Market Talk – July 11, 2019

Posted Jul 11, 2019 by Martin Armstrong |

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ASIA:

President Trump tweeted today that China has let us (the U.S.) down by not purchasing American agricultural products as promised. This could impact the possibility of an amicable trade agreement. The positive reports indicating progress seem to have no positive end goal. Trump concluded his tweet with “hope they will soon,” a more optimistic tone rather than the usual ordering.

A new report has shown that countries that are either sanctioned or blacklisted in some way are looking into cryptocurrencies in order to avoid the sanctions imposed by the U.S. China’s former head of the central bank has told the country that they should rethink its plan for a national digital currency in order to beat new currencies such as Facebook’s Libra and the existing bitcoin.

Twenty-two countries have signed a letter calling on China to end their mass detention of Uighur people. The Uighur are a race based in the east of China who are predominantly Muslim. China reacted to this by stating that the accusations are false and there is no widespread surveillance in place.

The major Asian stock markets had a green day today:
• Shanghai increased 2.46 points or 0.08% to 2,917.76
• Kospi increased 21.80 points or 1.06% to 2,080.58
• ASX 200 increased 26.30 points or 0.39% to 6,716.10
• NIKKEI 225 increased 110.05 points or 0.51% to 21,643.53
• Hang Seng increased 227.11 points or 0.81% to 28,431.80
• SENSEX increased 266.07 points or 0.69% to 38,823.11

The major Asian currency markets had a mixed day today:
• AUDUSD increased 0.0029 or 0.41% to 0.6986
• NZDUSD increased 0.0039 or 0.59% to 0.6684
• USDJPY decreased 0.3950 or 0.36% to 108.0650
• USDCNY decreased 0.0027 or 0.04% to 6.8691

Precious Metals:

• Gold decreased 4.59 USD/t oz. or -0.32% to 1,413.68
• Silver decreased 0.03 USD/t. oz or -0.20% to 15.1910

Some economic news from last night:

New Zealand:
• Electronic Card Retail Sales (YoY) (Jun) decreased from 3.2% to 1.1%
• Electronic Card Retail Sales (MoM) (Jun) increased from -0.5% to 0.0%

Japan:
• Foreign Bonds Buying decreased from 514.5B to 297.1B
• Foreign Investments in Japanese Stocks increased from 58.5B to 192.2B

Australia:
• MI Inflation Expectations decreased from 3.3% to 3.2%
• Home Loans (MoM) (May) increased from -1.2% to 0.0%

South Korea:
• M2 Money supply (May) decreased from 6.9% to 6.5%

Some economic news from today:
• Tertiary Industry Activity Index (MoM) decreased from 0.8% to -0.2%

EUROPE/EMEA:

The European Central Bank today stated that they are “ready and prepared” to ease policy as uncertainty rises. The Bank of England has also sounded an alarm over the risks to banks in the city. The bank is warning that companies across Europe could be cut off from their lenders overnight if a no-deal Brexit occurs. The BOE also said that there will be significant volatility in the case of a no-deal Brexit.
In the UK, twelve days before the election, the latest polls show that Boris Johnson may win the leadership contest by a landslide.
For the third time in a matter of week German Chancellor Angela Merkel was seen shaking, this time in Berlin while receiving Finnish Prime Minister Antti Rinne.

France has approved its digital services tax despite threats of retaliation by the U.S. who argues that it unfairly targets American tech giants.
The major Europe stock markets had a negative day today:
• CAC 40 decreased 15.63 points or -0.28% to 5,551.95
• FTSE 100 decreased 20.87 points, or -0.28% to 7,509.82
• DAX decreased 41.29 points or -0.33% to 12,332.12.

