Saturday, April 14, 2018
Weekly Commentary:
Bizarre and Ominous
by Doug Noland
full column here:
My summary follows:
For the week
ending April 13, 2018:
STOCKS:
S&P500 jumped 2.0% (down 0.6% year-to-date)
Dow Industrials rose 1.8% (down 1.5%)
Dow Utilities fell 1.4% (down 5.9%)
Dow Transports rallied 2.2% (down 2.3%)
S&P 400 Midcaps gained 1.6% (down 0.9%)
Small cap Russell 2000 jumped 2.4% (up 0.9%)
Nasdaq100 recovered 3.0% (up 3.6%)
Biotechs jumped 8.6% (up 9.5%)
With gold bullion up $12,
the HUI gold stock index advanced 3.3%
(down 4.6%)
Dow Utilities fell 1.4% (down 5.9%)
Dow Transports rallied 2.2% (down 2.3%)
S&P 400 Midcaps gained 1.6% (down 0.9%)
Small cap Russell 2000 jumped 2.4% (up 0.9%)
Nasdaq100 recovered 3.0% (up 3.6%)
Biotechs jumped 8.6% (up 9.5%)
With gold bullion up $12,
the HUI gold stock index advanced 3.3%
(down 4.6%)
U.K.'s FTSE advanced 1.1% (down 5.5%).
Japan's Nikkei 225 rose 1.0% (down 4.3% y-t-d).
France's CAC40 gained 1.1% (unchanged)
German DAX rose 1.6% (down 3.7%)
Spain's IBEX 35 increased 0.9% (down 2.8%)
Italy's FTSE MIB index jumped 1.7% (up 6.8%)
Brazil's Bovespa slipped 0.6% (up 10.4%)
Mexico's Bolsa rose 1.8% (down 1.2%)
South Korea's Kospi gained 1.0% (down 0.5%)
India’s Sensex equities advanced 1.7% (up 0.4%)
China’s Shanghai rallied 0.9% (down 4.5%)
Turkey's Istanbul National 100 sank 4.5% (down 5.0%)
Russia's MICEX was hit 4.6% (up 3.1%).
German DAX rose 1.6% (down 3.7%)
Spain's IBEX 35 increased 0.9% (down 2.8%)
Italy's FTSE MIB index jumped 1.7% (up 6.8%)
Brazil's Bovespa slipped 0.6% (up 10.4%)
Mexico's Bolsa rose 1.8% (down 1.2%)
South Korea's Kospi gained 1.0% (down 0.5%)
India’s Sensex equities advanced 1.7% (up 0.4%)
China’s Shanghai rallied 0.9% (down 4.5%)
Turkey's Istanbul National 100 sank 4.5% (down 5.0%)
Russia's MICEX was hit 4.6% (up 3.1%).
US BONDS
& MORTGAGES
Ten-year Treasury yields rose five bps to 2.83%
(up 42bps).
Long bond yields added a basis point to 3.03%
(up 29bps).
(up 42bps).
Long bond yields added a basis point to 3.03%
(up 29bps).
Freddie Mac 30-year fixed mortgage rates
added two bps to 4.42%
(up 34bps y-o-y).
Fifteen-year rates were unchanged at 3.87%
(up 53bps).
Five-year hybrid ARM rates
slipped a basis point to 3.61%
(up 43bps).
Jumbo mortgage 30-yr fixed rates
down one basis point to 4.48%
(up 33bps).
added two bps to 4.42%
(up 34bps y-o-y).
Fifteen-year rates were unchanged at 3.87%
(up 53bps).
Five-year hybrid ARM rates
slipped a basis point to 3.61%
(up 43bps).
Jumbo mortgage 30-yr fixed rates
down one basis point to 4.48%
(up 33bps).
M2 money supply:
added $4.5bn last week to a record $13.940 TN.
added $4.5bn last week to a record $13.940 TN.
and gained $575bn, or 4.3%, over the past year.
Currency Watch:
The U.S. dollar index slipped 0.3% to 89.80
(down 2.5% y-t-d).
(down 2.5% y-t-d).
Commodities Watch:
Goldman Sachs Commodities Index surged 5.5% (up 5.8% y-t-d).
Spot Gold added 0.9% to $1,345 (up 3.3%).
Silver gained 1.8% to $16.658 (down 2.8%).
Crude jumped $5.33 to $67.39 (up 12%).
Gasoline surged 5.7% (up 15%)
Natural Gas gained 1.3% (down 7%).
Copper increased 0.4% (down 7%).
Wheat jumped 3.6% (up 15%).
Corn declined 0.6% (up 13%).
Spot Gold added 0.9% to $1,345 (up 3.3%).
Silver gained 1.8% to $16.658 (down 2.8%).
Crude jumped $5.33 to $67.39 (up 12%).
