A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.
S-L-O-W-I-N-G?
Share this story:
Alan Rose Foreign Exchange Head Trader
The U.S. has been in an economic recovery since 2009 making this economic expansion one of the longest since World War II. Over the last 18 months or so, the U.S. economic recovery has gained momentum spurred on by tax cuts and deregulation. Unfortunately, the rest of the major industrialized world has struggled at times to keep pace which has allowed U.S. economic exceptionalism to force the Fed to keep raising interest rates which in turn has also pushed the U.S. dollar to stronger levels.
Last night, both Japan and Germany reported Q3 GDP (see below) and it was disappointing despite the fact that exogenous factors impacted the Japanese data and the German data had its own peculiar twist. A key concern for the markets and many asset classes is how much longer U.S. growth can continue to march on in the face of higher U.S. interest rates, trade wars, and evidence of further slowing among our trading partners.
Despite the rhetoric, we live in a globalized economy where supply chains are all interconnected and when an economic slowdown grips multiple parts of the global economy, it has a ripple effect for all the participants. This, combined with an economic recovery that is increasingly getting longer in the tooth, raises concerns about our future economic momentum. These are key questions that the markets will have to constantly assess over the next weeks and months and will determine the level of equities, interest rates, commodity prices and the future course of the U.S. dollar.
HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT:
Japan reported Q3 GDP at -1.2% annualized which was worse than expected…Q2 came in at 0.3%. Exogenous factors related to earthquakes, typhoons and flooding caused GDP to weaken, but in addition to these factors, exports declined by 1.8%, the fastest decline in three years, adding more negatives news implying weaker global demand for Japanese exports...
The German economy shrank for the first time since 2015 as Q3 GDP fell into negative territory at -0.2% against expectations of 0.1%. Q2 GDP came in at 0.5%. Government officials are downplaying the data as temporary due to auto plant shutdowns related to reworking production to meet emission standards.
U.S. equities are opened stronger this morning on the back of a benign October CPI that met market expectations as the investors were concerned that the very strong October PPI would filter into higher consumer prices. CPI rose by 0.3% and ex-food and energy rose by only 0.2%; YoY CPI moved higher from 2.3% to 2.5%. Oil prices are seeing their first bounce in almost two weeks which is also positive news for energy stocks.
Want to learn more about international finance, economics, and global events? Sign up for our other Foreign Exchange emails and videos!
Follow City National Bank on social media:
Investment and Insurance Products:
•
Are Not insured by the FDIC or any other federal government agency
•
Are Not deposits of or guaranteed by a Bank or any Bank Affiliate
•
May Lose Value
This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. The Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.
Tune in for a guide to ETFs and investing strategies for potential long-term success. View in a browser Fidelity Fidelity Log in Creating a portfolio with ETFs: Why and how Creating a portfolio with ETFs: Why and how
View this email in your browser Want to watch a recording of yesterday's Simply Successful Investing Webinar. Just click here and use passcode 5q59Z&3M.
Exclusive webinar: The market, my portfolio, and options. Exclusive webinar: The market, my portfolio, and options. View in a browser Fidelity Fidelity Log in The market, my portfolio, and options The market, my portfolio, and options
Comments
Post a Comment