Stronger Dollar and Stocks

November 28, 2017

Financial markets are in a healthy mood as November winds down.

  • The dollar shows gains of a half percent or less against the euro, yen, Swissie, sterling, and Aussie dollar.
  • The DOW is up 0.3%. Share prices have advanced 0.9% in the U.K., 0.6% in Spain, 0.5% in Switzerland and France, and 0.4% in Germany. Stocks closed up in China, Hong Kong, and South Korea.
  • Copper is almost 2% lower. Gold and oil prices dipped slightly.
  • 10-year sovereign debt yields are little changed.

Strong U.S. data have been reported.

  • The Conference Board reading for U.S. consumer confidence in November is 3.3 points above October’s level and the highest in 17 years.
  • The Richmond Fed manufacturing index jumped 18 points to a reading of 30 in November, best since 1993.
  • The Case-Shiller monthly house price index went up 0.5% in September and accelerated 0.4 percentage points to a 12-month 6.19% rate of increase.
  • The FHFA house price index recorded a solid 3Q-over-2Q increase of 1.4% and a 6.5% advance from a year earlier.

In news from Europe,

  • No British banks failed this year’s annual stress test.
  • German import prices rose more than forecast in October, climbing 0.6% on month and 2.6% on year. The increase was led by a 2.8% rise in energy from September and an on-year surge of 10.3% in that item. Non-energy import prices were 1.8% above their year-earlier level.
  • German consumer confidence was unchanged from the prior month’s 4-month low reading of 10.7.
  • Irish retail sales in October were 4.6% greater than a year earlier.
  • Swedish retail sales edged just 0.1% higher in October and posted a lower 2.6% 12-month increase.
  • There was a SEK 3.1 billion Swedish trade deficit in October, a bit less than SEK 3.5 billion  in October 2016, and this left the year-to-date deficit at SEK  4.3 billion, down from SEK  11.2 billion a year before.
  • Icelandic CPI inflation slowed to a 2-month low of 1.7% in October.
  • M3 money in the euro area expanded 5.0% in the year to October and by 5.1% on-year in August-October. The expansion rates of private loans and private credit expanded marginally to 2.9% and 2.8%.
  • Bank of England Governor Carney, a critic of Brexit from the start, again warned of financial and real economic hardship if an orderly plan for the U.K. to disengage for the European Union is not worked out.

A new economic outlook from the OECD projects global growth of 3.6% this year, then 3.7% in 2018 and 3.6% in 2019. For 2018, the group expects GDP to expanded 2.5% in the U.S., 2.1% in the euro area, and 1.2% in Japan.

Canadian producer price inflation accelerated to 1.8% in October, mostly due to energy price gains. Non-energy PPI inflation was just 0.7%.

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

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