US Treasury Secretary Mnuchin comments
- hopeful China trade talks will make progress
- Huawei is not a pawn in trade talks
Munchy has been loquacious:
Mnuchin: Trump prepared to keep tariffs in place and raise them if necessary
Archives of “finance” tag
rssJP Morgan think progress in US-China talks is unlikely
JP Morgan on the upcoming talks between the US and China.
- We are more sceptical
- still see risks to our growth outlook for 2H 2019 skewed to the downside
JPM that a deal could be struck at the ministerial level talks in mid-Oct and “activity get a cyclical bounce into year end”. But:
- “Are either likely? No.”
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Based on what we have seen come out of US-China talks so far I find it difficult to disagree with JPM.
Time to dust off the ‘hawkish cut’ outlook – September FOMC to lift the USD
Morgan Stanley expect the sept September meeting of the Federal Open Market Committee to cut
- by 25bp
- But the dot plot published alongside is unlikely to show more rate cuts for the balance of 2019 and into next
- expects confusing dots reflecting diversity of views on the committee
More:
- ” …. FOMC materials are likely to be insufficiently dovish to meet the market’s lofty expectations”
- “USD is likely to outperform on the day, particularly against risk-sensitive currencies like high-yielding EM FX and the dollar bloc”
ICYMI: Mnuchin says yuan will be in focus in next round of China talks
An overnight report on comments from US Treasury Secretary Mnuchin
- “I expect the governor of the People’s Bank of China to come over for these talks,” Mnuchin told reporters Monday. “So part of the conversations we will be having with them is around currency and currency manipulation.”
Via Politico (more at the link, but the quote above is the gist of it)
Berkshire taps Japan’s hunger for yields with $4bn bond debut
Warren Buffett’s Berkshire Hathaway headlined a record day in Japan’s bond market Friday by setting the terms on a 430 billion yen ($4 billion) offering, the biggest yen-denominated issue ever by a foreign multinational.
The U.S. investment group is selling five-, seven-, 10-, 15-, 20- and 30-year bonds.
The biggest chunk, 146.5 billion yen in 10-year debt, carries a 0.44% coupon — an attractive yield at a time when Japan’s benchmark long-term interest rate languishes below zero.
Banks, insurers, asset managers and other investors flocked to Berkshire’s offering, which falls under a global yen bond heading that allows foreign buyers to participate. Debt offerings under this framework have been growing gradually, with such big names as Apple, Starbucks, and Procter & Gamble joining in, and both Wall Street and Japanese financial institutions are pitching bond floats.
The success of the record debt sale could embolden other multinationals to raise capital in Japan’s bond market, where most yen-denominated offerings by foreign issuers have been small.
Berkshire’s AA issuer rating from S&P Global Ratings puts it slightly above the AA- of Japanese blue chip Toyota Motor. (more…)
US stocks opened lower and closed lower
…but off lows for the day
The US major stock indices opened lower and closed lower. The low for the Dow reached -1.61%. For the Nasdaq it reached -1.45%. For the S&P it fell by as much as -1.18%. However, the indices did recover some of those declines by the close.
The final numbers are showing:
- The S&P fell -20.02 points or -0.69% at 2906.27
- The Nasdaq fell -88.72 points or -1.11% at 7874.16
- The Dow fell -285.26 points or -1.08% at 26118
Below are the % ranges for the North American and European markets for the day. All major indices are ending lower.
S&P ratings cut for Argentina
Any surprise? Anyone?
From B- to SD
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An ‘SD’ rating is assigned when S&P Global Ratings believes that the obligor has selectively defaulted on a specific issue or class of obligations but it will continue to meet its payment obligations on other issues or classes of obligations in a timely manner.
ICYMI – Warnings of turmoil in markets if the US intervenes in the Chinese yuan
The Financial Times ran a piece overnight canvassing potential US intervention to drive the USD down against the Chinese currency.
The background to this is
- strong, and stronger USD, despite the Fed’s rate cut
- The US naming China as a currency manipulator
- USD/CNY and USD/CNH moving above what was though as a bit of a ‘line in the sand’ at 7 (wheter it is is/was or not remains to be seen)
- Plenty of chatter and speculation that the US admin could intervene to send the dollar lower
Via the FT:
- One senior staffer at a London-based Chinese bank said the US could conceivably intervene in the offshore renminbi market, where the currency is traded more freely than on the mainland. But the consequences could be serious.
- “If you take on China on the currency . . . it would be interpreted as a political act and it would throw markets into turmoil,” said the senior staffer, speaking on condition of anonymity. The political fallout would be “unprecedented”, the person added.
He says market turmoil likes that’s a bad thing? 😀
(Off to the naughty corner for those thinking what I’m thinking!)
FT piece is here, may be gated
US stocks mixed as attention turns to Fed
US stocks were mixed as Federal Reserve officials cast doubts on further rate cuts and a reading on domestic manufacturing stoked concerns over the health of the economy. The S&P 500 ticked 0.1 per cent lower after drifting between gains and losses, with investors turning their attention to the central bank’s annual summit where chairman Jay Powell will speak on Friday. The Nasdaq Composite was down 0.4 per cent, while the Dow Jones Industrial Average rose 0.2 per cent on a rally in shares of Boeing. Central bankers from around the world have descended on Jackson Hole, Wyoming, for a policy symposium that is closely watched by investors seeking clues on monetary policy.
Market participants are looking for the Fed to follow its July rate cut with another one in September, but at the start of the Jackson Hole gathering on Thursday, Philadelphia Fed president Patrick Harker and Kansas City Fed president Esther George indicated in television interviews that they would not back further cuts. “My sense was we’ve added accommodation, and it wasn’t required in my view,” Ms George, one of two dissenters in the July decision, told CNBC. Mr Harker, who is not a voting member of the Fed’s policy setting committee, said he believes the federal funds rate is around its neutral level, adding: “I think we should stay here for a while and see how things play out.” The US 10- and two-year yield curve inverted for the second time this week following the remarks. The yield on the benchmark 10-year Treasury rose 3.3 basis points to 1.6097 per cent, while the policy-sensitive two-year yield was up 4.5bp at 1.6141 per cent. An inverted yield curve is considered a sign that investors expect a recession.
quotations and euphemisms from : Reminiscences of a Stock Operator
- It takes a man a long time to learn all the lessons of his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side.
- I think it was a long step forward in my trading education when I realized at last that when old Mr. Partridge kept on telling the other customers, Well, you know this is a bull market! he really meant to tell them that the big money was not in the individual fluctuations but in the main movements that is, not in reading the tape, but in sizing up the entire market and its trend.
- The reason is that a man may see straight and clearly and yet become impatient or doubtful when the market takes its time about doing as he figured it must do. That is why so many men in Wall Street, who are not at all in the sucker class, not even in the third grade, nevertheless lose money. The market does not beat them. They beat themselves, because though they have brains they cannot sit tight. Old Turkey was dead right in doing and saying what he did. He had not only the courage of his convictions but the intelligent patience to sit tight.
- The average man doesn’t wish to be told that it is a bull or bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn’t even wish to have to think. It is too much bother to have to count the money that he picks up from the ground. We love volatility and days like the one in which the stock market took a big plunge, for being on the right side of moving markets is what makes us money. A stagnant market in any commodity, such as grain has experienced recently, means there’s no opportunity for us to make money.
- A man will risk half his fortune in the stock market with less reflection than he devotes to the selection of a medium-priced automobile.