Please don't tell us you're still using the Laffer Curve, Mr Mnuchin...

ref :- " Most Economists Agree : Trump Tax Plan Will Widen Budget Deficit" , Bloomberg Markets It's Friday ..... whose got the energy to go into President Trump's tax plans announced on Wednesday ? Come to that, whose got the inclination, given that it would take all weekend ? We should however offer a few general observations with markets in mind. Although they're taking a small breather this morning, stock markets have mostly reacted favourably to Mr Trump's speech ..... as well they might. Just to pick out a few headlines, a reduction in corporation tax from 35% to 20% would plainly be beneficial for corporate earnings and for growth. So too the temporary tax break on corporate capital ex

Who'd have thunk it ? The Dollar on a roll...

ref : - "Dollar Gains on Rates , US Tax Plan : Stocks Climb : Markets Wrap" , Bloomberg Online On September 8th the Dollar Index, the trade-weighted measure of the US unit's value against a basket of currencies, traded down to a low of 91.01. At the time EUR / US$ was knocking at the door of $1.21, prospects of another US rate rise this year were in serious doubt, and Korea-inspired safe-haven seeking meant that the Dollar had few friends. Today, the Dollar index is trading at 93.34, EUR / US$ is at 1.1740 and the prevailing wisdom of 2 1/2 weeks ago looks a bit foolish. As regulars will know, we always get a bit nervous when everyone's talking the same way but what fundamentally is behind

A slapdown for Mrs Merkel, Trump puts his foot in it, and a whole list of crises .... well, it is Mo

ref :- "Time spent thinking about the next financial crisis is not wasted" , by John Authers in the Financial Times 22/9/17, and "Merkel's fourth-term victory marred by rise of rightwing AfD" , the Financial Times It may have been a fourth election win for Angela Merkel but a resounding victory it certainly wasn't. A reduced share of the vote (around 32.7%) for her Christian Democrats and a strong showing for the nationalist Alternative for Germany party (AfD) were probably both manifestations of the same thing -- widespread residual discontent at the Chancellor's "open door" immigration policy in 2015/16. Capturing an estimated 13.4% of the vote means that the anti-immigration AfD will ha

Like watching paint dry, or Candidate No. 1 for the next global financial crisis ? That's the th

Thursday 21st September 2017 ref :- "Yellen pulls trigger to reverse QE but we're now in uncharted waters" , Ambrose Evans-Pritchard in the Daily Telegraph No surprises from the Fed yesterday per se, though the subsequent lift in US Treasury yields and in the Dollar attested to the Fed's accompanying script being more hawkish than some expected. A majority of the Fed's Open Market Committee are still pretty gung-ho for a rate rise in December (now a 96% probability, according to some measures) and for another three hikes in 2018, though the median projection for longer-term rates was adjusted down from 3.0% to 2.75%. Fed Chair Janet Yellen also confirmed to no one's great surprise that the

What Hollywood and the markets have in common : "Nobody knows anything..."

ref :- General That doyen amongst screenwiters William Goldman shook up the Hollywood establishment with the publication in 1983 of "Adventures in the Screen Trade" . As a dissertation on his own profession and on the film industry in general, it swiftly came to regarded as a seminal work by those interested in that slightly unreal world. More than just a tutorial on what makes good screenwriting, Mr Goldman had plenty of recollections about Hollywood people and events that may have ruffled a few feathers. But it was his frank and myth-busting approach to the aura surrounding Tinseltown's major players and their perceived talents that attracted most attention. Foremost among the lessons to

Two thoughts to end the week : Sooner or later, the BoE's going to have to do more than talk a g

Two thoughts to end the week : Sooner or later, the BoE's going to have to do more than talk a good game ..... and how bad would the N. Korea thing have to get to ruffle this market ? ref : General, and "Economists divided as BoE ramps up rhetoric....." , The Financial Times N. Korea first ..... and news overnight of another missile fired over Japan into a spot in the Pacific 3,700km away. The distance is significant and quite deliberate, being almost exactly the same as that between N. Korean launch sites and the US territory of Guam. The threat could not have been more obvious. Six minutes after the launch, S. Korea let fly with some missiles of its own at an imaginary target 250km out to

Any move likely from the Bank of England tomorrow and the Fed next week ? No ..... just a lot of hea

Wednesday 13th September 2017 Any move likely from the Bank of England tomorrow and the Fed next week ? No ..... just a lot of head-scratching. ref :- "Act or Wait ? Fed Debate Heats Up After Inflation Misses Target " , Bloomberg Markets "The value of Sterling is largely a function of the Brexit process .... discuss." The answer to that one is "Yes of course ..... on the way down and indirectly, and a little ironically, on the way up too" . Without doubt the concerns over how Brexit, and especially a messy Brexit, might adversely affect the UK's economic performance have been the driver behind the Pound's fall from $1.49 to the low $1.20's (at one stage), and from €1.30 to €1.08. But notwith

China reins back the measures supporting the Yuan ..... Can accusations of "currency manipulati

Monday 11th September 2017 ref :- "China Is Striving to Contain Its Once-Diving, Now-Thriving Yuan" , Wall Street Journal , Markets Now that's just plain silly ..... At the start of the year (Jan 3rd, to be precise), USD / CNY made a high print above 6.96 -- last week, it briefly traded below 6.45. That represents a strengthening in the Chinese Yuan / Renmimbi of something a little over 7.3% against the Dollar . How could anyone accuse the Chinese authorities of currency manipulation -- artificially finessing your currency lower in order to gain an "unfair" competitive advantage -- just because they have decided that it's time to withdraw some of the measures designed to have exactly t

Cosy up to "Chuck and Nancy" and leave your own guys looking stupid   -- --   Getting the

As we've often mentioned, no one would ever describe Donald Trump as a classic Republican in a party political sense ..... his right-of-centre politics certainly have more in common with the broad views of the GOP than they do with those of the Democrats, but his obvious disdain for political elites and party structures mark him out as more of a natural independent. Nothing at all wrong with that, but since independents don't get elected President he landed up as the Republican candidate despite the ill-concealed discomfort of many of the party establishment. Events since have proved that the old guard were right to feel a little anxious. Whether it's the Russian connections or the ongoing b

Whether you call it the "Fall" or the "Autumn", the real question is : "Whe

ref :- "Draghi could leave investors in the dark with the QE exit delayed" , CNBC Markets We'll turn the focus away from the Korean peninsular for just a moment ..... not that there's any sign of a healthy resolution . Rather the opposite, in fact. Catching up a little after the Labour Day holiday in the US, markets continued to see further "safe-haven" seeking with gold up again, the dollar lower and US Treasuries particularly in demand -- the yield on 10yr Treasury Notes fell 9bp to 2.07%. Instead, we'd better take a quick shufti at central bank issues ahead of the European Central Bank's monetary policy meeting tomorrow. Crises may come and go, but speculation on the intentions of centr

Some musings on Labour Day .....  somehow events are not very conducive to relaxing. ref :- General

Normally one might expect the annual Labour Day holiday in the United States to be marked by quiet market conditions across the globe, a chance to grab a long weekend perhaps or for the more conscientious, time to mull over what the week has in store. Unfortunately, Kim Jong Un is not being too accommodating on either front. There are rumours around this morning that the South Koreans have detected preparations for an ICBM launch north of the border. Obviously, after the weekend's apparently successful detonation of a decent-sized hydrogen bomb with a capacity of roughly ten times that of the Hiroshima atomic bomb, news that North Korea is continuing to test methods of delivering it is a lit

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