The major Europe currency markets had a mixed day today:
• EURUSD increased 0.0018 or 0.16% to 1.1267
• GBPUSD increased 0.0067 or 0.54% to 1.2566
• USDCHF decreased 0.0028 or 0.28% to 0.9866

Some economic news from Europe:

Germany:
•German CPI (YoY) (Jun) remain the same at 1.6%
• German CPI (MoM) (Jun) remain the same at 0.3%
• German HICP (YoY) (Jun) increased from 1.3% to 1.5%
• German HICP (MoM) (Jun) increased from 0.1% to 0.3%

France:
• French CPI (YoY) increased from 0.9% to 1.2%
• French CPI (MoM) (Jun) increased from 0.2% to 0.3%
•French HICP (YoY) (Jun) increased from 1.1% to 1.4%
• French HICP (MoM) (Jun) increased from 0.1% to 0.3%

U.S./AMERICAS:

For the first time in history, the Dow surpassed the 27,000 level today and closed at a record high of 27,088.08 (227.88 points, 0.85%). UnitedHealth led the way for the Dow after rising by 5.53%, followed by Goldman Sachs (+2.57%), 3M (2.03%), and Boeing (1.92%). The S&P 500 also strengthened this Thursday after surpassing the 3,000 level during midday trading for the second consecutive day. The S&P 500 added an additional 6.84 points or 0.23% before closing at 2,999.91. In what proved to be a bullish day for healthcare, Cigna soared by 9.4% and led the rally in the S&P 500. Anthem (5.60%), UnitedHealth (5.53%), CVS (4.68%), and Humana (4.58%) all contributed to the indexes’ impressive performance.

“Monetary policy hasn’t been as accommodative as we had thought,” Federal Reserve Chairman Jerome Powell stated before the Senate Banking Committee. Unemployment and the neutral interest rate are both lower than the Federal Reserve initially anticipated. Furthermore, Powell declared that the relationship that once existed between employment and interest rates no longer exists. During yesterday’s hearings, the chairman voiced concerns over ongoing trade disputes and the worldwide economic slowdown. Although an official policy implementation has not occurred, the marketplace is certainly anticipating a rate cut in the near future.

The Bank of Canada, meanwhile, announced yesterday that it will hold the current interest rate of 1.75%. Similar to the Federal Reserve, Canada’s central bank voiced concerns over unresolved trade disputes. “Escalating trade conflicts, geopolitical tensions and related uncertainty are contributing to the broad-based slowdown of global economic activity,” the central bank stated in its official report. However, the bank foresees an uptick in the Canadian economy despite downgrading their growth forecast from 3.2% to 3%. Historically low unemployment, wage growth, and revitalized oil production were cited as reasons for the economy stabilizing after stagnating in recent years.

U.S. market closings:
• The Dow advanced 227.88 points or 0.85% to 27,088.08
• S&P 500 advanced 6.84 points or 0.23% to 2,999.92
• Nasdaq declined 6.49 points or -0.08% to 8,196.04
• Russell 2000 declined 7.13 points or -0.46% to 1,557.92

Canada market closings:
• TSX Composite declined 35.39 points or 0.21% to 16,527.90
• TSX 60 declined 1.28 points or -0.13% to 989.48

Brazil market closings:
• BOVESPA declined 670.62 points or -0.63% to 105,146.44

ENERGY:

A British tanker in the Gulf was apparently cornered by an Iranian fleet moments before a navy ship came to its rescue.

The oil markets had a green day today:
• Crude Oil increased 0.07 USD/BBL or 0.12% to 60.3776
• Brent decreased 0.01 USD/BBL or -0.01% to 66.8686
• Natural gas increased 0.023 USD/MMBtu or 0.94% to 2.4624
• Gasoline increased 0.004 USD/GAL or 0.20% to 2.0131
• Heating oil increased 0.0069 USD/GAL or 0.35% to 1.9993

• Top commodity gainers: Wheat (4.78%), Corn (2.65%), Ethanol (2.26%), and Coffee (1.15%).
• Top commodity losers: Oat (-5.26 %), Lumber (-3.05%), Cocoa (-2.60%), and Palladium (-1.73%)

The above data was collected around 16:43 EST on Thursday.

BONDS:

Japan -0.12%(+3bp), US 2’s 1.86% (+3bps), US 10’s 2.13%(+7bps), US 30’s 2.65%(+11bps), Bunds -0.31% (+5bp), France -0.02% (+2bp), Italy 1.71% (-4bp), Turkey 16.54% (+8bp), Greece 2.29% (-5bp), Portugal 0.57% (+7bp), Spain 0.49% (+5bp) and UK Gilts 0.84% (+8bp).