With investors asking "what is the probability of the Trump tax deal getting done?" it turns out that is the wrong question. As Morgan Stanley shows, the outcome from Trump's tax proposal is not binary but rather leads to the following nine distinct possible results.
"If things are so bad during good times, 2Q-4Q is set to resemble a "Nightmare on Elm Street."Next move in U.S. steel industry fundamentals is lower, given scrap prices now in full-on correction mode, negative seasonality around the corner for U.S. steel mills, iron ore price declines, rising steel imports and correction in coking coal prices."
After two days of back to back triple digit gains in the Dow for the first time since the election, overnight the torrid rally has faded, with European shares and U.S. stock futures little changed ahead of Trump's big unveil of his much anticipated tax cut plan as investors seek new impetus for a flagging relief rally.
The biggest problem for individuals, and the culprit of the great “ETF buying panic,” is the “herding effect” as investors rush to chase market returns. The coming problem will be “loss aversion,”as the herding effect runs in reverse in the rush to get out.
Global markets were oddly calm on Friday, the last day of trading before the first round of France's closely fought presidential election, with European stocks posting modest declines ahead of Sunday's main event, Asian shares rising, and set for first weekly gain in the past month, while U.S. futures were unchanged.
European stocks rose amid earnings beats, offsetting weakness in the energy sector and easing investor concerns ahead of the weekend’s French election. Asian shares and U.S. futures also rise. The dollar weakens against the euro and most crosses, while crude oil rebounds following renewed OPEC chatter of a production cut, this time with Saudi Arabia seemingly onboard.
"One respondent said that during a recent six-month attempt to add to staff for a new product, two-thirds of applicants for assembly line jobs were screened out before hiring via math tests and drug tests; of 400 workers hired, only 180 worked out."
Following yesterday's surprising Goldman miss, traders were closely watching the results of its closest comp, Morgan Stanley this morning to determine if the Goldman FICC revenue disappointment was systemic or a one-off event. They were pleasantly surprised when MS beat on both the top and bottom line, as net income jumped 70% driven by a 96% surge in fixed income sales and trading revenue.
European stocks rebounded after the biggest one-day drop since November, alongside S&P futures, while Asian equities posted modest declines after yesterday's weak US close. Gold and yen slid, while the dollar gained on the latest Mnuchin comments to the FT according to which Trump was "absolutely not" trying to talk down the dollar.
With every other asset class roundtripping the November election outcome, it was only a matter of time before Japan's 10Y JGB retraced the entire "reflationary" move from 0.0% to 0.1%. And, sure enough, after today's violent deflationary capitulation, moments ago Japan's JGB 0.1% of 2027 once again dipped back under 0%, sliding as low as -0.003% as deflation returns with a whimper.