Ahmed Ibrahim’s Post

Macro-News round-up: #MarketNews • Europe's consumer confidence index remains negative, but yesterday's data came out relatively better than expected. Klaas Knot , President of the Dutch central bank, said that rate cuts in the first half of 2024 were unlikely given the current data. • In the US, the consumer confidence index rebounded above expected levels, 110.7 vs 104.5, momentarily generating a strong response in the dollar. Existing home sales were also positive and better than expected. Philadelphia Fed President, Patrick Harker, made a series of comments yesterday, stating that there is no need to raise rates further, but also clarified that the Fed will not simply cut interest rates, and that the soft landing process is likely to be bumpy, as many factors could frustrate it. Recall that Atlanta Fed President Raphael Bostic said on Tuesday that there is currently no “urgency” for the Fed to cut US interest rates, given the strength of the economy. • US considers raising tariffs on Chinese electric vehicles (EVs) -WSJ. A twenty-five percent tax on Chinese cars is presently in place; it was imposed during the previous administration of Donald Trump and increased by his successor. The report also stated that the U.S. administration is discussing Trump-era tariffs on some $300 billion worth of Chinese goods, with the goal of concluding a protracted assessment of the penalties by early next year. Another significant export hub for foreign automakers is China, where Tesla is based. • This afternoon we will see US Q3 GDP growth as well as initial jobless claims and the Philadelphia Fed's manufacturing index report. • Crude oil seems to finally move into buying mode. Yesterday's US crude inventories showed a turnaround to positive, the US seems to be replenishing its crude stockpiles. In response to recent strikes by Yemeni Houthi terrorists affiliated with Iran, oil prices rose for the seventh straight session on Wednesday, amidst tensions in the Red Sea. As the largest shipping companies steer clear of one of the busiest shipping lanes in the world, worries over disruptions to global trade caused both benchmarks to rise more than 1% on Tuesday. Additionally, BP has suspended all oil supplies across the Red Sea.

ECB: ECB's peak rates to endure economic perils: Bloomberg reported that a poll of analysts suggests the ECB will next week hammer home the message that borrowing costs are set to stay high for an extended period, despite risks to economic growth swirling. That stance has been reinforced by the recent bond rout and the Israel-Hamas conflict. Poll suggests ECB hiking campaign over but no easing until at least July: Reuters reported that a poll of analysts expected the ECB's rate hiking cycle to be over, but it won't be until at least July 2024 before it begins easing as the battle against elevated inflation rattles on. The Eurozone will narrowly dodge a recession, as increased borrowing and living costs force consumers to rein in spending. Energy: EU gas resumes gains on fears of wider Middle East conflict: Bloomberg reported that European natural gas prices resumed gains on mounting fears that the conflict in the Middle East will widen and affect global flows of the vital fuel ahead of winter. Germany: German producer prices fall at fastest rate since 1949: Reuters reported that German producer prices fell at the fastest rate since 1949 in September, beating estimates. The magnitude of the fall was reportedly due to base effects amid the very high price level in the previous year. Industries push for subsidies ahead of German government meeting: Euractiv reported that representatives of Germany's energy-intensive industries have urged the government to decide on subsidies for electricity prices, which, while strongly discouraged by economists, will be the point of discussion in Chancellor Scholz's discussions with government leaders. Germany still trades Russian gas as cancelling costs €10B: Bloomberg reported that Germany is still trading Russian LNG through a nationalized firm, SEFE, due to a legacy contract. Breaching the contract could cost German taxpayers €10B. The trade has become a headache for Germany, which has explicitly said it won't use gas from Russia. Geopolitics: Prospects dim for US-EU summit deals on trade, with focus on Mideast, Ukraine: Reuters reported that US and EU trade negotiators met throughout the day, but were unlikely to reach an agreement on the steel tariffs or a way to lessen the impact on Europe of new US tax breaks to buy electric vehicles (EVs) assembled in North America, two sources familiar with the matter said.

