Popular Fox News host Judge Jeanine Pirro is under fire after a now viral Saturday segment wherein she questioned Democratic Congresswoman Ilhan Omar’s loyalty to the United States due to her Muslim identity and especially because she wears a hijab, later resulting in a rare rebuke from her own network.
In a monologue on her show “Justice with Judge Jeanine” Pirro questioned everything from Omar’s oath to uphold the Constitution to her Muslim identity to the roots of her anti-Israel views, saying, “Your party is not anti-Israel, she is,” and adding, “So if it’s not rooted in the party, where is she getting it from?”
The Fox host said that given her views for which she’s recently been in hot water couldn’t have come from the Democrat party, but must have more sinister anti-American origins.
She strongly suggested Rep. Omar’s views are rooted in Sharia law given that she wear’s a hijab: “Omar wears a hijab, which according to the Koran 33:59 tells women to cover so they won’t get molested,” Pirro said during the opening monologue, and followed with “which in itself is antithetical to the United States Constitution.”
“Think about it: Omar wears a hijab,” Pirro began “Is her adherence to this Islamic doctrine indicative of her adherence to Sharia law, which in itself is antithetical to the United States Constitution?”
Outcry from a number of media figures and legal groups on both the left and the right resulted in Fox later on Sunday issuing a rare statement which“strongly condemned” the segment.
Fox host Jeanine Pirro says that Ilhan Omar’s hijab may mean that she’s against the Constitution. pic.twitter.com/yxGRVoYkQm
“We strongly condemn Jeanine Pirro’s comments about Rep. Ilhan Omar,” Fox News said in the statement. “They do not reflect those of the network and we have addressed the matter with her directly.”
The clip was then removed from Fox’s YouTube channel, but not before already going viral as the controversy grew into Monday, which resulted in a number of groups, including the American Jewish Committee slamming the segment.
“Suggesting that a member of Congress’s faith or identity is inconsistent with his or her commitment to uphold the Constitution is ugly bigotry. Muslims, Christians, Jews, and others have long served America with distinction. Judge Jeanine should apologize,” the American Jewish Committee said on Twitter.
Author James Surowiecki has also been widely cited in his reaction to Pirro’s comments: “The irony here is that Pirro is a practicing Catholic. And the slur she’s making against Omar — that if she follows the Koran, she can’t follow the Constitution — is remarkably similar to the arguments that were once made against Catholic politicians,” the popular New Yorkerjournalist said.
Amidst the backlash Pirro tried to clarify her remarks, saying on Sunday:
I’ve seen a lot of comments about my opening statement from Saturday night’s show and I did not call Representative Omar un-American. My intention was to ask a question and start a debate, but of course because one is Muslim does not mean you don’t support the Constitution. I invite Representative Omar to come on my show any time to discuss all of the important issues facing America today.
The controversy follows a row that erupted at the West Virginia state capitol last week over a poster that was hung outside the House of Delegates chamber connecting Omar to the September 11 terrorist attacks, resulting in a physical confrontation and an injuring, and ended with the resignation of a Capitol staffer.
via ZeroHedge News https://ift.tt/2Uu4pMB Tyler Durden
Cast your mind back to summer last year. The Cabinet gathered at the Prime Minister’s country retreat of Chequers, on the sylvan Chiltern downs. There was very important business: Theresa May, flanked by senior civil servant Olly Robbins, presented the draft agreement for Britain’s departure from the EU. For the first time, ministers (including Brexit secretary David Davis and foreign secretary Boris Johnson) saw the proposed terms – and the extent to which May would abide by her pledge of ‘Brexit means Brexit’. The chief whip instructed that nobody could leave without consenting to the Withdrawal Agreement, unless they resigned – and must then find their way home without ministerial transport.
For Leavers in the Cabinet, it was a shocker. Scarcely anything appropriate for a renewed sovereign nation could be found in this document, which seemed an abject surrender to Messrs Barnier and Juncker. For Brexit voters, it was hard to believe that their government would consider such punitive clauses; their faith in Theresa May, until then buoyant, was shattered. And this document, we were told, was only the initial negotiating stance – it could get worse. In the morass since the referendum on 23rd June 2016, this has been the most significant subsequent event to date.
It was widely reported that Theresa May paid a visit to Angela Merkel in Berlin shortly before the Chequers meeting. What did they discuss? We weren’t told at the time...
