В пятницу, 3 ноября, ожидается внушительный объем макроэкономической статистики. В 04:45 МСК лента статистики откроется индексом деловой активности в сфере услуг Caixin за октябрь, а в Великобритании аналогичный индекс выйдет в 12:30 МСК. В Соединенных Штатах в 15:30 МСК ожидается октябрьский блок данных по рынку труда. На этот раз ожидается весьма солидный прирост занятости в несельскохозяйственных отраслях – на 310 тысяч, и в случае реализации этих ожиданий доллар может обрести поддержку. Одновременно в США выйдут данные по сальдо торгового баланса товаров и услуг за сентябрь, а спустя полтора часа появится индекс экономических условий ISM в непроизводственной сфере за октябрь и сентябрьская динамика заказов в обрабатывающей промышленности. Также сегодня ожидается выступление представителя ФРС Нила Кашкари.
With the appointment of the next Fed Chairman imminent, the WSJ investigated whether knowing his/her identity and policy stance would have led to successful investment decisions. Spoiler alert – it’s often paid to do the opposite. As The Wall Street Journal reports, President Donald Trump’s The Apprentice-style hiring process for the Federal Reserve chair is due to end this week, and it looks like the message to Janet Yellen is: “You’re fired!” Jerome Powell, a Fed governor, is the leading candidate to take the world’s leading economic job—and he isn’t an economist. Investors following the process have been raking over the past pronouncements of the five main candidates, in an effort to understand the direction of Fed policy over the next four years. History suggests that it is tough to make money from betting on a new chairman’s hawkishness or dovishness, even if you knew who it was going to be. Political betting site PredictIt has Mr. Powell’s chances at 80%, with Ms. Yellen at 8% and academic economist John Taylor at 7%. Outsiders include former Governor Kevin Warsh ; Federal Reserve Bank of Minneapolis President Neel Kashkari ; and Gary Cohn, Mr. Trump’s top economic adviser. Assuming an incoming Fed Chairman’s identity is known, the WSJ argues that the “most obvious ways to make money” would be trading Treasuries, the dollar and gold. Okay, we won’t disagree with that, but how about back-testing some prominent examples. Paul Volcker should have been relatively straightforward, shouldn’t he? This is what the WSJ found... The clearest example of bets on a Fed chair was in August 1979, when President Jimmy Carter appointed the hawkish Paul Volcker in a sharp break with his predecessor during the inflationary 1970s. Investors expected Mr. Volcker to tackle runaway inflation with tighter monetary policy, meaning higher short-term rates, and they were right. But after his appointment, many bet that a Fed chair committed to bringing down inflation meant lower long-term bond yields, a lower gold price and a stronger dollar. They made money for about two weeks, before being crushed. As inflation soared Mr. Volcker stayed true to forecasts, and short-term rates peaked at 22%, the highest ever, pushing the U.S. into double-dip recessions. Contrary to the expectations of investors, bond yields also jumped, with the 10-year reaching almost 16% in 1981, and far from falling, there was a bubble in the price of gold. Gold was at $304 on the day Mr. Volcker was nominated and fell to $282 as investors bet on his hawkishness. Just five months later gold had nearly tripled to $835, the dollar was weaker and the early Volcker trade was dead and buried. Mr. Volcker’s appointment was a case of investors getting the policy positioning of the new chairman right, but their bets on what that meant for asset prices wrong, at least over the next few years. Bad Bets on Volcker What about the “Maestro”? The Journal sets the scene when the (then) Ayn Rand disciple was appointed. Alan Greenspan’s selection was a quite different matter. Conservatives welcomed his appointment in 1987, thinking he shared the hawkish inflation-fighting mind-set of Mr. Volcker, his predecessor. The main point of difference was Mr. Greenspan’s willingness to support financial deregulation—something now espoused by Mr. Powell. As we remember only two well, however, Greenspan changed his spots as the WSJ notes... Mr. Greenspan does seem to have started out hawkish, raising new concerns about inflation at his first Fed policy meeting, according to the transcript. But his hawkish credentials lasted just two months, until the Black Monday stock market crash of October 1987. The new Fed chairman said the central bank stood ready to “serve as a source of liquidity”—thus ushering in the infamous “Greenspan put,” the idea that the Fed would step in to support markets in a crisis. A repeat after the Russian default and Wall Street chaos of 1998 helped fuel the final stages of the dot-com bubble, and many believe that Mr. Greenspan pushed up rates too slowly and too predictably during the 2000s, contributing to the excessive risk-taking that ended in the 2008 crisis. Investors might have been wrong about Mr. Greenspan’s commitment to tight money, let alone his devotion to the views of right-wing novelist Ayn Rand, but they were right about his support for financial deregulation. Ironically, current candidate, John Taylor, was not a fan of “Easy Al’s” policies, which stoked the bull market in gold and bear market in the dollar during the 2000s. The WSJ continues... One prominent critic of the Fed’s pre-crisis policies is Mr. Taylor, whose “Taylor rule” suggested rates should be higher during the 2000s. The market backed up his view: Gold prices began to rise and the dollar fall from 2002, when the Fed set rates well below what the Taylor rule suggested for the first time since the 1970s. Democratic and Republican presidents stripped the financial sector of the burden of rules introduced in the Great Depression, working wonders on the sector’s share prices—at least for a while. By the time Mr. Greenspan left office in 2006 the U.S. financial sector was up 653% since his 1987 appointment, gaining more than double the 319% of nonfinancial stocks, according to Thomson Reuters Datastream. The Maestro’s legacy was tainted shortly afterwards. Having concluded that knowing whether an incoming Fed Chairman is hawkish or dovish was essentially a contraindicator for asset allocation, the WSJ discusses current front runner, Jerome Powell. We can tentatively say two things about Mr. Powell, assuming he is appointed: he will be friendlier to Wall Street than Ms. Yellen, and he will take a similarly dovish approach to monetary policy. In the short run, less red tape will support bank stocks a bit, but banks surely won’t return to their wild pre-crisis leverage any time soon. Equally, a continuation of Ms. Yellen’s cautious approach to rate increases will avoid shocking the market, while leaving unchecked the danger that a bubble develops in the already-expensive stock market. Given investors’ dire history of predicting how Fed chairmen will use their power, the wisest approach may be to wait and see how he turns out. So, using the WSJ’s insights, we might invest on the basis that Powell will be anti-Wall Street and hawkish? If so, we are struggling to think of asset classes which aren’t horrendously mispriced at this point.
FOMC Statement: Information received since the Federal Open Market Committee met in September indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate despite hurricane-related disruptions. Although the hurricanes caused a drop in payroll employment in September, the unemployment rate declined further. Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters. Gasoline prices rose in the aftermath of the hurricanes, boosting overall inflation in September; however, inflation for items other than food and energy remained soft. On a 12-month basis, both inflation measures have declined this year and are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Hurricane-related disruptions and rebuilding will continue to affect economic activity, employment, and inflation in the near term, but past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term. Consequently, the Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further. Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee's 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1 to 1-1/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.The balance sheet normalization program initiated in October 2017 is proceeding.Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Jerome H. Powell; and Randal K. Quarles.emphasis added
В то время как инвесторы с нетерпением ждут, когда президент США Дональд Трамп выберет нового председателя Федеральной резервной системы, заседание Федерального комитета по открытым рынкам (FOMC) ФРС на этой неделе отошло на второй план.
With a full slate of central bank meetings, data (including payrolls Friday) and earnings next week there’s a little bit for everyone. On Thursday, according to Politico, we will also know who the next Fed Chair is as well as get a first look at a version of the House tax bill in the US, perhaps on Wednesday. In terms of the scheduled events, front and center we’ve got the Bank of Japan (Tuesday), Fed (Wednesday) and Bank of England (Thursday) policy meetings all due in a three day window. Only the BoE is expected to change policy though with a 25bp hike to 0.5% the consensus on the street. In terms of the Fed, while there is no Yellen press conference scheduled we may get clues in the statement as to whether the Fed is on track to raise rates in December. Over at the BoJ, Governor Kuroda will make a scheduled press conference post the meeting so keep an eye on that. With regards to the economic data next week, Monday’s just reported September PCE report in the US was closely watched with a modest +0.1% mom core reading expected (it printed at 0.1%, in line with expectations), while attention will also fall on Germany’s flash CPI report for October. We’ll get the wider Euro area report on Tuesday where the consensus is for no change in the +1.1% yoy core reading. In the US we also get ADP, ISM, and trade balance. We also have FOMC rate decision and Fed speakers in the schedule. In the Eurozone, we wait for unemployment, GDP, CPI, PMI and ECB speakers. In the UK, main focus is on BoE rate decision but we also have PMIs Scattered throughout the week will be the final October PMIs, while we end the week with a bit of a bang on Friday with the October employment report in the US and that ever important nonfarm payrolls print. Current market expectations is for a bounceback 310k reading following that -33k slide in September. A +0.2% mom average hourly earnings reading is also expected. Earnings wise next week we’ve got 136 S&P 500 companies scheduled including Apple on Thursday while 58 Stoxx 600 companies are due. The full breakdown charted below, courtesy of BofA DB's Jim Reid has a day by day summary of key events: Monday: A big day for inflation readings with the September PCE and personal spending reports in the US and flash October CPI report in Germany being the highlights. October confidence indicators for the Euro area and September money and credit aggregates data in the UK will also be worth watching, while the October Dallas Fed manufacturing activity reading in the US will also be out this afternoon. Late tonight we get industrial production and jobless rate data in Japan. Politics wise, Germany Chancellor Angela Merkel is due to meet leaders of the Free Democrats and Greens in the latest round of exploratory talks on forming a government. Tuesday: The most significant overnight event is the BoJ monetary policy meeting along with the release of the Bank’s quarterly outlook report. Governor Kuroda’s press conference is due to follow shortly after. Meanwhile notable data includes the October PMIs in China, the flash October CPI print for the Euro area and France, advance Q3 GDP report for the Euro area and consumer confidence for the UK for October. In the US the Q3 employment cost index, October Chicago PMI, October consumer confidence and August S&P/Case-Shiller house price index is amongst the data due. The ECB’s Visco and Padoan are also due to speak while UK Brexit Secretary David Davis is questioned by the House of Lords EU Committee about