U.S. stocks finished Thursday lower after the country dropped the largest non-nuclear bomb in Afghanistan despite upbeat earnings from JP Morgan and Citigroup.
The Dow Jones industrial average fell 138.61 points (-0.67%) to settle at 20,453.25, mostly driven by losses from Chevron. The S&P 500 dropped 15.98 points (-0.68%) to close at 2,328.95 with energy and financials sectors contributing the most losses. The tech-heavy Nasdaq composite lost 31.01 points (-0.53%) to finish at 5,805.15. For the week as a whole, all major U.S. indices finished in the red again.
On Monday, the Federal Reserve Chair Janet Yellen delivered her remarks at the University of Michigan’s Ford School of Public Policy. She expressed that the FOMC is looking to ease back significantly this year regarding the accommodative monetary policy that the central bank has been providing to the U.S. economy, as the country is on track to full employment and 2% inflation. Policy makers have penciled in two additional rate hikes this year, after the one executed in March.
On Tuesday, U.K. reported its Consumer Price Index result for March, which came in at 2.3% for the second month in a row, driven by more expensive food, alcohol, tobacco, and apparel. This leaves a question to the Bank of England on when it should raise interest rate if inflation pressures persist and wage growth remains stagnant.
On Wednesday, the U.K. unemployment rate was reported to remain at the 12-year low of 4.7%. The number of people unemployed dropped by 45,000 to 1.56 million in the three months to February. In addition, Bank of Canada held its rate steady at 0.5%; however, governor Stephen Poloz projected a slightly hawkish tone that further interest rate cuts are no longer on the table. The central bank raised its growth estimate for the year to 2.6% (from 2.1%), the upward revision is largely attributable to residential investment being brought forward from future years and will largely dissipate by 2018, the central bank estimates. As a result, the central bank lowered its estimate for 2018 growth to 1.9%. Also see below an excerpt of the discussion about the heated Toronto housing market from Poloz.
Are we going to see any meaningful measures being announced next week after the meeting among the federal finance minister, minister of finance, and Ontario minister of finance?
Further, U.S. President Donald Trump shifted his tone to be more moderate compared to what was declared during his campaign period in an interview with the Wall Street Journal, stating that he prefers a low-interest-rate policy, and considers reappointing the Federal Reserve Chair Janet Yellen to a second term. Will the Fed incorporate Trump’s message and slow down its commitment to rate hike and balance sheet deleveraging?
On Thursday, China reported its March trade balance surplus, which came in at $23.9 billion (vs. $9.15 billion trade deficit in February), more than double the $10 billion estimate from the street. In addition, the U.S. military dropped one of the largest nonnuclear bombs in its arsenal on an Islamic State tunnel-and-cave complex in eastern Afghanistan, claiming it was targeting terrorists. Stocks extended losses while gold futures were up about 0.9% shortly after the news.
On Friday, the U.S. retail sales result disappointed and it fell for a second straight month in March amid softening demand for automobiles. The reading came in at -0.2% in March, while the February’s retail sales were revised down to -0.3% instead of the previously reported 0.1% gain. In addition, U.S. CPI was reported to fall 0.3% MoM in March, reflecting cheaper motor vehicles, wireless phones services, and apparel. On a YoY basis, the index was still up 2.4%, following a 2.7% advance the prior month.
Final thought: U.S. vs North Korea (& China), imminent war?
On the one hand, North Korea has been actively conducting nuclear missile tests, and military experts estimated that the country would be able to hit the United States west coast within four years. This development deserves immediate attention from countries such as the U.S., China, and Japan. However, does it justify a potential war between the U.S. and North Korea, comparing to imposing economic sanctions on North Korea, which was deemed relatively more effective and peaceful?
On the other hand, the U.S. has become forceful and could come across as aggressive in the way of delivering its message to North Korea, which could prompt more rebellion than compromise. In addition, China, stuck in between its historical war ally and its largest economic partner, is under pressure to continue to urge both the U.S. and North Korea to step back from the brink of a potentially catastrophic conflict.
Below two graphs from The Economist explaining the history of North Korea’s nuclear path as well as its missile range (full article).
Source: The Economist
Will end this week with this comic picture.
Source: South China Morning Post
The week ahead: China will report GDP, retail sales, and industrial production on Monday (Apr 17); The Fed will publish its Beige Book, and eurozone will release its Consumer Price Index for March on Wednesday (Apr 19); The U.K. will release its retail sales data for March, and the U.S. will report its existing home sales data on Friday (Apr 21).