According to a confidential source who has seen a complete transcript of the meeting, the two leaders agreed to a plan that Mrs May allegedly told the Chancellor would “appease” Brexit voters while nonetheless enabling her to get rid of those Tories who were (in her words) “against progress and unity in the EU.” According to the transcript, Mrs May is also reported to have agreed “to keep as many EU laws and institutions in effect as she could despite the current groundswell of anti-EU hysteria in Britain” (again, apparently her words). It is claimed that both leaders agreed that the only realistic future for the UK was as a member of the EU, and that in the likely course of events Britain would re-join the EU in full at some time after the next general election.
The transcript also indicated that the Withdrawal Agreement was essentially a German production, with the original draft completed in May 2018 in Berlin. It was then sent to the Cabinet Office marked “Secret”. After much to-ing and fro-ing in the subsequent few weeks, including several telephone calls between Mrs May and the Chancellor the final draft was completed late in June, with the Chancellor telling Mrs May that she was happy with it. However, a few more small concessions by the UK would be needed later on, just to keep the EU happy.
David Davis was kept in the dark about this planning, as were other pro-Brexit ministers. The EU, by contrast, was happy to circulate the transcript of the final May/Merkel meeting to key EU and German embassies. What is more, Mrs May was probably unaware that the Chancellor had made a recording of this private meeting! Perhaps our Prime Minister would not have spoken so freely had she realised her words were being noted for posterity.
If this account of the meeting between the PM and the German Chancellor is accurate, this paints a very different picture of the Brexit process from that reported to the public by the BBC and other mainstream media. There is one obvious objection: these explosive claims are impossible to prove in the absence of a copy of the transcript of either the May/Merkel meetings or of the briefings given to EU embassies. My source, however, has been accurate in the past: several other tip-offs of EU intentions passed to me were revealed two or three days later by the press.
Furthermore, I believe that this account of the meeting has verisimilitude, because of the considerable amount of circumstantial evidence to support it. For example, John Ashworth, of the campaign group Fishing for Leave, has analysed many UK government and EU documents over the past twenty years. Familiar with the style of both, he has noted how the Withdrawal Agreement resembles an EU document rather than anything originating from the UK government. Lawyers for Britain has also noted examples in the Political Declaration accompanying the Withdrawal Agreement which sound more like a translation from a foreign language.
Paragraph 6, for example, begins: “The Parties agree that the future relationship should be underpinned by shared values such as the respect for and safeguarding of human rights.”
The final “the” before “respect” is totally superfluous.
The next paragraph ends with a clumsy sentence. Paragraph 8 begins with an ugly construction:- “In view of the importance of data flows and exchanges across the future relationship…”
No British civil servant would have written such gobbledygook.
There is much circumstantial evidence from the EU side. Martin Selmayr and Sabine Weyand, both Germans and deputies to Jean-Claude Juncker and Michel Barnier respectively, have spoken very positively about the Withdrawal Agreement. On 9thNovember last year, Weyand told The Times, “They must align their rules but the EU will retain all the controls. They apply the same rules. UK wants a lot more from future relationship, so EU retains its leverage.” Selmayr said that he wanted the Withdrawal Agreement to show that “Brexit doesn’t work” and he told a group of EU officials last November “The power is with us.” These statements have been widely reported in British media. Dan Hannan MEP recently quoted an interview with Michel Barnier in which he said, “I’ll have done my job if, in the end, the deal is so tough on the British that they’d prefer to stay in the EU”. In an article In an article in the Daily Telegraph published only yesterday (6th March), Igor Gräzin, an Estonian Eurosceptic MEP, claimed that “around Europe, Theresa May’s ‘deal’ is described as a capitulation.” Why, if the EU regards the Withdrawal Agreement as a victory for them, is Mrs May pushing so hard for us to agree to such a one-sided outcome while refusing to consider any alternative? The only plausible explanation is that she actually wants a deal that disempowers her own country.
