Apr 19, 2017 - Market Update

Short recap

Asia lower

Europe opened mixed

GBP up yesterday as market speculates that snap elections can remove the political uncertainty

And give a stronger mandate for May in Brexit talks

Pence – NK to expect an overwhelming and effective response

China shadow banking back at full speed

China eased capital flow controls

Foreign investment in Canada hitting high of CAD 39 bln on M&A

Geopolitical events and upcoming French election driving investors to safe heavens (gold, bonds)

FTSE 100 below recent lows on stronger GBP

BMW see China sales to grow 10% in 2017 while globally should rise 5-5.5%

Credit Suisse still in a clash with its shareholders over top execs bonuses

Earnings season

Goldman Sachs disappointed on trading revenue what impacted markets yesterday

Lower trading activity was to blame as the bank doesn’t benefit from lending as competitors do or additional trading related business.

Is Goldman Sachs loosing a market share?

Morgan Stanley – expecting positive surprise on more active bond trading and cost cutting

American Express – expecting a negative surprise due to competition margin squeeze and rising costs

BlackRock – more than profit report markets will scrutinize cost cutting and reorganization plans

Especially at active stock picking division

Others: Qualcomm, CSX, Abbott Laboratories, eBay, U.S. Bancorp

Bonds

10-yr Bund yield at 0.16%

10-yr Trys yield at 2.18%

Touched 2.1629% - the lowest since Nov 2016 elections

The area of support is around 2.1346% (38.2% Fibo)

The levels around/below 2.20% may be a good place to start to sell bonds

But the appetite for safety stays strong for now

Don’t forget about Fed hiking and trimming bond portfolio

George (Fed) supporting bond taper this year

June hiking priced at 43%

EURUSD daily – getting crowded

GBPUSD daily – no risks of Brexit negotiations removed

More to go? Will the 1.2800 hold? How long?

The move occurred on very thin liquidity

After surprise announcement

Data

EZ: CPI – no surprise expected, should stay in line

Beige Book (Fed)

Hansson (ECB) speaking (0800 GMT)

Coeure (ECB) speaking (1200 GMT)

Praet (ECB) speaking (1430 GMT)

Rosengren (Fed) speaking (1630 GMT)

Upcoming:

Apr 23 – French presidential elections

40% still undecided

Official results at 1800 GMT

Exit polls from midday but on BE and CH media only

More precise estimates around 1600 GMT

Apr 29 – EU Summit to sign off the Brexit negotiations guidelines – until then we won’t have clearer EU position on Brexit

May 7 – French presidential elections 2^nd round

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

Good luck Champs!

Mr Hawk

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