The Morning Call – March 2018
Technology out of favour, markets a little confused
Thursday 29th March 2018
President Xi has been heavily promoting Made in China 2025, using technology to promote highly competitive products. But how much of that innovation is the IP of the United States? In today’s podcast Phil Dobbie talks to NAB’s Tapas Strickland about how the Trump administration is strengthening its aim at China’s high-tech industries and the impact it’s having on the NASDAQ. But it’s not just those trade talks that are hitting technology stocks. They also look ahead to tonight’s PCE deflators, the key measure of US inflation. And it’s exactly one year till Britain leaves the EU, with so much still to sort out.
Trade-war tap is turned back on, markets beat a retreat
Wednesday 28th March 2018
Early in the session it looked like share trading in the US was going to build on the upward momentum of yesterday, but then a sudden shift in sentiment. Phil Dobbie asks NAB’s David de Garis, why the sudden change in mood? In part, it’s because of further trade restrictions suggested by President Trump, suggesting the battle is far from over. They also discuss falling confidence in Europe and the US, the flattening yield curve and increased supply from the Fed, and New Zealand’s consumer confidence figures out this morning.
Trade War Fears Subside, Stocks Bounce Back, Risk Sentiment Eases
Tuesday 27th March 2018
What a difference a day makes. The mere hint that a resolution could be found in the trade dispute between the US and China has seen shares rebound today, with money moving from safe havens like treasuries and the Japanese Yen. Phil Dobbie talks to NAB’s Tapas Strickland in London about the rebound and the the impact on the Aussie and Kiwi dollars. They also discuss the looming Trump audience with Kim Jong Un and the latest on Brexit.
Another correction, but what’s the cause?
Monday 26th March 2018
Will equities take another hammering today? Phil Dobbie puts the question to NAB’s Ray Attrill, and discusses the reason for the big falls we saw on Friday. They also discuss the reason for the latest ‘correction’ – is it fears of a trade war, changes to the Trump administration or something more fundamental, like economic performance and an over-valuation of shares. Could we see contagion to bonds and currencies today? They also look ahead to the first day in a new job at the RBNZ for Adrian Orr, with a new Policy Targets Agreement with the NZ government.
The end of economic surrender – Trump’s first swipe at China
Friday 23rd March 2018
President Trump signed an executive memo this morning, permitting tariffs on $50 billion worth of Chinese imports. Phil Dobbie asks NAB’s Rodrigo Catril if is this the start of a trade war good and proper. The need for the senate to pass the government’s spending bill before another government shutdown, plus the resignation of one of Trump’s lawyers handling the Mueller investigation, will be adding to uncertainty in the markets. They also discuss the Bank of England rate decision overnight, yesterday’s Aussie employment figures and key data to look out for today.
Fed’s quarter percent rise on a steeper path to 2020
Thursday 22nd March 2018
It will be no surprise that the Fed has lifted interest rates this morning. Perhaps the tone was more hawkish than expected in Jay Powell’s first meeting as Fed chair. Phil Dobbie talks to NAB’s Ray Attrill about the path for future hikes, with the Fed expecting to reach 3.4% by the end of 2020. They also discuss the Bank of England decision tonight, Australian Labour force data, and the day’s other key data.
Markets rebound ahead of Fed; Facebook loses Friends
Wednesday 21st March 2018
The share markets rebounded today. NAB’s Tapas Strickland says it’s a positive sign that the reaction was contagion from tech stocks rather than anything more lasting. Meanwhile markets prepare for the Fed meeting, with an announcement tomorrow morning Australia time. They also discuss the rise in oil prices, confusing commentary from the Bank of Japan and the latest on reactions to Trump’s trade war.
Europe’s deal is no deal, US stocks tumble, Aussie slides
Tuesday 20th March 2018
The UK and the EU have seemingly reached a transition deal that changes very little till the end of December 2020, when Britain goes it alone. But as Phil Dobbie discusses with NAB’s Rodrigo Catril, it has no winning formula for the Irish border quetsion. There’s also been a big drop in stocks in the US, particularly tech stocks – we explore why on today’s podcast, plus the reasons for the fall in the Aussie dollar, which hit a year to date low overnight. Plus the data releases worth looking out for today.
This time, G20 unrest is on the inside
Monday 19th March 2018
G20 summits normally attract anti-capitalist protestors on the outside. As Phil Dobbie discusses with NAB’s Ray Attrill, this week we can expect the unrest to be on the inside, with Steven Mnuchin already firing the first salvo at the Chinese. They also look ahead to the FOMC meeting this week. And has the inflationary path in Europe just become a lot more gradual?
Is Goldilocks About to Take a Hit?
Friday 16th March 2018
The markets were relatively calm today, with light trading on equity markets. Phil Dobbie asks NAB’s Gavin Friend if we are in a Goldilocks environment right now, with just the right amount of growth and not too much inflation. Maybe, but not for long is the warning, as President Trump’s new economic advisor ratchets up the rhetoric against China. It might be a quiet end to the week, but Goldilocks could be in trouble.
US targets China, UK targets Russia
Thursday 15th March 2018
It seems highly likely that President Trump will be targeting China with a tariff package that could impact more than 100 products and impose restrictions on Chinese investment. Phil Dobbie talks to NAB’s Tapas Strickland about the market reaction to this, and to Theresa May’s announcement that 23 Russian diplomats will be sent packing in response to the Salisbury nerve agent attack. They also look at the weak retail sales results in the US and China, consumer confidence in Australia and today’s GDP figures for New Zealand.