The whole subject of defence integration also strongly hints at collaboration between the EU, Mrs May and pro-remain Civil Servants. Prior to the 2016 referendum, as an EU member state, the UK strongly opposed efforts by the EU to develop its own military capability independent of NATO. After 2016, however, the EU has pushed ahead with military integration. Astonishingly, since 2016 the Government has signed no fewer than five agreements with the EU on military matters. The excuse given to MPs at the time was that as the UK was leaving anyway, we didn’t want to be obstructive. The Withdrawal Agreement and accompanying Political Declaration, however, looks to create a longer-term relationship with military EU, beyond any transitional period. Particularly worrying are proposals in the Political Declaration pointing to an attempt to bypass Parliament in the shape of a future defence treaty, to be signed after Brexit Day using ministerial, or ‘prerogative’ powers delegated by the Crown.
There is absolutely no need for the UK to continue being involved with the EU’s military programme at all – even during any transition period. We will still be a member of NATO, the true guarantor of peace in Europe. Unlike trade, there would be no disruption for the UK if we simply cut off our involvement with military EU on the day we leave. Given the UK’s leading military role in Europe, the inclusion of a long-term military arrangement with the EU in the Withdrawal Agreement when the EU has specifically stated that “third countries” cannot be involved in key decision making is extremely worrying. We would essentially be compromising our independent military and intelligence capability and handing over ultimate control of these areas to Brussels in a manner that would be extremely difficult to reverse. This only makes sense in the context of a plan for the UK to resume EU membership. Surely this cannot have happened behind the Prime Minister’s back?
Returning to the topic of fishing, why has our side thrown away one of the strongest cards in its hand? Surely our negotiators must have studied Greenland’s departure in the 1980s. Faced with a similar unsatisfactory deal from the EEC (as it was then), the Greenlanders issued an ultimatum: all EEC fishing boats must depart from their territorial waters on Independence Day. Brussels rapidly backed down and Greenland gained a satisfactory deal. By contrast, the UK caved in right at the start, agreeing in effect to a common fisheries policy in all but name during the transition period, and completely failing to use any leverage on access to rich fishing grounds. Indeed, under the proposed arrangements for the 21 months after Brexit, our fishermen will have a worse deal than before, with the discard ban likely to result in many small firms going out of business before the transition period is ended.
Lastly, why the reluctance to consider, even as a transitional arrangement, re-joining EFTA and following Norway’s example? At a stroke, on 29th March, we could have regained control over fishing, extricated ourselves from about 75% of the total acquis,solved most of the Irish border problems and ended the supervision of the ECJ. The “Norway Model” was never popular with the majority of Leavers, but it is infinitely superior to the arrangements which will be in place on 30th March if Mrs May’s deal goes through. What is more, for all its shortcomings, the Norwegians prefer their arrangement with the EU to membership. Even if we had left via this unpopular route, there is no reason to doubt that within a couple of years, the issue of EU membership would have died a natural death in the UK with travel and trade flowing smoothly and no one except a handful of incorrigible Remainers regretting our exclusion from the federalist project.
The EU has been accused of everything from persuading the Norwegians to discourage our following their example to dissuading the Chinese from starting trade negotiations with us. There is no doubt that they don’t like Brexit and have done nothing to help us leave. However, the repeated pattern of failing to stand up for the UK’s best interest and overlooking a given option in favour of a worse one leaves me in little doubt that the transcript of the May/Merkel meetings, as seen by my source, is trustworthy. Why, when Mrs May dismissed both “Canada” and “Norway” options in her Florence speech saying “We can do so much better than this” has she ended up with something far worse? Such an appalling exit deal for the UK could not have been obtained by accident or through sheer incompetence.
The absence of documentary corroboration for the transcript will inevitably lead to these claims being dismissed as conspiracy theory, but veracity is bolstered by contextual evidence. We know May met Merkel before Chequers – that is not disputed. My informant was shown the document but was not allowed to take it away, due to the risk of severe consequences for the exhibitor. However, it would be justifiable for a British parliamentarian, perhaps from the ERG or DUP, to request a copy of the minutes from the German administration. Of course, Berlin might refuse, but there is a strong moral case here. The British people have a right to know what was discussed about their future with a foreign power, and whether there is any truth in these scandalous allegations.
If this account of the meeting is true, the Withdrawal Agreement was written within the German administration, and our ministers and MPs are being bullied and cajoled into passing this into law by a Prime Minister who seems far more interested in pleasing Chancellor Merkel than the 17,410,742 voters who delivered their verdict on the EU in June 2016.
via ZeroHedge News https://ift.tt/2XPL36U Tyler Durden
In what appears to be its third business model shift over the course of just under two weeks (closing stores, freezing stores, now keeping them open), Tesla has now abruptly decided to keep “keep significantly more stores open than previously announced”, according to a new blog posted on the company’s website.
