Economic & Financial News for the week ending September 20, 2019

Saturday, September 21, 2019

Weekly Commentary: 

No Coincidences

by Doug Noland

full column here:

http://creditbubblebulletin.blogspot.com/2019/09/weekly-commentary-no-coincidences.html

My short summary is below:

Ye Editor

For the week ending

September 20, 2019:

S&P500 dipped 0.5% (up 19.4% y-t-d)

Dow Industrials fell 1.0% (up 15.5%)

Dow Utilities jumped 2.2% (up 21.5%)

Dow Transports sank 3.3% (up 14.0%)

S&P 400 Midcaps declined 0.9% (up 16.9%)

Small cap Russell 2000 fell 1.2% (up 15.7%)

Nasdaq100 lost 0.9% (up 23.6%)

Biotechs advanced 1.0% (up 6.0%)

With bullion jumping $28, 

the HUI gold index surged 6.9% 

(up 35.9%)

 U.K.'s FTSE slipped 0.3% (up 9.2% y-t-d).

Japan's Nikkei added 0.4% (up 10.3% y-t-d). 

France's CAC40 increased 0.6% (up 20.3%). 

German DAX was unchanged (up 18.1%). 

Spain's IBEX 35 increased 0.4% (up 7.5%).

 Italy's FTSE MIB dipped 0.3% (up 20.7%)

Brazil's Bovespa gained 1.3% (up 15.2%)

Mexico's Bolsa jumped 1.7% (up 4.6%)

South Korea's Kospi rose 2.1% (up 2.5%

 India's Sensex gained 1.7% (up 5.4%)

China's Shanghai declined 0.8% (up 20.6%)

Turkey's Istanbul National 100 dropped 3.2% (up 9.8%)

 Russia's MICEX added 0.2% (up 18.0%).

Ten-year US Treasury bond yields 
dropped 18 bps to 1.72% (down 96bps). 

Thirty-year US Treasury bond bond yields 
sank 21 bps to 2.16% (down 85bps). 

Freddie Mac 30-year fixed mortgage rates 
jumped 17 bps to 3.73% (down 92bps y-o-y). 

Fifteen-year rates 
rose 12 bps to 3.21% (down 90bps). 

Five-year hybrid ARM rates 
gained 13 bps to 3.49% (down 43bps). 

Jumbo mortgage 30-year fixed rates 
down 16 bps to 4.16% (down 69bps).

Federal Reserve Credit 

over the past year, 

contracted 10.1%.

M2 money supply up 5.6%, over the past year. 

Bloomberg Commodities Index i
ncreased 0.6% this week (up 2.9% y-t-d). 

Spot Gold jumped 1.9% to $1,517 (up 18.3%). 

Silver rose 1.6% to $17.849 (up 14.9%). 

WTI crude surged $3.24 to $58.09 (up 28%). 

Gasoline jumped 8.1% (up 27%)

Natural Gas fell 3.1% (down 14%). 

Copper dropped 3.4% (down 1%). 

Wheat increased 0.2% (down 4%). 

Corn gained 0.5% (down 1%).

September 20 – Bloomberg (Mike Dorning, Jordan Fabian, and Mario Parker): 

“A Chinese trade delegation canceled a planned visit to farms in the U.S. heartland, driving down stock indexes as investors turned pessimistic on progress toward resolving the two nations’ trade war. The cancellation came only about an hour after President Donald Trump said he wasn’t interested in ‘a partial deal’ with China based on Beijing increasing its purchases of U.S. agricultural products. U.S. and Chinese officials held negotiations this week and are aiming for a high-level meeting around Oct. 10.”

September 18 – Associated Press (Martin Crutsinger): 

“A sharply divided Federal Reserve cut its benchmark interest rate… for a second time this year but declined to signal that further rate cuts are likely this year. The Fed’s move reduced its key short-term rate… by an additional quarter-point to a range of 1.75% to 2%. The action was approved 7-3, with two officials preferring to keep rates unchanged and one arguing for a bigger half-point cut. The divisions on the policy committee underscored the challenges for Chairman Jerome Powell in guiding the Fed at a time of high economic uncertainty. The Fed did leave the door open to additional rate cuts — if… the economy weakens. For now, he suggested, the economic expansion appears durable in its 11th year, with a still-solid job market and steady consumer spending.”

