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Daily Briefing – Monday, October 16, 2017

Asia

Asian markets were mainly up overnight, with a softening Yen pushing the Nikkei by nearly half a percent, after BoJ Gov Kuroda on Sunday promised to continue his monetary policy. Energy and mining energized the S&P/ASX by 0.56%, and the Hang Seng was up by nearly a full percent. Chinese consumer inflation slowed from 1.8% in August to 1.6% YoY; and indexes ended in the red. Still, central bank Governor Zhou Xiaochuan said he expects economic growth this year to top 7%. China and Russia this morning announced a new Yuan-Ruble payment system that will improve transaction efficiency between the nations – the first of its kind between the Chinese currency and any other foreign currency. Russia is currently China’s major oil supplier, and next on the agenda – regulating the gold trade between the two. An emerging gold standard in Asia would undermine dollar-based commerce.

 

Europe

With expectations ripe for this week’s UK data deluge, the pound is regaining some of last week’s lost territory, as Theresa May heads to Europe to speak with leaders about the Brexit deadlock. The Euro is down 0.225, although this morning’s data from Germany shows a healthy 3.2% (YoY) increase in wholesale prices, after the European Central Bank’s Vice President, Vitor Constancio expressed optimism on inflation on Sunday.

 

US

The US bull market is coming close to its 9-year mark this week, stocks about 200% above 2009 levels. The USD regained some losses overnight on Trump’s belligerent geopolitical stance and a 6-point increase in the Michigan consumer sentiment index. Last week, earnings had declined for the 2nd month in a row in September, retail sales were up from August’s 0.1% decline, but at 1.6% – less than expected, although still their best in 2 years; and consumer inflation came in at 1.7% – well below the FED’s required 2% for the 6th month in a row.

 

Commodities

As Iraqi and Kurdish forces clash near the oil-rich province of Kirkuk, oil is up 0.86% and nearing the $52 mark – this after Thursday’s EIA report reported a 2.75 mB decline in inventories and despite the reopening of 3 wells, according to the Baker Hughes count, Friday. The Financial Times reports that Saudi Arabia is considering replacing its IPO of a 5% stake of the national oil company, ARAMCO with a private share sale to several sovereign wealth funds and governments, specifically China. Gold is still up this morning after a $10 bull gap at the China opening overnight. And Bitcoin has pushed past $5800 as rumors spread that China will restore trading in cryptocurrencies.

Shares

With Goldman Sachs slated to report quarterly earnings tomorrow, the Bank of America on Thursday reported better-than-expected earnings, mirroring the results of JPMorgan and CitiBank the day before. US banks are celebrating an increase in interest rates, this year, with another expected in December. Meanwhile, today Netflix reports its earnings after market close. Expectations are for an EPS of $0.32 on $2.97 bn of revenues – a 30% improvement YoY. Shares are up nearly 2%, as the company continues to invest heavily in original production as international subscriptions grow by 3.62m and feesare up $1-2.

 

Today’s Events

9 AM GMT EU: Trade Balance
6 PM GMT US: Monthly Budget Statement
9:45 PM GMT NZ: Consumer Price Index

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