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August 20, 2018

Market Moves Forward Despite Geopolitical Concerns

 

Optimism Dominates

All three major US equity indices closed higher on the day, with investors confident that, in spite of trade wars and other geopolitical tensions, the market will continue to march higher.  The DJIA and the S&P 500 climbed 0.35% and 0.24%, respectively, while the DJIA eked out a slight gain at +0.06%.   US Treasuries rallied 2-4 bps across the curve, with the 10yr US Treasury Note closing at a yield near 2.82%, 4bps lower than where it closed on Friday.  In foreign exchange markets, the US Dollar (USD) fell 0.3% vs both the Euro (EUR...

August 17, 2018

Easing Trade Concerns Boost Risk Assets

 

Trade War Concerns Easing

Risk assets posted a second consecutive day of gains, boosted by the news of refreshed trade talks between the US and China along with comments from Mexico’s economy minister Ildefonso Guajardo, who stated his hopes to resolve the outstanding bilateral issues with NAFTA by next week.  All three major US stock indices finished the week on a high note, with the DJIA advancing 0.4% while the S&P 500 (+0.3%) and Nasdaq (+0.1%) posted more modest gains.  US Treasurys held within a tight range throughout the trading session, with the...

August 16, 2018

Trade Talks Set to Resume Between US and China

 

Time Apart is Good Sometimes

After an impasse of nearly two months, today the US and China managed to make minor progress in ending the existing trade war between the world’s two largest economies.  This morning it was confirmed that a Chinese vice minister would be travelling to the US on August 22nd and 23rd to hold lower-level trade talks with the Treasury Department.  While the announcement drew skepticism from several analysts given the lack of key decision makers to be involved in the meeting, White House economic...

August 15, 2018

Equity Markets Slide on Earnings Disappointment

 

Turkey Threat Escalates

The global concerns over the financial stability of Turkey continued to curb the risk appetite of financial markets today.  Over the past two days Turkish authorities have managed to escalate the trade rift with the US, first by declaring a boycott on US electronic goods such as the iPhone, and then announcing a series of tariffs to be imposed on US exports, including motor vehicles, alcohol and tobacco.  Much of the action was a rebuttal to President Trump’s doubling of the tariffs on Turkish metal imports, which the Vice President...

August 14, 2018

Market Digests Turkey, Household Debt Rises

 

Risk Assets Rebound

After several days of declines driven largely by concerns over the Turkish economic crisis spreading, the equity markets generally rebounded today. This is partly due to the news that Turkish Treasury and Finance Minister Berat Albayrak will participate in a conference call with foreign investors on Thursday.  All three major US equity indices closed higher on the day.  The NASDAQ and the S&P 500 climbed 0.65% and 0.64%, respectively, while the DJIA increased 0.45%.   US Treasuries sold off 1-3 bps across the curve, with the 10yr US...

August 13, 2018

Turkey Continues to Rattle Financial Markets

 

Turkey’s Crisis Deepens and Spreads?

In emerging markets, as Turkey continues to defiantly oppose raising rates or accepting an international bailout, the crisis continues to drag down the valuation of other emerging market assets.  The Turkish situation could lead to broad losses across many markets as Turkish debt and equities are broadly held by international investors.  Emerging market stocks, which suffered losses in the second quarter before rebounding in July, have given back a significant amount of that rebound.  Prior to this most recent crisis (...

August 10, 2018

Turkey Contagion Weighs Down Markets

 

Talking Turkey

The country of Turkey dominated the headlines today with the Turkish Lira plunging as much as 17% against the US Dollar.  Turkey’s refusal to release an American pastor has led to an escalating rift with and threats from the US. The Financial Times also reported that said the ECB is concerned with European banks’ exposure to the embattled country, accelerating the decline in the Turkish financial markets.  Turkish President Erdogan called for an emergency meeting on Saturday in an effort to stabilize the currency and address contagion fears...

August 9, 2018

Risk Off as PPI Disappoints

 

Inflationary Pressure Slows at Business Level

Key economic data releases on the day were highlighted by the producer price index, which reported zero growth in the prices paid to domestic producers of goods and services in July.  The flat monthly number failed to meet market expectations of +0.2%, dragged down by decreases in energy prices and food.  Energy prices were down -0.5% in the past month, while the food index component fell 0.1% over the same period.  The core PPI also failed to meet median forecasts, reported at +0.1% MoM vs expectations of +0.2...

August 8, 2018

Another Day, Another Tariff Tiff

 

US vs. China Tariff Battle: Round Two

Yesterday evening the US announced its intention to levy the second round of tariffs on Chinese imports come August 23rd.  The 25% duty will target roughly $16 billion worth of Chinese goods, including electronics, motorcycles, and semiconductors.  This morning the Chinese commerce ministry acknowledged the move by the US, labeling it “very unreasonable”, and stated its plan to retaliate with equal tariffs on US imports on the very same day.

 

August 7, 2018

Earnings Continue to Boost Equities, Risk Assets

 

Equities Rise on Earnings

A strong corporate earnings season continues to boost the stock market, as we remain on pace this quarter for the highest number of firms in history reporting better than expected results.  All three major indices posted gains on the day, with the DJIA leading the way (+0.50%), and the NASDAQ and S&P 500 recording more modest gains of +0.31% and +0.28%, respectively, as the S&P traded within 1% of its all-time high.   The stock price of Tesla surged this afternoon (+11%) following a controversial tweet from CEO Elon Musk,...

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