Archives of “Economy” tag

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Japan trade balance for October Y 17.3bn (expected Y 229.3bn)

  
Analysis, Economy
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Japan trade balance for October Y 17.3bn

  • expected Y 229.3bn, prior Y -124.8bn

trade balance adjusted Y -34.7bn

  • expected Y 248.1bn, prior Y -97.2bn

exports -9.2% y/y –  worse than expected and the biggest y/y fall in 3 years.

  • expected -7.5%, prior 5.2%

imports -14.8% y/y – not as bad as expected but not good, ditto on the biggest y/y fall in 3 years.

  • expected -15.2%, prior -1.5%
More on export performance. Exports to:
  • the US down 11.4% y/y
  • to China down 10.3% y/y
  • to the EU down 8.4% y/y
  • to Asia down 11.2% y/y

Overnight :Nasdaq the sole record maker

  
Analysis, US Market
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S&P and Dow close lower

After a few days where the major indices all closed at record levels, today only the Nasdaq is closing with gains. The Dow led the way to the downside.
Home Depot is weighing on the Dow after revenues and forward guidance disappointed today. The price is down $-13.06 or -5.47%.   Home Depot has the 4th highest component weight in the Dow at 5.78%, hence the big impact.
The final numbers are showing:
  • S&P index fell -1.87 points or -0.06% at 3120.17. The high price reached 3127.64. The low extended to 3113.47
  • Nasdaq index rose 20.722 points or 0.24% at 8570.66. The high reached 8589.758. The low extended to 8536.727.
  • Dow index fell -102.37 points or -0.37% at 27933.85. The high reached 28090.21. The low extended to 27894.52
Some winner for the day included:
  • AMD, +3.43%
  • Tesla, +2.75%
  • First Solar, +2.71%
  • Broadcom, +2.12%
  • Amgen, +1.77%
  • Visa, +1.73%
  • Mastercard, +1.58%
  • Intuitive Surgical, +1.52%
  • Intuit, +1.41%
  • Adobe, +1.20%
  • Pfizer, +1.18%
Some of the biggest losers included:
  • Slack, -8.40%
  • Home Depot, -5.47%
  • AT&T, -4.04%
  • Beyond Meat -2.96%
  • Qualcomm, -2.79%
  • Micron, -2.57%
  • Nvidia, -2.01%
  • Bristol-Myers Squibb, -2.0%
  • Chevron, -1.77%
  • Phillip Morris, -1.52%
  • FedEx, -1.30%

Near-deal from May now being used as benchmark on how much tariffs to be rolled back – report

  
  Analysis
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US contemplates removing more tariffs than anticipated

China and the US are discussing linking the size of tariff rollbacks to the preliminary terms set in the deal that failed in May, according to Bloomberg who cites two people familiar.
The White House is still debating the precise percentage internally but the report says a deal would at least include removing the Sept tariffs and eliminating the planned Dec tariffs.
China has demanded that all tariffs imposed after May be removed immediately and those from beforehand be lifted gradually.
The report says that some of the $250B in tariffs imposed in 2018 are under consideration to be rolled back and that opposition to the move has softened. Overall, the White House is looking at the tariffs holistically and debating on whether to remove somewhere between 35% and 60%. Those percentages fall inline with what percentage of the overall deal Phase One accomplishes.
For reference, the US currently has tariffs on $360B in goods. That number was $250B before the May talks fell apart. On May 10, the US also raised the tariff rate on those $250B in goods to 25% from 10%.

Overall this report reflects a generally positive take and shows that both sides are working on a deal and perhaps closer than anticipated. This is the first indication they’re working off the May text but it’s also a hint that the US may remove more tariffs than anticipated. It would be a great signal for markets if anything from May or earlier was lowered.

Moody’s: Global economy will remain fragile in 2020

  
  Analysis
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Moody’s weighs in with some commentary about the world economy

  • Global economy will remain fragile next year as risks to credit conditions rise
  • Rising political and geopolitical risks are exacerbating slow growth
  • That reduces economies’ abilities to respond to shocks
  • Trade uncertainty will continue to disrupt supply chains and weigh on investment
  • Overall global growth will remain lackluster amid deceleration in US and China
  • Recession risks will remain elevated in Europe and in the US
Adding that they do not expect a recession next year but recession risks are building amid a backdrop of trade policy uncertainty in the global economy.
They also mention that global interest rates will remain low and that yield curves are to remain flat for several years going forward.
I think this is pretty much the base-case scenario for the global economy at this point i.e. slow and sluggish growth with rising risks of things turning into something worse.
Any potential rebound in global trade and manufacturing conditions will likely take a few years to come about so if we can weather that storm, then perhaps the recession can will be kicked down the road again for a few more years.