“Last month, we announced that we would be winding down many of our stores and moving to online-only sales in order to pass the savings along to our customers,” the blog piece leads off, seemingly ignoring the fact that last month was 12 days ago.
“Over the past two weeks we have been closely evaluating every single Tesla retail location, and we have decided to keep significantly more stores open than previously announced as we continue to evaluate them over the course of several months,” the piece continues.
Tesla says that it wound up closing 10% of its sales locations and that these locations were stores that “didn’t invite the natural foot traffic our stores have always been designed for”. It then goes on to say that they were stores that “would have closed anyway”. Tesla says an additional 20% of stores remain under review for potential action.
But wait, there’s more.
After slashing prices on its cars three times over the last couple of months – the latest cuts coming just 12 days ago and inciting protests in China – the company has now announced that will be raising prices on its models. From the company’s blog:
As a result of keeping significantly more stores open, Tesla will need to raise vehicle prices by about 3% on average worldwide. In other words, we will only close about half as many stores, but the cost savings are therefore only about half.
Potential Tesla owners will have a week to place their order before prices rise, so current prices are valid until March 18th. There will be no price increase to the $35,000 Model 3. The price increases will only apply to the more expensive variants of Model 3, as well as Model S and X.
Just two days ago we reported that the company had frozen its previously disclosed plan of closing all of its retail stores.
Some retail stores that didn’t close were told to stop booking test drives last week. And yet, last week some of them were reportedly prompted to go back to “business as usual”, despite retail employees not having access to commission and bonuses, resulting in far lower compensation.
Tesla currently owes lease obligations of $1.6 billion, with $1.1 billion due between now and 2023 the Wall Street Journal reported last week. This includes payments for store leases, galleries and real estate abroad. Robert Taubman, chief executive officer of Taubman Centers Inc., is quoted as saying at the Citi 2019 Global Property CEO conference: “Tesla is a company with a viable balance sheet that is going to owe a lot of landlords a lot of money.”
The decision to close down all of its retail stores and move to an online-only sales model surprised many of the company’s employees and investors, with some investors dumping the company’s shares as its “growth” aura was rapidly deflating. Pro-Tesla blog electrek called the business model changes a “chaotic situation”, saying it was “either turning into what feels like an extremely poorly managed, haphazard transition or it is intentionally made that way to push out employees like some are suspecting.”
Is it possible that the company (or rather Elon Musk) not only blindsided its own employees by its announcement of store closures, but also that it blindsided itself? Given the WSJ report from last week that Tesla would still be on the hook for many of its lease obligations regardless of if they close stores, this business model shift feels like a famous Elon Musk “shoot first, ask questions later” situation. At least this one didn’t result in retail store tents.
via ZeroHedge News https://ift.tt/2Ux88ZN Tyler Durden
After December’s narrative-destroying-“outlier” collapse in retail sales, January saw a modest rebound (+0.2% MoM) but against a downwardly revised December (from -1.2% to -1.6% MoM).
Under the headline data, things improved more with core retail sales up 1.2% MoM in Januray (but again with a dramatic downward revision in Dec).
The Control Group – which fits into the GDP data – rebounded +1.1% MoM but saw a huge downward revision in December to -2.3% MoM…the weakest since Jan 2000! But rebounded most since Feb 2014…
Non-store retail sales soared in January…
Sporting Goods and building materials rose by the most…
Sporting goods, hobby, musical and book stores: +4.8%
Building material and garden equipment: +3.3%
Food and beverage stores 1.1%
Health and personal care stores: 1.6%
General Merchandise stores: 0.8%
Miscellaneous store retailers: 0.1%
Nonstore (Online) retailers: 2.6%
Food service and drinking places: 0.7%
But not everything was rosy with drops in the following sectors:
Motor Vehicles and parts dealers -2.4%
Furniture and home furnishings -1.2%
Electronics and appliance stores -0.3%
Clothing and accessories stores -1.3%
Gasoline Stations -2.0%
But the headline point is that the last two months have seen the biggest decline since March 2009…
Seems like this rebound print won’t help the GDP expectations due to the downward revisions.
via ZeroHedge News https://ift.tt/2CdO33U Tyler Durden
It didn’t take long for Florida Senator Marco Rubio’s comments that Saudi Crown Prince Mohammed bin Salman had “gone full gangster” to make the news rounds all the way from the U.S. to the Middle East, across the globe and back again. The Republican senator made his controversial comments during Retired Gen. John Abizaid’s nomination hearing Wednesday in Washington to be the Trump administration’s first ambassador to Saudi Arabia. Despite increasing tensions between the two long-time allies, the U.S. has not had an ambassador to Saudi Arabia since Trump became president in January 2017. Abizaid is a retired four-star Army general who led U.S. Central Command during the Iraq war under the Bush and Obama administrations.
