Dollar Rises Before Trump Press Conference; Futures Flat, Turkish Lira Plunges

Tyler Durden's picture

European and Asian shares, the dollar and crude all rose before President-elect Donald Trump’s first press conference since July at 11am on Wednesday, while S&P futures are little changed. Surging raw-materials stocks sent Asian stocks higher. Oil rebounds from the lowest level in a month.

In a session light on economic news, all eyes will be on Trump's press conference scheduled for 11 am: while Trump's election campaign calls for tax cuts and more infrastructure spending have boosted U.S. shares and the dollar, his protectionist statements and a flurry of off-the-cuff Tweets have kept many investors from adding to risky positions. Trump has vowed to label China a currency manipulator on his first day in office on Jan. 20 and has threatened to slap huge tariffs on imports from China.  Paul Ryan and top members of Trump's transition team are discussing a controversial plan to tax imports. Economists have warned that protectionist measures could stifle international trade and hurt global growth. That brings Trump's press conference into sharp focus.

Ahead of this markets have been fairly reluctant to lay on any big bets this week heading into today’s main event. Indeed it’s been another fairly quiet 24 hours on the whole. Look no further than the S&P 500 which closed completely unchanged last night after wiping out some early modest gains. Sector wise gains for financials and health care stocks were balanced out by losses across energy stocks and real estate

So with that out of the way, here are the session highlights so far:

  1. Dollar pushes higher ahead of Trump press conference
  2. Oil prices edge higher ahead of U.S. inventory data
  3. U.S. stock futures point to flat open on Wall Street
  4. Turkish lira hits fresh record lows
  5. Gold hits fresh 6-week high before Trump appearance

"From a currency perspective, markets will aim to get a clearer picture on trade, fiscal stimulus and the new administration’s relationship to the Fed," Morgan Stanley strategists wrote in a note to clients.

“There’s quite a lot of positioning that Trump delivers at least part of the stimulus he promises,” said Christopher Jeffery, asset allocation strategist at Legal & General Investment Management in London, who has recently adopted neutral weighting on the dollar from a more-bullish stance. “We worry that positioning has become stretched and that he doesn’t deliver.”

In early trading, Europe opened lower only to post a modest rebound, as the Stoxx Europe 600 Index added 0.2% while after sliding -0.3%, while the U.K.’s FTSE 100 Index rose 0.1 percent as a result of the latest drop in sterling, climbing for a 12th day. If the move holds, it would be the gauge’s longest rising streak on record. The pound briefly dropped below $1.21 for the first time since October, even as reports show industrial and manufacturing production grew at a faster pace than analysts forecasts.

As sterling fell, the dollar rose, and the Bloomberg Dollar Spot Index gained 0.2 percent as of 11:00 a.m. in London.

In other notable currency moves, the plunge in Turkey’s lira continued again this morning, tumbling nearly 2% against the dollar to new all time lows after data showed a worsening in the country’s current account deficit and investors took no comfort in the central bank’s latest move to shore up the currency. The lira traded at an all-time low of TRY3.8925 against the dollar after November’s current account figures showed a $590m deterioration in the deficit as the FT notes, heaping further pressure on a slowing economy suffering from sharp drops in tourist revenue. Today’s renewed lira selling follows the central bank’s attempt to put a floor on the currency by freeing up liquidity in the foreign exchange market. However, as we expected, yesterday’s announcement to tweak banks’ FX reserve requirements has done nothing stop investors dumping the currency.

S&P 500 Index futures edged higher, reversing declines over the week’s first two days.

Commodities rebounded despite the dollar strength, with West Texas Intermediate rebounding from its lowest level in a month, up 0.9% to $52.16 a barrel. Iron ore futures jumped 3 percent in China after a 5.5 percent rally on Tuesday. Gold was little changed. Uranium surged the most in more than three weeks as Kazakhstan said it will reduce production by 10 percent this year after prices slumped in 2016 amid a global inventory glut. Copper held near the highest closing price in nearly a month on the outlook for tighter supply following Indonesia’s signing of new mineral export regulations and miners’ wage negotiations in Chile.  U.S. natural gas fell 1.8 percent, paring its biggest gain in three weeks following forecasts of below-average temperatures.

