The Morning Call Podcast – May 2017
Down, down, inflation is down
Wednesday 31st May 2017
Central banks, supposedly, lift rates to stop economies overheating, and to calm the ravages of inflation. Yet the US, Germany and Spain have all seen inflation fall, and Europe’s figures are likely to show the same tonight. Phil Dobbie asks NAB’s Tapas Strickland what this means to the ECB and US Fed’s plans to raise rates and cut QE. We also look at Trump’s latest Twitter torments, and a plethora of data out today.
Will Draghi Drag Out Stimulus?
Tuesday 30th May 2017
On a quiet trading day (with holidays in the US, UK and China), the Euro fell slightly as ECB President Mario Draghi suggested there wasn’t any rush to ease their monetary stimulus program. Phil Dobbie asks NAB’s David de Garis whether that spells an end to speculation that changes to the program could be made as early as next month. Meanwhile, the likelihood of a US rate rise in June rests, in part, on inflation and spending figures released tonight.
Entente not very cordiale
Monday 29th May, 2017
President Trump’s charm offensive doesn’t seem to have worked on Angela Merkel who has said Europe can no longer “completely depend” on the US and UK, after the Trump and Brexit votes. As Phi Dobbie discusses with NAB’s Rodrigo Catril, it indicates an even harder line from the EU, whose economy seems to be doing better than either of the Chancellor’s new sparring partners. Politics could again drive the markets this week, with the Russia investigation continuing in the US, Jacob Zuma hanging on to the ANC Presidency (for now) and Theresa May losing ground in the UK polls.
Oil cuts not deep enough; UK GDP falls further
Friday 26th May 2017
Even though OPEC (and others) have agreed to extend oil production cuts into next year, it wasn’t enough for the markets, who clearly expected more. Phil Dobbie talks to NAB;’s David de Garis about the reaction, which has seen major commodity currencies fall, along with oil prices and shares. They also discuss the UK’s disappointing GDP results, and look ahead to data, speeches and meetings – not least of which is the G7 in Sicily, with President Trump in attendance.
Markets Respond to Fed Minutes and China’s Downgrade
Thursday 25th May 2017
This morning Phil Dobbie talks to NAB’s Tapas Strickland about the two biggest drivers of the markets – the release of the FOMC minutes, which pushed the dollar down further, and Moody’s downgrade of China’s sovereign credit rating. How could the China story influence the Australian economy? We also look at yesterday’s Aussie construction data, the UK’s Q1 GDP and the ECB’s Financial Stability Review.
President Trump’s Plan – A Budget Ignored
Wednesday March 24th, 2017
President Trump’s full budget, released today, has had a muted reaction in the markets. Perhaps it’s because we already knew most of the detail and most people assume it won’t be enacted in full. But Phil Dobbie asks NAB’s Rodrigo Catril about one new item in the budget list – the plan to sell off half of America’s emergency fuel reserves. What impact will that have on oil prices? We also look at strong data from Europe, the release of the FOMC Minutes and Australia’s construction data out today.
Trump Crusade Doesn’t Save the US Dollar
Tuesday 23rd May 2017
President Trump has been in Israel hoping to bring peace to the Middle East, which might have deflected attention from proceedings in Washington but the US dollar still lost ground again overnight. Phil Dobbie talks to NAB’s David de Garis about how politics and data is driving markets and what impact we can expect from the budget request today. Also, how the pound has wobbled as the British PM backflips on a key reform. She is still likely to win, but could her lead diminish further?
Trump goes to Saudi Arabia, money moves to Europe
Monday 22nd May, 2017
President Trump seems to have won favour with Arab leaders during his first official trip overseas, signing a $110 billion arms deal that should help create jobs back home. Meanwhile the House Intelligence Committee holds its first public hearing into Russian involvement in the US election, with James Comey a witness due to appear later in the month. Phil Dobbie talks to NAB’s Rodrigo Catril about the extent to which politics will influence the markets this week and how the rising value of the Euro will influence policy decisions from the ECB.
Brazil’s turn for turmoil, Trump worries shelved, pound flash crashes again
Friday 19th May, 2017
The US dollar recovered a lot of ground overnight as the US turned in better than expected jobs and manufacturing data. Phil Dobbie asks David de Garis whether we can assume the Trump allegations will return to their sideshow status as far as markets are concerned. We also look at a crisis brewing in Brazil, better than expected retail sales in the UK, and the subsequent mini flash-crash. Algorithms at play? The pound did surpass US$1.30, but only for a little while.
Trump’s Memo Packs a Punch to the Markets
Thursday May 18th, 2017
President Trump is facing scrutiny over allegations he wrote a memo to FBI Director Comey asking him to drop a probe of his former national security advisor. The markets have reacted – with the dollar down and equities taking a tumble, whilst the gold price and the VIX index are showing marked rises. We’ve also seen a fall in 10 Year Treasury Yields. Phil Dobbie asks NAB’s David De Garis about the likelihood that we’ll see just one more rate rise from the Fed this year. We also look at the UK’s employment data, which shows a fall in real wages – just like Australia. And will we see much reaction to Japan’s GDP figures today, or will all eyes be on the White House?
Dollar and Euro, both back to pre-US election levels
Wednesday 17th May 2017
The US dollar is now back to where it was before the US election. The focus for optimism seems to have shifted to Europe, with the Euro up to the highest level since November, whilst the UK saw higher than expected inflation with the prospect of slow wages growth in data released later today. Phil Dobbie talks to NAB’s Tapas Strickland about the state of the markets and the key data driving decisions today.