During the hearing, both Republican and Democrats pressed Abizaid over what they said were Saudi domestic repression, including lashings, electrocutions, beatings, whippings, sexual abuse, raids, the alleged detention and torture of activists androyal family members, the likely killing of Saudi dissident journalist, and U.S. resident, Jamal Khashoggi in the Saudi consulate in Turkey last October, as well as the recent alleged torture of a U.S. citizen.
Ruthless and reckless
Republican Sen. Jim Risch, the committee chairman, joined in, stating that “Saudi Arabia has engaged in acts that are simply not acceptable.” Another Republican, Sen. Ron Johnson reiterated Rubio’s “full gangster” remarks. Rubio added that “He [bin Salman] is reckless, he’s ruthless, he has a penchant for escalation, for taking high risks, confrontational in his foreign policy approach and I think increasingly willing to test the limits of what he can get away with the United States.”
Senators also condemned Saudi Arabia’s conduct in the ongoing war in Yemen, which the Crown Prince has been instrumental in. Abizaid, for his part, paid his part skillfully, which should help ease concerns among senators whether he is fit or not for the high-profile diplomatic post. Though defending the relationship between the U.S. and Saudi Arabia as strategically important, he also called for accountability for the murder of Khashoggi, and support for human rights.
“It is in our interests to make sure that the relationship is sound.”
Part of the unbridled criticism over recent alleged Saudi misbehavior comes from frustrated American lawmakers that want to see the Trump administration take a harder line over Saudi Arabia, while both the House and Senate have passed resolutions to that would end U.S. support for the Saudi-led coalition in Yemen. However, Trump has resisted such resolutions. Abizaid said that continued U.S. support “bolsters the self-defense capabilities of our partners and reduces the risk of harm to civilians.”
Significant take-aways
At the end of the day, several issues have to be examined.
First, though lawmakers have the right to make such assertions at the hearing, the actions of Saudi Arabia are still the actions of a sovereign power beyond the scope of U.S. control. A comparison could even be made over human rights abuse claims, torture and other disconcerting claims in China, particularly in Tibet, where hundreds of thousands of citizens, mostly men, are detained for extended periods of time and endure what Beijing calls re-education. Yet, the U.S. relationship with China operates under different imperatives that the U.S.-Saudi relationship, so pressure over these alleged abuses isn’t being promulgated on the same scale.
The second take away from remarks made at Wednesday’s hearing centers on what can be called reality-geopolitics. The more than 70-year alliance between Washington and Riyadh that has survived World War II, being on the same side against Soviet expansion during the Cold War, surviving the fallout from both the 1967 and 1973 Arab oil embargo, managing Saudi angst at continued U.S. support of Israel, as well as now working together trying to reign in Iranian regional hegemony and support of terrorism – this fragile alliance has to be viewed through a different lens than other alliances.
Economic necessity
The U.S.-Saudi alliance is one born of necessity, mostly economic (global oil markets) as well as one of wrestling with middle eastern security. The two nations don’t share common values, like the U.S. does with the U.K. or with much of Western Europe, doesn’t share a similar history, whose values are derived from extremely a different religious history and perspective. The U.S. is the largest democracy in the world, while Saudi Arabia is a top-down authoritarian monarchy influenced in large part by its strict Wahhabi interpretation of Islam.
Just the fact that two radically different nations can exist as allies for so long has to be appreciated. Nonetheless, Senator Bob Menendez, the committee’s ranking Democrat, acknowledged the strategic importance of Saudi ties, amid threats from Iran. “But we cannot let these interests blind us to our values or to our long-term interests in stability,” he added.