the state of Brexit talks. BP and BNP Paribas are amongst the companies reporting results. Wednesday: Front and centre on Wednesday evening will be the FOMC meeting although it’s worth noting that there is no scheduled Yellen press conference after. Along with the meeting we’ll also get some important data releases in the US including the ADP employment change report for October, ISM manufacturing print for October and October vehicle sales. Prior to this, in Asia the Caixin manufacturing PMI in China and Nikkei manufacturing PMI in Japan are due, while in the UK October house price data and the manufacturing PMI for October will be out. Away from that, UK Trade Secretary Liam Fox testifies before a parliamentary panel on plans for post-Brexit trade while BoJ Deputy Governor Nakaso is due to speak. In the US, the initial version of the tax plans should be released for further debates. Facebook and Tesla are amongst the notable earnings reports. Thursday: Another central bank meeting should hog the spotlight with the BoE meeting outcome due around lunchtime. BoE Governor Carney will follow while the Bank’s latest inflation report will also be released alongside. Datawise we’ll receive the final October PMI revisions in Europe along with the October unemployment print in Germany and initial jobless claims and Q3 nonfarm productivity and until labour costs in the US. The Fed’s Bostic is also due to speak along with the IMF’s Lagarde. Apple and Credit Suisse are amongst the notable corporate reporters. Friday: A busy end to the week for data. The highlight will likely be this afternoon with the October employment report in the US including the latest monthly nonfarm payrolls print. China’s remaining Caixin PMIs for October, the UK’s remaining October PMIs and the ISM non-manufacturing, final durable and capital goods orders for September, factory orders for September and the final PMIs in the US round out the data. The Fed’s Kashkari will also speak in the afternoon and the ECB’s Coeure in the evening. President Trump is also due to depart on his 11-day trip to Asia. Finally, looking at just the US, here are the key events together with consensus expectations... ... and a full breakdown from Goldman: The key economic releases this week are the personal income and spending report on Monday, ISM manufacturing on Wednesday, and the employment report on Friday. The statement from the October/November FOMC meeting will be released on Wednesday, and there are a few speaking engagements by Fed officials later this week. Monday, October 30 8:30 AM Personal income, September (GS +0.4%, consensus +0.4%, last +0.2%); Personal spending, September (GS +1.1%, consensus +0.9%, last +0.1%); PCE price index, September (GS +0.39%, consensus +0.4%, last +0.2%); Core PCE price index, September (GS +0.14%, consensus +0.1%, last +0.1%); PCE price index (yoy), September (GS +1.65%, consensus +1.6%, last +1.4%); Core PCE price index (yoy), September (GS +1.34%, consensus +1.3%, last +1.3%): We estimate a 1.1% increase in September personal spending (nominal, mom sa), reflecting a post-hurricane rebound in retail spending and auto sales, as well as a boost from higher gas prices. Based on details in the GDP, PPI, and CPI reports, we estimate that the core PCE price index increased 0.14% month-over-month in September, or +1.34% from a year earlier. Additionally, we expect that the headline PCE price index rose 0.39% in September, or +1.65% from a year earlier. We estimate a 0.4% increase in personal income. 10:30 AM Dallas Fed manufacturing survey, October (consensus 21.3, last 21.3) Tuesday, October 31 08:30 AM Employment cost index, Q3 (GS +0.7%, consensus +0.7%, last +0.5%): We estimate that growth in the employment cost index (ECI) accelerated to 0.7% in Q3, with the year-over-year pace rising a tenth to +2.5%. Our forecast reflects diminished labor market slack and a boost from expected mean-reversion in the pace of growth in incentive-paid industries, particularly sales and related occupations. Wage growth also firmed in the third quarter, and our wage tracker—which distills signals from several wage measures—rose to 2.8% year-on-year in Q3 from 2.6% in Q2. 09:00 AM S&P/Case-Shiller 20-city home price index, August (GS +0.4%, consensus +0.4%, last +0.3%): We expect the S&P/Case-Shiller 20-city home price index to increase further by 0.4% in August, following a 0.3% increase in the prior month. The measure still appears to be influenced by seasonal adjustment challenges, and we place more weight on the year-over-year increase, which was 5.9% in July. 09:45 AM Chicago PMI, October (GS 62.5, consensus 60.0, last 65.2): We expect the Chicago PMI to moderate 2.7pt to 62.5 following a 6.3pt gain in the prior month. The index is likely to remain at levels consistent with expansion in business activity. 10:00 AM Conference Board consumer confidence, September (GS 119.5, consensus 120.0, last 122.9): We estimate that the Conference Board consumer confidence index pulled back 3.4pt in September following a 5.6pt increase over the previous two months. Our forecast reflects sequential deterioration in higher frequency consumer surveys as well as scope for hurricane related weakness. Wednesday, November 1 08:15 AM ADP employment report, October (GS +135k, consensus +200k, last +135k): We expect a 135k increase in ADP payroll employment in October, reflecting a large drag from the September nonfarm payroll decline that is an input into ADP's model. The report is likely to be difficult to interpret as a result, particularly because it could also be affected by the net strength in other financial and economic indicators used in the model. 09:45 AM Markit US Manufacturing PMI, October (consensus 53.1, last 54.5) 10:00 AM Construction spending, September (GS flat, consensus -0.2%, last +0.5%): We expect construction spending to be flat in September following a 0.5% gain in the August report, likely reflecting the impact of recent hurricanes on construction activity. 10:00 AM ISM manufacturing index, October (GS 60.0, consensus 59.6, last 60.8): Regional manufacturing surveys have strengthened on net in October, while other measures of business confidence were more mixed. Overall, our manufacturing survey tracker moved up 0.9pt to 60.5 in October. We expect the ISM manufacturing index to decline 0.8pt to 60.0, following a 4.5pt gain over the last two months, but it will likely remain at levels consistent with a firm pace of expansion in business activity. 02:00 PM FOMC statement, Oct 31-Nov 1 meeting: We expect the FOMC to keep policy unchanged next week and see few substantive changes to the statement. We expect a slightly more upbeat tone on growth that acknowledges the disruptions from the hurricanes but characterizes them as temporary or in the past tense, as we think Fed officials will view the data released over the inter-meeting period as broadly encouraging. Despite the disappointing September CPI report, we do not expect a downgrade of the inflation assessment or outlook, reflecting broadly stable year-over-year inflation and the further decline in the unemployment rate. We also expect the committee will continue to describe the risks to the outlook as “roughly balanced,” but there is a possibility that the statement upgrades the assessment of growth risks to “balanced” and leaves the inflation language unchanged (“closely monitoring”). 5:00 PM Total vehicle sales, October (GS 17.7mn, consensus 17.5mn, last 18.5mn): Domestic vehicle sales, October (GS 13.7mn, consensus 13.7mn, last 14.3mn) Thursday, November 2 08:30 AM Nonfarm productivity (qoq saar), Q3 preliminary (GS +3.2%, consensus +2.5%, last +1.5%); Unit labor costs, Q3 preliminary (GS +0.6%, consensus +0.4%, last +0.2%): We estimate non-farm productivity increased 3.2% in Q3 (qoq ar), well above the 0.75% average achieved during this expansion. We expect unit labor costs – compensation per hour divided by output per hour – to increase 0.6% (qoq saar). 08:30 AM Initial jobless claims, week ended October 28 (GS 230k, consensus 235k, last 233k): Continuing jobless claims, week ended October 21 (consensus 1,897k, last 1,893k): We estimate initial jobless claims fell 3k to 230k in the week ended October 28. Our forecast reflects additional post-hurricane normalization in Florida filings, which have retraced most of their earlier increases. Continuing claims – the number of persons receiving benefits through standard programs – have resumed their downtrend, falling to a new year-to-date low in the week ended October 21. 08:30 AM Fed Governor Powell (FOMC voter) speaks: Federal Reserve Governor Powell will deliver introductory remarks at the Alternative Reference Rates Committee’s roundtable event in New York. No Q&A is expected. 12:20 PM New York Fed President Dudley (FOMC voter) speaks: New York Fed President William Dudley will give closing remarks at the Alternative Reference Rates Committee’s roundtable event in New York. No Q&A is expected. 06:15 PM Atlanta Fed President Bostic (FOMC non-voter) speaks: Atlanta Federal Reserve President Raphael Bostic will take part in a panel on “The Vital Role of Government Statistics” at the Association for Public Policy Analysis and Management’s 39th Annual Fall Research Conference in Chicago. Audience Q&A is expected. Friday, November 3 08:30 AM Nonfarm payroll employment, October (GS +325k, consensus +310k, last -33k); Private payroll employment, October (GS +310k, consensus +300k, last -40k); Average hourly earnings (mom), October (GS +0.2%, consensus +0.2%, last +0.5%); Average hourly earnings (yoy), October (GS +2.7%, consensus +2.7%, last +2.9%); Unemployment rate, October (GS 4.2%, consensus 4.2%, last 4.2%): We estimate nonfarm payrolls rebounded 325k in October, following a 33k decline in September and compared to three- and six-month moving averages of 185k and 160k, respectively. Our forecast reflects a 150k boost from workers returning to their jobs after Hurricanes Harvey and Irma, which weighed heavily on September payrolls based on the state-level breakdown. Relatedly, we note that electricity usage in Florida and Texas had returned to normal levels by mid-September, several weeks before the October survey period. We also believe the underlying pace of job growth remains firm, as jobless claims fell to a 44-year low in the survey week and our service-sector employment tracker rose to a 2-year high in October. We estimate the unemployment rate was unchanged at 4.2%, as the two-tenths drop last month was not driven by unusual declines in hurricane-affected areas. Finally, we expect average hourly earnings to increase 0.2% month over month and 2.7% year over year, reflecting neutral calendar effects. 08:30 AM Trade balance, September (GS -$43.5bn, consensus -$43.3bn, last -$42.4bn): We estimate the trade deficit widened by $1.1bn in September. The Advance Economic Indicators report last week showed a wider goods trade deficit, and we also expect a pickup in services imports following lackluster growth in recent months. 09:45 AM Markit US Services PMI, October (consensus 55.3, last 55.9) 10:00 AM ISM non-manufacturing index, October (GS 59.0, consensus 58.5, last 59.8): We expect the ISM non-manufacturing index to move down 0.8pt to 59.0 in the October report, following a 4.5pt gain in September. A post-hurricane rebound in construction, mining, and retail is likely to offset some moderation following a big September boost. Overall, our non-manufacturing survey tracker decreased by 0.3pt to 56.7 in October. 10:00 AM Factory orders, September (GS +1.4%, consensus +1.2%, last +1.2%); Durable goods orders, September final (last +2.2%); Durable goods orders ex transportation, September final (last +0.7%); Core capital goods orders, September final (last +1.3%); Core capital goods shipments, September final (last +0.7%): We estimate factory orders increased 1.4% in September following a 1.2% gain in August. Core measures in the September durable goods report were strong, with solid growth in core capital goods orders and shipments. 12:15 PM Minneapolis Fed President Kashkari (FOMC voter) speaks: Minneapolis Fed President Neel Kashkari will participate in a moderated Q&A session with Women in Housing and Finance in Washington. Audience Q&A is expected. Source: BofA. DB, Goldman
