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Tag Archives: EU

Fed Funds Futures No Longer Imply Negative Rates

Overview: Another late sell-off of US equities, ostensibly on questions over Moderna's progress on a vaccine, failed to deter equity gains in the Asia Pacific region. China was a notable exception, but the MSCI Asia Pacific Index rose for the fourth consecutive session. European shares are little changed, but reflects a split. On the one hand, health care and utility sectors are up more than 1%, while financials and real estate are off more than 1%. Meanwhile, US shares are higher with...

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Optimism Burns Eternal

Overview: Hopes for a vaccine and a German-French proposal to break the logjam at the EU for a joint recovery effort helped propel equities higher yesterday. There was strong follow-through in the Asia Pacific region, where most markets advanced by more than 1% today. However,  the bloom came off the rose, so to speak, in Europe. After a higher opening, markets reversed lower, and the Dow Jones Stoxx 600 is off about 0.75% in late morning turnover. All the major sectors are lower, led by...

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Around the tracks: Virus topples global autos and weakens steel coil prices

As some national lockdowns begin to ease, Clement Choo assesses latest indicators of the health of the global auto industry, and the performance of a key input for the sector, steel coil. Vehicle markets saw their first quarter performance take a beating, with existing weak demand pummeled by the coronavirus pandemic as countries around the world reacted by going into lockdown. GM suspended its 2020 profit outlook amid the uncertainty, after it added $16 billion to its cash reserves by...

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Markets Tread Water, Looking for New Focus

Overview: Investors seem to be in want of new drivers, leaving the capital markets with little fresh direction. While Japanese and China equities were little changed, several markets in the region, including Australia, Hong Kong, Taiwan, and India, were off more than 1%. European bourses are mostly higher after the Dow Jones Stoxx 600 slipped 0.4% yesterday. US shares are trading with a softer bias. Bond markets are subdued. The US 10-year yield is hovering around 70 bp ahead of the...

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A New Divergence?

Do you ever read the last few pages of a fiction book before getting into it?  It seems a bit like watching the economic data now. We know roughly where it is headed, the unknown is precisely how it gets there. A common criticism of economists is that they are too late in calling a recession.  One observer suggested that banks don't want their economists forecasting a recession. That strikes me as little more than an urban myth.  Non-bank economists, central banks, multilateral...

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Cool Video: TD Ameritrade–Stocks, the Dollar and the Trap Laid by the German Court

Here is a nine-minute clip of a chat I had with Ben Lichtenstein at TD Ameritrade. Ben captures futures traders' energy and breadth of vision.  Often in institutional settings, one develops a specialization, but in my experience, futures traders are more likely to look across the markets and asset classes.  It is one of the lasting lessons learned early in my career on the floor of the CME.  We focus on the S&P 500 and yesterday's German court decision, which I think is a trap that...

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Investors Take PMI Crash in Stride

Overview: Investors have remained fairly calm in the face of flash April PMI crashes and an increase of virus cases in several European countries. Most equity markets in the Asia Pacific region rose, with the notable exceptions of China and Australia.  The Nikkei rose for the first time this week, and its 1.5% gain led the region. Europe's Dow Jone Stoxx 600 is little changed as it continues to move sideways in a 320-340 range. US shares are slightly firmer.  In the bond market, the...

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17/4/20: COVID19 Updated Charts and Outliers

Updating two charts for #COVID19 pandemic today:First: US vs EU chart: Second: Russia chart: Since I included no commentary on Russian data in the chart itself, it is worth noting that data so far indicates no data suppression or mis-reporting. This is confirmed by analysis of 'outliers' in the data. I have looked at all countries with > 1,000 cases reported and considered observations on cases reported that fall out of trend line from the time when the country cumulated cases...

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8/4/20: Ifo Institute Germany Forecast for 2020

A surprisingly 'positive' forecast for Germany from ifo Institute this morning: While GDP contraction for 2020 looks sharp at -4.2 percent y/y, unemployment figures appear rather robust and employment levels seem to be only weakly impacted. Forecast for current account implies subdued global demand shocks. The swing in the fiscal position is roughly 6.5 percent of GDP, reflecting emergency supports measures. This is significant, and underpins shallower expected effects on employment and...

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Now We are Getting Serious

There is folklore among many investors that is preventing an understanding of what is happening.  The fiction is that the Fed has killed the last three expansions by pursuing too tight of monetary policy.  In fact, the previous three downturns were caused by financial crises (the S&L Crisis, the Tech Bubble, and the Great Financial Crisis) that spilled over and hit the real economy.  If anything, policy was too accommodative for too long, and regulatory authority was too lax.   This...

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