(JPM on overnight) There were a few interesting headlines although markets aren’t moving dramatically. The core Eurozone CPI for Jul firmed by a bit more than expected (+1.2% vs. the St +1.1%) while China’s Jul NBS PMIs showed very mild signs of softening vs. June (neither number is dramatically altering the macro narrative). In Washington the narrative is shifting away from healthcare and to taxes but it will prob. Be some time (at least a couple of months) before a credible and plausible plan emerges (and meanwhile Trump isn’t dropping repeal/replace and could undermine the ACA exchanges further by withholding subsidy payments).
(Bloomberg) The greenback has fallen hard on Trump’s watch and currency traders are now betting on even more declines. Is Trump necessarily “bad” for the dollar, that global symbol of U.S. economic might? Probably no more than he is “good” for stocks. And you can argue much of the dollar’s slide — now the longest in six years — has to do with the vagaries of central-bank policy and interest rates.
(JPM on Fed policy) The market assumes (and the Fed statement on 7/26 largely confirmed) balance sheet shrinkage will commence at the Sept. meeting (9/19-20) w/the next hike occurring at the Dec (12/12-13), Jan (1/30-31), or Mar (3/20-21) meetings. If US inflation stays tepid the Dec hike could easily be pushed into 2018.
(Politico) The White House is working on a set of economic measures aimed at punishing China according to sources cited by Politico. A range of options are on the table, including
trade restrictions and economic sanctions. Trump has long accused China of engaging in unfair trade practices and increasingly is dissatisfied w/Beijing’s policy towards North Korea.
(WSJ) OPEC has a compliance problem –many OPEC members are violating the recent production agreement, a trend that undermines the cartel’s relevance on the global oil stage
(Reuters) Hedge funds and money managers boosted their bullish wagers on U.S. crude oil to the highest in three months, data showed on Friday, as U.S. shale showed signs of a slowdown and Saudi Arabia pledged to cut exports in August.