Feb 13, 2017 - Market Update

Short recap

EU markets higher

Abe sure US will make major investments

Expanding free trade to be done in a fair manner

US will make currencies to fair level playing field but no specifics, USDJPY relief rally, later corrected

Risk of currency wars fading

The tax overhaul and incentive based policy part of next steps

On the other hand US lowering taxes and exporting more means stronger USD (unless they do something about it)

Likely Trump backed off from Taiwan issue (One China policy) for the benefit of Senkaku islands (China backing off from Japan control islands)

Likely something regarding North Korea as well

Trump administration will have a chance to fill three vacancies at Fed, thus can make a print on monetary policy after recent announcement of top official responsible for bank regulation resignation

North Korea biting again with medium- to long-range missile test

Canada Pension Plan (one of the biggest infrastructure investors globally) awaiting Trump’s plans but still too soon to see opportunities

Iron ore futures up 5.6% breaking important resistance

Oil – higher inventories may lead to additional OPEC production cuts

6 month period is too short for rebalancing the oil market despite high compliance with cuts

Some US financials may not be able to service the EU markets if Trump repeals globally imposed financial regulations

Sanofi to sell some OTC products to Ipsen

Stada becoming an acquisition target after receiving two offers

GE-FR and GE-NL spreads rising ahead of elections in NL (March) and FR (April/May)

Data

US: Treasury Inflation Forecast – expectations to edge higher

Yellen testimony (Tuesday/Wednesday):

For markets it is enough if she supports the view of Fed moving without looking too much at Trump

No need for a date and USD can find further support

Comments on balance sheet can be of interest

Gold – 1220/1245/1250 levels

To watch USD, yields, Trump tax plans

Specs keep increasing longs

AUDUSD – an inflation play

Next 0.7700, then 0.7750

To loose momentum needs to break below 0.7600

Specs longs in USD reduced further but still long USD 17 bln

Good luck Champs!

Mr Hawk

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