Saturday , July 20 2019
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Tag Archives: Canada

Dollar is Bid Ahead of Jobs Report

Overview:  The dovish response to news that Lagarde was nominated to replace Draghi was extended by the dismal German factory order report that has pushed the euro to new two-week lows and kept bond yields near record lows.  The focus ahead of the weekend is squarely on the US employment data, where a second consecutive poor report will fan expectations for a large Fed cut to initiate an easing cycle.  The large markets in Asia Pacific, including, China, Japan, Korea, Taiwan, and...

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The World may Look Different Come Monday

Overview:  Quarter-end positioning seems to dominate today's activity.  The outcome of bilateral talks at the G20 gathering partly reflects the influence of the US President who eschews multilateral efforts as a hindrance to its sovereignty.  Equities in Asia Pacific slipped today but held on to modest gains for the week.  The MSCI Asia Pacific Index rose every week this month for the first time since January 2018.  The Dow Jones Stoxx 600 is little changed and is off a little more than...

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Biggest Drop in the S&P 500 in June Weighs on Global Equities

Overview:  The S&P 500 fell nearly one percent yesterday, its steepest fall this month and this was a weight on Asia Pacific and European activity.  Most markets have eased, though not as much as the US did.  Hong Kong, India, and Singapore were notable exceptions in Asia, where the MSCI benchmark slipped for a second day.  Led by health care and real estate, Europe's Dow Jones Stoxx 600 is off for the fourth consecutive session.  US shares have stabilized, but the gap created by...

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Jobs Data and Tariffs Dominate

Overview:  Global equities continue to recover from the recent slide.  Chinese and Hong Kong markets were on holiday today, but the MSCI Asia Pacific Index eked out a minor gain and ensured that its four-week slide ended.  Europe's Dow Jones Stoxx 600 is up about 0.7% through the European morning.  It is the fourth advancing session this week, and ahead of the US employment data, it is up 2% for the week, which is the best in two months.  US shares are also trading firmer, and the...

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The Global Squeeze; US, Canada, China

Ever since the first major outbreaks of Euro$ #4 last year, the balance of data has tipped further and further toward the minuses. Yesterday was a big one. US income growth in 2019 is no longer growth. Not huge declines, but minus signs where, if the prior boom narrative had been valid, large plus signs should rule unchallenged. The business cycle used to be relatively easy and intuitive. A recession shows up, the economy quickly, violently plunges, and then just as fast back to normal. The...

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Globally Synchronized…

The economic sickness is predictably spreading. While unexpected in most of the world which still, somehow, depends on central banking forecasts, it really has been almost inevitable. From the very start, just the utterance of the word “decoupling” was the kiss of death. What that meant in the context of globally synchronized growth, 2017’s repeatedly dominant narrative, wasn’t the end of synchronized as many tried to say but the end of growth. This was more than an economic factor. A fixed...

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Canada Signals Japan For Bond Yields

Back in October, late October specifically, the Bank of Canada removed the word “gradual” from its policy statement. Inflation, staff Economists projected, was moving up as was the Canadian economy. It was finally time to become more aggressive. Freed from that one word, BoC officials could opt for a “rate hike” at every meeting. It was widely expected in December that’s what would happen – the first consecutive benchmark rate increases in the cycle. Canada was leading, way out in front of...

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Six Events to Watch Next Week

The divergence thesis that drives our constructive outlook for the dollar received more support last week than we expected.  A few hours after investors learned that Japan's flash PMI remained below the 50 boom/bust level, Europe reported disappointing PMI data as well.  And a few hours after that the US reported that retail sales surged in March by the most in a year and a half (1.6%).  This coupled with the new cyclical low in weekly jobless claims boosted GDP forecasts, quieted the...

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30/3/19: The Art of Trade Fudge: USMCA

Much-lauded Trump's Nafta 2.0, officially known as the United States – Mexico – Canada Agreement (USMCA) came to being on November 30, 2018. In his State of the Union speech on February 5, 2019, President Donald Trump claimed that the USMCA will replace “the catastrophe known as NAFTA” and “deliver for American workers like they have not had delivered to for a long time.” In a brief summary of the USMCA, Vox (see...

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Same Planet, Very Different Worlds

This is really getting out of hand. For the fourth day in a row, unofficially, effective federal funds or EFF remains above IOER. At the same, now the 10-year UST yields less. What was last week pretty concerning stuff before the Fed’s capitulation is this week whatever category lies below. This is not a resumption of the bond bull market. Despite so many popular stories which had predicted it being called off throughout 2018, a bond bull market never existed. To begin with, there is...

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