In the latest update on Trump's search for the next Fed Chair, Reuters reported that the search has narrowed down to 5 finalists - Yellen, Warsh, Taylor, Powell and Cohn (condolences to Jeff Gundlach: his dark horse candidate, Neel Kashkari did not make the cut) - and that after meeting Yellen on Thursday, Trump will have discussed the Fed job with all five candidates. More importantly was the news that Trump is expected to announce his decision for next Fed Chair in the next 2 weeks, before he leaves for his Asian trip on November 3. YELLEN, WARSH, TAYLOR, POWELL AND COHN ALL CANDIDATES FOR FED CHAIR -WHITE HOUSE OFFICIAL FED CHAIR SEARCH NOW NARROWED TO FIVE FINAL CANDIDATES, WHITE HOUSE OFFICIAL SAYS AFTER YELLEN MEETING, TRUMP WILL HAVE DISCUSSED FED JOB WITH ALL FIVE FED CANDIDATES -WHITE HOUSE OFFICIAL TRUMP EXPECTED TO ANNOUNCE FED DECISION BEFORE HE LEAVES FOR ASIA TRIP NOV. 3 -WHITE HOUSE OFFICIAL Yesterday, the USD and bond yields turmoiled briefly following news that Trump had warmed to the candidacy of San Fran professor John Taylor, father of the Taylor Rule and advocate of rules-based monetary policy, and who is widely perceived as a mega hawk. The news sent the USD surging and hit bonds. That said, Taylor's hawkishness appears to have worked against him, and after surging to 2nd spot on Predictit yesterday, Taylor was tumbled to 4th spot this morning. That said, Taylor's hawkish reputation may be unwarranted. As SocGen's Kit Juckes wrote this morning, what rate the Taylor Rule indicates is dependent on a variety of assumptions. To wit: President Trump is reported to have taken away a favourable impression of John Taylor after he met the Stanford University economist and inventor of the ‘Taylor Rule'. As the President ponders who to appoint as the next Fed Chair, he now only has Janet Yellen to meet with, and Professor Taylor is the new market favourite. That, in turn, has given the dollar a bit of support and sent yields a bit higher as everyone contemplates what the Taylor Rule would imply for monetary policy. It's generally concluded that a rules-based approach would deliver higher rates faster than we would see under the current policy framework. Anyone armed with a Bloomberg terminal can type in TAYL GO and see where a Taylor rule estimate of appropriate rates is, and if they want, they can play with the critical elements of the rue - the estate of ‘neutral' real rates, NAIRU, and the inflation target. On the basis of a 2% neutral real rate, and a 4% NAIRU, the Fed is a long way behind the curve, which may be reason enough to think that a Taylor Fed would be more hawkish. On the other hand, lower the NAIRU (which may be reasonable given what we've seen from the labour market data in recent years) and you can get that estimate down. A 3% NAIRU throws out a 1.5% Funds rate, for example. And if Professor Taylor really wants to fine-tune his rule, he can head down the road from Stanford to the San Francisco Fed, 36 miles away, and have a chat with Stanford alumni and head of the San Francisco Fed, John Williams. He developed an estimate of neutral rates with Thomas Laubach, which moves over time and is currently at -0.2%. See Professor's comments on a debate about that here . Plug Williams-Laubach's R* into Bloomberg's TAYL function with a 4% NAIRU and rates ‘should' be 0.5%. Now cut NAIRU to 3% and we're at -0.75%. By way of indication, I've plotted some variants of this below, though I haven't adjusted the Wiliams-Laubach R* all the way through the time series so they are only relevant in the recent past. The lesson is clear however - the rule's just a rule, it's how it's used that matters. Choose your rule - but neither R* or NAIRU are necessarily constant through time For now, however, Taylor's hawkish reputation precedes him, and - for a president who realizes he needs rates as low as possible for as long as possible - that will hardly boost Taylor's application. In fact, as we noted yesterday, the most likely outcome at this point is that Trump simply asks Yellen to continue for one more term.
S&P futures are again modestly in the green as European shares hold steady ahead of a meeting of the Catalan regional parliament and a possible declaration of independence by Catalan leader Puigdemont, while Asian shares rise a the second day. The dollar declined for the 3rd day, its losses accelerating across the board amid growing concerns that Trump's tax reform is once again dead following the Corker spat and a rejection from Paul Ryan, with the move gaining traction after China set the yuan’s fixing stronger for the first time in seven days. Monday’s sell-off in Turkish assets seemed to have little follow-through, with emerging-market currencies all trading higher and Treasuries steady. Traders are also waiting for minutes from the Federal Reserve’s last meeting, which may provide more details on the path of interest rates and balance sheet tapering. “The weak dollar is a cue for investors that the U.S. Fed will not be aggressive in raising interest rates and this supports the outlook for a strong equities market," said Cristina Ulang, head of research at First Metro Investment Corp. in Manila. “We will see a U.S. rate increase in December but it’s not going to be sharp since we aren’t seeing runaway U.S. economic growth." Asia stocks advanced as traders in Japan and South Korea returned from holidays, pushing the regional benchmark to a three-week high amid a broad weakness in the dollar. The MSCI Asia Pacific Index gained 0.7% to 164.49, its highest close since Sept. 20. The biggest boost came from Samsung Electronics which also helped South Korea’s Kospi advance 1.6%. In Japan, the Topix rose to its highest close in more than a decade, driven by a string of positive economic data both at home and abroad. The Asia-wide gauge has rallied 22 percent so far this year, on course for its best performance since 2009. It’s still trading at the biggest discount to the S&P 500 Index in 15 years in terms of price-to-book. All eyes are on Europe however, and Spain in particular, where Catalan lawmakers will meet today to consider a declaration of independence that risks an ironclad backlash from Madrid. Attention will focus on the form of words used by Catalan President Carles Puigdemont, who is due to address the parliament in Barcelona at 6 p.m. The IBEX fell alongside most national gauges across Europe. The common currency gained for a third day. It is Spain’s biggest political crisis since an attempted military coup in 1981. Madrid’s IBEX stocks index drooped 0.5 percent early on and it is now down almost 9 percent since May, though a sharp rise in the euro has also taken a toll. “We have not witnessed any relevant statement or signal by the separatists that would hint at a change of strategy ahead of today’s discussion in the Catalonian parliament,” economists at Barclays wrote. “Consequently, at this point, it seems likely that Catalan President Carles Puigdemont remains on track to announce a unilateral declaration of independence as early as today.” “Rather than a full universal declaration of independence, we may see a ‘symbolic statement’ from the Catalan government,” said Fabio Balboni, economist at HSBC Bank Plc. “Signs of disagreement are starting to emerge within the regional government, with more moderate members fearing the consequences of a further step towards independence, given the lack of support from the EU, and moves by some banks and firms to leave Catalonia.” Despite the Spain jitters, The euro remained resilient, rising to a one-week high as data showed German exports had surged in August. Traders were also still upbeat on the currency after one of the European Central Bank’s German policymakers called for an end to its stimulus. Elsewhere, Turkey’s lira recouped some of yesterdays losses even as the U.S. signaled the crisis between the two countries could drag on. Gold rose as the greenback weakened, and West Texas oil held gains near $50 a barrel before U.S. government data forecast to show crude inventories extended declines for a third week. Japan’s Topix index closed at the highest since July 2007 and Korean stocks staged a catch-up rally after a week-long holiday. Turkey also got some help from a weaker dollar which was down for a third straight day. The dollar index, which tracks the greenback against six major rivals, dropped 0.2 percent to 93.533 and away from Friday’s almost 3-month peak. It gave the Turkish lira a breather having been sent sprawling to a nine-month low on Monday after the United States and Turkey scaled back visa services. Meanwhile, Mexico’s peso hovered at its weakest in more than four months, ahead of the latest round of talks over the North American Free Trade Agreement (NAFTA) on Wednesday. Over in Asia, the offshore Chinese yuan rate surged to its strongest levels in more than two-weeks. The central bank had also set a firmer-than-expected official rate, suggesting authorities are keen to keep the currency in check ahead of next week’s key national leadership meeting. In commodities, Crude oil prices edged slightly higher, supported by OPEC comments signaling the possibility of continued action to restore market balance in the long-term. But gains were seen as limited as oil production platforms in the Gulf of Mexico started returning to service after the latest U.S. hurricane forced the shutdown of more than 90 percent of crude output in the area. Brent crude inched up 1 cent to $55.80 a barrel. U.S. crude added 2 cents to $49.60. Gold prices hit their highest in more than a week, though gains were capped as expectations of another U.S. interest rate hike this year limited appetite. Spot gold added 0.2 percent to $1,286.52 an ounce Rate markets were largely unchanged, with the yield on 10-year Treasuries declined one basis point to 2.35 percent. Germany’s 10-year yield dipped one basis point to 0.44 percent, the lowest in two weeks. Britain’s 10-year yield was unchanged at 1.357 percent, the lowest in a week. Traders are awaiting the start of the earnings season this week, with several major banks due to report, as well as Wednesday’s minutes from the Federal Reserve’s last meeting. Canadian stocks reopen after a holiday. Investors also await speeches by Fed Presidents and the minutes from the most recent Federal Reserve meeting due Wednesday. Economic data include NFIB small-business optimism. No major earnings scheduled. Market Snapshot E-Mini futures on S&P 500, Dow and Nasdaq 100 each up 0.2% VIX Index down 1.7% at 10.15 STOXX Europe 600 down 0.2% to 389.47 MSCI Asia up 0.7% to 164.49 MSCI Asia ex Japan up 0.7% to 542.58 Nikkei up 0.6% to 20,823.51 Topix up 0.5% to 1,695.14 Hang Seng Index up 0.6% to 28,490.83 Shanghai Composite up 0.3% to 3,382.99 Sensex up 0.3% to 31,929.41 Australia S&P/ASX 200 down 0.02% to 5,738.11 Kospi up 1.6% to 2,433.81 German 10Y yield fell 0.4 bps to 0.44% Euro up 0.4% to $1.1785 Brent Futures up 0.4% to $56.01/bbl Italian 10Y yield fell 3.3 bps to 1.82% Spanish 10Y yield unchanged at 1.677% Gold spot up 0.4% to $1,289.21 U.S. Dollar Index down 0.3% to 93.39 Top Overnight News Catalan President Carles Puigdemont is due to address regional lawmakers around noon New York time on the outcome of the Oct. 1 referendum that has been ruled illegal by the Spanish courts Minneapolis Fed President Neel Kashkari, a known dove and a candidate in running for the next Fed Chair, delivers opening remarks at a conference Allies of President Donald Trump say they fear his feud with Republican Senator Bob Corker risks unraveling the White House tax overhaul effort and that another major legislative failure could hobble the administration for the rest of his term The U.S. Ambassador to Turkey issued a video statement saying he “can’t predict” how long the latest crisis between the two countries will last Trump may travel to the demilitarized zone separating North and South Korea as part of his first visit to South Korea in Nov., Yonhap News reported, citing an unidentified military official; Trump is expected to send a “significant message” to North Korea during the trip, Yonhap said Spanish police are ready to arrest Catalan President Carles Puigdemont immediately if he declares independence in