Some Thoughts on the European Parliamentary Elections

Voting for the European Parliament begins this Thursday and continues through Sunday. While these elections have little direct impact on fiscal and monetary policy, they will nevertheless be a referendum on the EU itself. In turn, the results will have significant implications for domestic politics and policies. Continue reading “Some Thoughts on the European Parliamentary Elections”

Drivers for the Week Ahead

  • We believe the dollar rally remains on track
  • FOMC minutes will be released Wednesday; there is a full slate of Fed speakers this week
  • Eurozone flash PMIs will be reported Thursday; UK reports April CPI Wednesday
  • Japan has a heavy data week; RBA minutes will be released Tuesday
  • In EM, the central banks of Israel and South Africa meet Continue reading “Drivers for the Week Ahead”

Italian Political Outlook Hinges on European Parliamentary Elections

Italy is back in the spotlight as Deputy Prime Minister Salvini turns up the rhetoric ahead of European Parliamentary elections. His controversial statements reopen old wounds from last fall and suggests similar market turmoil may be in store for the eurozone. Much will depend on the outcome of European Parliamentary elections this month. Continue reading “Italian Political Outlook Hinges on European Parliamentary Elections”

Some Thoughts on the Upcoming Semiannual US Treasury FX Report

The US Treasury will soon release its semiannual report to Congress on “Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States.” As well as adjusting the criteria for being named a currency manipulator, more countries will reportedly come under scrutiny. Yet despite the current trade frictions, we do not think China will be named as a manipulator. Continue reading “Some Thoughts on the Upcoming Semiannual US Treasury FX Report”

Drivers for the Week Ahead

  • Trade tensions should dictate the tone of global financial markets this week, and it won’t be pretty
  • The US data highlight this week is April retail sales Wednesday
  • A deeper and more protracted trade war is one of those exogenous shocks that could tip the US into recession
  • In the eurozone, the focus this week is more political than economic
  • UK reports labor market data Tuesday; Canada reports April CPI Wednesday; Australia reports April labor market data Thursday
  • In EM, several central banks meet this week Continue reading “Drivers for the Week Ahead”

My Baby, Xi Wrote Me A Letter

With the trade war heating up, we have been getting more questions about yuan policy. Despite renewed US-China tensions being a headwind for the mainland economy, we do not see the yuan being used as a weapon in this trade war. Continue reading “My Baby, Xi Wrote Me A Letter”

DM Equity Allocation Model For Q2 2019 – UPDATE

  • Equity markets may find out if there is a Powell Put, Part Two; short answer is no
  • Falling equity markets this week reflect growth concerns stemming from renewed trade tensions
  • Fed officials continue to push back against any notions of easing
  • Our 1-rated grouping (outperformers) for Q2 2019 consists of Ireland, Singapore, Austria, New Zealand, and Israel
  • Our 5-rated grouping (underperformers) for Q2 2019 consists of Greece, Germany, Japan, Portugal, and Italy
  • Since our model update on April 10, our proprietary DM equity portfolio has fallen -0.4%, slightly outperforming MSCI World (-0.7%) 

Continue reading “DM Equity Allocation Model For Q2 2019 – UPDATE”

Drivers for the Week Ahead

  • The week is starting off with a bout of risk-off sentiment from several triggers
  • China officials had been scheduled to arrive in Washington this Wednesday to continue trade talks
  • Markets are still digesting Powell’s less dovish than expected comments; Fed officials are out in full force this week
  • The main US data focus this week will be April PPI Thursday and April CPI Friday
  • Final eurozone services and composite PMI readings will be reported Monday; UK reports Q1 GDP Friday
  • Japan reopens Tuesday after the extended Super Golden Week holiday; Canada highlight will be April jobs data Friday
  • RBA meets Tuesday; RBNZ meets Wednesday; Norges Bank meets Thursday
  • In EM, the central banks of Malaysia, the Philippines, Chile, Thailand, Brazil, and Peru all meet this week Continue reading “Drivers for the Week Ahead”

Some Thoughts on the Spanish Election

Spain went to the polls Sunday for the third time since 2015. The Socialist victory suggests that more expansionary fiscal policies will be followed, which in turn is slightly negative for Spanish bonds. The weaker euro should help Spain’s export sector, amongst the largest in the eurozone. Continue reading “Some Thoughts on the Spanish Election”