Market update: Traders wait for the US inflation data, the US sends a message to Russia

14 Feb

by Mihály Tatár

 

Good Morning!

 

  • Markets remained in waiting mode before today’s all-important US inflation data (SPX +0.26%, Nasdaq +0.45%, DAX -0.70%, Nikkei -0.43%, Shanghai +0.52%), taking some comfort in the swearing-in cerenomy of the new Fed Chairman Jerome Powell (’the Fed remains alert to any developing risk to financial stability’). The Dollar weakened somewhat further (EURUSD 1.2370, USDPLN 3.37, USDHUF 252, USDCZK 20.51), as many traders remain suspicious that the Trump economic team wants to weaken the USD and the Social Democrats in Germany nominated a new, pro- coalition leader (Andrea Nahles), lifting the Euro.  Bond markets remained extremely careful, and the freshly issued Greek seven-year euro bond – the symbol of the Eurozone finally getting out of the bad times –  crashed from 3.5% to 4%, showing that investors now anticipate global tightening and don’t accept ’unreal’ yields anymore.

 

  • In a sign of changing user preferences, analysts note that Apple shipped more watches in the fourth quarter of 2017 than the entire Swiss watch industry (!), selling more than 8 million units and increasing revenue by 50%. This doesn’t bode well for traditional watchmakers, and one has to wonder what will happen if the new generation watches will become ’indeed’ smart.

 

  • Veteran geopolitical strategist David Goldman writes that it is hard to avoid the impression that the US is now sending a strong message to Russia to distance itself from Iran in Syria: The killing of 200 Russian mercenaries by US special forces and air force within two days, followed by systematic attacks on Russian-made tanks in the region, together with the funny commentaries that ’Russia was not the intended target’, and Washington’s unusually warm support of Israel bombing Iranian-Syrian targets, all fall into this pattern. In the meantime, the US increased the pressure on Pakistan as well, and announced it will put Islamabad on the global list of terror-financing countries (that would have far-reaching consequences from bank relationships to investments.)

 

Have a nice day,

Mihály

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