Mr. Trump Goes to Davos

January 26, 2018

While at the World Economic Forum, President Trump in interview said some unexpected things, like he seeks a stronger, not weaker dollar, and expects the currency to strengthen eventually. Rarer yet, he seemed to apologize for tweets that may have ruffled U.S. relations with Great Britain. And finally, trade is fine, so long as it’s fair trade.

Nonetheless, the dollar weakened overnight by 0.6% against sterling, 0.5% relative to the Swiss franc and Australian dollar, 0.4% versus the loonie, 0.3% vis-a-vis the euro, 0.2% against the peso and 0.1% versus the kiwi. The yen is steady.

Share prices leaped 2% in Hong Kong, rose 0.3% in China but fell 1.0% in New Zealand, 0.3% in India and 0.2% in Japan, Singapore and Taiwan. In Europe, stocks so far have gained 0.9% in France, 0.5% in Switzerland, 0.3% in Italy, and 0.1% in Germany and Spain.

The 10-year U.S. Treasury yield is 2 basis points firmer in futures trading. The German bund yield rose a basis point, but the Japanese JGB yield is a basis point softer.

Gold dropped 0.9% to $1,355.80 per ounce. WTI oil is little changed at $65.59 per barrel.

Investors await fourth-quarter U.S. GDP data due at 08:30 Eastern Standard Time. U.S. durable goods orders and the U. Michigan consumer sentiment index will be reported today as well.

Australians are observing Australia Day.

Released minutes today from last month’s meeting of the Bank of Japan policy Board observe that expected inflation is no longer declining and that some measures in fact have improved, but they nonetheless strongly reaffirm the continuing need for forceful monetary stimulus, since actual inflation still lies far below the 2% target.

Chinese corporate profits posted a 10.8% on-year increase in December, the smallest such rise in 2017. As a calendar year whole, earnings went up 21%, most since 2011 and more than twice as much as the 8.5% average advance in 2016.

South Korean consumer sentiment slipped to a reading of 109.9 this month from 110.6 in December. Unemployment in Singapore stayed level at 2.1%.

British GDP grew 0.5% last quarter. Although 0.1 percentage point faster than the quarter-on-quarter pace in 3Q, on-year growth slowed to 1.5%, lowest in 19 quarters and down from 2.0% in the year through the final quarter of 2016. Calendar year growth of 1.8% in 2017 was the slowest since 2012, as the advance in services dropped to 1.6% from 2.5% in 2016.

Euroland M3 money growth slowed to an on-year pace of 4.6% in December from 4.9% in November and to 4.8% in the fourth quarter from 4.9% in the third quarter. The slowdown involved M1, which posted an on-year advance of 8.6% in December versus 9.4% in October. Loans and credit to the private sector remained fairly steady at an on-year pace of slightly under 3.0%.

Sweden’s trade deficit narrowed to SEK 3.9 billion last year from SEK 14.7 billion in 2016. In 2015, there had been a SEK 13.8 billion surplus. Swedish retail sales volume in December was 3.3% greater than a year earlier. Nominal sales posted on-year increases of 2.3% in December and 2.4% in 2017.

President Trump gives a speech later today at the Davos World Economic Forum.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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