The Day Today

The Day Today 16 Jan 2017

* Theresa May wants “hard” Brexit now to be “clean” Brexit, either way it’s out of Single Market, Customs Union, ECJ
* Chancellor Hammond warns the EU “if we are forced to be something different, then we will have to become something different”, such as slashing corporation tax
* Parliament’s Brexit Committee wants a plan by mid-Feb
* EU Brexit negotiator Barnier: “When asked on equivalence I said: EU would need special vigilance on financial stability risk, not special deal to access the City”
* UK food prices rose for 1st time since 2014 in final quarter of the year
* Trump on UK trade deal, “We’re gonna get something done very quickly”
* Early elections set for Northern Ireland

* Trump threatens BMW with 35% border tax on cars built in Mexico
* Trump on EU: “I believe others will leave…If refugees keep pouring into different parts of Europe . . . I think it’s gonna be very hard to keep it together because people are angry about it.”
* Trump on Merkel: “I think she made one very catastrophic mistake and that was taking all of these illegals”
* Trump could end sanctions on Russia if they reduce nuclear arms
* Trump vows ‘insurance for everybody’ in replacing Obamacare
Japan, Australia Vow to Work With Trump on Regional Security

* China Daily: “If Trump is determined to use this gambit in taking office, a period of fierce, damaging interactions will be unavoidable, as Beijing will have no choice but to take off the gloves”

* ECB officials tell Reuters they’re worried that Trump protectionism might hurt the Eurozone

* France’s Fillon likes privatisation: “The state should only be a shareholder in strategic companies”

* DBRS cuts Italy to BBB, it had been the only ratings agency with a rating in the A band

* Swiss business minister supports the SNB but would like EUR/CHF 1.1500

* Bond funds continue to reduce duration, JPIM Global Bond Opportunities Fund now at 3yr from 5yr in July

Fitch puts Australian banks on a negative sector outlook

* IEA: Oil prices will be much more volatile in 2017


The Day Today 13 Jan 2017

* German FinMin: “It would presumably be right if the ECB dared to exit this year”… and it would be “possible and necessary” for the next govt to lower taxes
* WSJ: “Politicians in Germany, France, Italy and the Netherlands—which all face general elections this year—have recently stepped up attacks on ECB”

* Fitch: “We’ve not seen any sector where Brexit will be the bogeyman that causes everything to fall over”

* Fed Yellen: In the “short term I would say I don’t think there are serious obstacles. I see the economy as doing quite well”
* Fed Kaplan: ‘reasonable’ to debate balance sheet this year
* Yellen panned by colleagues in 2011 for arguing the Fed should say it’s keep rates low until 9% unemployment fell to 7.5%, according to recently released transcripts

* Trump’s choice for the Pentagon: “I’m all for engagement but we also have to recognize reality in what Russia is up to”

Turkish ruling party warns of elections if constitution bill not passed

China, Russia agree on more ‘countermeasures’ against U.S. anti-missile system
China’s trade surplus narrowed in December as exports underwhelm

* No, this isn’t a headline from the 1980s… U.S. troops’ move to Poland unnerves Kremlin

* Soros lost $1bn, Druckenmiller made money, post US election

The Day Today 11 Jan 2017

* A report alleges the “FSB has compromised Trump through his activities in Moscow sufficiently to be able to blackmail him”
* Trump secretary of state choice to say Russia must be held to account in his confirmation hearing today
* France’s independent Presidential candidate Macron (and former EconMin): the Euro may not exist in 10 years’ time as it benefits Germany at the expense of others, “It has not provided Europe with a natural convergence between the different member states”
* If Macron makes it to 2nd round, poll puts him as 52-48% winner vs Le Pen; Fillon would be 64-36% winner
* German financial regulator warns Basel 4 would hit some German banks
* UK Considers Promising EU Citizens They Can Stay After Brexit [nice to know it’s being “considered” – unfortunate choice of words by Brexit Minister in testimony to House of Lords!]
* World Bank: Trump Tax Cuts Could Jump-Start Global Economy
* Fed Lacker, known hawk, to retire in Oct
* Gundlach: US 10yr to 3% ends bull market in bonds
* Bond issuance the highest ever for this time of year, already done half of what was done for full month of Jan 2016

The Day Today 10 Jan 2017

* UK Foreign Sec: UK is “first in line” for a trade deal with the US
* Northern Ireland (land of my father) faces elections – they’d be the ones who have to deal with a land border on Brexit
* Fed Lockhart: 2 hikes this year and not yet factored in fiscal expansion but “I shifted the weight or risk to the upside”
* Fed Rosengren: “multiple tightenings…at that time we should be seriously thinking about reducing the balance sheet”
* Trump’s Son-in-law steps down as CEO from his companies in order to join White House as an adviser
* U.S. Navy ship fired warning shots at Iranian vessels
* China’s Dec producer prices accelerate at fastest pace in over 5 years
* Goldman Sachs Sees ‘Structural Break’ in Yuan Fixing Mechanism

The Day Today 9 Jan 2017

* UK PM: cannot hold onto “bits of membership” of the EU
* But ‘sources‘ suggest UK will look for customs union access and tax breaks for certain industries
* SNP Sturgeon: “I don’t feel as if I know any more about her negotiating objectives today than I did six months ago, and probably what’s more worrying than that, I’m not sure she knows more about her negotiating objectives than she did back then as well”

* German Vice Chancellor Gabriel on the EU: “It is no longer unthinkable that it breaks apart”

* US 10yr short positions reach a record

* Hubbard, Taylor and Warsh – all potential replacements for Yellen this time next year – all say they’d pursue tighter policy
* Fed Evans: 3 hikes this year is “not implausible”
* Fed Lacker: rates may need to rise “more briskly than markets appear to expect”
* Fed Powell: signs of excess risk are “isolated” and “net leverage is not elevated”
* Fed Harker: “I’m pencilled in for 3 hikes”… but could be “3, 2, 4” this year

Summers Warns of Financial-Crisis Risk From Trump Economic Plans

* China’s state tabloid Global Times: “If Trump reneges on the one-China policy after taking office, the Chinese people will demand the government to take revenge. There is no room for bargaining”

North Korea says can test-launch ICBM at any time