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Reflect & Prepare


Reflect and Prepare

Crazy week this week in terms of speakers, Brexit, and of course Trump!. Let us start with the Brexit negotiations, it looked like all hell was about to break loose at the start of the week as PM May and Hammond keep speaking of alternatives to the direct trade deals with the EU. We heard about joining NAFTA and other such initiatives but ultimately the strong spoken Barnier buckled to the pressure and said that there could be a possibility that the UK could be granted access into the EU while the 2 year transitionary process was taking place. Cable then rallied and the FTSE 100 fell, it was all very dramatic. As for relationships among the Conservative party things seemed to have died down, Johnson says he backs the PM and May insists she has no problems with Johnson and Hammond..... So is the press telling porkies? 

Across the pond we had the FOMC meeting minutes, no real surprises but the USD turned negative as the FOMC members looks to be in a bout of tug and war over inflation. Some of the FOMC members say the issue is only transitionary some say it’s here to stay all I know is we got the latest set of CPI figures and the Y/Y reading came in at 2.2% above the Fed's target of 2%. Good news I hear you say? Not really as the short term effects of the hurricanes wear off and oil prices retrace slightly it seems that some of these central bankers may have a point. I was adamant that the weaker USD over August would make a difference in the September reading but maybe these things take longer to materialise. In US politics this week the nuclear deal with Iran is in focus once more, Trump and his merry men feel that all is not well with this and it’s time to rock the boat with another volatile country. Sounds like a good plan, but at the time of writing I am yet to see the latest address from Trump regarding this situation as he is set to speak in the evening.


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Reflect and Prepare

Another manic week in the financial markets, with one of the main events *cough* was the UK Prime Minister's Speech. UK PM May is under massive pressure from her own Conservative party at the moment as much as 30 members looking to oust her. The whole speech was considered a monumental failure by the world's press but I happen to think it could have happened to anyone. 



Reflect and Prepare

The FOMC meeting this week was taken in a bullish light from a USD perspective as the normalisation process looks set to continue. The Fed are going to look to unwind the balance sheet starting next month, the futures markets are also pricing in a higher chance of an interest rate hike (45% to 70% Dec). As the major economies look to unwind there QE induced balance sheets equities will need to adjust to the lack of cheap money. On the contrary, financial stocks will look to this favorably interest rates rise as HSBC, RBS and Lloyds shares all performed well this week. In the UK the strong GBP last week had a negative effect on stocks, this was caused but BoE Gov. Carney turned Hawkish. At the start of the week Carney kept his stance the same but the FTSE 100 consolidated and now trades between 7200 and 7300.


Reflect and Prepare

What a week! This week did not disappoint in terms of macroeconomic news. The Bank of England got themselves in a right muddle and completely U-turned over policy compared to remarks heard in August. It all started with the CPI readings on Tuesday, a higher than expected reading of 2.9% sent the markets into a frenzy and GBP rose and the FTSE fell, this was due to the fact that traders and investors felt that the BoE would have to normalise sooner rather than later. 


Reflect and Prepare

A week of central bank rate decisions drove the financial markets this week. RBA (Australian), RBC (Canadian) and the ECB (Eurozone) central banks all met and it was a real mix bag, in Australia the key rate remained unchanged although the sentiment was slightly on the hawkish side as RBA's Lowe hinted the next move if any would be up. In Sydney a booming housing market is causing concern despite tightening lending conditions a rate increase could put pressure on household finances. Lowe stated “Housing prices have been rising briskly in some markets, although there are signs that conditions are easing, especially in Sydney. In some other markets, prices are declining.” this gives us an indication that if the data improves he may be willing to move on rates.


Reflect and Prepare

Another jam packed week this week, we have had ECB, NFP and GDP. Let’s start in the UK and the continues problems with Brexit, Barnier and Macron this week have stated that the numbers floating around in UK press regarding the exit bill are false. We still have not seen anything concrete from either party but Brexit Minister David Davis stated there is a clear disparity with expectations and what the UK are prepared to pay.


Macro, Markets, and Companies

This week has been pretty crazy for a summer one! Dixons and Provident Financial capitulated and Jackson Hole took centre stage. Lets start with the macro stuff...

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