However, another point to consider is growing U.S. energy independence, particularly as the country recent recently passed the 12 million barrels per day oil production mark, with that production amount projected to increase going forward to next year and beyond. Though U.S. crude is mostly light, sweet as opposed to heavier, sour crude mostly produced and imported from Saudi Arabia by U.S. refineries, growing U.S. global market share, reduced Saudi oil imports, could indeed lead to fracturing on the U.S.-Saudi alliance. It’s oil first and middle eastern security second, which often goes hand in hand, that is the glue that keeps this fragile alliance from falling apart.
via ZeroHedge News https://ift.tt/2TMJw2o Tyler Durden
All eyes turn to Brexit this week in what could be a crunch few days for the UK government. Additionally, as DB notes, a BoJ meeting and US CPI, PPI and retail sales data are also highlights. China’s NPC also enters its second week while European Parliament votes on a resolution about security threats linked to Chinese tech.
With just three weeks to go until the UK is scheduled to leave the EU, another “crunch” week awaits the UK government. On Tuesday the House of Commons is scheduled to hold a meaningful vote on the amended Withdrawal Agreement. If the vote is rejected, lawmakers will then be asked on Wednesday if the UK should take a no-deal Brexit option off the table in its negotiations. If that is rejected, then on Thursday Parliament will hold a vote on an extension to Article 50. Should the extension be accepted then this would likely result in it being signed off at the March 21/22 EU summit. Needless to say that newsflow in recent days has been less than encouraging for PM May, despite signs that the two sides are engaging. That said it appears that the two sides remain far apart. Talks are expected to continue over the weekend and into Monday, however should they fail then it’s likely Parliament will vote against the deal on Tuesday. That would make an extension likely. Much could depend on the next 72 hours however.
As for the BoJ on Friday, no change in policy is expected and the meeting also doesn’t include an outlook report so it’s likely to be mostly a non-event. There was a bit of interest in a Bloomberg report this week which suggested that the BoJ would discuss a possible downgrade in its view of overseas economies, production and exports. Deutsche Bank economists consider this appropriate given the disappointing production and export data for January. Nevertheless, they note that the output gap as measured by the BoJ remains positive, so even a downward revision in production and exports should not affect its overall evaluation of the economy. The team see a low likelihood of measures being eased further at the meeting. The ongoing decline in the yen is also a plus for the BoJ.
The top tier data releases in the US this week include January retail sales on Monday, February CPI on Tuesday and February PPI on Wednesday. We’ll also get important preliminary January durable and capital goods orders data on Wednesday and February industrial production on Friday. For retail sales, core sales are expected to have risen a solid +0.6% mom during the month following the very weak December stats. CPI is expected to have risen +0.2% mom at the core level which should hold the annual rate at +2.2% yoy and therefore comfortably within the Fed’s target. Meanwhile PPI is expected to also be up +0.2% mom at the core.
The highlights in Europe next week are January industrial production reports in Germany, UK and the Euro Area on Monday, Tuesday and Wednesday respectively, January GDP in the UK on Tuesday, and final February CPI revisions for Germany and France on Thursday and the Euro Area on Friday.
In China the NPC will begin its second week. The Congress will conclude with Premier Li Keqiang’s annual press conference on Friday.
Other things to potentially watch out for next week include President Trump’s proposed fiscal 2020 budget, expected on Monday. The partial government shutdown delayed its release. Euro Area finance ministers also meet on Monday and Tuesday to discuss progress on Greek reforms, the budget and tax on internet companies. European Parliament meets on Tuesday to vote on a security measure tied to Huawei titled “Security Threats Connected with the Rising Chinese Technological Presence”. The OPEC monthly report is out on Thursday while ECB speakers next week include Lautenschlaeger on Tuesday, Coeure on Wednesday and Rehn on Friday.
Summary of Key Events by Day
Monday: The main data focus will be in the US where the January retail sales report is due to be released. Prior to that we’ll see the January industrial production and trade balance prints in Germany, and February industrial sentiment reading in France. December business inventories in the US will also be out. Meanwhile, President Trump is expected to release his proposed fiscal 2020 budget, Euro Area finance ministers are due to meet in Brussels and the BoE’s Haskel is due to speak.
Tuesday: The February CPI report in the US is likely to be the highlight for data releases. In Europe we’ll see Q4 payrolls data in France and January GDP, trade and industrial production data in the UK. The February NFIB small business optimism reading will also be out in the US. Away from that the House of Commons is scheduled to vote on the revised Brexit deal, European Parliament votes on security measures tied to Huawei and the ECB’s Lautenschlaeger speaks in Basel.