ECB: ECB's de Cos says June rate cut viable if inflation path remains intact: Bloomberg reported that Spain central bank chief de Cos said uncertainty remains very high, and a data-dependent approach is required, but a June rate cut appears viable if inflation continues on the current path. Markets: EU banks' share buybacks may have peaked given lofty valuations, with focus shifting to deployment of excess cash: Bloomberg reported that European banks are scaling back on share buybacks due to rising valuations, with €15.4B earmarked for buybacks this year compared to €21.2B in 2023, prompting a shift in focus to alternative capital deployment strategies like M&A. Germany: German factory orders unexpectedly dropped in sign of enduring weakness while exports rebound: Reuters and Bloomberg reported that German factory orders unexpectedly dropped in March versus consensus for a 0.5% increase. On a y/y basis, orders were down 1.9% versus 8.8% drop reported in February. Data undermines German growth prospects for Q2. DIHK says German exports expected to stagnate this year, following a 1.8% decline in 2023: Reuters and Bloomberg reported that German Chamber of Commerce (DIHK) said German exports are expected to stagnate this year, following a 1.8% decline in 2023. In its world outlook, DIHK said there are signs of an upturn in the global economy, but companies are not benefiting because of political uncertainty and geopolitical risk. Geopolitics: France's Macron and EU Commission chief von der Leyen urged Xi Jinping to address trade imbalances and curb support for Russia: FT and Reuters reported that the EU is trying to balance getting tough on trade with attracting Chinese capital amid US-China tensions. EU leaders Macron and von der Leyen warned China President Xi Jinping the bloc must protect itself from cheap Chinese imports to rebalance trade ties. Subjects: News - EU, Macro Daily Summaries Eurozone

This will only support the current disinflation narrative in the US and Europe and keep the Fed and ECB on track to ease in 2024. The only question is whether it is 75bp or more from the FED, conscious of the tight labour market, my sense is they progress slowly, which keeps a bid in the equity and the treasury market. The ECB move too, but maybe the surprise for 2024 is they go first, as the freight traffic developments bite on Europe more. St Patrick’s weeekend has always been a strong trend reversal time (2009 bottom for the Equity market), maybe it is again this year.

“China’s manufacturing activity shrank for a third straight month in December and weakened more than expected, clouding the outlook for the country’s economic recovery and raising the case for fresh stimulus measures in the new year. The government has in recent months introduced a series of policies to shore up a feeble post-pandemic recovery. But the world’s second-largest economy is still struggling to gain traction. The official purchasing managers’ index (PMI) fell to 49.0 in December from 49.4 the previous month, an official factory survey showed on Sunday, below the 50-mark separating growth from contraction and weaker than a median forecast of 49.5 in a Reuters poll. ‘We must step up policy support, otherwise the trend of slowing growth will continue,’ said Nie Wen, an economist at Hwabao Trust. Nie expects the central bank to cut interest rates and banks’ reserve requirement ratios (RRR) in the coming weeks.” “‘Falling prices have greatly affected companies’ profits and further affected people’s employment and incomes. We may see a vicious cycle,’ he said. China’s central bank said on Thursday it would step up policy adjustments to support the economy and promote a rebound in prices, amid signs of rising deflationary pressures. Earlier this month, top Chinese leaders at a key meeting to chart the economic course for 2024 pledged to take more steps to support the recovery next year. Five of China’s largest state banks lowered interest rates on some deposits on Dec. 22, the third round of such cuts this year, which could help the central bank move toward easing monetary policy. The government, which in October unveiled plans to issue 1 trillion yuan ($140.89 billion) in sovereign bonds to fund investment projects, is likely to focus on more fiscal steps to support growth next year, analysts said.” “China’s consumer prices fell the fastest in three years in November while factory-gate deflation deepened, weighed by weak domestic demand. ‘The current external environment is increasingly complex, severe, and uncertain,’ the statistical bureau said. The new orders sub-index was at 48.7, contracting for the third month, according to the PMI survey released by the National Bureau of Statistics. Weak external demand also remained a major drag on factory activity, with new export orders index registering 45.8 in December, contracting for the ninth straight month. The sub-index of factory gate prices was at 47.7, contracting for a third straight month. The official non-manufacturing purchasing managers’ index (PMI), which includes services and construction, rose to 50.4 from 50.2 in November, supported by a recovery in the vast services sector. China’s economic growth is seen on track to hit the official target of around 5% this year.”

