May 11, 2017 - Market Update

Short recap

Asia up on stock markets gains led by rising energy sector

Trump falling deeper into the election scandal orchestrated by Russians

An impeachment coming at certain point...?

Or at the best the tax and biz reforms being delayed…

Six Canadian banks downgraded on ongoing concerns about expanding levels of private-sector debt across the country

And not just situation in real estate

CAD caught in between rising commodity prices, bubbling housing and appreciating USD

Market very negative sentiment on CAD

Rosengren played hawkish yesterday with gradual reduction of balance sheet and 4 hikes this year

Draghi just repeated himself, didn’t please German hawks

As EZ economy is solid but it is too early to pull out the QE (EUR 2.3 bln)

Hinted some changes though

Equities

Standard Life to merge with Aberdeen Asset Management, cutting 10% of jobs

NYSE (after LSE) trying to charm Saudis to gain the Aramco IPO

Tesla open for solar roofs orders

Mylan not comfortable with FDA

AXA to float its shares of its US life insurance and asset management business in US

Looking to free some capital and refocus

Earnings

UniCredit doing better as restructuring pays off

Following the path of CH banks and dropping complex activities, simplifying and focusing on the core

NVDIA benefiting from data centers and automotive

Enbridge (CA) expected lower profit due to rising costs

Others to report: Macy’s, Kohl’s, Nordstrom, Teva Pharmaceuticals, Aegon, Wells-Fargo, Dow Chemical, Bombardier (CA), Magna (CA)

Bonds

2-yr Trys yield at 1.35% marching towards 1.40% level

10-yr Trys yield at 2.40% - 10-yr auction disappointed yesterday

10-yr Bund yield at 0.44%

EURUSD – pivotal level 1.0850

Then 1.0825/30 area (21 & 200 DMA) – if broken, likely to see more downside

As longs may get nervous

Some selling interest towards 1.0900 area

USDJPY – some offers above 114.40, more towards 115.00

Next 115.50 and 118.60 highs may be in focus

Support around 114.00

Yields and risk on mood prevailing

Commodities

Oil supported by the fall in US inventories, slowing production/imports that resulted in heavy short covering

Goldman Sachs, IEA – accelerating decline in inventories, rising demand to be higher than supply

Support USD 47 (WTI) and USD 50 (Brent)

Gold on the way to 1200

But supported by North Korea and unpredictable Trump

Upcoming

Fed's Dudley speaking at 1025 GMT

ECB’s Draghi, Coeure at G7 Fin Mins at 1535 GMT

ECB’s Praet speaking at 1630 GMT

G7 Fin Mins & Central bankers meeting in Italy for three days

To discuss: trade, financial institutions coordination, fighting inequality and tax crime

Mnuchin to inform about changes in US taxes, Dodd-Frank, infrastructure investments and ease of biz regulations

Fri – US CPI and Fed's Evans speaking

May 25 – OPEC/Non-OPEC meeting

June 8 – ECB meeting

June 8 – UK elections

June 11/18 – French Legislative (Parliamentary) elections (a big question mark for Macron to gain majority)

June 13/14 – FOMC meeting – market pricing rate hike above 90%

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

Good luck Champs!

Mr Hawk

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