Feb 15, 2017 - Market Update

Short recap

Asian markets up on Wall Street and Yellen

EU markets opening higher

SoftBank Group to buy Fortress Investment Group (USD 3.3 bln) as it is preparing to enter the private equity space

GM’s decision to put Opel/Vauxhall on sale is a turning point for the company as the company will exit the production in Europe

If talks with Peugeot-Citroen succeed the global auto map will be redesigned completely

CEOs of US retailers to discuss the border tax with Trump today

Studying Trump actions becoming a norm for professional investors (apart from fundamentals…etc.)

FinTech is venturing into M&A business of Goldman Sachs now after eliminating tons of trading jobs before

Momentum in financials seems to be firmly in place with Goldman Sachs reaching historic highs

But we may be getting a bit overstretched despite momentum

Trump’s New world is turning into New NATO and many European countries need to live up their 2% of GDP obligation

Thus seeing new opportunities on long side in: BAE, Leonardo, Lockheed, General Dynamics, Raytheon and Northrop

EZ peripheral yields falling down despite the ongoing clash between EZ and IMF over Greece

Greece not open to any further spending cuts; the situation may turn up badly at some point

Some US banks licensed to issue Panda bonds in China (inland)

USDJPY – levels 115.00 and 116.00 (cloud top)

EURUSD – 1.0566-1.0576/78

Yellen

Fed likely hiking on Mar 15 but need to watch job market and inflation expectations (probability at 34%)

3 hikes still in place for 2017 (prised at 50/50 for Dec); market is pricing 2 hikes

Waiting too long would be unwise

Trump policies are a big unknown/risk

Eventually, Fed can do pre-talk in March and hike on May meeting (despite no press conference)

Fed has an authority and responsibility to talk with global regulators

Data

UK: Labour Market Report – claimant count expected higher

US: Consumer Price Index – headline CPI to rise the most since 2012 while Core CPI expected slightly lower

US: Consumer Price Index – expected to slow down

Good luck Champs!

Mr Hawk

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