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Daily Briefing – Monday, September 18, 2017


US markets closed slightly up Friday, but global investors have their eyes on Wednesday’s FOMC meeting and interest rate decision. Although there is little chance of a hike, the FED is committed to another interest rate hike by the end of this year; however the hard data seems to be thwarting those intentions. With retail sales down 0.2% in August and industrial production down by nearly a full percent, the New York and Atlanta Federal Reserves plus Goldman Sachs have dramatically cut Q3 GDP forecasts. The retail figure is the worst in over a year.



In Europe, eyes are also on next Sunday’s Federal elections in Germany. However, stealing the spotlight momentarily and following Thursday’s Bank of England interest rate vote, which had 2 members vote in favor of a hike, the pound took 2 upward bounds on Thursday and Friday, and it is currently trading at 1.3642 to the US Dollar – a 1-year high – despite the failed Friday terror attack in London’s underground. Across the channel, the zone’s trade balance fell in July to 23.2bn EUR – better than the expected 21bn. while wages rose at a 2-year record pace. That plus another missile launch in North Korea pressured markets into the red as markets closed Friday.



Asian markets started the week with healthy gains as risk levels rose despite yet another North Korean missile test over the weekend. Chinese regulators are considering a relaxing of margin requirements and fees on stock futures trading, this as the house price index fell by a percent and a quarter to 8.3% in August. . The yen opened trading overnight with a 25-pip bear gap after reports emerged that PM Shinzo Abe is planning to dissolve Parliament and call for elections next month.




Bitcoin crashed over the weekend once again to below the $3000 threshold following China’s confirmation of a crackdown on exchanges, according to which Bitcoin/fiat currency trading is to be outlawed. All exchanges performing these trades have until the end of the year to cease operation. Meanwhile, across the border and after the failure of its demonetization program, India is planning to issue its own cryptocurrency – the Lakshmi – in an effort to fight corruption and unmonitored transactions. Oil spiked above $53 for a barrel of WTI following Friday’s report of a 7 rig reduction of active oil wells being operated by the Baker-Hughes consortium. Futures this morning are at 50.50 and rising. Texas production is still far from pre-hurricane Harvey levels. And Saudi Arabia could delay the privatization of ARAMCO by a year with hopes of a further recovery in oil prices, which could lift the company’s value considerably.



Finally, with a nod towards third quarterly earnings season that hits full swing in mid-October FedEx will be reporting fiscal results for the year’s first quarter on Tuesday. Expected EPS is $3.14 on revenues of $15.38bn, and shares are targeting $230.




Today’s Events

9 AM GMT EU Consumer Price Index
2 PM GMT US: NAHB Housing Market Index
10 PM GMT NZ: Westpac Consumer Survey
1:30 AM GMT (+1) Australia: RBA Meeting Minutes

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