Gasoline surged 5.7% (up 15%)
Natural Gas gained 1.3% (down 7%).
Copper increased 0.4% (down 7%).
Wheat jumped 3.6% (up 15%).
Corn declined 0.6% (up 13%).
Trump Administration Watch:
April 9 - CNBC (Berkeley Lovelace Jr.):
"White House economic advisor Larry Kudlow told CNBC on Monday that President Donald Trump is warning China about its trade practices with tariffs. 'This president's got some backbone, others didn't and he's raising the issue in full public view, setting up a process that may include tariffs. Hopefully, it will be mostly negotiations,' Kudlow said… 'I don't know if we'll have tariffs or not… [Trump] is responding to decades of misdeeds by China [on] trade… It's high time we did that… Somebody's got to do it. Somebody's got to say to China, 'you are no longer a Third World country. You are a First World country and you have to act like it… The president's got to stick up for himself and the United States.'"
"White House economic advisor Larry Kudlow told CNBC on Monday that President Donald Trump is warning China about its trade practices with tariffs. 'This president's got some backbone, others didn't and he's raising the issue in full public view, setting up a process that may include tariffs. Hopefully, it will be mostly negotiations,' Kudlow said… 'I don't know if we'll have tariffs or not… [Trump] is responding to decades of misdeeds by China [on] trade… It's high time we did that… Somebody's got to do it. Somebody's got to say to China, 'you are no longer a Third World country. You are a First World country and you have to act like it… The president's got to stick up for himself and the United States.'"
April 10 - Bloomberg (Keith Zhai):
"Trade talks between the world's biggest economies broke down last week after the Trump administration demanded that China curtail support for high-technology industries, a person familiar with the situation said, signaling that a resolution may be some ways off. Liu He, a vice premier overseeing economics and finance, told a group of officials… that Beijing had rejected a U.S. request to stop subsidizing industries related to its 'Made in China 2025' initiative, the person said. The U.S. has accused China of using the policy to force companies into transferring technology in areas like robotics, aerospace and artificial intelligence."
"Trade talks between the world's biggest economies broke down last week after the Trump administration demanded that China curtail support for high-technology industries, a person familiar with the situation said, signaling that a resolution may be some ways off. Liu He, a vice premier overseeing economics and finance, told a group of officials… that Beijing had rejected a U.S. request to stop subsidizing industries related to its 'Made in China 2025' initiative, the person said. The U.S. has accused China of using the policy to force companies into transferring technology in areas like robotics, aerospace and artificial intelligence."
April 11 - Bloomberg (Justin Sink, Billy House, and Anna Edgerton):
"House Speaker Paul Ryan said… he won't seek re-election in November, dealing a blow to congressional Republicans already facing a possible Democratic takeover of the House in the November elections and setting off a GOP leadership battle. 'I will be retiring in January, leaving this majority in good hands with what I believe is a very bright future,' Ryan, 48, said… 'I think we have achieved a heck of a lot.'"
"House Speaker Paul Ryan said… he won't seek re-election in November, dealing a blow to congressional Republicans already facing a possible Democratic takeover of the House in the November elections and setting off a GOP leadership battle. 'I will be retiring in January, leaving this majority in good hands with what I believe is a very bright future,' Ryan, 48, said… 'I think we have achieved a heck of a lot.'"
April 9 - CNBC (Dan Mangan):
"The FBI on Monday raided the New York City office and residence of President Donald Trump's personal attorney Michael Cohen, seeking evidence related to the payment Cohen made to porn star Stormy Daniels on the eve of the 2016 presidential election. The Washington Post… reported that Cohen is being investigated for crimes possibly related to bank fraud and campaign finance violations. The raids came after federal prosecutors in New York City obtained a search warrant following a referral from special counsel Robert Mueller, Cohen's lawyer said."
"The FBI on Monday raided the New York City office and residence of President Donald Trump's personal attorney Michael Cohen, seeking evidence related to the payment Cohen made to porn star Stormy Daniels on the eve of the 2016 presidential election. The Washington Post… reported that Cohen is being investigated for crimes possibly related to bank fraud and campaign finance violations. The raids came after federal prosecutors in New York City obtained a search warrant following a referral from special counsel Robert Mueller, Cohen's lawyer said."
U.S. Bubble Watch:
April 11 - Reuters (David Lawder and Lindsay Dunsmuir):
"The U.S. government ran a $209 billion budget deficit in March as outlays grew and receipts fell… That compared with a budget deficit of $176 billion in the same month last year, according to Treasury's monthly budget statement."
"The U.S. government ran a $209 billion budget deficit in March as outlays grew and receipts fell… That compared with a budget deficit of $176 billion in the same month last year, according to Treasury's monthly budget statement."
