Sleepless at The White House

December 24, 2018

The Christmas break, which has begun in many countries around the world, has not halted the the Byzantine atmosphere surrounding the U.S. White House. Defense Secretary Mattis resigned but agreed to stay on through February 28, but President Trump has asked him to be gone by January 1st. The President is reportedly also seeking ways to fire Fed Chairman Powell, an action without precedent, and is blaming Treasury Secretary Mnuchin for recent share price declines. Meanwhile, the federal government remains closed, with no sign that it will soon reopen, nor for that matter any observed effort by White House officials to expedite a deal. Trump has assumed a what-me-worry posture on the matter. Mnuchin’s behavior over the weekend was erratic as well, calling the Chairmen of the six largest banks and then proclaiming that there is no danger of a credit crunch, even though that was not an expressed fear in the market previously.

Markets either shut today for Christmas Eve or that closed early include Germany, Finland, Norway, Hungary, Austria, Switzerland, Denmark, Poland, The Netherlands, Spain, Italy France, Sweden, Iceland, The Philippines, the Czech Republic, Malta, Bulgaria, and Cyprus. Japanese markets also didn’t open because of the observance of the Emperor’s Birthday holiday, and the U.S. stock exchanges will be shutting at 13:00 EST (18:00 GMT).

Among markets that trade at least part of today, share prices dropped 1.3% in Ukraine, 1.0% in Italy, 1.0% in France, 0.7% in Russia and Spain, 0.5% in Hong Kong, 0.8% in India, 0.9% in Greece, and 1.1% in Vietnam. All eyes will be on the U.S. market, where the Nasdaq’s slump already qualifies as a bear market (i.e., down at least 20% from peak), and the S&P and DJIA are within a 1-3 days range of that distinction if last week’s pace of decline persists.

The dollar is 0.1% firmer against the euro, unchanged relative to sterling and the kiwi, down 0.1% versus the yen, Swiss franc, yuan and Mexican peso, and off 0.2% vis-a-vis the loonie and Australian dollar.

Ten-year sovereign debt yields are down 4, 3, and 1 basis points in the U.K., Greece, and the United States. WTI oil has eased 0.2%. Copper has fallen more steeply than that, but gold shows a 0.5% rise today so far.

There’s little released data to report.

  • The Dutch current account surplus of EUR 20.485 billion last quarter follows a surplus of EUR 16.824 billion in 2Q and represents the second widest surplus since the first quarter of 2017.
  • Dutch GDP growth was cut by a third to just 0.2% in 3Q18, its slowest pace in nine quarters, and personal consumption, business investment and government spending each held unchanged and export growth slowed. On-year Dutch growth dropped to 2.4% (least since the year to 4Q16) from 3.1% in the second quarter of 2018.
  • Consumer prices in Singapore rose 0.2% in November following a 0.3% slide in October and no change in September. Year-0n-year inflation of 0.3% was the slowest since April and followed 0.7% on-year inflation in each of the previous three months.

In the U.S., the Chicago Fed National Activity Index constitutes a thin data release calendar today. Mexican unemployment is also due.

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

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