Market update: US employment data disappoints pessimists, Trump pushes for rate cuts, oil jumps on Libya

8 Apr

by Mihály Tatár

 

Good Morning!

 

  • Disappointing pessimists, the US economy seemed to be doing pretty well judging from Friday’s data (196.000 jobs created in March, unemployment rate 3.8%, hourly wages rising 3.2% Y/Y), and it also helped the sentiment that Trump increased the pressure on the Fed (if they had ’dropped rates’, and instead of tightening went into easing, the US economy would become a ’rocket ship’. Note that while commentators are preoccupied with whether Trump should tell the Fed what to do or whether he is right, which are irrelevant, there is now a clear frustration with the strong Dollar.) In less positive news, the US and China seemed to be backtracking from an immediate deal announcement (’still hard nuts to crack’, SPX +0.46%, Nasdaq +0.59%, DAX +0.18%, Nikkei -0.15%, Shanghai -0.29%, EURUSD 1.1225, US 10Y yield 2.49%), and oil prices spiked higher on reported heavy fighting between Khalifa Haftar’s troops and government forces within Tripoli that included air strikes and the rapid evacuation of US troops stationed there (WTI 63.40, Brent 70.70 USD). (Rome is understandably very afraid of its oil workers and its business investments – hey, why not send in the EU army to get the people out? Oh, wait, there isn’t any. Anyhow, while the UK and Italy want Haftar to stop, and call for sanctions,  France is supporting him. Let’s have a summit here.) Otherwise, traders waited for the fresh Brexit developments (GBPUSD 1.3060), as May – so far unsuccessfuly – tried to appease Labour-leader Jeremy Corbyn into a Brexit deal, but got her June 30 extension plea rejected by the EU (Tusk wants a one-year delay, while an icy Macron criticized both May and Tusk and demanded a ’a credible alternative plan’. (I am quite sure the next country that wants to leave the EU or the euro won’t bother with negotations before leaving, only after the fact. Regarding May’s sudden innovation that a ’dialoge is needed for the good of the coutry’, as pro-Brexit lawmaker Rees-Mogg put it, ’there is an irony, at the very minimum, of saying one week that one thinks Mr.Corbyn is dangerous and unfit for office, and the next week deciding to co-habit with him’. Does May think tories will have a chance at the next election after this horror show?)

 

  • While Angela Merkel received former US President Obama with a super warm welcome (somebody please tell her that he is not running in 2020), Obama himself has become very worried about the brutal infighting in the Democratic party (forecasted here back in 2017): He warned that  ’ideologically rigid progressives’ in the left have created a ’circular firing squad’ , where ’you start shooting at your allies because one of them has strayed from purity on the issues’. Note that according to Reuters, 70% of Wall Street workers now think Trump will be re-elected, which is a brutal, maybe unprecedented shift in perception.

 

 

Have a nice week,

Mihaly

 

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