Market Talk – August 9, 2019

ASIA:

The IMF has released a report stressing that the US-China trade war be resolved quickly as it is putting pressure on global growth. “That is not only good for China and the U.S., but also for the international community as a whole,” Jin Zhongxia, executive director for the People’s Republic of China, says in a statement.

As the 10th week of protests against China took place. Thousands of Hong Kong residents continue to protest against mainland China. This time, residents have taken to the airport as many demonstrators gather and take place and occupy parts of the international airport. The protests are expected to take 3 days. Mrs. Lam stated that the protests are causing a lot of issues for the country — a 30% decline in tourists since the protests began. The protestors are handing out leaflets with 5 demands by the protestors.

The UN has stated that North Korea have stolen up to 2 billion USD from financial institutions and cryptocurrency exchanges to fund their weapon purchases.

India has formed a military lockdown parts of Kashmir, a blackout and a curfew to halt expected demonstrations against recent decisions by India. There has also been large demonstrations in Pakistan against India’s actions.

Malaysia charges 17 current and former Goldman Sachs directors due to the 1MDB scandal.

The major Asian stock markets had a mixed day today:

• Shanghai decreased 19.80 points or -0.71% to 2,774.75
• Kospi increased 17.14 points or 0.89% to 1,937.75
• ASX 200 increased 16.30 points or 0.25% to 6,584.40
• NIKKEI 225 increased 91.47 points or 0.44% to 20,684.82
• Hang Seng decreased 181.47 points or -0.69% to 25,939.30
• SENSEX increased 254.55 points or 0.68% to 37,581.91

The major Asian currency markets had a mixed day today:

• AUDUSD decreased 0.0005 or 0.08% to 0.6795
• NZDUSD decreased 0.0007 or 0.10% to 0.6471
• USDJPY decreased 0.6690 or 0.63% to 105.3910
• USDCNY increased 0.0272 or 0.38% to 7.1040

Precious Metals:

• Gold increased 2.30 USD/t oz. or 0.15% to 1,499.52
• Silver increased 0.07 USD/t. oz or 0.43% to 16.9391

Some economic news from last night:

Japan:

• GDP (YoY) (Q2) decreased from 2.2% to 1.8%
• GDP (QoQ) (Q2) decreased from 0.6% to 0.4%
• GDP Capital Expenditure (QoQ) (Q2) increased from 0.3% to 1.5%
• GDP External Demand (QoQ) (Q2) decreased from 0.4% to -0.3%
• GDP Price Index (YoY) remain the same at 0.1%
• GDP Private Consumption (QoQ) (Q2) increased from -0.1% to 0.6%
• M2 Money Stock (YoY) increased from 2.3% to 2.4%
• M3 Money Supply (Jul) increased from 1,802.9T to 1,807.7T

China:

• CPI (YoY) (Jul) increased from 2.7% to 2.8%
• CPI (MoM) (Jul) increased from -0.1% to 0.4%
• PPI (YoY) (Jul) decreased from 0.0% to -0.3%

New Zealand:

• External Migration & Visitors (Jun) increased from -1.20% to 0.60%
• Permanent/Long-Term Migration (Jun) decreased from 4,130 to 3,100
• Visitor Arrivals (MoM) remain the same at -0.2%

Some economic news from today:

Japan:

• Economy Watchers Current Index (Jul) decreased from 44.0 to 41.2

India:

• FX Reserves, USD decreased from 429.65B to 428.95B
• Cumulative Industrial Production (Jun) decreased from 3.70% to 3.60%
• Industrial Production (YoY) (Jun) decreased from 4.6% to 2.0%
• Manufacturing Output (MoM) (Jun) decreased from 4.5% to 1.2%

EUROPE/EMEA:

The UK economy shrunk by 0.2% for the month of April and June, the worst monthly performance since 2012, the office of National Statistics revealed. Of course, the uncertainties surrounding Brexit was cited as the culprit.

The Balkans expansion is on hold as Macedonian and Albanian discussions to join the EU are not moving ahead with speed.