the regional parliament, two people familiar with the matter said; Puigdemont has called a press conference at 1pm in Barcelona New Zealand First Party leader to delay his public announcement about the result of talks to form a new government until Friday: NZ Herald German exports rose 3.1% m/m in August, beating an estimate 1.1% rise Banks in Europe have sold about 33 billion euros ($39 billion) of a new type of bank bond they’re calling “senior non-preferred”; the label allows underwriters to market the notes to managers of funds that can only hold senior debt, even though the securities can be forced by regulators to take losses in a crisis U.K. industrial output rose 1.6% y/y in Aug. vs est. 0.9%, while the trade deficit widened to GBP14.2B vs est. GBP11.2B Canadian Prime Minister Justin Trudeau will discuss international security and trade during a meeting with President Donald Trump Canadian housing data: Median estimate forecasts a drop; still, momentum for a strong housing market will still be strong Asia equity markets were mixed after a cautious tone in the US, although the KOSPI (+1.8%) surged as it took its turn to play catch up from a 10-day closure. ASX 200 (-0.3%) was indecisive with weakness in energy names offset by strength in gold miners, while Nikkei 225 (+0.5%) found support from a weaker currency following dovish comments from BoJ Governor Kuroda. Hang Seng (+0.6%) and Shanghai Comp. (-0.3%) were subdued with profit taking seen in the mainland after yesterday’s outperformance. Finally, 10yr JGBs were flat with demand dampened amid a positive risk tone in Japan and a reserved BoJ Rinban announcement for just JPY 605bln of JGBs. BoJ Governor Kuroda said Japan's economy is expanding moderately and expects CPI to pick up pace towards 2% goal, while Kuroda added the BoJ is to expand the monetary base until inflation overshoots target. Top Asian News Japan-Wide Scandal Erupts Over Steelmaker’s Falsified Data Bank Indonesia to Keep Inflation Focus Despite Aggressive Easing Japan Stocks to Watch: Fujitsu, Honda, Retailers, Rohm, Toyota Bank Indonesia to Keep Inflation Focus After Aggressive Cuts Chinese Firms List at Fastest Pace Since Market Opened in 1990 PBOC Chief Quotes Phantom of the Opera in Push for Market Reform All anticipation is on the upcoming speech from the Catalonian leader, expected at 12:00 London Time, where there overwhelming consensus is that he will officially announce the referendum result. The IBEX underperforms, yet largely in-line with the periphery European bourses, as the FTSE MIB trades close to 1% down close, with the nation clearly seeing the largest reaction to the ECB’s plan to rein in bad loans. Not the best results in terms of UK and German auctions, and the respective 10 year debt futures are acknowledging the signs of indigestion or simply tepid demand accordingly. Specifically, covers were relatively light and for the DMO the tail was lengthy, while the Buba retained around 20% of its inflation linker. Pre-issuance Eurex low holding in, for now, but Liffe setting a marginal new base and it could be a sell into dips market until or unless something changes to provide fresh leads. Top European News Famous Brands Plunges Most in 14 Years on Gourmet Burgers Blow U.K. Utilities Heading for Price War to Protect Market Share What to Watch for If Catalan Leader Says ‘Independence’ Today Italy Industrial Output Rises Above Estimate, Boosting Outlook Mirabaud Says Brokerage Business Targets Break-Even This Year In currencies, the highlight data of the day came from the UK, as sterling was initially propped up by the higher than expected Manufacturing data. Cable tested 1.32 following the data, however, clearly running into offers around this key level. UK Manufacturing Output MM (Aug) 0.4% vs. Exp. 0.2% (Prev. 0.5%, Rev. 0.4%) Manufacturing Output YY (Aug) 2.8% vs. Exp. 1.9% (Prev. 1.9%, Rev. 2.7%) Goods Trade Balance GBP (Aug) 14.24B vs. Exp. -11.20B (Prev. -11.58B, Rev. -12.83B) Goods Trade Bal. Non-EU (Aug) -5.83B vs. Exp. -3.60B (Prev. -3.84B, Rev. -5.34B). The Norwegian Krone took a hit in early European trade, as the nation’s CPI report missed across the board, albeit marginally so. EUR/NOK broke out the week’s early range and spiked through Friday’s highs. In commodities, gold has continued to recover following the bounce seen ahead of 1260.00, drawing support from global uncertainty, alongside a softer USD. However, the increased expectations of another hike from the Fed, and the tightening likely to move into 2018, upside could be curved. Oil markets have also continued to recover from last week’s lows ahead of 49.00, which is evident of pending bids. WTI trades near session highs, looking to break back through 50.00/bbl, seemingly strengthened by comments from Barkindo stating that growth in US shale had slowed compared to the first half of 2017 and growth in global demand may show further upward revisions, giving the supply cut effort tailwind. Looking at the day ahead, the only reading due in the US is the September NFIB small business optimism print. Onto other events, The Fed’s Kashkari is scheduled to speak at a regional economic conference. The IMF and World Bank annual meetings also start today and run through to Saturday. US Event Calendar 6am: NFIB Small Business Optimism 103, est. 105, prior 105.3 10am: Fed’s Kashkari Speaks at Regional Economic Conference 8pm: Fed’s Kaplan Speaks at Stanford Institute Oct. 10-Oct. 15: Annual Meetings of the IMF and the World Bank DB's Jim Reid concludes the overnight wrap Markets were given their own lullaby yesterday with the US on partial hols thus resulting in a quiet session. It was actually a landmark day though as it marked 10 years since the pre-GFC peak in the S&P 500. At periodic intervals throughout this year we’ve marked such 10 year crisis related anniversaries with a quick performance review of the major asset classes from our regular monthly’s performance review. We repeat this today for this latest anniversary with the graph and the 10yr performance table today. To summarise in dollar terms, the S&P 500 (+102%) actually tops our list of 38 global assets even though this point 10 years ago was the local peak. This is followed by US HY (+85%) and 6 of the top 8 in dollar terms are credit assets. Gold (+74%) breaks up the top 8. 26 of the 38 assets are in positive total return territory since this point and 12 are in negative territory led by Greek equities (-85%), European Banks (-54%) with other major underperformers including Portuguese equities (-39%), Oil (-38%), FTSE-MIB (-34%), Bovespa (-33%), Russian Micex (-30%), Shanghai Comp (-18%) and the IBEX (-2%). So although US equities and credit markets have shrugged off the impact of the crisis and have prospered, deep scars still remain especially for the European periphery and some EM equities (all dollar adjusted). Turning to Catalonia, Spanish markets slightly rebounded on Monday (IBEX +0.50%, 10y bonds -3bp) following increased pressure over the weekend on the Catalan authorities to avoid declaring independence. We should have more clarity today as Catalan President Puigdemont is expected to address the regional Parliament in Barcelona (Tuesday, 6pm local time). Back on Monday, Spanish newswire Efe reported Puigdemont plans to declare independence, but is also likely to insist Catalonia wishes to negotiate with the Spanish government with the help of external mediators. Elsewhere, as per Bloomberg, Catalan secessionists have tried to urge the Spanish opposition Socialists to form a coalition to oust Spanish PM Rajoy, which they have since refused. A member of the Socialists’ executive board (Carmen Calvo) said her party is focused on ensuring that the Spanish Constitution is observed. Over to Brexit, the UK government has published White papers or contingency plans for leaving EU without a new Brexit deal. In the papers, the UK will set up its own customs regime where it will set its own tariffs, quotas and classification of goods, broadly in line with WTO requirements. However, the FT noted that British officials admit these contingency plans are at early stages and the government has not really invested in staff and systems to build a new customs system yet. Following up, PM May spoke yesterday, noting “it is our responsibility as a government to prepare for every eventuality” and that these white papers “support that work”, which sets out “steps to minimise disruptions for businesses and travellers”. Further, she noted that re the Brexit talks the “ball is in their court”. However, the EU commission spokesman responded “the ball is entirely in the UK court for the rest to happen”. In view of the stalemate, we note that the fifth round of Brexit talks are currently underway and will conclude this Thursday. This morning in Asia, markets are trading marginally higher as we type. The Kospi is up +1.93% after markets reopened following a 10 day break. Elsewhere, the Nikkei (+0.34%) and ASX 200 (+0.06%) are up slightly, while the Hang Seng (-0.06%) and Shanghai Comp. (-0.25%) are slightly lower. Turning to Turkey, the Lira/USD fell to a 6 month low (Lira -2.46%; equities -2.73%) yesterday after the US and then Turkey suspended Visa services for citizens seeking to visit the other country over the weekend. While the White House has remained silent, the U S ambassador to Turkey went onto YouTube to say “we hope (the situation) will not last long, but…we can’t predict how long it will take to resolve this matter”. Later on Monday, Turkey’s Erdogan spoke during a news conference, noting “the implementation of such decision (suspending Visa services) by the US ambassador is very saddening. Turkey is a state of law, not a tribal state”. As a reminder, Turkey represents c1% of the MSCI emerging market index, c23% of its government debt is held by foreigners (highest since Aug. 2015) and c37k US citizens travelled to Turkey in 2016. Onto market performance yesterday now. US bourses softened on limited news flow and trading, with the S&P 500 (-0.18%), Dow (-0.06%) and Nasdaq (-0.16%) all slightly down on light volumes. Within the S&P, marginal gains in the energy and utilities sectors were more than offset by losses from healthcare and industrial names. Conversely, European markets were modestly higher, aided by a rebound in Spain's IBEX (+0.50%) and a solid IP reading from Germany. Across the region, the Stoxx 600 and DAX both rose c0.2% while the FTSE dipped 0.20%. The VIX has halted its trend of 8th consecutive days of being below 10, rising 0.68 to 10.33, likely reflecting increased geopolitical tensions. The record stretch was 10 days in July this year. Bond markets were slightly firmer, with core European 10y bond yields down modestly, with Bunds (-1.6bp), OATs (-1.7bp) and Gilts (-0.6bp) all rallying. Elsewhere, peripherals slightly outperformed with Spanish and Italian 10y yields both down 3.4bp. At the 2y part of the curve, changes were more modest, with Bunds (-0.4bp) and OATs (-0.3bp) slightly down while Gilts were unchanged. Most key currencies were little changed with the US dollar index down 0.13% while the Euro gained 0.09%. Notably, Sterling had a solid day (+0.58%), partly due to a positive data revision to the UK labour cost figure (likely a better measure of pay growth). The Office of National Statistics conceded an error in its 2Q growth in unit labour costs, as it should be 2.4% yoy rather than 1.6% as reported on Friday. In commodities, WTI oil rose 0.59%, following reports that Saudi Arabia plans to make further cut to its crude supplies in November. Elsewhere, precious metals (Gold +0.58%; Silver +0.79%) were slightly higher, while other base metals were mixed, but little changed (Copper -0.27%; Zinc -0.13%; Aluminium +0.99%). Away from the markets, ECB Executive Board member Sabine Lautenschlaeger said “we should begin reducing our bond purchases next year” and exit QE as soon as possible, but noted that “it is important that we really move towards the exit – step by step, but steadily and in a clear direction”. On inflation, she noted “looking to the future, we can be confident that inflation will return to our objective”. Staying in Europe, some words of caution from politicians and central bankers. The ECB policy maker Klass Knot