* * *

Bulletin headline summary from RanSquawk

  •  European equities trade modestly higher with participants very much awaiting today's press conference from President-elect Trump
  • Once again we are left watching GBP taking another beating, with the Cable rate pushed down to 1.2100
  • Highlights include DoE crude oil inventories, comments from BoE's Carney and press conference from President-Elect Trump

Market Snapshot

  • S&P 500 futures up less than 0.1% to 2265
  • Stoxx 600 up 0.2% to 365
  • FTSE 100 up 0.2% to 7289
  • DAX up 0.2% to 11609
  • German 10Yr yield up 8bps to 0.36%
  • Italian 10Yr yield up less than 1bp to 1.92%
  • Spanish 10Yr yield down 2bps to 1.46%
  • S&P GSCI Index up 0.6% to 391.2
  • MSCI Asia Pacific up 0.2% to 140
  • Nikkei 225 up 0.3% to 19365
  • Hang Seng up 0.8% to 22935
  • Shanghai Composite down 0.8% to 3137
  • S&P/ASX 200 up 0.2% to 5771
  • US 10-yr yield up 1bp to 2.39%
  • Dollar Index up 0.27% to 102.29
  • WTI Crude futures up 0.7% to $51.20
  • Brent Futures up 0.9% to $54.11
  • Gold spot up less than 0.1% to $1,189
  • Silver spot up 0.1% to $16.81

Top Global News

  • Trump Said to Be Told of Unverified Russian Intelligence Plot: U.S. spy agencies told Obama and president-elect about scheme
  • Ex-Head of Russia’s FSB Says No Dirt Collected on Trump: IFX
  • Tillerson to Call Russia ‘a Danger’ in Confirmation Testimony
  • President-Elect Trump to hold news conference to discuss business ventures, potential conflicts of interest
  • Ford to Pay $200 Million Cash on Top of Regular Dividend: payment a show of confidence even as co. enters a year planning expensive investments in electric and autonomous vehicles
  • Tesla’s Autopilot Head Said to Depart as Apple Engineer Hired: Sterling Anderson leaves car company’s autonomous driving post, Chris Lattner, who led Apple’s Swift development, joins Tesla
  • VW Board Set to Sign Off on $4.3 Billion U.S. Diesel Penalty: settlement sends crisis cost above $19.2 billion set aside; U.S. Justice Department deal includes VW guilty plea
  • Warburg Said to Be Forming Consortium to Bid for Singapore’s GLP: Warburg Pincus talking to banks, potential bidding partners
  • U.S. May Be Probing Other Targets in Former Autonomy CFO’s Case: former Autonomy CFO Hussain set to appear in U.S. court for first time
  • Airbus Retains Order Lead Over Boeing Over Late Sales Windfall: European co. booked 320 aircraft puchases in Dec.; delivery tally beat target by 18 planes as A350 pinch eased

Looking at regional markets, Asian stocks traded mostly higher to shake off a mixed US close where the energy sector dragged the DJIA lower. ASX 200 (+0.2%) traded in the green and was boosted by the materials and mining sector after Dalian iron ore rose 8% yesterday. Nikkei 225 (+0.3%) was positive as exporters benefited from recent JPY weakness as USD/JPY reclaimed the 116.00 handle, while Sony (+3.5%) shares post over 3% gains for the second consecutive day. In China, markets were mixed as Shanghai Comp (-0.6%) suffered amid the PBoC conducting yet another weak liquidity operation, while Hang Seng (+0.7%) outperformed and was lifted by positive earnings from a number of properties names. Finally, 10yr JGBs traded marginally higher after the 30yr auction showed a better than prior bid-to-cover, while there was some underperformance seen in the long end of the curve.

Top Asian News

  • Singapore’s Garena Said to Pick Goldman for $1 Billion IPO: Most valuable Southeast Asian startup considering U.S. listing
  • Samsung’s Lee Summoned in Bribery Probe, Prosecutors Say: Appearance set for 9:30 a.m. local time Thursday
  • Indonesia Orders Bond Dealers to Uphold Country’s Interest: Bond dealers asked to maintain professionalism, integrity
  • Analyst Who Foresaw Yen Fall Sees More Pain as 125 in Sight: Expects the Federal Reserve to raise rates three times

European equities trade modestly higher so far this morning, with slight outperformance seen in the FTSE 100 (+0.2%). UK indices were supported by the latest earnings update from Sainsbury's, which followed the trend set by Morrison's earlier in the week with their impressive report. Elsewhere, focus will remain on the UK housing sector after Foxtons trade lower by around 6% in the wake of their pre-market update. Elsewhere, on a sector specific basis energy and material names are among the laggards, with pharmaceuticals also seeing softness. Fixed income markets continue to see Bunds trade in a relatively tight range, as has been the case throughout the week so far. As such, the German benchmark trades marginally above the 163 level, at the upper end of the aforementioned range.