April 11 - Bloomberg (Sarah McGregor):
"The U.S. budget deficit widened to $600 billion halfway through the fiscal year, as spending growth outstripped revenue. Receipts rose by 1.6% to $1.5 trillion between October and March compared with a year earlier, while outlays climbed by 4.8% to $2.1 trillion, the Treasury Department said in its monthly budget statement on Wednesday. Corporate income taxes fell to $78.6 billion in the first half of fiscal 2018, from $100.2 billion a year earlier."
"The U.S. budget deficit widened to $600 billion halfway through the fiscal year, as spending growth outstripped revenue. Receipts rose by 1.6% to $1.5 trillion between October and March compared with a year earlier, while outlays climbed by 4.8% to $2.1 trillion, the Treasury Department said in its monthly budget statement on Wednesday. Corporate income taxes fell to $78.6 billion in the first half of fiscal 2018, from $100.2 billion a year earlier."
April 10 - Wall Street Journal (Laura Kusisto and Christina Rexrode):
"Roughly one in five conventional mortgage loans made this winter went to borrowers spending more than 45% of their monthly incomes on their mortgage payment and other debts, the highest proportion since the housing crisis… That was almost triple the proportion of such loans made in 2016 and the first half of 2017, CoreLogic said. Economists said rising debt levels are a symptom of a market in which home prices are rising sharply in relation to incomes, driven in part by a historic lack of supply that is forcing prices higher."
"Roughly one in five conventional mortgage loans made this winter went to borrowers spending more than 45% of their monthly incomes on their mortgage payment and other debts, the highest proportion since the housing crisis… That was almost triple the proportion of such loans made in 2016 and the first half of 2017, CoreLogic said. Economists said rising debt levels are a symptom of a market in which home prices are rising sharply in relation to incomes, driven in part by a historic lack of supply that is forcing prices higher."
April 10 - Bloomberg (Jesse Hamilton):
"Wall Street banks could face higher capital hurdles under a Federal Reserve proposal that would mark the most significant rewrite of requirements put in place after the 2008 financial crisis. The new 'stress capital buffer' announced by the Fed… is meant to streamline competing regulatory demands on lenders and better tailor standards to each bank's specific business. The central bank's proposal would also relax parts of its annual stress tests. For financial firms anticipating a deregulatory wave under President Donald Trump, it's a mixed bag. The proposal could make capital requirements a bit tougher for megabanks but the industry's overall demands may fall by tens of billions of dollars."
"Wall Street banks could face higher capital hurdles under a Federal Reserve proposal that would mark the most significant rewrite of requirements put in place after the 2008 financial crisis. The new 'stress capital buffer' announced by the Fed… is meant to streamline competing regulatory demands on lenders and better tailor standards to each bank's specific business. The central bank's proposal would also relax parts of its annual stress tests. For financial firms anticipating a deregulatory wave under President Donald Trump, it's a mixed bag. The proposal could make capital requirements a bit tougher for megabanks but the industry's overall demands may fall by tens of billions of dollars."
April 10 - Wall Street Journal (Peter Rudegeair, Rachel Louise Ensign and Coulter Jones):
"These days, Wells Fargo… and Citigroup Inc. are unlikely to make a $14,000 auto loan to a borrower with a subprime credit score. That is now the domain of direct lenders such as Exeter Finance LLC, based in Irving, Texas. But where does Exeter get the money to make subprime auto loans? From Wells Fargo and Citigroup. They have helped lend Exeter $1.4 billion for that very purpose. Bank loans to Exeter and other nonbank financial firms have increased sixfold between 2010 and 2017 to a record high of nearly $345 billion… They are now one of the largest categories of bank loans to companies."
"These days, Wells Fargo… and Citigroup Inc. are unlikely to make a $14,000 auto loan to a borrower with a subprime credit score. That is now the domain of direct lenders such as Exeter Finance LLC, based in Irving, Texas. But where does Exeter get the money to make subprime auto loans? From Wells Fargo and Citigroup. They have helped lend Exeter $1.4 billion for that very purpose. Bank loans to Exeter and other nonbank financial firms have increased sixfold between 2010 and 2017 to a record high of nearly $345 billion… They are now one of the largest categories of bank loans to companies."