Tillerson out & Broadcom blocked as Trump takes control
Wednesday 14th March 2018
Rex Tillerson was fired by a tweet this morning. Phil Dobbie talks to NAB’s Rodrigo Cattril about the market impact of a President following a “my way or the highway” agenda. We saw another example of his America First approach with his decision to block the acquisition of Qualcomm. Meanwhile, CPI figures overnight indicated inflation is not running away, whilst Canada’s central bank hints that there’s more slack in the labour market for prices are expected to rise. And the Spring Statement for the UK shows growth is going to be slow for some time yet.
Will CPI rise, will Abe go?
Tuesday 13th March 2018
The markets are waiting for today’s CPI figures from the US. Phil Dobbie asks NAB’s David de Garis whether they will influence speculation on the path of rate rises this year. They also discuss the latest on Trump’s tariffs, today’s NAB Business Survey, Hammond’s Spring Statement in the UK and the scandal brewing in Japan which is posing a threat to the Abe government.
Steel stories, payrolls surprise and a meeting of the supreme leaders
Monday 12th March 2018
It looks like Australia will be exempt from US steel tariffs. Phil Dobbie asks NAB’s Ray Attrill about the impact on the Aussie dollar and whether it would have any material impact on our economy. They also look at the surprising impact of Friday’s non-farm payrolls data in the US, which showed a jump in employment but a fall in wage growth. And what of the Trump Kin Jong Un meeting, if it ever happens?
Will Australia make it to Trump’s exclusion list? ECB unanimously says very little
Friday 9th March 2018
As we record this morning’s podcast President Trump is about to meet at the White House to discuss trade tariffs. As Phil Dobbie discusses with NAB’s Ray Attrill, we know Canada and Mexico have been excluded from the new measures, but there’s a chance Australia might also be given preferential treatment. They also discuss the latest ECB meeting in which Mario Draghi removed the pledge to increase its asset buying program, but gave nothing away about when it might end altogether. Plus, the all-important non-farm payrolls data tonight, where all eyes will be looking for signs of wage growth.
With Cohn gone, Trump is unbalanced on trade
Thursday 8th March 2018
The resignation of the US President’s economic advisor Gary Cohn hit US equities overnight. As Phil Dobbie discusses with NAB’s Rodrigo Catril, there are reports that Trump will extend tariffs further against China in retaliation for intellectual property theft. So how concerned should we be about a trade war? And to add fuel to the fire, China, Japan and Australia release balance of trade figures today. Plus, how likely is a soft Brexit? The latest response from the EU seems to suggest a free trade agreement is the only outcome. Will all the Brexit and tariff talk have any influence on the ECB’s QE timetable – will the Bank actually commit to one tonight?
Two Wars Could Be Off the Agenda
Wednesday 7th March 2018
Even though the US dollar and equities slid today, there’s optimism that President Trump will see sense and reverse his plans to kick start a trade war, or at least be more specific about which countries he targets. Phil Dobbie discusses the shifting scene with NAB’s Gavin Friend in London. They also look at the day’s second big back down – could North Korea go as far as removing its nuclear weapons after peace talks with the south? They also look ahead to today’s GDP figures for Australia and what to expect when the Fed’s Lael Brainard speaks this morning.
Self-deprecating Trump stands firm on steel, or does he?
Tuesday 6th March 2018
There’s been a mixed reaction to President Trump’s continued insistence on steel tariffs today, as Phil Dobbie discusses with NAB’s Tapas Strickland. On the one side equities are on the rise, with traders assuming some sort of compromise will be reached. On the other side, the Canadian dollar has taken a hit with continued fears that tariffs will impact NAFTA. To lighten the mood, President Trump did a stand-up routine at a journo’s dinner overnight. He says he was very good. They also discuss a slug of Aussie data, the RBA rate decision today, Brexit (of course), US ISM figures and the meeting of the People’s Congress in China.
My tariffs are bigger than your tariffs
Monday 5th March 2018
The markets continued to react to President Trump’s stance on steel tariffs, with his resolve seemingly increasing over the weekend. Phil Dobbie asks NAB’s Rodrigo Catril how far the influence will reach this week. They also discuss the situation in Europe, where Teresa May’s speech is seen by many as a step in the right direction and where another election in Germany is no longer on the cards. We still have to wait and see how Italy voted. They also discuss Japan’s exit strategy from QE, Australian property and China’s Caixin PMI today, will it echo the decline shown in the official figures last week.
Trump Rolls Out Steel Tariffs; Politics dominates Europe
Friday 2nd March 2018
Lots of numbers out overnight but it’s politics driving the markets right now, with President Trump saying he will sign the order next week to impose tariffs on steel imports. Phil Dobbie talks to NAB’s Rodrigo Catril about the market reaction. Plus, an election this weekend in Italy, the SDP vote in Germany that could determine whether another general election is imminent, and Theresa May’s response to the EU – what’s her answer to the Irish border question? They also look at Jerome Powell’s senate appearance – he seems to be blowing hot and not quite so hot on the economy. And discussion about the Aussie capex figures yesterday – a cause for concern?
Brexit Breakdown Pummels the Pound
Thursday 1st March 2018
A transition agreement for Brexit is by no means a done-deal. The EU’s draft agreement is far from acceptable to the UK. The reaction has hit the pound, bond yields and equities – Phil Dobbie asks NAB’s Ray Attrill if the situation could worsen if Theresa May offers up no answers. They also discuss the growth in US oil production, Europe’s evasive inflation, China’s cooling economy and what to expect from today’s capex figures in Australia.