Unity for France and Germany; Saudi Arabia and Russia
Tuesday May 16th, 2017
France now has a new Prime Minister (you won’t have heard of him), whilst President Macron and Chancellor Merkel talk of forging a bright new future for Europe. The Russians and Saudis are also working together, to keep the price of oil high. Whilst the Brits wait for data that could well show a decline in living standards, if wages fail to keep pace with CPI. NAB’s Rodrigo Catril joins Phil Dobbie to discuss what will drive markets today.
Weaker US data, Xi’s big push, busy week for Oz data
Monday 15th May, 2017
US CPI and retail sales data came in below expectations on Friday. Phil Dobbie asks NAB’s Ray Attrill whether this means it will also have been a surprise for the Fed and what it means for their plans this year. Plus China’s President Xi talks up plans for the Belt and Road Initiative as the “project of the century,” pledging more money to drive multilateral trade. Plus a plethora of data from Australia to digest this week.
UK and NZ rates on hold but markets still react; US CPI the one to watch
Friday 12th May, 2017
The Kiwi dollar hasn’t recovered from yesterday’s announcement from the RBNZ, which mapped a more cautious approach to future interest rates. In the UK, the Bank of England also kept rates on hold, and despite a good run of data, Mark Carney warned that tough times could lay ahead for the British consumer. So, what of the US? PPI inflation data overnight was stronger than expected, but it’s tonight’s CPI data that could influence the prospect of a June rate hike.
Nobody cares about Comey. It’s oil that counts! And the RBNZ rate decision.
Thursday 11th May, 2017
The sudden sacking of FBI chief James Comey has had no impact on the markets. Instead, a 3.5% rebound in oil prices has been the most influential factor overnight. Today, Britain’s Super Thursday sees an announcement from the Bank of England, plus an inflation forecast and other data that will give a clearer picture on where the UK economy is heading. Plus, a decision closer to home – the RBNZ kept rates on hold, but still surprised the markets.
Muted Reaction to the Budget, Retail Sales a Bigger Concern
Wednesday 10th May, 2017
There was little market response to Scott Morrison’s infrastructure budget last night. But the Aussie dollar lost ground on the back of a further fall in retail sales. NAB’s Ray Attrill tells Phil Dobbie that the consumer confidence data today will give a clearer picture of where retail spending is heading. Meanwhile inflation data from China is worth looking out for, and that US rate rise in June is looking more and more likely.
Preparing for a good debt budget
Tuesday 9th May 2017
The Treasurer announces his Budget plans tonight. Phil Dobbie talks to NAB’s Rodrigo Catril about what can we expect and how the markets might react? The government has already laid out the difference between good and bad debt. So, we can assume a lot of Trump-style infrastructure build as part of the good debt, but how will that influence their ability to return the budget to surplus? That, plus a good day for the US dollar, a bad day for everyone else – including the Euro, despite Macron’s win.
Macron’s victory largely priced in
Monday 8th May 2017
Emmanuel Macron will be the next President of France. Undoubtedly many will breathe a sigh of relief, even if his victory doesn’t totally resolve divisions within the country. But what of the market reaction today? Phil Dobbie asks NAB’s Ray Attrill about that, as well as the follow-through from Friday’s non-farm payrolls from the US, and the Aussie budget tomorrow.
Trump’s Healthcare Win; Commodities & Aussie Dollar Down Again
Friday 5th May 2017
On Day 105 President Trump has narrowly won a House vote to replace Obamacare, but he still has to convince the Senate. Phil Dobbie asks Tapas Strickland whether this could be a turning point for the Presidency. We also look at the continued fall in oil prices and in the Aussie dollar, as well as looking ahead to the non-farm payrolls data from the US and the weekend’s final French Presidential election.
FOMC raises hike expectations; Aussie dives; UK EU relations dip; French debate drags on
Thursday 4th May 2017
The US Fed has kept rates on hold, but they’ve also raised expectations for a hike next month. Phil Dobbie talks to NAB’s David de Garis about the announcement and market reaction. A Macron win at the weekend is looking more likely – the early indication from the TV debate (on now) is that Le Pen is failing to win ground and is light on policy detail. Meanwhile, relations between the UK and Europe seem to be worsening, with Theresa May accusing some in the EU of trying to sabotage the UK election. Plus why the drop in the Aussie dollar – the worst performing of the major currencies over the last 24 hours?
Oil down, markets quiet ahead of FOMC meeting, Putin talks to Trump
Wednesday 3rd May 2017
Surging oil output from Libya has hit oil prices again. Otherwise, as Phil Dobbie discusses with NAB’s Rodrigo Catril, the markets have been fairly quiet, ahead of tomorrow’s FOMC rate decision in the US tomorrow. Still, there’s a swag of data releases to look out for, as well as the French Presidential debate on TV in the early hours of tomorrow morning.
All talk: bank breakups, bonds and Brexit
Tuesday 2nd May 2017
There was light trading on Monday, with many markets closed. But mouths were wide open. President Trump talked about splitting up banks, whilst Steven Mnuchin hyped the idea of longer term treasury bonds. Phil Dobbie talks to NAB’s David de Garis about the markets’ reaction to these ideas, plus the shelving of the wall to keep government running, Juncker and May talking tough and the RBA decision today.
Trump’s honeymoon is over, May’s divorce kicks in
Monday 1st May, 2017
Donald Trump has passed his first 100 days in office. Phil Dobbie talks to NAB’s Ray Attrill whether Friday’s GDP figures are a sign that the US economy is weakening; whilst a strengthening pound reflects Theresa May’s standing in the election polls – but will it hold? And a busy week for Australia, with the RBA meeting on Tuesday and their quarterly statement on monetary policy out on Friday.