
I came across an interesting Bloomberg piece when the Market’s Live team published a piece on the Market’s Live blog making a case for QE continuing indefinitely.  The rationale for the view is that the world’s major banks are not buying debt quickly enough leaving  ~$1 trillion of new sovereign bonds for buyers in the months ahead. This mean that the Fed, ECB and BoE will need to increase the pace of purchases in order to maintain the present low bond yield levels.
The devilish deal means that huge COVID-19 support packages is met with a seemingly virtually unlimited amount of bond purchases to keep borrowing costs down.
The Market’s Live team make a greta point. There is no way to go back now we have started down this QE road. Many people now who take mortgages will have no memory of high interest rates and how crippling they can be. Many new mortgages will be based on these ultra low rates which means that the central banks must keep adding to their QE programs and keep the borrowing costs down. Failure to do so will just cripple an economy now that is dependent on low borrowing costs
Gold and silver set to shine
This environment is perfect for both gold and silver to shine in. With central banks committed to do ‘whatever it takes’ to cushion the COVID-19 blow and low yields for the medium term future expect the precious metals to keep moving higher and look for pullbacks for buying.
$1855 looks like an area where we can expect pullback buyers in gold and $21 an area to expect pullback buyers in silver.

China reportedly blacks out English football amid ongoing spat with the UK

  
  Analysis
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Chinese state media are taking EPL matches off the air

EPL

This being reported by Bloomberg, citing a person familiar with the decision. China state media television, CCTV, holds the rights to broadcast Premier League matches in China but is now said to not show the remainder of the competition.

The match between Liverpool and Chelsea (Pulisic!) yesterday was not aired and the television program schedule are also not including the next set of matches. That said, there’s only one round of fixtures left for the current season.
This comes amid the ongoing spat between China and UK surrounding the Hong Kong issue as well as Huawei, with the UK now detailing the route for Hong Kong citizens to apply for citizenship as well – a move which has angered China even more.

Japan has approved a coronavirus drug – dexamethasone

  
  Analysis
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NHK report overnight via Bloomberg

Japan’s health ministry has approved the use of the steroid drug dexamethasone
  • for the treatment of coronavirus patient
  • following the approval of remdesivir in May
Dexamethasone has been reported as reducing deaths among patients with severe cases of COVID-19
Dexamethasone is cheap, widely available.

USD facing more questions about its status as the primary reserve currency

  
Analysis, Forex
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Here is an item on the US dollar from Bloomberg that may be of interest.

It cites analysts from Credit Agricole and Mizuho
  • USD accounts for more than 60% of global reserves
  • the most widely used currency for international transactions
  • But it risks ceding ground to the euro after European Union leaders agreed on a 750 billion euro stimulus package that enhances the appeal of the shared currency and euro-denominated assets
CA say that the recovery fund will facilitate diversification out of the US dollar
offering liquid, high-rating, euro-denominated debt
Here is an item on the US dollar from Bloomberg that may be of interest.
I’d not be getting too gung-ho on this, and note that the analysts say ‘risks ceding ground’, they are not writing off the dollar.
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