September 18 – Reuters (Lucia Mutikani): 

“U.S. homebuilding surged to more than a 12-year high in August as both single- and multi-family housing construction increased, suggesting that lower mortgage rates were finally providing a boost to the struggling housing market. Housing starts jumped 12.3% to a seasonally adjusted annual rate of 1.364 million units last month, the highest level since June 2007…”

September 16 – Reuters (Kevin Yao and Stella Qiu): 

“The slowdown in China’s economy deepened in August, with growth in industrial production at its weakest 17-1/2 years amid spreading pain from a trade war with the United States and softening domestic demand… Industrial output growth unexpectedly weakened to 4.4% in August from the same period a year earlier, the slowest pace since February 2002 and receding from 4.8% in July.”

September 15 – Bloomberg: 

“China’s Industrial output rose 4.4% from a year earlier in August, the lowest for a single month since 2002, while retail sales came in below expectations. 

Fixed-asset investment slowed to 5.5% in the first eight months, with the private sector lagging state investment for the 6th month.”

September 18 – Associated Press (Kim Tong-Hyung): 

“South Korea… dropped Japan from a list of countries receiving fast-track approvals in trade, a reaction to Tokyo’s decision to downgrade Seoul’s trade status amid a tense diplomatic dispute. South Korea’ trade ministry said Japan’s removal from a 29-member ‘white list’ of nations enjoying minimum trade restrictions went into effect as Seoul rearranged its export control system covering hundreds of sensitive materials that can be used for both civilian and military purposes. The change comes a week after South Korea initiated a complaint to the World Trade Organization over a separate Japanese move to tighten export controls on key chemicals…”

September 16 – Financial Times (Laurence Fletcher)

: “Parts of Wall Street’s debt securitisation engine are back running at levels not seen since the pre-financial crisis boom. …Dealogic’s indices of US securitisation activity show that issuance of collateralised debt obligations — structured products made up of bundles of bonds and loans — rose above its pre-crisis peak late last year and is currently back close to those levels this year. The market for commercial mortgage-backed securities has also rebounded strongly since late 2008 and early 2009, when issuance completely seized up in the aftermath of the financial crisis. Activity in the asset class is now some way above its 2007 high.”

September 18 – Reuters (Phil Stewart and Parisa Hafezi): 

“The United States believes the attacks that crippled Saudi Arabian oil facilities last weekend originated in southwestern Iran, a U.S. official told Reuters, an assessment that further increases tension in the Middle East. Three officials… said the attacks involved cruise missiles and drones, indicating that they involved a higher degree of complexity and sophistication than initially thought.”

September 15 – Bloomberg (Anthony Dipaola and Verity Ratcliffe): 

“The latest and most destructive attacks on Saudi oil facilities provide stark evidence of the vulnerability of global crude supply in an age of disruptive technologies that can bring a century-old industry to its knees -- at least temporarily. From remote-controlled drones to anti-ship mines and computer worms, hostile parties have employed an unpredictable array of asymmetric weaponry to confound one of the best-equipped militaries in the Middle East. Saudi Arabia blames many of the attacks against its oil assets on Houthi rebels in impoverished Yemen, where Saudi forces have been fighting since 2015 in a civil war that’s spilling across their shared border.”

September 17 – Reuters (Stephen Kalin, Sylvia Westall):

“Billions of dollars spent by Saudi Arabia on cutting edge Western military hardware mainly designed to deter high altitude attacks has proved no match for low-cost drones and cruise missiles used in a strike that crippled its giant oil industry. Saturday’s assault on Saudi oil facilities that halved production has exposed how ill-prepared the Gulf state is to defend itself despite repeated attacks on vital assets during its four-and-a-half year foray into the war in neighboring Yemen.”

September 16 – CNBC (Natasha Turak):

“Satellite photos released by the U.S. government and DigitalGlobe reveal the surgical precision with which Saudi Aramco’s oil facilities were struck in attacks early Saturday. The strikes, which unidentified U.S. officials have said involved at least 20 drones and several cruise missiles, forced Saudi Arabia to shut down half its oil production capacity, or 5.7 million barrels per day of crude — 5% of the world’s global daily oil production.”