📰 Macro-News round-up
📊 #MarketNews
📺 Last night we participated in the Wall Street close, on Negocios TV, where we gave the clues as to why there are doubts about the US rate cut, or at least that is what the markets are discounting. As an example, we mentioned that the words of Bolstic and Goolsbee of Federal Reserve, do not seem to agree on how many and when rate cuts will be made.
💬 Additionally, We had new comments made by Waller of Fed this time. He seems to be saying what we have been repeating in these reports for months, ever since Gerome Powell first mentioned, in December, the possibility of cutting interest rates. If the macroeconomic figures they present are true, neither their unemployment rate nor their economic growth rate justify the need for interest rate cuts. Not only that, their inflation rate seems to be zigzagging around 3%. The Fed has not asked us what we think, but if I were on the Board, I would be sure that, until I see that inflation is on a clear downward trend, I would not risk cutting rates, which may later need to be raised in the event of a pick-up in inflation. Well, Waller said the following last night: “Economy is not giving fed case to pursue big rate cuts.” and “Dollar Reigns Supreme as Currency”.
💡 Now, the emphasis we have placed for weeks on the DXY dollar index and US 2-year bonds, which do not reflect a near-term rate cut scenario, makes more sense than ever.
In any case, this afternoon we will have the release of the Q4 GDP revision for the US, which may shed some light on this matter.
🇩🇪 Germany: Bad data continues. Retail sales have plunged -1.9% against an expected rate of 0.4% up. Its unemployment rate remains close to 6%. Compared to economies such as the US or the UK, with rates below 4%.
🇬🇧 UK business investment is recovering, but at a slower pace than expected. The Q4 business investment rate came in at 1.4%, 1.5% was expected, but at least it indicates recovery, given that the previous period was -2.8%.
🌍 Geopolitics: The witch-hunt continues behind the curtain of the Ukrainian war. The new Czech government has sanctioned a Ukrainian opponent of Zelensky’s government, Ukrainian tycoon Medvedchuk, accusing him of being a pro-Russian and seeking influence in the European Parliament. The director of the Ukrainian-Israeli news website voiceofeurope.com, Artem Marchevskyi, has also been sanctioned for pro-Russian influence.
🇩🇪 In Germany, a rebellion in the governing party appears to be brewing. Five members of the Social Democratic Party SPD have issued a letter accusing the chancellor of not being enough of a warmonger. Apparently, Macron’s aggressive rhetoric needs to be replicated by Germany to be effective. The letter reads: “The Chancellor and the SPD leadership drawing red lines, not for Russia, but for German politics, weakens Germany’s security policy and benefits Russia.”
🇺🇸 At times like these, Trump’s words in this regard seem to make more sense. When he warned that the Biden administration was desperately seeking a direct confrontation with Russia and unleashing World War III, rather than being defeated in the US elections, he said that the US would be more likely to go to war with Russia than be defeated in the US elections. Is the US pushing its allies into a frontal war with Russia?
🇨🇳 Speaking of Trump, the trade war he started against China seems to be still simmering, in this case from Europe. A top EU official refuted claims that China is the focus of the organization’s recently approved strategy to diversify its sources of strategically important raw commodities, which may be interpreted as an attempt to defuse tensions between Beijing and Brussels. The European Parliament and Council co-legislators passed the EU Critical Raw Materials Act (CRMA) last week with the goal of “simply diversifying sources of supply,” an official told to European media on Wednesday.
