Mar 24, 2017 - Market Update

Short recap

EU markets opening flat to higher

US stocks no clear direction but highest valuation in 15 years

Institutional investors overweighed in stocks despite seeing high valuations

Risk of crowded trade from short side on the horizon if Fed keeps hiking and Trump doesn’t deliver

EU stock and bond markets look completely mispriced

To watch EZ economic data, FR elections and rise of inflation (lower oil can mute it)

UK’s Brexit bill to be around GBP 50 bln according to Juncker

US to review 14 free trade agreements to benefit US companies

US House voting on Obamacare repeal – Republican debate to continue today

As mentioned yesterday, politicians have a show time but will get it done

Expecting vote between 1800-2000 GMT, to be a test of discipline for Republican party going to debates on tax and reform bills

Meanwhile, Trump was out saying he will let Obamacare in place if the vote is not successful

And move over to tax reform, what was a strong message to Republicans

Truly speaking, this vote is not a such weight lifter for the economy as tax, fiscal or infrastructural reforms are

Kuroda – QE in place as inflation far from 2%

Praet (ECB chief economist) – QE exit premature

No inflation/deflation risks in EZ

Job market still lagging

IT having structural problems, Lira is not a solution

PPG closer to Akzo Nobel takevover (EUR 23 bln) as the largest shareholder is in favor

LVMH doing well in China

RBS to close branches and shed jobs

Deutsche Bank to move its London’s HQ to new place

Oil higher on lower Saudis export to US

USD 50 should act as a short term support

10-yr Trys yield at 2.43%

10-yr Bunds yield at 0.43%

DXY found support above 99.26 (61.8% Fibo) and above triple bottom area

Fed balance sheet cuts talking making the rounds but real cuts will steepen the yield curve what in turn will support the USD

June hike is 50/50

EURUSD waiting for Obamacare vote

May be posed for higher move short term

But US-GE yield spread tells the other story medium term

USDJPY towards 111.60 resistance

Gold daily - strong resistance at 200 DMA and descending trendline

Data

EZ: PMI to decline slightly

US: Durable Goods Orders to increase but stay flat on y/y

Fed speakers:

Evans (1200 GMT)

Bullard (1305 GMT)

Dudley (1400 GMT)

Williams

Should you have any questions feel free to contact me anytime.

Good luck Champs!

Mr Hawk

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