Thursday, March 09, 2017

Today's Headlines

  • Draghi Says Risks Receding, Just Not Fast Enough to End Stimulus. (video) Mario Draghi tweaked the European Central Bank’s policy language to show that the economic risks to the euro area are starting to recede, even while insisting that monetary stimulus must continue. The single currency rose. The ECB president said the cyclical recovery may be gaining momentum after almost four years of uninterrupted growth, and that policy makers considered removing a key phrase in their forward guidance on interest rates. He also said the balance of risks to growth has improved, and dropped a pledge to use “all instruments” within the central bank’s mandate if necessary.
  • China Plans Stricter Bank Capital Rules to Contain Risks. China’s central bank plans to apply a stricter method for assessing banks’ capital as part of efforts to contain financial-sector risks, people with knowledge of the matter said. Under the proposed change to the so-called Macro Prudential Assessment framework, the People’s Bank of China will remove an intermediary category in its evaluation of banks’ capital adequacy, the people said, asking not to be identified because the matter is private. That means banks would either get a full score if they meet capital requirements, or a zero score if they fall short, according to the people. Banks in danger of falling into the bottom category will be encouraged to take steps to contain risks, such as raising capital or slowing asset growth, the people said. 
  • China Money Supply Growth Slows Amid Campaign to Contain Risk. 
  • China Factory Prices Extend Surge in February, Lifting Reflation Outlook. (video) Producer price index rose 7.8 percent last month from a year earlier, compared with median estimate of 7.7 percent in Bloomberg survey and a 6.9 percent in January. Factory prices only swung out of 4 1/2 years of deflation in September. Consumer price index rose 0.8 percent versus 1.7 percent increase forecast by analysts, as timing of Lunar New Year holidays skewed the reading.
  • Europe Stocks Little Changed as Banks Rally After Draghi Speech. (video) European stocks closed little changed, erasing an earlier drop after Mario Draghi said downside risks to the euro-area economy were less pronounced. The Stoxx Europe 600 Index added less than 0.1 percent at the close. Banks rallied, leading gains among industry groups, after European Central Bank President Draghi acknowledged that the cyclical recovery may be gaining momentum, saying there’s no longer a “sense of urgency” prompted by deflation risks. The euro and German bond yields rose.
  • The OPEC Deal Is Facing Its Biggest Test. (graph) With the focus now shifting to what the Organization of Petroleum Exporting Countries will do next, here are six charts indicating which way the oil market could be starting to turn.
  • Dimon Says Trump Has Reawakened ‘Animal Spirits’ in the U.S. (video) Jamie Dimon said President Trump’s economic agenda has ignited U.S. business and consumer confidence and he expects at least some of the administration’s proposals to be enacted. “It seems like he’s woken up the animal spirits,” Dimon, chairman and chief executive officer of JPMorgan Chase & Co., said Thursday in a Bloomberg Television interview in Paris. Confidence has “skyrocketed because it’s a growth agenda,” Dimon said, adding that he’s not overly concerned about the possibility of a correction in equities markets, which have surged since the November election. 
  • The Market Is Suddenly Having Second Thoughts on Reflation. (video)
  • Trump Woos Lawmakers With Flattery and White House Bowling. (video) Less than two months on the job, President Donald Trump is showing that when it comes to wooing members of Congress, he’s no Barack Obama. Where Obama was usually reserved and met sparingly with lawmakers, Trump has launched a full-out charm offensive, much of it aimed at bolstering the beleaguered Republican Obamacare plan. Trump “was talking about how we all got to work together,” said Representative Tom Cole of Oklahoma, who was part of a group of House Republican vote-counters who met Trump Tuesday in the White House. “He even said at one point, ‘Maybe we should meet once a week. Maybe we should meet every four days!’”
Wall Street Journal:
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