Tops News
AMJourney 
Market Commentary – April 14, 2017
U.S. stocks finished Thursday lower after the country dropped the largest non-nuclear bomb in Afghanistan despite upbeat earnings from JP Morgan and Citigroup.
The Dow Jones industrial average fell 138.61 points (-0.67%) to settle at 20,453.25, mostly driven by losses from Chevron. The S&P 500 dropped 15.98 points (-0.68%) to close at 2,328.95 with energy and financials sectors contributing the most losses. The tech-heavy Nasdaq composite lost 31.01 points (-0.53%) to finish at 5,805.15. For the week as a whole, all major U.S. indices finished in the red again.
On Monday, the Federal Reserve Chair Janet Yellen delivered her remarks at the University of Michigan’s Ford School of Public Policy. She expressed that the FOMC is looking to ease back significantly this year regarding the accommodative monetary policy that the central bank has been providing to the U.S. economy, as the country is on track to full employment and 2% inflation. Policy makers have penciled in two additional rate hikes this year, after the one executed in March.
On Tuesday, U.K. reported its Consumer Price Index result for March, which came in at 2.3% for the second month in a row, driven by more expensive food, alcohol, tobacco, and apparel. This leaves a question to the Bank of England on when it should raise interest rate if inflation pressures persist and wage growth remains stagnant.
On Wednesday, the U.K. unemployment rate was reported to remain at the 12-year low of 4.7%. The number of people unemployed dropped by 45,000 to 1.56 million in the three months to February. In addition, Bank of Canada held its rate steady at 0.5%; however, governor Stephen Poloz projected a slightly hawkish tone that further interest rate cuts are no longer on the table. The central bank raised its growth estimate for the year to 2.6% (from 2.1%), the upward revision is largely attributable to residential investment being brought forward from future years and will largely dissipate by 2018, the central bank estimates. As a result, the central bank lowered its estimate for 2018 growth to 1.9%. Also see below an excerpt of the discussion about the heated Toronto housing market from Poloz.
Are we going to see any meaningful measures being announced next week after the meeting among the federal finance minister, minister of finance, and Ontario minister of finance?
Further, U.S. President Donald Trump shifted his tone to be more moderate compared to what was declared during his campaign period in an interview with the Wall Street Journal, stating that he prefers a low-interest-rate policy, and considers reappointing the Federal Reserve Chair Janet Yellen to a second term. Will the Fed incorporate Trump’s message and slow down its commitment to rate hike and balance sheet deleveraging?
On Thursday, China reported its March trade balance surplus, which came in at $23.9 billion (vs. $9.15 billion trade deficit in February), more than double the $10 billion estimate from the street. In addition, the U.S. military dropped one of the largest nonnuclear bombs in its arsenal on an Islamic State tunnel-and-cave complex in eastern Afghanistan, claiming it was targeting terrorists. Stocks extended losses while gold futures were up about 0.9% shortly after the news.
On Friday, the U.S. retail sales result disappointed and it fell for a second straight month in March amid softening demand for automobiles. The reading came in at -0.2% in March, while the February’s retail sales were revised down to -0.3% instead of the previously reported 0.1% gain. In addition, U.S. CPI was reported to fall 0.3% MoM in March, reflecting cheaper motor vehicles, wireless phones services, and apparel. On a YoY basis, the index was still up 2.4%, following a 2.7% advance the prior month.
Final thought: U.S. vs North Korea (& China), imminent war?
On the one hand, North Korea has been actively conducting nuclear missile tests, and military experts estimated that the country would be able to hit the United States west coast within four years. This development deserves immediate attention from countries such as the U.S., China, and Japan. However, does it justify a potential war between the U.S. and North Korea, comparing to imposing economic sanctions on North Korea, which was deemed relatively more effective and peaceful?
On the other hand, the U.S. has become forceful and could come across as aggressive in the way of delivering its message to North Korea, which could prompt more rebellion than compromise. In addition, China, stuck in between its historical war ally and its largest economic partner, is under pressure to continue to urge both the U.S. and North Korea to step back from the brink of a potentially catastrophic conflict.
Below two graphs from The Economist explaining the history of North Korea’s nuclear path as well as its missile range (full article).
Will end this week with this comic picture.
The week ahead: China will report GDP, retail sales, and industrial production on Monday (Apr 17); The Fed will publish its Beige Book, and eurozone will release its Consumer Price Index for March on Wednesday (Apr 19); The U.K. will release its retail sales data for March, and the U.S. will report its existing home sales data on Friday (Apr 21).
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About AM_Journey
A small potato working on Bay Street