Bad Vibrations

April 14, 2017

Most markets around the world are closed for Good Friday. 

Share prices in those few open markets are lower, with declines of 1.4% in Russia, 0.9% in China, 0.8% in Pakistan, 0.6% in South Korea, 1.1% in Taiwan, and 0.4% in Malaysia, Japan, and Vietnam.

Dangerous geopolitics has maintained a sour mood.

  • Russian officials now suspect the Syrian chemical attack was faked to provide an excuse for the U.S. bombing toward the purpose of ousting the Assad regime.
  • Both North Korea and the United States have ramped up their provocatively aggressive rhetoric. President Trump has warned of repercussions if North Korea tests a missile tomorrow on the 105th anniversary of the leader’s grandfather’s birthday. North Korea is warning of war.

The 10-year Japanese JGB yield fell two basis points to zero. Japan would be extremely vulnerable if war breaks out in Korea.

The February rise in Japanese industrial production was revised up to 3.2% from 2.0% reported two weeks ago. Shipments were revised to show an increase of 1.4% from a 0.1% dip estimated initially. Capacity usage increased 3.2% in February, reversing a 2.8% drop in January. Capacity was unchanged on month.

Although there is no trading today in U.S. stocks or Treasuries, U.S. retail sales and consumer price data were released.

  • Retail sales fell 0.2% in March following a 0.3%  decline in February. However, sales advanced 1.0% in the first quarter compared to 4Q16 and by 5.4% from a year earlier.
  • U.S. consumer prices in March posted their first monthly drop since February 2016, a decline of 0.3%. This depressed the 12-month increase to 2.4%, a 3-month low after a rise of 2.7% in the year to February. Core CPI inflation of 2.0% was down from 2.2% in February and 2.3% in January, and such was at a 16-month low.

The dollar has weakened 0.5% versus the peso, 0.4% against the yen, 0.2% relative to the Swiss franc, Australian dollar, and sterling and 0.1% vis-a-vis the yuan, euro, kiwi, and loonie.

Gold closed 0.8% higher yesterday, benefiting from the risk averse mood.

As if present geopolitical conditions weren’t scary enough, April 14-15 already is a period of infamy. In 2012, the Titanic hit an iceberg in the North Atlantic late in the evening of April 14 and sank a couple of hours later on April 15. Even more coincidental, five days after the American Civil War ended, President Lincoln was shot by an assassin on the night of Good Friday, April 14, 1865 and died the morning after.  Finally, April 15 is the due date for U.S. individual income taxes to be filed and thus not a favorite time for the people.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.




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