Roach is a former Morgan Stanley Asia chairman and is now a senior fellow at Yale University.
- “The U.S. economy has been afflicted with some significant macro imbalances for a long time, namely a very low domestic savings rate and a chronic current account deficit”
- “The dollar is going to fall very, very sharply.”
Roach spoke in an interview with CNBC, called for a 35% fall in the dollar.
- “These problems are going from bad to worse as we blow out the fiscal deficit in the years ahead”
The meeting will begin at 0000 GMT
- BOJ calls for unscheduled monetary policy meeting on 22 May
The central bank is likely to announce a new scheme to facilitate funding for banks to extend to small businesses that have been hit by the fallout from the coronavirus outbreak.
In short, it is yet another measure to bolster liquidity conditions in the financial system, in order to ease corporate funding strains.
I don’t believe that the Kuroda & co. will offer any surprises beyond that, so expect other monetary policy tools to remain unchanged. They will likely just use the meeting to communicate the details of the new scheme if anything else.
As for the impact on the yen, I would argue that this should not play too significant of a role as the central bank has played it down and Kuroda has made mention to this in the past.
For USD/JPY, continue to keep an eye on the elusive 108.00 handle in any case.
BOJ to hold an unscheduled monetary policy meeting this week
The meeting will take place at 0000 GMT on 22 May (this Friday). The BOJ says that the meeting is to discuss new measures to provide funds to financial institutions, following up on instructions by governor Kuroda from the 27 April meeting.
Their next policy meeting was supposed to be on 16 June but Kuroda had already hinted that they were looking to do something like this before that meeting here
So, this is merely to follow up on that as they will introduce a funding scheme to aid the financial system and inject more liquidity. But the sudden call here isn’t going to be all too comforting and it’ll prompt questions on if there are any banks in trouble.
Last week Germany’s constitutional court issued a decision ruling that the European Central Bank had overstepped its mandate with QE bond purchases,
- German court in Karlsruhe gave the ECB 3 months to justify its euro zone QE stimulus programme, or the Bundesbank might have to step aside from it
Responding, the European Union’s highest court (which had previously permitted the ECB QE programme) and the European Commission said that EU law holds precedence over national regulations
Further now, on Sunday, EU Commission President Ursula von der Leyen said the EU executive might end up opening a legal case against Germany.
- “We are now analysing the ruling of the German Constitutional Court in detail. And we will look into possible next steps, which may include the option of infringement proceedings,”
These wort of legal wranglings are not a positive for EU coherency and stability. Nor are they positive for the EUR. Watching for developments on this front – both legal/political and for ECB actions ahead.
You’ll recall from earlier this week that the court ruled the European Central Bank must ensure its QE bond-buying program is proportionate or else Germany’s Bundesbank central bank may no longer participate.
- And if its not the Germany Bundesbank central bank may no longer participate
The Governing Council of the ECB responded with a “Yeah, right …”:
said it “takes note” of the judgement
- “The Governing Council remains fully committed to doing everything necessary within its mandate”
One member (at least) said the ECB will not respond directly to the court
- court’s arguments are ridiculous
- we could easily answer them
- we should not do so as this is a risk to central bank independence
So, its an ‘as you were’ for the ECB QE program.
Jamie Dimon is chief executive officer of JPMorgan Chase & Co.
On the coronavirus pandemic:
- “At a minimum, we assume that it will include a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008”
- More specifically for his firm, JPM earnings this year will be “down meaningfully”
- 180,000, or about 70%, of the firm’s employees are working from home
- JPM is paying around $1,000 to those whose jobs don’t allow them to work remotely
- people could return to work more quickly if governments made tests widely available
- to determine who has recovered from the disease
- “The country was not adequately prepared for this pandemic,”
Dimon is correct on the unpreparedness. Three months of denial from the very top of the US administration that there was even a problem has cause such a tragic escalation in the numbers of lives lost.
BlackRock is the world’s largest asset manager (circa $7.4 trillion in assets under management)
Given the surging equity markets (more ion this in just a moment) the comments from their latest update might appear stale (ps. these below relate to a credit view, not equities) :
- Unprecedented policy actions to limit the coronavirus shock and sharply lower valuations have improved the outlook for credit, in our view.
- Major central banks are committed to keep rates low and greatly expand their balance sheets.
More specifically on stocks (bolding mine):
- We previously downgraded global equities to neutral. The coronavirus outbreak is disrupting economic activity and supply chains. The outbreak also poses risks to corporate earnings, in our view. Accommodative monetary policy is a support. We now favour rebalancing back toward benchmark weights as markets fall.
Goldman Sachs were very close to the money indeed for jobless claims.
I posted yesterday:
- US Jobless claims data due Thursday – Goldman Sachs forecasts 5.25m
And then, prior to the data they boosted their forecast:
- Goldman Sachs raises US weekly initial jobless claims forecast to 6 million, from 5.25 million previously
Note that this NFP report is unlikely to be instructive, the survey was mainly before the big impact of the coronavirus outbreak on the economy. Over to GS’ comments:
- estimate for nonfarm payrolls is a decline of 180k in March
- unemployment rate up 0.3 to 3.8% … risks skewed towards a larger increase
- the March employment numbers are already fairly stale and insignificant in our view, because the April report will likely show job losses in the millions.
Jefferies LLC is a US multinational independent investment bank and financial services company.
- The firm is headquartered in New York City.
A company statement
says its chief financial officer Peregrine “Peg” Broadbent has died from “coronavirus complications”
The virus is cutting a swathe through New York, deaths in the city are nearing (if not above as I post) 1000.