Top European News

  • U.K. Industrial Output Rises More Than Forecast on Oil, Gas: gause rose more than forecast in November, led by a surge in oil and gas as a major North Sea field resumed operations
  • Sainsbury’s Sales Beat Estimates as Grocers Get Christmas Boost: holiday sales growth at Argos chain confounds skeptics; shares advance as much as 7.1%, most since January last year
  • Bouygues Gets $1.8 Billion Hinkley Nuclear Plant Contract: French contractor to work with U.K. builder Laing O’Rourke
  • Defense Supplier Cobham Drops as Profit Falls Short, Debt Rises: U.K. aerospace parts maker cites delays in Boeing KC-46 tanker; shares fall 21% after Cobham cancels final dividend

In currencies, the Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, gained 0.2 percent as of 10:58 a.m. in London. Turkey’s lira slumped 1.7 percent, retreating for a fifth day as investors awaited signs the central bank will support the currency. Once again we are left watching GBP taking another beating, with the Cable rate pushed down to 1.2100 to record new cycle lows in the wake of the production and trade data this morning. Both the Nov manufacturing and industrial numbers beat on expectations, but the trade deficit widened on all counts to give GBP bears the ammunition to spark off another sell off. The USD rate is particularly vulnerable going forward, as ahead of the Trump press conference this evening, we are seeing the greenback gaining some traction again, just as many were expecting a little caution/moderation ahead of this, and indeed the inauguration next week. USD/JPY is again leading the way as dip buyers ahead of 115.00 have been plenty this week, but plenty more wood to chop on the upside before we can get comfortable again, as EUR/USD sales continue to run into demand on the way down. Support seen ahead of 1.0500 but stronger levels seen into the mid 1.0400's. USD/CHF is testing 1.0200 again, but the commodity currencies are giving up little ground as AUD stays in touch with .7400 up top.

In commodities, West Texas Intermediate crude advanced 0.9 percent to $52.16 a barrel. Iron ore futures jumped 3 percent in China after a 5.5 percent rally on Tuesday. Gold was little changed. Uranium surged the most in more than three weeks as Kazakhstan said it will reduce production by 10 percent this year after prices slumped in 2016 amid a global inventory glut. Copper held near the highest closing price in nearly a month on the outlook for tighter supply following Indonesia’s signing of new mineral export regulations and miners’ wage negotiations in Chile.  U.S. natural gas fell 1.8 percent, paring its biggest gain in three weeks following forecasts of below-average temperatures.

In terms of the day ahead, clearly all eyes will be on President-elect Trump’s news conference this afternoon. In fairness the calendar is fairly light anyway with just UK trade data and the industrial and manufacturing production reports for November due out this morning. BoE Governor Carney is also scheduled to speak this afternoon at 2.15pm GMT when he is set to testify before the UK parliament’s Treasury Select Committee while the NY Fed’s Dudley is due to speak at 6.20pm GMT.

* * *

US Event Calendar

  • 7am: MBA Mortgage Applications, Jan. 6 (prior 0.1%)
  • 10:30am: DOE Energy Inventories
  • 1:20pm: Fed’s Dudley Speaks on Bank Culture in New York

US Government agenda

  • 9am: U.S. Chamber of Commerce CEO Thomas Donohue and group’s chief policy officer, Neil Bradley, deliver annual “State of American Business” address
  • 9:15am: Senate Foreign Relations hearing on nomination of former Exxon Mobil CEO Rex Tillerson for sec. of state
  • 9:30am: Senate Judiciary Cmte second hearing on Sen. Jeff Sessions’ nomination for attorney general
  • 10:15am: Senate Commerce, Science and Transportation Cmte hearing on nomination of Elaine Chao for transportation secretary
  • 11am: President-Elect Trump to hold news conference to discuss business ventures, potential conflicts of interest

DB's Jim Reid concludes the overnight wrap

President-elect Trump's first news conference since the summer kicks off at 11am ET time/4pm GMT and if his recent tweets are anything to go by it promises to be a lively affair.

