Tags: investors | trump | kim | talks

Investors Watch 'Nuclear Option' in Trump-Kim Talks

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Wednesday, 27 February 2019 10:16 AM Current | Bio | Archive

President Donald Trump is meeting today with North Korea's Supreme Leader Kim Jong-un in Hanoi, Vietnam.

Before the meeting, Trump tweeted: “All false reporting (guessing) on my intentions with respect to North Korea. Kim Jong Un and I will try very hard to work something out on Denuclearization & then making North Korea an Economic Powerhouse. I believe that China, Russia, Japan & South Korea will be very helpful!”

No doubt they will talk about the same thing they talked about when they had their historic first meeting last June in Singapore: nuclear weapons.

We’ll see what comes out this time around.

Fed Chair Jerome Powell gave his testimony before the Senate Banking Committee and said: “With our policy rate in the range of neutral, with muted inflation pressures and with some of the downside risks we’ve talked about, this is a good time to be patient and watch and wait and see how the situation evolves,” The Wall Street Journal reported.

Whoever prepared the economic section of the Fed chair’s remarks did a good job of making sure there was nothing especially interesting for financial markets to focus on, So, no one is going to change his or her interest rate expectations on the back of those remarks.

Powell will give his testimony before the House Financial Services Committee delivering the same testimony he gave yesterday and then will take lawmakers’ questions.

We’ll see if the Q&A session turns out to be more interesting than what we got yesterday.

As expected, the Conference Board Consumer Confidence Index bounced back yesterday, increasing in February after a decline in January.

  • The Index now stands at 131.4, up from 121.7 in January.
  • The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – improved, from 170.2 to 173.5, which is an 18-year high.
  • The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – increased from 89.4 in January to 103.4 in February, which represents the largest monthly gain since 2011.

From the European Commission we got the Economic Sentiment Indicator for February that extended its downward trend to eight months. At 106.1, the index was down 0.2 points versus a minimally firmer revised January reading but still saw its weakest reading since November 2016.

The headline dip reflected worsening morale in industry (minus 0.4 after 0.6) and construction (6.4 after 8.4) that more than offset gains in services (12.1 after 11.0), retail (minus 1.6 after minus 2.1) and the household sector (minus 7.4 after minus 7.9). 

Under these circumstances, the euro should remain weak. 

The euro is quoting in the $1.13 - $1.14 range

Tensions between India and Pakistan have escalated in Kashmir. With Pakistan shooting down two Indian aircraft the day after an Indian missile strike in Pakistani territory. 

Any risk of military conflict will always tend to lead to a short-lived reaction in financial markets.

The problems in Kashmir are certainly not without precedent and this is unlikely to have any significant impact beyond the countries’ involved.

About Brexit, Prime Minster Theresa May has now proposed three options:

  • To hold a "meaningful vote" on embracing an EU exit deal by March 12;
  • If the March 12 vote fails, to hold another vote on March 13 "asking this House if it supports leaving the EU without a withdrawal agreement;"
  • If those votes fail, to vote on March 14 on whether to "seek a short, limited extension to Article 50" — the exit clause in the EU Constitution that was triggered after the Brexit vote.

Prime Minister Theresa May also said the vote would mean that the UK will only leave without a deal on March 29 if there is explicit consent in the House for that outcome,” the National Public Radio reported.

Etienne "Hans" Parisis is a bank economist who has advised investors on financial markets and international investments.

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No doubt they will talk about the same thing they talked about when they had their historic first meeting last June in Singapore: nuclear weapons.
investors, trump, kim, talks
Wednesday, 27 February 2019 10:16 AM
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