said it feels “increasingly uncomfortable” to have low volatility in markets while there are risks in the global economy. Elsewhere, in his departing interview with the FT as Germany’s longest servicing finance minister, Schaeuble warned that investors are “concerned about the increased risks arising from the accumulation of more and more liquidity and the growth in public and private debt, “I myself am concerned about this, too”. Over in Japan, with only 12 days till the election, the latest polls suggests the challenger – Tokyo governor Koike’s new Party of Hope may be losing steam. According to a small survey by Yomiuri newspaper over the weekend, 13% of respondents said they will vote for her party, down from 19% a week ago. Notably, support for Abe’s LDP is at 32% and 27% of respondents are still undecided. Staying in Asia, China’s long serving People’s Bank of China Governor Zhou Xiaochuan reiterated calls for further opening up of China’s financial sector, as per Bloomberg. He said “we could take bigger steps to increase the market access for financial institutions and the opening up of the financial market”. The interview is perhaps conveniently timed before the Chinese Community Party meets tomorrow for a final time before the big party congress later in the month (potentially 18th October). The latest ECB CSPP numbers were out yesterday. The average daily run rate last week was €356mn (vs. €349mn average since the CSPP started). This is at the low end of the recent range but the CSPP/PSPP ratio is still notably above the pre-taper ratio. The current week saw the ratio at 12.9% and is above the 11.6% seen before the taper (vs. 16.6%, 14.8%, 19.2%, 13.6% in the last few weeks). So still strong evidence that the ECB is tapering PSPP more than CSPP. It’ll be interesting to see what happens after the expected additional taper likely to be announced in just over two weeks. Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In Germany, August IP was materially above expectations at 2.6% mom (vs. 0.9% expected) and 4.7% yoy (vs. 2.9%). Notably this stronger month follows two consecutive months of decline, so annualised growth over the quarter is c3.4% saar for total production. Our German team needs a strong Sep. IP and retail sales to get to their expected 0.6% qoq increase in 3Q GDP, although positive sentiment indicators makes them optimistic that we are getting there. Elsewhere, the Eurozone’s October Sentix investor confidence index slightly beat at 29.7 (vs. 28.5 expected) to a new post-GFC high, while France’s business industry confidence was a tad softer at 104 (vs. 105 expected). Looking at the day ahead, it’s a fairly busy day, particularly in Europe. The most significant releases in Europe include the August industrial production prints for France (1.5% yoy expected), Italy (2.9% yoy expected) and the UK (0.9% yoy expected) along with August trade data for Germany and the UK. The only reading due in the US is the September NFIB small business optimism print. Onto other events, The Fed’s Kashkari is scheduled to speak at a regional economic conference. The IMF and World Bank annual meetings also start today and run through to Saturday.
Во вторник, 10 октября, в Соединенных Штатах Америки ожидается публикация лишь второстепенной макроэкономической статистики, а именно недельного индекса сопоставимых продаж крупнейших розничных сетей (Красная книга). Также сегодня состоится выступление главы ФРБ Миннеаполиса Нила Кашкари. В календаре корпоративных отчетностей ничего интересного на сегодня не значится. К 13:26 МСК фьючерсы на индекс S&P 500 торгуются с повышением на 0,08%.
"В сложившихся условиях мы ожидаем преобладания покупок в российских акциях в начале торгов, что позволит индексу ММВБ подняться в район 2100 пунктов. Однако для более существенного роста сил может не хватить. При этом в дальнейшем внимание игроков переключится на новости из Европы, где сегодня будет опубликованы важные данные по экономикам Германии, Великобритании и Швейцарии, способные определить настроения инвесторов в середине дня. Во второй половине торгов поддержку российскому рынку может оказать ситуация на рынке энергоносителей, где нефть марки Brent попытается преодолеть отметку 56 долларов. Поводом для этого станет ожидания публикации статистики по запасам углеводородов от API, которая выйдет уже после нашего закрытия. На фоне ожидания дальнейшего снижения запасов нефти в Штатах, покупки в "черном золоте" могут возобладать, что поддержит наши активы. Также в отсутствии важной макроэкономической статистики из США изменения в настроения инвесторов может внести выступление президента ФРБ Миннеаполиса Нила Кашкари", - указывает старший аналитик ИК "Фридом Финанс" Богдан Зварич.
Authored by Sven Henrich via NorthmanTrader.com, In the movie Flatliners aspiring medical doctors tried to unlock the mysteries of death by, well, killing themselves. It was meant to be a controlled death of course, to flat line on the heart rate monitor for a few minutes to find out what wonders where to be found “on the other side” only to then return safe & sound thanks to medical intervention. Well, they soon found out the other side wasn’t everything it was cracked up to be and the main character soon got regular beatings as the sins of his past came back to haunt him. In my view markets find themselves in a very similar script. The promise of investor nirvana where the pains of real life no longer matter. If you only pay attention to the record highs headlines it all looks rather fantastical these days. Prices only go up no matter what time frame you look at. Annually: Quarterly: Monthly: And still central bankers can’t find any evidence of inflation. Funny. Indeed all risk has been flat-lined in this grand central bank experiment as the following chart of the $VIX shows: Oh I’m kidding of course, but any trader staring at the tape knows that we find ourselves in the most compressed price environment in history. This is not normal, there’s no heartbeat: As I’m writing this I’m fully aware I may be viewed as the bear who cried wolf. After all I’ve been outlining structural risk factors for a while and markets have moved past my technical risk zones of 2450-2500 and most recently 2530. That’s what bubbles do. They blow past anyone’s expectations, they make believers of the unbelievers, make bears look like idiots and the most reckless look like geniuses. But an extreme market that only becomes more extreme is not any less extreme, it is just more extreme. As no risk is apparent these extremes are then dismissed as the new normal. Yet momentum driven price appreciation has absolutely zero predictive value of future price appreciation, it only appears as such at the time. Here’s the $NDX leading up to the 2000 top: It looked fantastic. It meant absolutely nothing: For traders of course the key is how to trade set-ups (I’ll post more on this in the near future, but I’ve talked a bit about it in The Relevance of Technical Charts) and for investors it is a matter of how to take advantage while at the same time know when things change. At this time I want to document a bit of what I see here in markets and the structural world as I don’t want anyone to be surprised when the flat risk line we currently see brings about those nasty consequences. Let’s be clear. We find ourselves in a very unique point in history and in a world dominated by false narratives. It is a challenge to keep an analytical grip on reality, but I’ll try to tie a few threads together here to put everything in a macro context. Firstly the underlying base reality: Free money, easy money, whatever you want to call it, permeates everything we see in financial markets. Indeed I would argue price appreciation has been paid for with unprecedented and, in my view, unsustainable volatility compression. A couple of charts really highlight this. Most clearly perhaps is the precise trend line tagging we can observe in the correlated picture of price appreciation and volatility compression since the February 2016 lows: The $VIX’s corollary, the inverse $XIV, embarked on an explosive near one way journey since the US election coinciding with over $2 trillion central bank intervention in just the first 9 months of 2017: And it has continued to this day and just made another all time high this past week on a massive negative divergence. It is the magnitude of this volatility compression that explains the current trading environment we find ourselves in. Aside from the obvious artificial liquidity avalanche we’ve had speculated about the driver of all this and the answer may simply be the promise of even more free money, specifically tax cuts. As some of you may recall from my analysis over the past year I’ve been very clear that math ultimately will bring out truth in any narrative. In this case that notion that tax cuts pay for themselves is a fantasy. It always has been. Can it result in a short term bump in spending or even growth? Yes it is possible, especially if structured right. But any historical analysis will show you that tax cuts, especially already coming from a relatively low base, will just add to debt via larger deficits. Recently the White House budget director finally acknowledged this very reality: “a tax plan that doesn’t add to the deficit won’t spur growth” My criticism has been that all this marketing talk is simply a lie and will structurally put the country further at risk of trillion dollar deficits and a massive debt explosion that is already baked in even without tax cuts. Indeed the further one digs through the details the bigger the expense of these tax cuts become: “We have a lot of businesses… I don’t think any of them are non-competitive in the world because of the corporate tax rate,” Buffett, the chairman and CEO of Berkshire Hathaway Inc told CNBC. Fink said a corporate rate as high as 27 percent could satisfy U.S. businesses’ need for tax relief, while avoiding an increase in the federal deficit. “What is being proposed is a pretty large expansion of our deficits,” Fink told Bloomberg TV. The plan contains up to $6 trillion in tax cuts, according to independent analysts.” I bet you if you ran these tax cuts through a budget that accounts for a recession case somewhere in the future this entire budget would be an utter disaster and they could never sell it. And this is why you won’t see a stress tested scenario, all you will see is happy steady 2.9% growth projections in perpetuity. Nonsensical. Unrealistic. And frankly intellectually insulting to anyone that insists on any base line of intellectual veracity to any budget process. Running the numbers it’s clear who actually benefits: So I ask, how will any of this change this trend? The answer is it won’t despite public narratives to the contrary. People will choose to believe what they want, but math is independent of beliefs and the math is very clear on this. Put this proposal in context of standing trends: Real disposable personable income growth remains meager at best: Debt expansion at low rates continues to sustain the illusion of real prosperity for the 90%: A meager set of rate hikes is already putting pressure on revolving credit obligations and personal interest payments: Why does all this matter for us here? Look no further than to the earlier quoted Warren Buffett who may have explained much of the reason we see no sellers in these markets currently: “Buffett also said he would wait to see how the tax push played out before doing any significant selling of Berkshire Hathaway stock to avoid paying unnecessary taxes on his gains. “I would feel kind of silly if I realized $1 billion worth of gains and paid $350 million in tax on it if I just waited a few months and would have paid $250 million,” Buffett said.” I get it, why sell anything if you can save on taxes and while central banks keep pushing markets higher with record liquidity? Steady as she goes after all. And we have to acknowledge that the combined effect may be here to stay until clarity has emerged. If current legislative efficiency is any indicator then this may drag on for months with perhaps nothing accomplished. Health care? Still nothing has happened. And let’s be clear: Not a single health care proposal (and there have been multiple