Draghi Faced Unprecedented ECB Revolt as Core Europe Resisted QE

Video commentary for September 12th 2019

Eoin Treacy’s view

A link to today’s video commentary is posted in the Subscriber’s Area. 

Some of the topics discussed include: ECB modest QE ambitions, bonds continue to sell off, stock markets steady, Euro volatile but positive, gold volatile but unchanged, palladium breaks out while lean hogs and soybeans firm, 

Draghi Faced Unprecedented ECB Revolt as Core Europe Resisted QE

This article by Jana Randow for Bloomberg may be of interest subscribers. Here is a section:

The unprecedented revolt took place during a fractious meeting where Bank of France Governor Francois Villeroy de Galhau joined more traditional hawks including his Dutch colleague Klaas Knot and Bundesbank President Jens Weidmann in pressing against an immediate resumption of bond purchases, the people said. They spoke on condition of anonymity, because such discussions are confidential.

Those three governors alone represent roughly half of the euro region as measured by economic output and population. Other dissenters included, but weren’t limited, to their colleagues from Austria and Estonia, as well as members on the ECB’s Executive Board including Sabine Lautenschlaeger and the markets chief, Benoit Coeure, the officials said.

Eoin Treacy’s view

The competition to replace Mario Draghi as head of the ECB is heating up. Verbal opposition to the policies announced today came from a number of the countries who have contenders in the race for the top job. Proving your verbal commitment to monetary prudence is almost a pre-requisite for getting the job, regardless of the reality once appointed.

Trump Advisers Considering Interim China Deal to Delay Tariffs

This article by Jenny Leonard and Shawn Donnan for Bloomberg may be of interest to subscribers. Here is a section:

The proposal also would be an interim deal, which would freeze the conflict, rather than bring a final resolution to a trade war that has cast a shadow over the global economy. U.S. stocks advanced on the news.

The plan reflects concerns within the White House over the recent escalation in tariffs and their economic impact on the U.S. going into an election year. Polls show the trade war is not popular with many voters and farmers are increasingly angry over depressed commodity prices.

Eoin Treacy’s view

The one thing any politician wants is to win re-election to prove that the first victory was not a mistake and to cement their legacy as a winner. If the USA enters a recession ahead of the election that greatly endangers President Trump’s re-election chances. The market has already reached that conclusion which is one of the primary reasons stocks have remained within striking distance of all-time highs over the summer.

A new study tracks the surge in Chinese loans to poor countries

This article from the Economist may be of interest to subscribers. Here is a section:   

Loan talks with Belarus; funding for bridges in Liberia; a possible gas project in Timor-Leste; accusations of exploitation in Tanzania; a corporate dispute in India; pledges to support the Rwandan private sector. And that was just the past few weeks. Such is the frenetic pace of China’s overseas lending that its outstanding loans have risen from almost nothing in 2000 to more than $700bn today. It is the world’s largest official creditor, more than twice as big as the World Bank and IMF combined. Yet tracking the money is hard because of limited transparency in its disclosures.

A new study by Sebastian Horn and Christoph Trebesch of the Kiel Institute for the World Economy and Carmen Reinhart of Harvard University offers the most comprehensive picture yet of China’s official credit flows (including state-owned banks). It adds to concern about whether China has sowed the seeds for debt problems abroad. They find that nearly half of China’s lending to developing countries is “hidden”, in that neither the World Bank nor the IMF has data on it.

Eoin Treacy’s view

Ken Griffin is still swooping on trophy properties. investors are bidding up the value of private assets to unimaginable levels but that has been less successful recently following the WeWork haircut and dismal performance of Uber and Lyft.  Classic car auctions were hitting all-time highs earlier this year but the latest total for the Monterey auctions was down 34% on last year.

Jeffrey Gundlach Says U.S. on Pre-Election ‘Recession Watch”

This article by Suzy Waite and John Gittelsohn for Bloomberg may be of interest to subscribers. Here it is in full:

The likelihood of U.S. recession before the 2020 election has grown, based on changes in the Treasury yield curve, according to Jeffrey Gundlach, the billionaire money manager and chief executive officer of DoubleLine Capital.

“We should be on recession watch before the 2020 election,” Gundlach said Thursday in London. “We’re getting closer but we’re not there yet.”

The odds of a U.S. recession before the election are 75%, said Gundlach, whose Los Angeles-based firm oversees more than $140 billion, reiterating a prediction he made in August.

The best signal of a recession is not an inverted yield curve, the money manager said. “It’s the inversion occurring and then going away.”

Yields on 2-year Treasuries exceeded those on 10-years in August, forming an inversion, before flipping back this month.

In other comments, Gundlach said:

* He’s turned “neutral” on gold, one of his previously recommended investments. “It’s had a big run.”

* The U.S. and China are unlikely to reach a long-term trade pact before the presidential election.

* It’s a “terrible time” to bet on U.S. housing and homebuilder stocks because of high inventory and weak demand.

Eoin Treacy’s view

The US yield curve spread inverted in August and is now mildly positive. The peculiarity of the spread is it is a reliable lead indicator for US recessions, but the corresponding spread does not provide a reliable lead indicator for other markets even though the rationale for why it should lead is the same.

Eoin’s personal portfolio precious metal trading position profit taken September 5th 2019

Eoin Treacy’s view

One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change. I’ll change the title to the date of publication of new details so you will know when the information was provided. 

2019: The 50th year of The Chart Seminar

Eoin Treacy’s view

The London Philharmonic Orchestra is holding a concert in David’s memory on October 5th October at the Royal Festival Hall. There is a reception between 5.30 and 6.45 in the Foyle Pavilion, Level 3, Green Side and subscribers are well to join David’s family there for light refreshments. Following the reception, we will move to the Beecham Bar, Blue Side, Level 5 for a short talk by Tim Walker, Chairman of the LPO. 

If you wish to attend the concert as well, which includes a performance of Elgar’s Cello Concerto by the Young Musician of the Year, it begins at 7.30 and you may book tickets (£67) by telephone on 020 7840 4242 quoting the code Fuller Concert.

Since this is the 50th year of The Chart Seminar we will be conducting the event on October 3rd and 4th to coincide with the memorial on the Saturday.

In the meantime, if you have any questions, would like to attend, or have a suggestion for another venue please feel to reach out to Sarah at [email protected].  

The full rate for The Chart Seminar is £1799 + VAT. (Please note US, Australian and Asian delegates, as non-EU residents are not liable for VAT). Annual subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.

Story by ProactiveInvestors