Matteo Salvini leader of far-right Italian party has asked for a snap election as he states differences with the current coalition leader cannot be mended. He mentioned that the country is “paralyzed” for months and he is unable to give the country a voice. Latest polls show that he could have a chance to be elected without a coalition which will make it the first far right-wing party elected in the EU. Italian MPs will meet on Monday to set a date for no confidence vote. The current PM held a press conference late last night saying it is not up to Salvini whether a snap election will be held.

In Moscow more protests are occurring regarding President Vladimir Putin’s 28th year in power. The protesters are highlighting the “Russian fake democracy”, stating the regime is really authoritarian. Although the protests are relatively small, in the low thousands with a city of approximately 20 million people.

Greek and Turkish senior officials are due to meet to discuss peace talks regarding the island of Cyprus which is divided between the two from north to south.

The major Europe stock markets had a negative day today:

• CAC 40 decreased 60.03 points or -1.11% to 5,327.92
• FTSE 100 decreased 32.05 points, or -0.44% to 7,253.85
• DAX decreased 151.61 points or -1.28% to 11,693.80

The major Europe currency markets had a mixed day today:

• EURUSD increased 0.0034 or 0.30% to 1.1212
• GBPUSD decreased 0.00599 or -0.49% to 1.20711
• USDCHF decreased 0.0019 or -0.19% to 0.9727

Some economic news from Europe:

Swiss:

• Unemployment Rate n.s.a. (Jul) remain the same at 2.1%
• Unemployment Rate s.a. (Jul) remain the same at 2.3%

Germany:

• German Current Account Balance n.s.a (Jun) increased from 16.2B to 26.0B
• German Exports (MoM) (Jun) decreased from 1.3% to -0.1%
• German Imports (MoM) (Jun) increased from -0.3% to 0.5%
• German Trade Balance (Jun) remain the same at 18.1B

Norway:

• Core CPI YTD (Jul) decreased from 2.3% to 2.2%
• Core Inflation (MoM) (Jul) increased from 0.4% to 0.6%
• CPI (MoM) (Jul) increased from 0.1% to 0.7%
• CPI (YoY) (Jul) remain the same at 1.9%
• PPI (YoY) (Jul) decreased from -6.5% to -8.6%

France:

• French Industrial Production (MoM) (Jun) decreased from 2.0% to -2.3%
• French Non-Farm Payrolls (QoQ) (Q2) decreased from 0.4% to 0.3%

Italy:

• Italian Trade Balance (Jun) increased from 5.385B to 5.728B
• Italian Trade Balance EU (Jun) decreased from 2.29B to 1.88B
• Italian CPI (MoM) (Jul) decreased from 0.1% to 0.0%
• Italian CPI (YoY) (Jul) decreased from 0.5% to 0.4%
• Italian CPI Ex Tobacco (MoM) (Jul) decreased from 0.5% to 0.2%
• Italian HICP (YoY) (Jul) decreased from 0.4% to 0.3%
• Italian HICP (MoM) (Jul) decreased from -1.7% to -1.8%

UK:

• Business Investment (YoY) (Q2) decreased from -1.5% to -1.6%
• Business Investment (QoQ) (Q2) decreased from 0.4% to -0.5%
• Construction Output (MoM) (Jun) decreased from 0.3% to -0.7%
• U.K. Construction Output (YoY) (Jun) decreased from 1.3% to -0.2%
• GDP (MoM) decreased from 0.2% to 0.0%
• GDP (YoY) (Q2) decreased from 1.8% to 1.2%
• GDP (QoQ) (Q2) decreased from 0.5% to -0.2%
• Index of Services decreased from 0.3% to 0.1%
• Industrial Production (MoM) (Jun) decreased from 1.2% to -0.1%
• Industrial Production (YoY) (Jun) decreased from 0.5% to -0.6%
• Manufacturing Production (MoM) (Jun) decreased from 1.4% to -0.2%
• Manufacturing Production (YoY) (Jun) decreased from -0.2% to -1.4%
• Monthly GDP 3M/3M Change decreased from 0.3% to -0.2%
• Trade Balance (Jun) increased from -10.70B o -7.01B
• Trade Balance Non-EU (Jun) increased from -4.07B to -0.19B