efforts) have had anything to do with health care. They have been proposals that would have knocked millions off health care coverage and financially benefitted the 1% in form of tax reversions. That’s the analytical reality. I don’t know why anyone still believes this administration will implement anything substantive to help the middle class. Previous administrations (both Democrat & Republican) have failed miserably on the wealth inequality front. And this administration looks no different and perhaps only worse. Every proposal looks to disproportionally benefit the top 1% and this latest tax cut proposal is no exception. Every analysis I have seen shows disproportionate benefit going to the wealthy. And how will that stimulate growth for the middle class? Or the bottom 50%? And don’t think I’m alone bemoaning wealth inequality & associated inbred dynastic economic structure as an increasing drag on society and its future prospects. Here’s Buffett himself again: Ironically it is those 400 that would benefit the most by getting rid of the estate tax that is currently proposed as part of the tax cut package. Bottom-line, it’s all tied together in a package that promises more and more debt. Central banks do whatever it takes to keep reality at bay: And hence I’ve called this entire central bank talk of “normalization” a fantasy. They can’t do it, they’re trapped and even the quants at JPM are out in force warning of it: As central banks begin shrinking their balance sheets, they risk triggering another financial crisis, something that may be sharpened by the shift away from active investing, JPMorgan’s top quant strategist has warned. “Such outflows (or lack of new inflows) could lead to asset declines and liquidity disruptions, and potentially cause a financial crisis,” said Mr Kolanovic (who, it is worth noting, has issued such warnings before). “The timing will largely be determined by the pace of central bank normalisation, business cycle dynamics and various idiosyncratic events, and hence cannot be known accurately.” Mr Kolanovic pointed out that “this is similar to the 2008 [Great Financial Crisis], when those that accurately predicted the nature of the GFC started doing so around 2006.” “The shift from active to passive assets, and specifically the decline of active value investors, reduces the ability of the market to prevent and recover from large drawdowns,” Mr Kolanovic said. He added that the move towards passive and momentum strategies, where traders chase market cues as opposed to company fundamentals, has “eliminated a large pool of assets that would be standing ready to buy cheap public securities and backstop a market disruption.” And this is precisely why we won’t see any real normalization ever again. Or perhaps only after a massive reset in the financial system. This new administration wants massive tax cuts. This year the military budget was already increased by $80B to $700B. The costs of the recent hurricanes are providing the perfect excuse for running larger deficits and you can already see the narrative creeping in: “I hate to tell you Puerto Rico, but you’ve thrown our budget a little out of whack,” said Trump as he introduced his budget director Mick Mulvaney. Not the $80B increase in military spending of course. Look, I can read between lines with the best of them and the message is clear. Low rates are here to stay and the administration needs low rates to keep it all going and justify tax cuts. The writing is on the wall, no, actually it is coming to you courtesy Jeffrey Gundlach: “Bond King” Jeffrey Gundlach has an unusual pick for who President Donald Trump will choose to be the next Federal Reserve chief. “I actually have a very non-consensus point of view. I think it’s going to be Neel Kashkari,” the the CEO of DoubleLine Capital told the Vanity Fair New Establishment Summit on Tuesday in Los Angeles. “He happens to be the most easy money guy that’s in the Federal Reserve system today and that’s why he may win.” Kashkari is the president of the Minneapolis Fed and happened to say Monday that the central bank is making a mistake by continuing to raise rates, comments Gundlach referenced as helping him possibly get the job. “I think there is no chance that she wants to be chairwoman, nor do I think the president wants her to be,” said the manager of $109 billion. Gundlach said that Trump needs someone who will keep rates low in order to keep his populist reputation and help his base voters and that’s why he’ll pick Kashkari. “A stronger dollar is not good for achieving that agenda,” he said. And there you have it. We need an easy money guy. Now I don’t know if Kashkari will be it, but it’s pretty clear Yellen is toast and some version of an easy money guy is coming and the Fed’s balance sheet reduction plan may be out the window shortly after February. But that’s the combined message, massively more debt is coming, normalization is at best a marketing ploy, and easy money will continue to be part of the equation with perhaps more coming in form of tax cuts. So yes, I get and receive comments about how it’s different this time, how price discovery as we know it may be a thing of the past. An asset price inflation world, without core inflation, where valuations don’t matter and debt flows continue unabated and consequence free… …and market caps rise in asymptotic fashion every quarter, month and week: The end result: The $SPX is now 18.8% above its annual 5 EMA: As far as I can tell this is the largest, or one of the largest disconnects ever. And I’ve shown the chart of $MSFT as an individual stock example of how historically extreme the current disconnect is: $MSFT is now 35% above its annual 5 EMA. There’s been only 1 year prior to 2017 when it did not touch its 5 EMA: 1999. Did it have any predictive value of future price appreciation? Nope. Speaking of 1999: Greed is back with a vengeance. It is all around us: Central bankers have flat lined risk and investors have crossed to the other side expecting nirvana & free money forever. So far so good it seems. Just remember in Flatliners the allure of nirvana turned into a running nightmare: What would be signs of nirvana turning into a nightmare? Keep an eye on this thin red line: It will get tested again. Currently the trend line is barely 2% below current prices and it is rising steeply. When price breaks below this line it’s time to return to real life. After all you do want a heart beat: Don’t you? I know I do.
Authored by MN Gordon via EconomicPrism.com, How is it that seemingly intelligent people, of apparent sound mind and rational thought, can stray so far off the beam? How come there are certain professions that reward their practitioners for their failures? The central banking and monetary policy vocation rings the bell on both accounts. Today we offer a brief case study in this regard. Minneapolis Federal Reserve President Neel Kashkari is a man with strong convictions. He’s what the late Eric Hoffer would’ve classified as “the true believer.” According to Hoffer: “It is the true believer’s ability to ‘shut his eyes and stop his ears’ to facts that do not deserve to be either seen or heard which is the source of his unequaled fortitude and constancy. He cannot be frightened by danger nor disheartened by obstacle nor baffled by contradictions because he denies their existence.” For starters, Kashkari believes the Federal Reserve, an unelected board of appointments, can crunch economic data into pie graphs and bar charts and draw conclusion as to what they should fix the price of credit at. Moreover, he believes that by fixing credit at the “correct” price, the Fed can somehow “optimize” the economy. This idea is patently false. Remember, the economy is comprised of billions of people with ever changing interactions. Activities and exchanges are always adapting. What may be the correct price of credit at one time is precisely the wrong price of credit at another. Only a free market for credit, where rates are agreed to by willing borrowers and lenders, and unobstructed by government decree, can self-correct in real time to properly meet changing demand. Well Considered Conclusions But even if it were true that economic data can be used by the Fed to properly fix the price of credit, there’s an even greater leap of faith that Kashkari takes with unequaled fortitude. Specifically, Kashkari whole-heartedly accepts data that’s contrived by federal bureaucrats as if it’s the gospel truth. These fabricated abstractions are what Kashkari and his cohorts use as the basis for fixing the price of credit to their liking. No doubt, the methodology of using economic data to identify apparent aggregate demand insufficiencies and perceived supply gluts is flawed. Unemployment. Gross domestic product. Price inflation. These data points are all fabricated and fudged by people with their own biases and prejudices. For each headline number, there are a list of footnotes and qualifiers. Hedonic price adjustments. Price deflators. Seasonal adjustments. Discouraged worker disappearances. These subjective adjustments greatly affect the results. So, what good are they? On Monday, in an article titled, My Take on Inflation, Kashkari demonstrated his full faith and convictions in government data – and the Fed’s ability to use it to pilot the economy. We won’t waste your time with his many rambling explanations. But in the spirit of observing a lost man navigate through the wilderness using butterflies as reference markers, we offer Kashkari’s well considered conclusion: “If I am correct that the Fed’s own actions are an important factor driving surprisingly low inflation and falling inflation expectations, the implication is that our policy should focus on supporting inflation to ensure that we are on track to return to our 2 percent target. My preference would be not to raise rates again until we actually hit 2 percent core PCE inflation on a 12-month basis, unless we have seen a large drop in the headline unemployment rate signaling that we have used up remaining labor market slack, or a surprise increase in inflation expectations.” Do you follow the logic? If not, consider it confirmation that your brain hasn’t been turned to mush by what passes today as learned economic thought. Federal Reserve President Kashkari’s Masterful Distractions Indeed, these are the words of the true believer. There’s no consideration that the data’s garbage. Kashkari likely never considered the possibility. Instead, he goes about his dubious profession with the certainty of a carpenter hanging kitchen cabinets. But unlike the carpenter, Kashkari doesn’t need to measure twice as to cut once. He operates with unmatched precision. Kashkari, without question, is a true believer in extreme economic intervention. If you recall, as federal bailout chief, he functioned as the highly visible hand of the market. In early-2009, he arrived at work each day with a smile and went about the business of rapidly dispersing Henry Paulson’s $700 billion of TARP funds to the government’s preferred corporations. He did so under the pretense that he was destroying capitalism to save it. Yet it’s questionable work experience like this that allows a person to rise to the level of a Federal Reserve President. Moreover, if Kashkari continues his zealot dedication to his craft, there’s no reason he won’t ascend to Fed Chairman or Managing Director of the International Monetary Fund. In fact, Jeffrey Gundlach believes Kashkari will be the next Chairman of the Federal Reserve. The point is, Kashkari and his cohorts have pushed public and private debt well past their serviceable limits. They’ve debased the dollar to less than 5 percent of its former value and propagated bubbles and busts in real estate, stock markets, emerging markets, mining, oil and gas, and just about every other market there is. At the same time, they’ve been remarkably successful at enriching private bankers. Hence, the true believers that keep the charade going via pseudo academic distractions about inflation targets, headline unemployment, labor market slack, supply gluts and other aggregated nonsense, are promoted for running interference. When it comes to being a tool for the big banks, Kashkari’s distractions are masterful.