Mr Trump passed the acceptance speech test with flying colours back on election day with a gracious rehearsed speech. This is likely to be a more confrontational event and much of the world will be keen to see a) how he handles it and b) whether he fleshes out the desired direction of policy. I really can't see it being a non-event even if I've no idea what he'll say. In fact everything appears to be open for discussion but markets will likely be most interested in what he says about the comprehensive tax reform, foreign policy and border taxes in particular. In addition, after Trump urged congressional Republicans to repeal Obamacare immediately yesterday and vote on a replacement bill within weeks, expect that to also be a topical subject. On top of this the overnight press is dominated by a CNN report which suggests that US intelligence officers presented Trump with classified documents last week including allegations that operatives in Russia claim to have unverified compromising financial and personal information about Trump. So it should be interesting.

Ahead of this markets have been fairly reluctant to lay on any big bets this week heading into today’s main event. Indeed it’s been another fairly quiet 24 hours on the whole. Look no further than the S&P 500 which closed completely unchanged last night after wiping out some early modest gains. Sector wise gains for financials and health care stocks were balanced out by losses across energy stocks and real estate. Prior to this in Europe the Stoxx 600 (+0.11%) closed a touch firmer but again it wasn’t anything to get too excited about. One market which continues to surge on though is the FTSE 100 which yesterday closed up another +0.52%. In doing so it not only notched up its 9th consecutive fresh record high – the longest such run – but also took its run of consecutive daily gains to 11 which is a feat matched on only three other occasions, those coming in 2009, 2004 and 1997. In total return terms over those 11 days the FTSE 100 has notched +3.37% with the latest leg lower for Sterling (-1.48% in the same period) a big driving force. Indeed in US Dollar terms the return over that time is a more modest +1.83%. Refreshing our performance charts quickly, with the Pound now down -18.20% since the Brexit vote the FTSE 100 has now delivered a +16.80% total return in Sterling terms but a -4.45% total return in US Dollar terms.

Meanwhile commodity markets continue to pull in different directions. WTI Oil dipped another -2.19% yesterday and finished below $51/bbl having closed at $54/bbl on Friday. That’s despite there not really being any new news with the market still seemingly focused on the supply story in the US. On the other hand Gold was up another +0.72% yesterday along with decent gains for other precious metals, while iron ore (+2.19%), copper (+2.99%) and zinc (+1.99%) also continue to hover around recent highs after getting a boost from the huge increase in China producer price inflation yesterday. Rates markets, meanwhile, were a touch weaker if anything with 10y Treasury yields edging up 1.1bps to 2.377%. The Greenback (+0.10%) ended a touch firmer.

This morning in Asia, with the exception of China the mood is generally positive. The Nikkei (+0.36%), Hang Seng (+0.66%), Kospi (+1.45%) and ASX (+0.23%) are all up, largely led by anything commodity linked, while the Shanghai Comp (-0.53%) is currently in the red. US equity index futures are little changed while bond markets have been quiet.

Moving on. While markets weren’t particularly thrilling yesterday there was at least some interest in the data. Specifically it was the NFIB small business optimism survey in the US which turned a few heads after the index surged 7.4pts in December to 105.8 (vs. 99.5 expected). That is actually the largest one-month gain ever for the index and puts the index at the highest level since December 2004. The gain  was mostly reflected in the economic outlook index which rose a whopping 38pts. Our US economists noted that the since the NFIB data are highly correlated with the broader economy, which makes sense given that small and medium sized business account for nearly 80% of the labour market, the recent upshift in the NFIB strongly suggests that 2017 real GDP growth may be even better than their well-above consensus 3% forecast. In terms of the other data, JOLTS job openings pointed to a steady hiring and quits rate in November (3.6% and 2.1% respectively while wholesale inventories were revised up one-tenth to +1.0% mom in November versus the initial estimate. In Europe the only data came from France where industrial production was reported as jumping a much better than expected +2.2% mom in November (vs. +0.6% expected). Finally before we wrap up, yesterday we also got the announcement that Richmond Fed President, Jeffrey Lacker, is to retire on October 1st and so step down from his role at the Fed. The news is notable given that Lacker has been one of the more, if not the most, hawkish Fed officials in recent years.

In terms of the day ahead, clearly all eyes will be on President-elect Trump’s news conference this afternoon. In fairness the calendar is fairly light anyway with just UK trade data and the industrial and manufacturing production reports for November due out this morning. BoE Governor Carney is also scheduled to speak this afternoon at 2.15pm GMT when he is set to testify before the UK parliament’s Treasury Select Committee while the NY Fed’s Dudley is due to speak at 6.20pm GMT.

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BritBob's picture

Not everyone likes Donald.

