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Japan PM Abe: Wants to start cash handouts as early as possible in May

  
  Analysis
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Comments by Japan prime minister, Shinzo Abe, in parliament

Japan
  • Economy is in an extremely severe state
  • This will continue for some time
  • Japan not seeing an explosive increase in virus cases now
The headline remark relates to the ¥100,000 cash handout to every citizen in the country. When launching these measures, timing and effectiveness are both equally key.
It sounds good to get money to every citizen to mitigate the fallout from the virus impact. But if it takes too long to reach them, the damage becomes more permanent.
In the case of other government measures, the effectiveness matters too. A good example is the US’ PPP funding whereby large and publicly traded companies even swooped in for the money alongside smaller companies and mom-and-pop shops.
So, while the market may respond favourably to these stimulus measures on the announcement, the true “value” depends on the execution. And that will show up in the medium-to-long term fundamentals in each country once this is all over and done with.

Bank of Canada cut rates 50 bps. Stocks soar. Biden Super Tuesday results help.

  
  Analysis
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Highlights for today’s near trading session:

  • The Bank of Canada cut the rates by 50 basis points. The expectations was for a 60% chance of a 50 basis point cut. As a result, the Canadian dollar weakened. The USDCAD went from a pre-decision low of around 1.3330, to a session high of 1.34308 (100 pip move). The move took the price above the swing highs from yesterday and the NY session high between 1.3090 to 1.30953. The prices since rotated back to the downside and afternoon trading and trades just above that swing high area.  a move below in the new day would next target the rising 100 hour moving average 1.3377
  • In the US the ADP employment report showed a bigger than expected gain of 183K versus 170K estimate. However the prior month was revised lower to 209K from 291K. The BLS will release the US job data on Friday with a change in nonfarm payroll of 175K estimate. It’s prior month came in at 225K. The revision down in the ADP report brings its number closer to the US number
  • Democratic nominee Biden was resurrected after the Super Tuesday primaries. Biden won 9 of the 12 contests, and took the lead over Bernie’s Sanders in the delegate vote. The big reversal helped to calm market fears about the implications of a Sanders nominee.
  • The US stocks surged with the Dow industrial average rising by over 1100 points on the day.  The Fed easing yesterday was not greeted with as much excitement, but Canada cut rates by 50 basis points as well and others were rumored to be moving in the cut direction.  That stimulus along with the Biden Super Tuesday showing, helped to send stocks soaring. In addition to the NASDAQ rising by over 1100 points or 4.4%, the S&P index is up over 120 points or 4.1% and the NASDAQ index is up 317 points or 3.66%. A huge day to the upside for US equities
  • European shares also close higher but off there high levels of the day. I would expect that all things being equal, they should play some catch up to the US afternoon gains

ICYMI: Trump and Macron agreed to a truce on tariffs until the end of the year

  
  Analysis
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Presidents Trump and Macron spoke on Sunday, Greg had the info here:

  • The two leaders agreed to a truce on tariffs until the end of the year.
The news gave EUR/USD a boost heading into the US time zone close (and note the US was out on a holiday Monday which thinned out liquidity for tat session).
Presidents Trump and Macron spoke on Sunday, Greg had the info here:

Rasmussen Numbers; PredictIt

  
  Analysis
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Their sampling of 1,000 Likely Voters taken a week ago shows a slight edge to the Big Orange. 46% think the President will be re-elected; 33% think he will lose to the Democrat and 12% think he will be convicted by the Senate. 9% are unsure. The sample weights a Democrat preponderance 38% to 32% Republican with the remaining 30% as independent. PredictIt shows the same: 52 cents for the Republican candidate to win; 51 cents for the Democrat.

The London Bookies have a very different view.

