Wednesday, November 09, 2016

Today's Headlines

  • Europe Braces for Trump Trade Assault as Economy Struggles. (video) The forecasts for Europe’s fragile economic recovery now have a Trump-shaped hole in them. Just hours after Donald Trump was declared winner of the U.S. presidential race, the European Commission published calculations for the outlook in the 19-nation euro area for slower growth in the region’s four biggest economies: Germany, Italy, Spain and France. Those projections were completed before the surprise result of the vote was known, suggesting there may be more risks to come. With campaign pledges that range from ripping up trade deals to expelling undocumented workers, the impact of the oncoming Trump presidency is incalculable but potentially severe for the major trading partners of the world’s biggest economy. The euro area -- already burdened by the U.K.’s decision to leave the European Union and a roster of populist candidates lining up for elections over the next 12 months -- looks especially vulnerable.
  • Italy’s Next in the Crosshairs for Anti-Establishment Wave. The anti-establishment whirlwind is headed for Italy now that it has sent Donald Trump to the White House. Italian government bonds slid in the wake of Trump’s stunning victory, reflecting worries that Prime Minister Matteo Renzi will lose a referendum on political reform, scheduled for Dec. 4.
  • Trump Win Spells More Trouble for Abenomics. Donald Trump’s stunning election victory delivers yet another blow Prime Minister Shinzo Abe’s efforts to revive Japan’s economy, underscoring the vulnerability of Abenomics to fluctuations in the yen and financial markets. Fears of a hard landing in China and the U.K.’s Brexit vote sent investors fleeing risk assets earlier this year, with many seeking the perceived safety of the yen, in the process eroding the profits of Japan’s exporters and the central bank’s inflation goal. The currency surged again as investors reacted to Trump’s win during Asian trading, though the rally eased as the European morning began. Trump’s win all but dooms the Trans-Pacific Partnership trade agreement, which could have boosted Japanese manufacturers. Abe was also counting on the pact as a catalyst for long-promised structural reforms in protected sectors of the economy. "This is a critical moment for Abenomics,” said Yasunari Ueno, the chief market economist at Mizuho Securities Co. in Tokyo. "A huge political obstacle has suddenly fallen in front of it.”
  • Russia Stocks Jump as Trump Win Stokes Bets for Sanctions Relief. (video) The Micex Index advanced 2.2 percent to 2,011.11 by 6:43 p.m. in Moscow, the biggest gain in the developing world, as most equity gauges declined after Trump pulled off an electoral upset by winning the race to the White House. The ruble was down 0.4 percent at 64.0 per dollar as Brent crude retreated.
  • Emerging Markets Drop as Investors Weigh Trade Risk Under Trump. (video) Emerging-market stocks fell the most since June and Mexico’s peso plunged the most in the world as Donald Trump’s presidential election victory stoked concern that the U.S. may adopt protectionist policies, jeopardizing benefits to developing nations from trade deals and immigration. The peso, the currency most vulnerable to Trump’s policies, fell toward its lowest closing level against the dollar on record as the Republican candidate defied forecasts by winning the race for the White House. A gauge of developing-nation exchange rates ended a two-day gain. The MSCI Emerging Markets Index was headed for its biggest one-day slump since the U.K. vote to leave the European Union in June. Technology and industrial stocks declined the most as 10 of the benchmark gauge’s 11 industry groups slumped. The MSCI Emerging Markets Index slid 2.4 percent to 880.40 at 11:26 a.m. in New York.
  • Industry Rift Widens on Trump as European Stocks Stage Rebound. (video) Winners separated from losers as European stocks rallied to their biggest turnaround since March, with health-care providers and miners surging, while utilities and food exporters bore the brunt of selling, following Donald Trump’s victory in the U.S. presidential election. Drugmakers, the region’s largest sector, jumped the most since 2008, supporting equity benchmarks as Trump won the race to govern the region’s biggest export market. Novo Nordisk A/S and Shire Plc rose more than 4 percent, after investors punished the shares in recent weeks amid disappointing earnings and speculation Hillary Clinton would push for drug-price controls as president. Rio Tinto Group led miners to the biggest gain on the Stoxx Europe 600 Index, as base and precious metal prices jumped. The Stoxx 600 rose 1.5 percent at the close, after earlier dropping as much as 2.4 percent, capping its biggest three-day gain since July. The volume of shares changing hands was about 68 percent higher than the 30-day average. Risk aversion was still evident in some industry groups.
  • Trump Day-One Winners and Losers Piling Up Fast Across the Globe. (video)
  • 2016 Election Center. (map)
  • Fed Faces Overhaul as Washington Braces for Trump-Led Shakeup. The leadership, powers and policies of the Federal Reserve may look very different in 18 months. President-elect Donald Trump can’t remove Fed Chair Janet Yellen from office before her four-year term expires. By mid-2018, however, Trump can replace the Fed’s top personnel and potentially alter monetary and regulatory policies. Some members of the Republican-controlled Congress may also take aim at the Fed’s independence from political influence. “Trump will have the ability to substantially reshape the nation’s central bank,” said Aaron Klein, a research fellow at the Brookings Institution in Washington.
Wall Street Journal:
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