Daily Briefing – Thursday, August 17, 2017
The USD was hurt badly yesterday after President Trump disbanded his council of CEOs of major corporations yesterday. Most had jumped ship following his abysmal post-Charlottesville performance. Adding to the pressure were yesterday’s dismal housing starts (-4.8%) and building permits (-4.1%) numbers which both belie the apparent housing recovery as revealed in the NAHB housing market index on Tuesday which beat expectations. And the New York Fed yesterday capped the icing with a report showing that US household debt has surpassed pre-bubble 2007 levels and – at $12.84 trillion – that delinquencies are rising. Member concerns regarding continued sub-par inflation were the cherry on the cake.
European equities logged their 3rd straight positive session in a row on mining and energy stocks. The Euro weakened after news broke of ECB Pres Draghi’s upcoming Jackson Hole speech. A hawkish tone is no longer expected from the central banker who will, instead, focus on the theme of fostering a global economy. Meanwhile, yesterday’s GDP reading exceeded expectations showing a Q2 growth of 2.2%. The GBP is recovering slightly from its 7-year low after yesterday’s positive employment data. Unemployment was down to 4.4% in June and earnings were up 2.1%. Residential building permits in Germany also fell by 7% during the first half of the year.
Asian indexes were mostly up this morning on tech shares. The Nikkei was the odd man out as the Yen rose on a better-than-expected improvement in trade balance and growth in both imports (16.3% compared to June’s 15.5%) and exports (13.4% compared to June’s 9.7%). Australia’s unemployment rate fell in July to 5.6%, supporting the RBA’s optimism the day before. Data however isn’t good enough for consumer sentiment which has been pressuring spending downward.
Commodities yesterday saw drama unfold when gold took a $20 hike from its intraday low of 1275 to precisely 1295 during one 12-hour session after President Trump disbanded his CEO council. Bitcoin has recovered most of its dip-losses and is back in the 4300 region. And oil lost over a dollar a barrel following yesterday’s EIA announcement of an 8.95mB drawdown – the largest inventory withdrawal since September; the reason – growing stockpiles of gasoline in the national reservoir at Cushing Oklahoma and a Bloomberg report that shale production is expected to hit a record high of 6mB/d in September.
Cisco shares fell yesterday after it reported another drop in revenues – as expected. Alibaba reports today as China’s Nt’l Bureau of Statistics reports a 41% growth in Q2 YoY e-commerce sales. Expect EPS at 93 cents on $7.1bn revenues – up 2.5bn YoY. Alibaba shares have added 28% in the past 3 months – outperforming the S&P500 tenfold.
|8:30 AM GMT||UK: Retail Sales|
|9 AM GMT||CPIs and Trade Balance at 10 AM.|
|12:30 PM GMT||US: Jobless Claims followed by Industrial Production at 1:15.|