From Oddschecker:

Donald Trump -110

Joe Biden +500

Bernie Sanders +750

Pete Buttigieg +2000

Elizabeth Warren +2000

Michael Bloomberg +2000

Hillary Clinton +5000

Andrew Yang +5000

Ruble slides after Russian government resigns

  
Analysis, Forex
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Ruble falls to one week low

Prime Minister Medvedev says the Russian government has submited a resignation and that Putin will decide the makeup of a new government. Separately, Putin appointed Medvedev deputy head of the security council.
The ruble is down about 0.5% on the news.
Earlier today Putin called for a nationwide vote that would distribute power to parliament and the PM and away from the Presidency. That sounds like Putin is giving away power but his term as President expires in 2024 and it would give parliament the power to choose the prime minister.
In the same speech, Putin announced measures to incentivize a higher birth rate. It’s fallen to 1.75 and he announced cash incentives, increased child benefits, hot lunches for kids and grants to mothers of large families.

Trump sends letter to Pelosi criticizing impeachment process

  
  Analysis
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Letter from Pres. Trump to Speaker of the House Pelosi

The White House letter to Pelosi
  • Impeachment process cheapened
  • McConnell will decide on impeachment witness issue
  • He’ll let Senate decide when to vote on US MCA
  • Abuse of power charges completely baseless

You can read the full 6 page letter here

Trump has signed off on China trade deal – report

  
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Report from Bloomberg’s Jennifer Jacobs:

The deal Trump’s trade negotiators presented to the president includes a delay in the Dec. 15 new round of tariffs, sources tell me. The trade meeting is over, and the president has signed off.
Report from Bloomberg's Jennifer Jacobs:This was expected at this point but there was a small risk he would change his mind.

US Senator plans legislation to block US govt pensions from investing in Chinese stocks

  
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Senator Marco Rubio want legislation to block the Federal Retirement Thrift Investment Board from investing in Chinese stocks

  • The Board delayed a decision on switching the benchmark for its $50 billion TSP I Fund to mirror an index with Chinese assets
  • for at least two weeks
  • Rubio said he would introduce bipartisan legislation “to ensure that federal retirement savings can never be a source of wealth funding the Chinese Communist Party at the expense of our nation’s future prosperity”

Tudor Jones says stocks would drop 25% on a Warren presidential win

  
Analysis, US Market
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Paul Tudor Jones says that a win from Elizabeth Warren in the US 2020 presidential election would prompt a 25% drop in the S&P500.

  • Cites concerns over her proposed wealth tax
PTJ was speaking at a conference on Monday in NY, Bloomberg report citing people familiar with his presentation. 
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warren is a contender for the Dem nomination. 

Trump impeachment drama muddles China deal timeline

  
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As U.S. President Donald Trump prepares for high-level trade negotiations with China next month, a sharp turn of events has blurred the timeline of a deal.

On Tuesday, Democratic House Speaker Nancy Pelosi shocked the nation when she announced an impeachment inquiry into Trump. Pelosi had resisted calls to start formal proceedings against the president during and after the Mueller investigation, but the latest allegations about Trump pressing Ukrainian President Volodymyr Zelensky to investigate former U.S. Vice President and Trump’s political rival Joe Biden’s family pushed her to act.

Trump on Wednesday sought to shift the focus away from the inquiry, praising the U.S. economy and an imminent trade deal with China.

“We have created the greatest economy in the history of our country, the greatest economy in the world…. Right now China is way behind us and they will never catch us if we have smart leadership,” Trump told reporters. “We have picked up trillions of dollars and they have lost trillions of dollars and they want to make a deal very badly. It could happen. It could happen sooner than you think.”

The comment came an hour after Trump released a transcription of his phone call with Zelensky from July 25. The president was under pressure from Democrats and some Republicans to make public the transcript after a whistleblower filed a complaint saying he pressured the Ukrainian president to investigate Biden’s son Hunter Biden as well as a Democratic National Committee computer server related to Russian interference in the 2016 election.

Trump said last week that China would like to see someone else win the 2020 presidential election, but they think he is going to win. He has warned Beijing that if the deal comes after the Nov. 3, 2020 election, trade talks will be on “far worse” terms.

U.S. President Donald Trump said a China trade deal could come “sooner than you think.”   © AP

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