New highs for Dow and SPX with trade, employment and political news still to come
Traders responded positively today to the lowest (best) US jobless claims figure in decades and comments from President Trump that an announcement on his tax reform is coming within two to three weeks. This tipped the focus away from immigration back to the economy, sending US indices to new all-time highs today. He also indicated support for airlines promising infrastructure improvements and action on international competition.
Hope trumped fear as capital moved back out into stocks from defensive havens like gold and JPY even though Europe’s political fractures continue to deepen. Sterling rallied, boosted by news that the House of Commons has passed the Brexit bill by a huge 494-122 margin without amendments. It's now off to the House of Lords with debate there to start February 20.
Meanwhile the Euro continues to retreat as internal divisions and splits continue to grow. Greece is back in the news today with the IMF and Germany having a public debate over debt relief. The IMF favours debt relief while Germany claims it impossible under EU rules unless Greece leaves the Eurozone. Schaeuble should be careful what he wishes for, Greece isn't the only country suffering under the single currency empire and there are a number of countries where a big chunk of the population wants out.
The US Dollar also bounced back today as Fed comments turned out to be less dovish than expected. While noting he doesn’t think the Fed should rush into another rate hike with fiscal uncertainty ongoing, St. Louis Fed President Bullard indicated he favours shrinking the Fed’s balance sheet as a normalization alternative to rate hikes. Meanwhile Chicago Fed President touted the potential for fiscal policy to boost the economy. Neither were really ringing the alarm bells for a dovish turn.
Despite all the publicity from President Trump’s usage, Twitter has been unable to convert user growth into advertising revenue. Sales in the most recent quarter fell short of expectations sending Twitter’s stock to a 12% tumble.
There is still a lot of potential news on the way that could keep markets active right through the week. Today’s Asia Pacific trading could be active around this month’s China trade report. Trade remains a big focus Friday with UK trade data and a summit meeting being held between US President Trump and Japanese PM Abe.
Canada’s monthly employment numbers are also due out Friday. The street is expecting a 10K decline after a big 53K increase last month. I think a retrenchment is possible but I also think that the street is too pessimistic once again. With oil prices double where they were a year ago, energy exploration activity has ramped up which could support employment gains. I’m thinking a 20K increase.
Activision Blizzard $0.92 vs street $0.73
Significant announcements released overnight include:
Canada new house prices 3.0% vs street 3.1%
US jobless claims 234K vs street 249K
US natural gas street (159 BCF)
Norway GDP 1.1% vs street 0.7% vs previous (0.5%)
Germany trade balance €18.7B vs street €20.5B
Germany exports (1.9%) vs street (3.3%)
Greece unemployment rate 23.0% as expected
Greece industrial production 2.2% vs previous 2.3%
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
8:50 am AEDT Japan producer prices street 0.0% vs previous (1.2%)
TBA China trade balance street $48.5B
TBA China exports street 3.2% vs previous (6.1%)
TBA China imports street 10.0% vs previous 3.1%
7:00 am GMT Norway consumer prices street 2.9% vs previous 3.5%
9:30 am GMT UK trade balance street (£3.5B)
9:30 am GMT UK industrial production street 3.2% vs previous 2.0%
9:30 am GMT UK manufacturing production street 1.7% vs previous 1.2%
3:00 pm GMT UK NIESR GDP estimate previous 0.5%
8:30 am EST US import prices street 3.3% vs previous 1.8%
8:30 am EST Canada employment change street (10.0K) vs previous 53K
8:30 am EST Canada full-time jobs previous 81K
8:30 am EST Canada part-time jobs previous (27K)
8:30 am EST Canada unemployment rate street 6.9%
10:00 am EST US consumer sentiment street 98.0
1:00 pm EST US Baker Hughes drill rig count previous 729
1:00 pm EST Press conference between US President Trump meets with Japan PM Abe following a meeting on trade, currency, monetary policy, military matters and more
7:30 am EST Sat FOMC Fischer speaking
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