🌎 This week, our economists look at three critical issues: 1️⃣ First, ECB: Moving closer to cuts but not there yet. At today's meeting, we expect the #ECB 🇪🇺 to keep the deposit rate unchanged at 4.0% afor the fifth consecutive time. Meanwhile, quantitative tightening remains on autopilot, and the complete expiration of the TLTRO funding by year-end should not affect overall liquidity provisioning. Policymakers will reiterate that initial rate cuts could start from June onwards, contingent on continued disinflation. 2️⃣ Second, #China 🇨🇳 and #Germany 🇩🇪 The trade tide is turning. Ahead of the German Chancellor’s trip to China next week, we find that the historic trade relationship could be on the rocks. China's global export shares in key sectors like machinery, chemicals and electrical equipment have surpassed Germany, while the latter's critical dependence on Chinese imports has increased significantly from 6% in 2004 to 22% in 2022. 3️⃣ Third, 🇬🇧 UK: New border controls to be largely offset by aggressive tariff-suspension measures. Border controls on agricultural imports from the EU will finally be implemented on 30 April, costing GBP2bn to British importers and potentially pushing up #inflation by +0.15pp. At the same time, and as of today, the UK decided on a massive two-year tariff suspension on almost half of its imports. Taking into account both measures, #UK inflation could land at 2.4% in 2024, and 2.0% in 2025, all other things equal. Read the full report here: https://ow.ly/Tm3F50RcXb5

Macro-News round-up: #MarketNews • UK: UK retail sales fell to 1.9% versus 2.3% expected and down from 2.6% in the previous period. Today, in a few hours, we will see a speech by the Bank of England's president. Not forgetting that later this week we will get published the UK's monthly growth rate as well as its manufacturing output and trade balance, it is a week of important macro data for the pound, which continues to tentatively gain ground against the dollar since November last year, repeatedly approaching the 1.28 GBPUSD zone. • Germany: Germany's industrial production contracted -0.7% vs. the expected 0.2%. Some recovery from the previous period's contraction of -0.3% was expected. Today's German bond auction closed with a yield of 2.19% for the 10yr bond. • EU: Europe's unemployment rate fell yesterday to 6.4% from 6.5%. A slight improvement. • US: On the one hand, the trade balance fell slightly yesterday, but this was mostly due to a reduction in imports. Exports also fell subtly from the previous period. The Atlanta Federal Reserve released yesterday its Fed GDPNow forward-looking GDP indicator, indicating US gross domestic product movement of 2.2% for Q4, falling below the market's expected 2.5%. • Canada: Macro data released yesterday shows a considerable contraction of its trade balance, 1.57 Billion USD, a contraction of almost 50% from the previous period. Additionally, building permits contracted by -3.9% compared to a positive 3% in the previous period. • South Korea: The unemployment rate rose more than expected to 3.3% in December (vs. 2.8% in November, 2.9% market estimate), partly due to higher labour participation (64.6% in December vs. 64.3% in November). • On the international scene, US Secretary of State Antony Blinken yesterday intended to meet with Israeli officials to prevent the Gaza war from turning into a regional catastrophe, while the Israeli army declared that its fight against Hamas will continue throughout the year. On Monday, Israel assassinated a senior leader of Hamas partner Hezbollah in southern Lebanon in the latest sign that the conflict is escalating. According to Reuters sources familiar with the situation, Israel is also carrying out an unprecedented wave of deadly attacks in Syria, targeting cargo trucks, infrastructure and individuals involved in Iran's arms supply chain to regional proxies. However, the price of crude oil and gold remain stable and fairly discounted since the start of the conflict, indicating an apparent calm in the commodity markets.

Inflation in Germany fell more than expected in June, signaling a more sustainable easing of inflationary pressures. This development is likely to reassure the European Central Bank (ECB), which recently cut interest rates for the first time in five years. According to the German statistics office Destatis, consumer prices were 2.2% higher in June compared to the same month last year, down from 2.4% in May. This figure was lower than the consensus of 2.3% from economists polled by The Wall Street Journal. The decline was primarily driven by a faster reduction in energy prices, though food inflation saw an uptick in June compared to May. Core inflation, which excludes volatile energy and food prices, also saw a slight decrease. It was reported at 2.9% in June, down from 3.0% in the previous month. This reduction in core inflation indicates a broader easing of price pressures, which is an encouraging sign for the ECB as it navigates its monetary policy. In early June, the ECB cut its key interest rate for the first time since 2019, lowering it from 4.0% to 3.75%. The decision to cut rates was partly in response to ongoing concerns about high inflation levels across the eurozone. The recent data from Germany supports the ECB's decision and suggests that their monetary policy measures are starting to take effect. The decline in German inflation adds to the evidence that inflationary pressures in the eurozone are beginning to ease. This is crucial for the ECB, as it aims to balance supporting economic growth with maintaining price stability. With the lower inflation figures, the ECB may feel more confident in its current policy stance and be less pressured to make further immediate rate adjustments. Read our other insightful economic news: https://lnkd.in/exQ-kXwE #FPG #Fortuneprimeglobal #commodity #equity #technicalanalysis #technology #news #investors #intraday #investing

