Equities up, USD down, for the time being at least

Good morning

What a fantastic weekend spent with the family celebrating my eldest’s 2st birthday. We enjoyed cocktails and steaks on Saturday and drinks with friends and family in one of our local pubs yesterday, which obviously went on considerably later than planned and it is fair to say I have felt better on a Monday morning.  As a result of the celebrations I missed pretty much all of the sporting action over the weekend. 

Congratulations first to McIlroy for eventually winning Masters and in doing so claiming the grand slam of majors.  Congratulations as well to McLaren’s Piastri for winning the Bahrain F1 GP and also to Liverpool for extending their lead in the premier league table to 13 points with just 18 points available, my simple maths calculates therefore that they need just one more win to claim the title. 

Let’s not talk about Spurs who, having lost to Wolves have taken just four points from the last 18 available as could well be looking at finishing in 17th place, just above the relegation zone.  Ange’s days must surely be numbered, perhaps even if Spurs do somehow win the Europa League.  Still, one of the RAM founders will be happy, with Mark’s Leeds still on top of the championship and in the automatic promotions places.  Sheffield Utd who at one point looked like they were running away with it have now lost three matches in a row to put their chances of automatic promotion in some jeopardy.

Anyway, enough of the weekend, lets look at the markets.  Friday saw EU and US equities end in positive territory, Asian markets were pretty much the same overnight.  Futures markets point to higher opens this morning.  The US dollar was generally weaker and we’ve seen a continuation of that since the open, GBPUSD now 1.3155 and EURUSD almost at 1.1400.  USDJPY has traded as low as 142.25, now 142.60.  US 10 year yield remain in the 4.5% area, helped in some small part by word from Japan that they won’t use Treasury holding as a bargaining chip in trade talks. 

Last weeks highs and lows led by Trumps on-off tariffs was something of a mess and I’d love to know what the White House really think about the mayhem they caused.  I speak in the past tense but of course we all know this is nowhere near the end of this and it is nigh on impossible to work out exactly how it will finish.  Which countries will get a decent trade deal ? 

How bad will the US/China  trade war get before something gives way.  Overnight we saw the latest China trade balance, which showed a massive overall surplus of $102.64bn, far greater than expectations.  That’s a lot of money to buy gold with, which happens to have retested the highs around $3,245 overnight.  That’s not all with the US of course but Trump will be looking with some jealousy at that surplus and would do anything to get the US that sort of trade balance.

 Big news over the weekend was the Uk government taking control of British Steel.  Some quite damning reports coming of possible deliberate action by its former Chinese owners to let the plant collapse, forcing the UK to be reliant on China steel imports.   Having become a steel furnace expert over the weekend, I discover that they must be kept running with supplies of coal and iron ore as they are damaged and very expensive to restart once they cool. It seems that the Chinese owners not only failed to purchase the materials needed to power the furnaces, I read one report suggesting they had been selling their remaining supplies of coal. 

Some have gone so far as to call this sabotage, and should serve as a warning of the risks attached to getting investment in major infrastructure from overseas powers.  I remember that China were going to be building the UK’s newest nuclear power stations, I wasn’t over the moon at that idea, nor was I keen to find out France owns most of our electricity power stations.  There are some things we just shouldn’t have to rely on any other country to provide.  The steel industry is an issue as it does seem to be perpetually loss-making but every other G7 nation seems to have its own steel manufacturer.  I presume they are also loss-making, I can’t believe it is only ours.  Cheap China imports won’t help.  Perhaps we should look at bigger tariffs…..

Not much on the calendar today, we’ll have UK unemployment first thing tomorrow morning and inflation Wednesday morning, US retail sales and BoC rate announcement Wednesday and ECB rate announcement Thursday.  It’s a short week this week and the next with Easter holidays Friday and Monday.  Typically, the weather looks like it’ll be a bit more mixed that we’ve had recently but I guess we should be used to that.

Have a great day…

-  18.00 Feds Waller speaks

-  21.00 Feds Harker speaks

-  00.01 UK BRC retail sales

-  00.40 Feds Bostic speaks

-  02.30 RBA minutes

-  07.00 UK unemployment