 

'God Forgive America' Spain hits out at US election of Donald Trump

SPAIN has hit out at the US election victory of Donald Trump with a Catalan daily posting a picture of him on its website above the words: "God Forgive America." (Daily Express 9.11.16)

Time for America to recognize that Spain's claim to Gibraltar is spurious: Gibraltar - Some Relevant International Law: https://www.academia.edu/10575180/Gibraltar_-_Some_Relevant_Internationa...

They have been hassling the US Navy ....Spanish Guardia Civil vessel Rio Cedena twice tried to disrupt the visit by ballistic missile sub USS Florida as it was approaching the British Overseas Territory on the southern tip of Spain.

 

nmewn's picture

Doesn't Spain and England still have kings & queens on public assistance? ;-)

effendi's picture

The Queen is self financing (from the royal estates and investments). She also works pretty hard for someone in their nineties and the cost of maintaining the Royals is about 5% of the cost of maintaining US presidents. The Spanish King is probably also good value for money as he did stop at least one military coup.

nmewn's picture

To be self-financing one would have to have seed money.

My point is, if europeans are going to continually yack about slavery reparations when the target is not themselves, colonialism, conquest, plunder, taxation to achieve social goals and the spoils of war I'm going to start revealing some rather unpleasant facts about their historical cognitive dissonance.

The gloves are off ;-)

Dien Bien Poo's picture

Utter bullshit. The royals are completely subsidized by the state to the tune of 150mm sterling annuallly. Thats why they are debating binging back the yacht Brittania; because its a public expense. Now whetehr thats good investment is another matter.

Shed Boy's picture

Come on....thats taking the Trump rah..rah a little over the top don't you think. A Trump press conference moving the market? And the market doesn't open for 2 1/2 hours? Please....

Arnold's picture

Hey, it takes a couple of Federales to bounce it around now.

The rate hike did not have the same effect it did last year..... yet.

nmewn's picture

Do it Don...

"Has Obama's FBI & CIA gotten any news on the whereabouts of Eric Braverman yet?"

...just-fucking-do-it! ;-)

ciscokid's picture

God save Donald Trump from all the evil going against him.

Scooter333's picture

 

Hey Tyler I thought you might be intrested in this 

http://economictimes.indiatimes.com/news/economy/policy/pm-narendra-modi...

PM Narendra Modi launches UPI based mobile payment app called BHIM  (Bharat Interface for Mobile)

 Urging people to make digital payments a "habit" to make the country a cashless economy.

 

 

lester1's picture

Dishonest liberal media are spiraling out of control. Their whole world view has beet shattered.

 

Go Trump!

King Tut's picture

How do you shatter a beet? Freeze it in dry ice first? I'm sure Orange Jesus could just shatter it using only his mind.

Dien Bien Poo's picture

100 bucks the Drumpf cancels the press conference because he is worried about questions on golden showers. pussy.

Shed Boy's picture

Gold off a cliff....Silver off a cliff....

Maestro Maestro's picture

My Turkish friends,

Do what Turks do best and destroy the megalomaniac plans of the American, European and anti-Semite Jewish bankers again.
The solution is to bring gold back into the public monetary realm. This is how you do it WITHOUT actually risking your gold reserves in the process:

1) Declare publicly that the Turkish monetary base is backed by gold. This way, you thrust into the consciousness of the populations of the world the fact that gold is money of the best kind, unlike paper/fiat money, WITHOUT actually risking your gold reserves by de jure making the Turkish Lira convertible to gold. Fiat money is a psychological construct: turn the psychology against it by plainly and publicly stating that pure fiat money is essentially an intrinsically worthless item.

2) Ask for immediate and unconditional repatriation of your 400 tons of gold supposedly held for you by the Bank of England, if I recall correctly. The Brits most likely sold it and they don't have it anymore, so that gold is lost to you anyway. Turn your stolen gold into a financial weapon of mass destruction thrust deep into the collective heart of the Western bankers who are attacking the Turkish Lira and thereby the Turkish state. Put the Western bankers' theft and fraud committed against the Turkish nation, on the public record thus expose the bankers and the Western governments that they control (the EU being the most obvious) as the filthy criminals that they truly are.

3) Kick the Americans out of the Incirlik airbase to weaken the Americans' grip on your nation and also to remove the risk of a Russian nuclear strike against Turkey by distancing yourselves from NATO.

Go Erdogan.

They give you no choice. You either win or you lose.
To win, you must FIGHT. I showed you how to do it without losing a drop of Turkish blood.

Fuck the Americans.

USA=ISIS