UK trade data from the Office of National Statistics (ONS) revealed an increase in the value of non-EU exports. A rise of £0.6bn in exports to non-EU countries in June, was enough to offset a decrease in EU exports. Overall, the value of exports increased £1.6bn (1.7%) in the second quarter. The trade deficit for goods and services also continued to narrow, down to £19bn, from £19.3bn last quarter. Overall, GDP is estimated to have grown 0.2% in Q2, driven by a more productive June. Growth of 0.5% in June helped to bump up slower growth earlier in the spring, following growth of 0.2% in April and a fall of 0.1% in May. Production output also grew by 0.7% in Q2, led by a 1.8% rise in June. The weather has been suggested as a potential cause for such positive data in June, along with increased working days, following the additional coronation Bank Holiday in May. Among the economy’s success stories were construction and manufacturing, which both posted strong figures this quarter. Construction output rose by 0.3%, driven mainly by repair and maintenance (up 0.9%). Manufacturing saw output increases of 1.6%, with most sub-sectors reporting growth. Transport equipment increased substantially, with the Society of Motor Manufacturers and Traders (SMMT) reporting a 16.2% increase in car manufacturing compared to June last year. Experts have suggested that lower input costs could have contributed to strong manufacturing figures. In the US the latest data showed inflation rose slightly for the first time since June 2022, increasing to 3.2% (up from 3% last month). This is despite the federal reserve’s decision to raise interest rates to a 16-year high of 5.25%. By contrast, the European Central Bank (ECB) is facing calls to walk-back its rate hikes as Germany’s weak growth and trade threatens to tip the eurozone intro recession.

USD/JPY achieved highs October 31 at 151.72 and BOJ failed to intervene. As informed from previous posts, the BOJ won’t intervene. To date, the BOJ not only failed to intervene but remains dead silent to USD/JPY levels. And at the most important end of month trade time. The BOJ message is trade is just fine as well as BOJ levels. Ueda Man spoke November 6 and reiterated information from the BOJ’s latest Economic Outlook. The job of Central bank members and chairpersons is to fly around the respective nation delivering the latest Economic reports previously published. News and new information is never found nor is the Economic information able to move markets. If the latest Economic report was read then no need exists to listen to central bank speeches. For the first 20 days of October, Imports = 6.691, 888 Vs Exports 5, 797, 441 or a difference of 894, 447. Does this look even remotely close to intervention. While the trade crowds were again wrong to intervention, USD/JPY Imports and Exports from October 22 to 28 were completed at 149.03. From 29th to November 4, trade was completed at 149.70. Current trade from November 5 to 11th, trade was done at 149.99. Last, November 12 to 18 = trade at 150.26. Imports and Exports were completed fairly close to USD/JPY market rates. No intervention. While GDP, Interest rates and Inflation are important Economic releases, Import and Export lines nullifies the requirement to focus on GDP, interest rates and Inflation as GDP, interest rates and Inflation direction and positions are known miles in advance. If Import and Export lines are known, exclude the reading and focus on Monetary Policy statements as statements reiterates economic information already known. GDP for example will remain low for Western nations, Inflation trades at the highs and an excruciating slow grind lower while Interest rates trade at current levels without a drop in sight. Market exchange rate levels trade on Interest rates and Imports and Exports. Everything else is irrelevant. What serves as analysis today is found in the word Corrigendum or the plural Corrigenda and defined by Webster’s as an error in a printed work discovered after printing. Next week is the time in the 6 week period to release trade data. USD/JPY and the BOJ will report excellent trade data while the west remains in Economic disaster mode. The Week USD/JPY achieved target at 150.50 from 149.32 then decided to travel to higher overbought to reach highs at 151.17. USD/JPY overall trades in a massive 400 pip range. The top USD/JPY line is located at 152.53 and overbought begins at any price above 150.86. Averages for USD/JPY are moving slow yet higher. USD/JPY next week targets 150.02 easily then 149.60. JPY Cross Pairs JPY cross pairs for the past 3 weeks began as oversold and all traded higher. Next week begins massive overbought to include CHF/JPY. CHF/JPY targets 165.00’s, NZD/JPY low 88.00’s and low 95.00’s for AUD/JPY. Brian Twomey