NASDAQ, S&P and Dow all close at record highs

  
Analysis, US Market
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Late rally kicks the S&P into positive territory

the major indices all closed positive on the day and that means record closes. The S&P was the closest at not reaching the milestone, but some late buying kicked the index into positive territory.  The NASDAQ and Dow had an easier time of it.
The unofficial closes are showing:
  • The S&P index +1.37 points or 0.04% at 3121.84. The high reached 3124.17. The low extended to 3112.06
  • The NASDAQ index +9.109 points or 0.11% at 8549.93. The high reached 8559.78. The low extended to 8503.625
  • The Dow close up 530.52 points or 0.11% at 28035.43. The high reached 28040.97. The low extended to 27969.24.
The major indices open lower and was under early pressure, but started to come back after word Pres. Trump and Fed Chair Powell had a private meeting in the private quarters of the White House (with Treasury Secretary Mnuchin).    Concerns about China were replaced by hopes that the Fed Chair might be convinced to cut rates down the road.
Disney continues to be a boost to the Dow. It rose $2.98 or 2.06%.
Other gainers today included:
  • Lyft, +4.37%
  • Nvidia, +3.99%
  • AMD, +3.5%
  • Netflix, +2.58%
  • Chipotle, +2.22%
  • Square, +1.59%
  • UnitedHealth, +1.3%
  • Facebook, +1.22%
  • Nike, +1.18%
  • Procter & Gamble, +1.14%
  • Walmart, +1.1%
Some underperformers today included:
  • Under Armour, -2.59%
  • Fiat, -2.31%
  • Schlumberger, -1.92%
  • Chevron, -1.71%
  • Bristol-Myers Squibb, -1.64%
  • Beyond Meat, -1.26%
  • Caterpillar, -1.2%
  • Gilead, -1.14%

Mood in Beijing on trade deal is pessimistic – report

  
Analysis, Forex
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USD/JPY down on the headlines

Risk trades are under pressure after this report from CNBC’s Beijing correspondent Eunice Yoon:

Mood in Beijing about #trade deal is pessimistic, government source tells me. China troubled after Trump said no tariff rollback. (China thought both had agreed in principle.) Strategy now to talk but wait due to impeachment, US election. Also prioritize China economic support.

20 risks to markets in 2020 – Use them to make profit

  
  Analysis
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Watch out for those risks

What exactly are the risks to the markets that you should pay attention to? The chief economist of Deutsche Bank Torsten Slok has prepared a list of top 20 risks to global markets in 2020. Each one of them may trigger a downtrend.

  1. Continued increase in wealth inequality, income inequality and healthcare inequality.
  2. Phase one trade deal remains unsigned, continued uncertainty about what comes after phase one.
  3. Trade war uncertainty continued to weigh on corporate capex decisions.
  4. Ongoing slow growth in China, Europe and Japan Triggering significant US dollar appreciation.
  5. Impeachment uncertainty & possible government shutdown.
  6. US election uncertainty; implications for taxes, regulation and capex spending.
  7. Antitrust, privacy and tech regulation.
  8. Foreigners lose appetite for US credit and US Treasuries following Presidential election.
  9. MMT-style fiscal expansion boosts growth significantly in US and/or Europe.
  10. US government debt levels begin to matter for long rates.
  11. Mismatch between demand and supply in T-bills , another repo rate spike.
  12. Fed reluctant to cut rates in an election year.
  13. Credit conditions tighten with more differentiation between CCC and BBB corporate credit.
  14. Credit conditions tighten with more differentiation between CCC and BBB consumer credit.
  15. Fallen angels: More companies falling into BBB. And out of BBB into HY.
  16. More negative-yielding debt sends global investors on renewed hunt for yield in US credit.
  17. Declining corporate profits means fewer dollars available for buybacks.
  18. Shrinking global auto industry a risk for global markets & economy.
  19. House price crash in Australia, Canada and Sweden.
  20. Brexit uncertainty persists.

US President Trump says US farmers will receive another round of cash subsidies

  
  Analysis
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The U.S. Department of Agriculture announced back on Friday that it’ll be making a scheduled subsidy payment to US farmers in the week ahead.

  • the payments will be the second part of a three part $16 billion aid package announced in May to compensate farmers for the U.S.-China trade war
Trump claiming credit:
  • “Our great Farmers will recieve (sic) another major round of ‘cash,’ compliments of China Tariffs, prior to Thanksgiving” 
  • “The smaller farms and farmers will be big beneficiaries. In the meantime, and as you may have noticed, China is starting to buy big again. Japan deal DONE. Enjoy!”
The U.S. Department of Agriculture announced back on Friday that it'll be making a scheduled subsidy payment to US farmers in the week ahead.

Record closes for all three US indices to end the week

  
Analysis, Global Indices, US Market
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The Dow above 28000 for the first time ever.  Indices close at record all time high levels.

The major indices are closing at records. The Dow hits 28,000 for the 1st time ever and looks like my close above that level as well. The S&P index and NASDAQ index are also trading at record levels and closed at the highs.  It is hard to get any better than that.
The closing numbers are showing:
  • The S&P index up 23.73 points or 0.77% at 3120.37. That is the high for the day. The low for the day was down at 3104.60
  • The NASDAQ index is up 61.81 points or 0.73% at 8540.82. That too is the high for the day. The low for the day reached 8506.79.
  • The Dow close up 222.45 points or 0.80% at 28004.69. Yes. it too is at the high for the day.  The low for the day reached 27843.54.
Below are the percentage changes of the major North American and European indices today (along with their low to high ranges).
The Dow above 28000 for the first time ever.  Indices close at record all time high levels.  

For the week, the Dow was the biggest gainer of a sample of major indices. The Shanghai composite index was the biggest decliner at -2.52%.

The weekly percentage changes for the major global stock indices
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