China Watch:
April 9 - Reuters (Kevin Yao and Lindsay Dunsmuir):
"China stepped up its attacks on the Trump administration on Monday over billions of dollars worth of threatened tariffs, but U.S. President Donald Trump again voiced optimism the two sides would hammer out a trade deal. The comments from both countries followed a week of escalating tariff threats sparked by U.S. frustration with China's trade and intellectual property policies, worrying financial markets over potential damage to global growth. 'When we do a deal with China, which, probably, we will - if we don't, they'll have to pay pretty high taxes to do business with our country,' Trump said…"
"China stepped up its attacks on the Trump administration on Monday over billions of dollars worth of threatened tariffs, but U.S. President Donald Trump again voiced optimism the two sides would hammer out a trade deal. The comments from both countries followed a week of escalating tariff threats sparked by U.S. frustration with China's trade and intellectual property policies, worrying financial markets over potential damage to global growth. 'When we do a deal with China, which, probably, we will - if we don't, they'll have to pay pretty high taxes to do business with our country,' Trump said…"
April 10 - Bloomberg:
"Chinese President Xi Jinping reiterated pledges to open sectors from banking to auto manufacturing in a speech that also warned against returning to a 'Cold War mentality' amid trade disputes with U.S. counterpart Donald Trump. Xi pledged a 'new phase of opening up' in his keynote address… to the Boao Forum for Asia, China's answer to Davos. While the speech offered little new policy, Xi affirmed or expanded on proposals to increase imports, lower foreign-ownership limits on manufacturing and expand protection to intellectual property -- all central issues in Trump's trade gripes."
"Chinese President Xi Jinping reiterated pledges to open sectors from banking to auto manufacturing in a speech that also warned against returning to a 'Cold War mentality' amid trade disputes with U.S. counterpart Donald Trump. Xi pledged a 'new phase of opening up' in his keynote address… to the Boao Forum for Asia, China's answer to Davos. While the speech offered little new policy, Xi affirmed or expanded on proposals to increase imports, lower foreign-ownership limits on manufacturing and expand protection to intellectual property -- all central issues in Trump's trade gripes."
April 10 - Bloomberg (John Ruwitch):
"Chinese investment in the United States fell more than a third last year to $29 billion from a record $46 billion in 2016, the first major correction in a decade, a report by the Rhodium Group and the National Committee on U.S.-China Relations showed."
"Chinese investment in the United States fell more than a third last year to $29 billion from a record $46 billion in 2016, the first major correction in a decade, a report by the Rhodium Group and the National Committee on U.S.-China Relations showed."
Emerging Markets Bubble Watch:
April 9 - Bloomberg (Ksenia Galouchko):
"Russian stocks had their biggest drop in four years and the ruble slumped the most in the world after the U.S. slapped new sanctions on Kremlin-connected billionaires and tensions with the U.S. spiraled following the latest chemical attack in Syria. The benchmark MOEX Russia Index sank 8.7% on Monday, the steepest slide since March 2014, when Moscow's annexation of the Crimean peninsula triggered international penalties. The ruble and local bonds had their biggest drop since 2016 and the cost of insuring sovereign notes against default was set for the sharpest increase since December 2014."
"Russian stocks had their biggest drop in four years and the ruble slumped the most in the world after the U.S. slapped new sanctions on Kremlin-connected billionaires and tensions with the U.S. spiraled following the latest chemical attack in Syria. The benchmark MOEX Russia Index sank 8.7% on Monday, the steepest slide since March 2014, when Moscow's annexation of the Crimean peninsula triggered international penalties. The ruble and local bonds had their biggest drop since 2016 and the cost of insuring sovereign notes against default was set for the sharpest increase since December 2014."
Geopolitical Watch:
April 9 - Wall Street Journal (Michael R. Gordon and Jeremy Page):
"China has installed equipment on two of its fortified outposts in the Spratly Islands capable of jamming communications and radar systems, a significant step in its creeping militarization of the South China Sea, U.S. officials say. The move strengthens China's ability to assert its extensive territorial claims and hinder U.S. military operations in a contested region that includes some of the world's busiest shipping routes."
"China has installed equipment on two of its fortified outposts in the Spratly Islands capable of jamming communications and radar systems, a significant step in its creeping militarization of the South China Sea, U.S. officials say. The move strengthens China's ability to assert its extensive territorial claims and hinder U.S. military operations in a contested region that includes some of the world's busiest shipping routes."
April 10 - Bloomberg (Karen Lema):
"In a span of 20 minutes, 20 F-18 fighter jets took off and landed on the USS Theodore Roosevelt aircraft carrier, in a powerful display of military precision and efficiency. The nuclear-powered warship, leading a carrier strike group, was conducting what the U.S. military called routine training in the disputed South China Sea on Tuesday, headed for a port call in the Philippines, a defense treaty ally. The United States is not alone in carrying out naval patrols in the strategic waterway, where Chinese, Japanese and some Southeast Asian navies operate, possibly increasing tensions and risking accidents at sea."
"In a span of 20 minutes, 20 F-18 fighter jets took off and landed on the USS Theodore Roosevelt aircraft carrier, in a powerful display of military precision and efficiency. The nuclear-powered warship, leading a carrier strike group, was conducting what the U.S. military called routine training in the disputed South China Sea on Tuesday, headed for a port call in the Philippines, a defense treaty ally. The United States is not alone in carrying out naval patrols in the strategic waterway, where Chinese, Japanese and some Southeast Asian navies operate, possibly increasing tensions and risking accidents at sea."
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.