Market update: European growth figures surprise to the topside, Romanian economy advances 8.8%

15 Nov

by Mihály Tatár

 

Good Morning!

 

  • After a set of weak Chinese data and some further signs that the Republicans are still divided about the tax reform, markets spiralled into full profit-taking mode (SPX -0.23%, DAX -0.31%, MIB -0.61%, Nikkei -1.32%, Shanghai -0.51%, US 10Y yield 2.36%), with commodities dropping the hardest (Nickel -6%, Copper -2%, WTI 55, Brent 61.40, the latter also on the market talk that Russia is ’hesitating’ to extend production cuts). Personally I don’t think much of the latest news, and to put stock movements into perspective, the S&P is a mere 0.70% from its record high. (A drop after passing the tax reform bill, especially if it is a watered down tax reform, would concern me more.)  Amid the pessimism,  European growth numbers came out even better than expected – Germany’s powerful 2.3% Y/Y print has sent the EURUSD to 1.18 -, and looking at the country performances, nobody can complain (Italy 1.8%, Spain 1.6%, Portugal 2.5%, Romania 8.8%, Czech Republic 5.0%, Poland 4.7%, Hungary 3.6%. Okey, the Italian and Hungarian number feels a bit weak in this series.) Speaking of Hungary, the MNB easing policy just reached a new milestone, with the Hungarian 10Y yield dropping to 2.26% (meaning, it is lower now than that of the US), with the average 1Y Forint interbank deposit rate falling to -0.20% and the ON Bubor cruising at -3 basis points. (No wonder Hungarian banks do so well at lending these days.)

 

  • Goldman Sachs notes that in contrast to the media sentiment, while self- driving cars is a much tougher challenge than journalist think (as mentioned here before, automatization has limits when meeting a social process called city driving), the automatization of – mostly highway – trucking is much simpler and the consequences will be felt in the coming years (heavy job losses for drivers, lower insurance premiums and transportation costs with even tighter delivery deadlines).

 

Have a nice day,

Mihály

 

 

Dear Readers, the next Market update will be published on the 20th of November.

 

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