U.S./AMERICAS:

President Trump stated that the U.S. is officially ceasing all business with Chinese operated Huawei. “That doesn’t mean we won’t agree to something if and when we made a trade deal,” Trump noted. Huawei was placed on a black list weeks ago but was recently permitted to conduct business with pre-approved parties in the U.S. It appears that the U.S. is leveraging conducting business with Huawei in the same manner that China is holding out on purchasing U.S. agriculture. “We are talking to China; we are not ready to make a deal, but we’ll see what happens…China wants to do something, but I’m not doing anything yet,” the U.S. president further stated.

Mexico is reaping the benefits of the U.S.-China trade war as new U.S. Census Bureau data shows the country is now the U.S.’s largest trading partner. During the first six months of 2019, $309 billion in goods were exchanged between the two nations, accounting for over 15% of U.S. trade. Canada has the second strongest trading partnership with the U.S., trading slightly below Mexico at $306 billion during the first half of the year. Although no longer in the top spot, U.S.-China financial ties remain strong after around $271 billion in imports and exports were passed between the two nations during Q1 and Q2. Japan holds the fourth slot for U.S. trading partnership ($109.7 billion), followed by Germany ($92.6 billion), South Korea ($67.5 billion), UK ($65.1 billion), France ($49.1 billion), India ($47.8 billion), and Taiwan ($41.4 billion).

Good news for Canadians with Chase Bank credit cards – the bank announced that they will “forgive” all outstanding debt. Chase Bank, owned by NY-based JP Morgan Chase, closed all Canadian credit card accounts last year but required debtors to continue paying their outstanding balances. Now, the bank has decided to cancel all outstanding balances much to the surprise of account holders.

U.S. Market Closings:

• The Dow declined 90.75 points or -0.34% to 26,287.44
• S&P 500 declined 19.44 points or -0.66% to 2,918.65
• Nasdaq declined by 80.02 or -1% to 7,959.14
• Russell 2000 declined 19.09 points or -1.25% to 1,513.04

Canada Market Closings:

• TSX Composite declined 63.19 points or -0.39% to 16,341.34
• TSX 60 declined 3.42 points or -0.35% to 974.34 103,996.16

Brazil Market Closing:

• Bovespa declined 119.07 points or -0.11% to

ENERGY:

Wti and crude had an up day today despite a surprising surplus to oil reserves in the US earlier this week and negative news regarding global growth and trade. However, positive news of growth from China and tensions in the Middle East are forcing the price up.

The oil markets had a green day today:

• Crude Oil increased 1.96 USD/BBL or 3.73% to 54.4343
• Brent increased 1.3 USD/BBL or 2.27% to 58.7491
• Natural gas increased 0.005 USD/MMBtu or 0.23% to 2.1288
• Gasoline increased 0.0294 USD/GAL or 1.79% to 1.6755
• Heating oil increased 0.0363 USD/GAL or 2.04% to 1.8138
• Top commodity gainers: Sugar (4.02%), Crude Oil (3.73%), Brent(2.37%), and Heating Oil (2.16%)
• Top commodity losers: Lumber (-2.64 %), Coal (-0.89%), Copper (-0.67%), and Steel (-2.10%)

The above data was collected around 13:15  EST on Friday.

BONDS:

Japan -0.22%(-3bp), US 2’s 1.61% (-1bps), US 10’s 1.70%(-1bps), US 30’s 2.21%(-2bps), Bunds -0.58% (-2bp), France -0.27% (+1bp), Italy 1.80% (+26bp), Turkey 14.64% (+34bp), Greece 2.14% (+9bp), Portugal 0.28% (+3bp), Spain 0.26% (+2bp) and UK Gilts 0.49% (-3bp).

Italian 12-Month BOT Auction increased from -0.061% to 0.107%