Следующим председателем Федеральной резервной системы станет чиновник, который будет придерживаться политики низких процентных ставок.
**Over at [Equitable Growth](http://EquitableGrowth.org): Must- and Should-Reads:** * Politics in the Way of Progress: Live Over at Project Syndicate * Brink Lindsey and the Road to Utopia * **Elizabeth Munnich and Abigail Wozniak**: What explains the rising share of U.S. men in registered nursing?: "This paper documents four decades of increasing participation in registered nursing among US men and explores reasons for this change... * **Nick Bunker**: Old companies may be slowing down the U.S. economyh: "Titan Alon and David Berger... Robert Dent... and Benjamin Pugsley... labor productivity of firms over their lifecycles... * **Karl Smith**: Just Say No To Kevin Warsh: "Apparently Kevin Warsh is in a dead heat with Janet Yellen for Fed Chair. I tried to articulate just how bad this is but the whole thing has me shrill... * **Victor Chernozhukov _et al._**: Announcement of new Economics (econ) archive: "An Economics section of the scientific repository arXiv is opening this month... * **James Pethokoukis**: Why can't the GOP come up with any serious ideas?: "This is proving to be a monumental week in the 163-year history of the Republican Party. And so far, it isn’t going very well... * **Jong-Wha Lee**: South Korea’s Looming Crisis: "More...
The Federal Reserve’s narrowest gauge of money supply (measured in real or inflation-adjusted terms) posted a fractional gain in August vs. the year-earlier level – the first positive year-over-year reading since February 2016. The return of annual growth for the monetary base suggests that the central bank may be laying the groundwork to slow or […]
Submitted by Bill Blain of Mint Partners “Always the hurricane’s blowing, always the population growing, and the money owing..” Who will be the next Fed Head? Marvellous start to the day as a cyclist stopped to say hello. He was one of my “nippers” from a Canary Wharf HQ’d bank I once worked for. He started as a junior in Debt Capital Markets origination – today’s he’s head of their whole Sovereign, Supranational and Agency Group! Fantastic! He’s successfully built up the bank’s reputation to be a top name in the sector! I know many SSA issuers read the porridge and will know who he is, so give the lad a mandate from me! Quite proud of him and others I worked with at that bank… Meanwhile, the markets continue to amaze me. Nothing has really changed re the fundamental picture: stocks continue to bound upwards, economic data is positive, but more and more folk are having to pinch themselves to check if this is real. Clue: it is not.. Meanwhile, the disastrous intervention of Donald Trump’s twitter-feed on Puerto Rico debt on Tuesday night really should be the subject of a criminal investigation. Anyone with an erg of authority tweeting a borrower is bust is bound to impact prices: Trump’s intervention to say Puerto Rico would go bust caused prices to spike 20 points lower on $74 billion of its debt, before officials were able to restore sanity, and prices to spike back up. But the damage is done. His ill-informed tweets undo confidence across the whole US municipal bond sector – funding everything from states to local football stadiums. He said, of Puerto Rico: “We have to look at their debt structure. They owe a lot of money to your friends on Wall Street. We’re going to have to wipe that out.” I don’t think he realises it’s not Wall Street that is owed money. They already made their money lead managing the debt issues. While Puerto Rico is known as a distressed debt “specialisation”, US pension funds and savings programmes across the country hold the bulk of $4 trln of US muni assets. He’s just shot the pension savings his electorate rely upon full of uncertainty. It’s a lesson in STFU 101. Officials should know when to say nothing. Bloomberg carries a quote from one Muni Fund president: “Like many things Donald Trump says, he doesn’t know the full details of the situation and probably doesn’t care about the limits of his power..” Now muni investors are panicking about the prospects for other struggling US muni issuers and even some states – meaning prices are spiking down across the board. And will Donald’s choice for next Fed Head be more considered? I’ve been reading lots about who is likely to become the next Fed Chair. After checking the form on runners and riders, and talking it through with our head pundit Martin Malone, our Macro Economist who knows these things: There is still a 10% chance Yellen retains the job, but more likely is a complete and utter change under Kevin Warsh – 70% likely to get the post. Warsh is a well-networked and connected banker-lawyer with previous Fed experience. He’s married to Jane Lauder (of the make-up family). Her father has been funding the Trump empire for years. Warsh has spent the last 5-years at the Hoover Institute, a Republican think-tank, studying how to reform the Fed and get it back to basics – which means potentially bad news for some of the 27 thousand Fed PhDs currently studying esoteric features of money.. He’ll support less banking regulation, de-emphasise inflation targets, and is likely to be a hawk in terms of rate hikes and rapid normalisation. He recently told Stanford University: “The central bank and the academic community should engage in a fundamental rethining of the Fed’s strategy, tools, governance and communications.. A reform agenda could improve the modal outlook for the US economy by clarifying the Fed’s responsibilities, improving its decision-making and bolstering its credibility.” Other contenders look less likely: Jerome Powel is close to Trump, while Neel Kashkari, who has also been mentioned recently, is likely to fail on the basis Trump’s fondness for being surrounded by Goldman Sach’s alumni is clearly fading. One name likely to be named to join the Fed will be Marvin Goodfriend – who could become a Governor or even Vice Chairman. It’s going to be interesting, and I suspect getting names validated might prove problematical on Capitol Hill.
Доллар США торгуется в узком диапазоне по отношению к основным валютам. Давление на американскую валюту оказывают спекуляции вокруг следующего главы ФРС. Между тем, падение доллара ограничивают сильные статданные из США, которые укрепили уверенность инвесторов в устойчивости экономики и увеличили шансы еще одного повышения ставки ФРС в текущем году. Советники президента Трампа дали ему окончательный список людей, которых они рекомендуют в качестве кандидатов на пост главы ФРС. Напоминаем, срок полномочий Йеллен истекает в феврале 2018 года. Йеллен рассматривается, но не рекомендуется многими помощниками Трампа. Также говорят, что в качестве главы ФРС рассматривается Джон B. Тейлор, всемирно известный экономист. В списке также директор Национального экономического совета Гэри Кон, губернатор правления ФРС Джером Пауэлл и бывший губернатор Кевин Уорш. Издание Politico сообщило, что министр финансов США Стивен Мнучин одобряет в качестве главы ФРС Джерома Пауэлла и Кевина Уоршема. Хотя оба они рассматриваются как серьезные кандидаты на замену главы ФРС, Пауэлл считается более вероятным преемником Йеллен, чем Уорш, который критиковал программу покупки облигаций ФРС в прошлом. Между тем, вчера CNBC сообщило, что кандидатура представителя ФРС Нила Кашкари на пост следующего главы ФРС не рассматривалась. Что касается данных по США, отчет от Automatic Data Processing (ADP) показал, что темпы роста занятости в частном секторе США замедлились в сентябре меньше, чем ожидалось. Согласно данным, в сентябре количество занятых выросло на 135 тыс. человек по сравнению с пересмотренным в сторону понижения показателем за август на уровне 228 тыс. (первоначально сообщалось о росте на 237 тыс.). Аналитики ожидали, что число занятых увеличится на 130 тыс. Австралийский доллар снизился после публикации более слабых, чем ожидалось, данных по розничным продажам в Австралии. Объем розничных продаж, публикуемый Австралийским бюро статистики, снизился в августе на -0,6%, что ниже предыдущего значения -0,2%( пересмотрено с 0,0%). Отметим, что экономисты ожидали рост показателя на 0,3%. Также сегодня стало известно, положительном сальдо торгового баланса Австралии с учетом сезонных колебаний составило $0,99 млрд, что выше прогноза экономистов $0, 875 млрд и предыдущего значения $0,81 млрд. Экспорт Австралии увеличился на $0,166 млн. или на 1,0% в месяц до $32,229 млрд. после снижения на -2% в июле. Импорт практически не изменился в августе после снижения на $0,15 млрд (-1%) до $31,240 млрд. в июле Информационно-аналитический отдел TeleTrade Источник: FxTeam
Доллар США торговался смешано против евро, но при этом оставался в узком диапазоне. Давление на американскую валюту оказывали спекуляции вокруг следующего главы ФРС. Между тем, падение доллара ограничивали сильные статданные по США, которые укрепили уверенность инвесторов в устойчивости экономики и увеличили шансы еще одного повышения ставки ФРС в текущем году. Советники президента Трампа дали ему окончательный список людей, которых они рекомендуют в качестве кандидатов на пост главы ФРС. Напоминаем, срок полномочий Йеллен истекает в феврале 2018 года. Йеллен рассматривается, но не рекомендуется многими помощниками Трампа. Также говорят, что в качестве главы ФРС рассматривается Джон B. Тейлор, всемирно известный экономист. В списке также директор Национального экономического совета Гэри Кон, губернатор правления ФРС Джером Пауэлл и бывший губернатор Кевин Уорш. Издание Politico сообщило, что министр финансов США Стивен Мнучин одобряет в качестве главы ФРС Джерома Пауэлла и Кевина Уоршема. Хотя оба они рассматриваются как серьезные кандидаты на замену главы ФРС, Пауэлл считается более вероятным преемником Йеллен, чем Уорш, который критиковал программу покупки облигаций ФРС в прошлом. Между тем, вчера CNBC сообщило, что кандидатура представителя ФРС Нила Кашкари на пост следующего главы ФРС не рассматривалась. Что касается данных по США, отчет от Automatic Data Processing (ADP) показал, что темпы роста занятости в частном секторе США замедлились в сентябре меньше, чем ожидалось. Согласно данным, в сентябре количество занятых выросло на 135 тыс. человек по сравнению с пересмотренным в сторону понижения показателем за август на уровне 228 тыс. (первоначально сообщалось о росте на 237 тыс.). Аналитики ожидали, что число занятых увеличится на 130 тыс. Между тем, данные от Markit сигнализировали о дальнейшем повышении деловой активности в секторе услуг США. Хотя темпы роста слегка ослабли по сравнению с августом, рост как активности, так и притоке новых заказов был сильным по сравнению со средним за последние два года. Индекс деловой активности в секторе услуг составил в сентябре 55,3, немного снизившись с 56,0 в августе. Это подтвердило сильное окончание третьего квартала, и самый быстрый средний квартальный рост в этом году. Устойчивый рост выпуска и новых заказов поддержал увеличение количества занятых. Дополнительные рабочие места помогли облегчить давление на мощность. Между тем, инфляция закупочных цен была самой быстрой с июня 2015 года, а инфляция отпускных цен ускорилась быстрее всего за три года. Отдельный отчет показал, что индекс деловой активности в сфере услуг США, рассчитываемый Институтом управления поставками, вырос до 59,8 пунктов в сентябре по сравнению с 55,3 пункта в августе. В итоге, индекс достиг самого высокого уровня с августа 2005 года (тогда индекс составлял 61,3 пункта). Аналитики прогнозировали, что показатель улучшится лишь до 55,5 пункта. Британский фунт отступил от максимума сессии против доллара США, растеряв почти все позиции, заработанные после выхода позитивных британских данных по деловой активности в секторе услуг. Причиной нисходящей коррекции пары GBP/USD было восстановление индекса доллара США от сессионного минимума в ответ на благоприятную статистику по США. Сейчас индекс доллара США, показывающий отношение доллара к корзине из шести основных валют, торгуется с понижением на 0,11%, на уровне 93,46. Ранее сегодня индекс опускался до отметки 93,27. Что касается британских данных, результаты опроса IHS Markit и CIPS показали, что рост активности в секторе услуг неожиданно улучшился в конце третьего квартала, хотя и незначительно. Индекс менеджеров по закупкам в секторе услуг, или PMI, поднялся до 53,6 в сентябре с 11-месячного минимума августа в 53,2 пункта. Экономисты ожидали, что индекс останется стабильным на уровне 53,2. Любое чтение выше 50 указывает на расширение в секторе. Среди компонентов в сентябре выпуск вырос устойчивыми темпами, а новые заказы увеличились самыми слабыми темпами за тринадцать месяцев. Однако темпы создания рабочих мест снизились лишь незначительно с 19-месячного максимума августа. На ценовом фронте, инфляция закупочных цен увеличилась до 7-месячного максимума, и осталась среди самых сильных с начала 2011 года. В результате, в сентябре отпускные цены на продукцию зафиксировали солидный рост. Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Authored by Kevin Muir via The Macro Tourist, The current front-runner for the next Fed Chair is Kevin Warsh. He seems to have all the prerequisites that Trump idolizes. He’s connected. He’s not an academic. He has conservative leanings. But most important, he’s rich. I mean really rich. You see, Kevin married the granddaughter of the founder of the Estee Lauder company. Jane Lauder owns 20 million shares of the company. Just for shits and giggles, I dialed the stock price of the company. At the current stock price, that means the Warsh family is worth more than $2 billion! On the trading desk, we used to joke about having f’ off money (the amount where you can tell your bosses to go fly a kite with no worries about being fired because after all, you already have more than enough.) Well, Warsh is in a whole other league. Why do I bring this up? The prevalent thinking on Wall Street is that although Warsh has in the past been extremely hawkish, if he were to get the appointment, he would quickly shift towards the dove camp. Although I have no doubt he would try to bring the committee together, this is not a man that will deviate from his principles. He believes the Fed has made a huge mistake over the past nine years, and is not wavering in his assessment. Here is an excerpt from a CNBC article from earlier in the week: Kevin Warsh, the favorite to be the next chairman of the U.S. Federal Reserve, apparently believes the central bank has become a servant to the stock market after years of loose monetary policy. Uber-bear Albert Edwards, an economist at Societe Generale’s strategy team, said Monday that after listening to Warsh speak at a banking conference last week, he would be his choice to lead the Fed. He also revealed Warsh felt the Fed had been captured by the “secular stagnation” ideas of former U.S. Treasury Secretary Larry Summers and had become persuaded by the idea that more monetary stimulus is needed. “Rather than admitting they are wrong, this group, who failed to predict the current economic malaise, have constructed this theory to explain why ever more stimulus is required. In particular Warsh warned that the Fed had become the slave of the S&P,” Edwards noted. “He (Warsh) got a rousing reception from the BCA (Research) audience as he talked a lot of sense - in particular on how the Yellen Fed has lost its way and current policy is deeply flawed,” he added. A couple of questions. How hawkish do you have to be to get Albert Edwards to cheer your nomination? And does this sound like a person about to slip back into the dove camp to gain the President’s approval? Trump campaigned on the idea that the Federal Reserve had been irresponsible and needed a change in direction, but once in office, he started cooing words about how much he likes low interest rates. I think Wall Street wants Warsh, and Trump’s advisors are whispering soothing words in his ear, but that if Trump takes the time to understand the situation, Warsh is the exact opposite of what he desires. I am in the minority amongst my peers because I believe Warsh would be a disaster for the US economy. Kevin is the classic economist stuck believing that nothing changed after the Great Financial Crisis, and all that is required is a return to the good ole’ days of the 1980’s. This camp dismisses Richard Koo’s work about balance sheet recessions, and instead think they can cut fiscal budgets and tighten monetary policy to prosperity. There is no sense arguing about who is right. I try my best to focus on what is instead of what should be. Here is the important part. If Warsh is appointed, he will follow through with his hawkish policies. Ignore all this talk about him shifting to the dovish side. He will only do that once we get a market dislocation. Sure, I buy the argument that there are no atheists in foxholes, but the shells needs to start flying overhead first. I see that Doubline’s Jeff Gundlach has joined me in my call (The Trump Eclipse Bottom) that Trump will appoint Neel Kashkari. I still think that if Trump listens to his inner voices, he would pick an easy money guy. Neel makes a lot of sense. He is a Republican, he has experience, he is a dove. On paper, he is everything Trump is looking for. But his name does not seem to be bandied about. Not sure why. Here is my new prediction. If it isn’t Kashkari, it’s going to be Cohn. Gary didn’t get as high up at the squid without learning something about politics. Yeah, he messed up by not standing behind Trump in those ugly moments, but it wouldn’t surprise me if he has since kissed and made up. So I am taking Cohn for $200 Alex. Cohn will be the most difficult appointment to trade. Warsh hawk, Kashkari dove, Cohn? * * * US Dollar and precious metals Proving a blind squirrel finds an acorn every now and then, I managed to get my long US dollar call from the other day right (The Fall Guy). Longer term, I am a US dollar bear, so it was difficult for me to pull the trigger on the long side. Since then the US dollar has rallied, but even more importantly, precious metals have stunk up the joint. I feel a little naked with long US dollar exposure, and little precious metals. So I am taking off some of my long USD position, and adding to my gold and silver. I think $1275 holds. Phew. There I feel better being on this side again…
Доллар США торговался смешано против евро, но при этом оставался в узком диапазоне. Давление на американскую валюту оказывали спекуляции вокруг следующего главы ФРС. Между тем, падение доллара ограничивали сильные статданные по США, которые укрепили уверенность инвесторов в устойчивости экономики и увеличили шансы еще одного повышения ставки ФРС в текущем году. Советники президента Трампа дали ему окончательный список людей, которых они рекомендуют в качестве кандидатов на пост главы ФРС. Напоминаем, срок полномочий Йеллен истекает в феврале 2018 года. Йеллен рассматривается, но не рекомендуется многими помощниками Трампа. Также говорят, что в качестве главы ФРС рассматривается Джон B. Тейлор, всемирно известный экономист. В списке также директор Национального экономического совета Гэри Кон, губернатор правления ФРС Джером Пауэлл и бывший губернатор Кевин Уорш. Издание Politico сообщило, что министр финансов США Стивен Мнучин одобряет в качестве главы ФРС Джерома Пауэлла и Кевина Уоршема. Хотя оба они рассматриваются как серьезные кандидаты на замену главы ФРС, Пауэлл считается более вероятным преемником Йеллен, чем Уорш, который критиковал программу покупки облигаций ФРС в прошлом. Между тем, сегодня CNBC сообщило, что кандидатура представителя ФРС Нила Кашкари на пост следующего главы ФРС не рассматривалась. Что касается данных по США, отчет от Automatic Data Processing (ADP) показал, что темпы роста занятости в частном секторе США замедлились в сентябре меньше, чем ожидалось. Согласно данным, в сентябре количество занятых выросло на 135 тыс. человек по сравнению с пересмотренным в сторону понижения показателем за август на уровне 228 тыс. (первоначально сообщалось о росте на 237 тыс.). Аналитики ожидали, что число занятых увеличится на 130 тыс. Между тем, данные от Markit сигнализировали о дальнейшем повышении деловой активности в секторе услуг США. Хотя темпы роста слегка ослабли по сравнению с августом, рост как активности, так и притоке новых заказов был сильным по сравнению со средним за последние два года. Индекс деловой активности в секторе услуг составил в сентябре 55,3, немного снизившись с 56,0 в августе. Это подтвердило сильное окончание третьего квартала, и самый быстрый средний квартальный рост в этом году. Устойчивый рост выпуска и новых заказов поддержал увеличение количества занятых. Дополнительные рабочие места помогли облегчить давление на мощность. Между тем, инфляция закупочных цен была самой быстрой с июня 2015 года, а инфляция отпускных цен ускорилась быстрее всего за три года. Отдельный отчет показал, что индекс деловой активности в сфере услуг США, рассчитываемый Институтом управления поставками, вырос до 59,8 пунктов в сентябре по сравнению с 55,3 пункта в августе. В итоге, индекс достиг самого высокого уровня с августа 2005 года (тогда индекс составлял 61,3 пункта). Аналитики прогнозировали, что показатель улучшится лишь до 55,5 пункта. Британский фунт отступил от максимума сессии против доллара США, растеряв почти все позиции, заработанные после выхода позитивных британских данных по деловой активности в секторе услуг. Причиной нисходящей коррекции пары GBP/USD было восстановление индекса доллара США от сессионного минимума в ответ на благоприятную статистику по США. Сейчас индекс доллара США, показывающий отношение доллара к корзине из шести основных валют, торгуется с понижением на 0,11%, на уровне 93,46. Ранее сегодня индекс опускался до отметки 93,27. Что касается британских данных, результаты опроса IHS Markit и CIPS показали, что рост активности в секторе услуг неожиданно улучшился в конце третьего квартала, хотя и незначительно. Индекс менеджеров по закупкам в секторе услуг, или PMI, поднялся до 53,6 в сентябре с 11-месячного минимума августа в 53,2 пункта. Экономисты ожидали, что индекс останется стабильным на уровне 53,2. Любое чтение выше 50 указывает на расширение в секторе. Среди компонентов в сентябре выпуск вырос устойчивыми темпами, а новые заказы увеличились самыми слабыми темпами за тринадцать месяцев. Однако темпы создания рабочих мест снизились лишь незначительно с 19-месячного максимума августа. На ценовом фронте, инфляция закупочных цен увеличилась до 7-месячного максимума, и осталась среди самых сильных с начала 2011 года. В результате, в сентябре отпускные цены на продукцию зафиксировали солидный рост. Информационно-аналитический отдел TeleTradeИсточник: FxTeam
Новым президентом Федерального резервного банка Миннеаполиса стал бывший топ-менеджер инвестбанка Goldman Sachs и фонда облигаций PIMCO Нил Кашкари.