Wednesday: The early data release is the January industrial production report for the Euro Area, while data due in the US includes February PPI, preliminary January durable and capital goods orders, and January construction spending. Elsewhere, EU ambassadors discuss Brexit in Brussels, UK lawmakers may vote on legislation to leave the EU without a deal. Chancellor Hammond presents the Spring Statement and the ECB’s Coeure speaks in Milan.
Thursday: The overnight focus should be in China where we’ll see February fixed asset investment, industrial production and retail sales data. In Europe we’ll get final February CPI revisions in Germany and France, while in the US we’ll get the February import price index print, latest weekly initial jobless claims and January new home sales. In the UK the House of Commons may vote on legislation to delay withdrawal from the EU. The OPEC monthly report is also due out.
Friday: The main focus will likely be the BoJ monetary policy meeting. Also out overnight will be February new home prices data in China. In Europe we’ll get the final February CPI revisions for the Euro Area, while in the US we’ll get March empire manufacturing, February industrial production, January JOLTS job openings and the preliminary March University of Michigan consumer sentiment survey. The ECB’s Rehn is also due to speak
Finally, here is Goldman’s preview of key events in the US, which are the retail sales report on Monday, the CPI report on Tuesday, and the PPI and durable goods reports on Wednesday. We do not expect any policy-related speeches by Fed officials, reflecting the blackout period ahead of the March FOMC meeting.
Monday, March 11
08:30 AM Retail sales, January (GS +0.8%, consensus +0.1%, last -1.2%); Retail sales ex-auto, January (GS +0.7%, consensus +0.4%, last -1.8%); Retail sales ex-auto & gas, January (GS +1.0%, consensus +0.6%, -1.4%); Core retail sales, January (GS +1.1%, consensus +0.6%, last -1.7%): We estimate that core retail sales (ex-autos, gasoline, and building materials) rose at a strong pace in January (+1.1% mom sa), reflecting alternative data at odds with the weak December retail sales report and some scope for a boost from residual seasonality. We estimate a 0.8% increase in the headline measure, reflecting a modest rebound in auto sales and a further decline in gasoline prices, and a 0.7% increase in the ex-auto measure.
10:00 AM Business inventories, December (consensus +0.6%, last -0.1%)
Tuesday, March 12
06:00 AM NFIB small business optimism, February (consensus 102.5, last 101.2)
08:30 AM CPI (mom), February (GS +0.16%, consensus +0.2%, last flat); Core CPI (mom), February (GS +0.18%, consensus +0.2%, last +0.2%); CPI (yoy), February (GS +1.52%, consensus +1.6%, last +1.6%); Core CPI (yoy), February (GS +2.16%, consensus +2.2%, last +2.2%): We estimate a 0.18% increase in February core CPI (mom sa), which would leave the year-over-year rate stable at +2.2%. Our forecast reflects a boost from the end of last year’s prescription-drug price freezes. We also expect a stable pace of monthly shelter inflation, as alternative rent measures have picked back up, apartment completions have peaked, and aggregate vacancy rates declined further. On the negative side, we expect a drag from lower airfare and weaker used car auction prices. We look for a 0.16% increase in headline CPI (mom sa), reflecting lower gasoline prices but higher food costs.
Wednesday, March 13
08:30 AM PPI final demand, February (GS +0.2%, consensus +0.2%, last -0.1%); PPI ex-food and energy, February (GS +0.2%, consensus +0.2%, last +0.3%); PPI ex-food, energy, and trade, February (GS +0.2%, consensus + 0.2%, last +0.2%): We estimate a 0.2% increase in headline PPI in February, reflecting relatively firm core prices and energy prices. We expect a 0.2% increase in the core measure excluding food and energy, and also a 0.2% increase in the core measure excluding food, energy, and trade.
08:30 AM Durable goods orders, January preliminary (GS +0.4%, consensus -0.6%, last +1.2%); Durable goods orders ex-transportation, January preliminary (GS flat, consensus +0.3%, last +0.1%); Core capital goods orders, January preliminary (GS flat, consensus +0.1%, last -1.0%); Core capital goods shipments, January preliminary (GS -0.3%, consensus +0.1%, last flat): We expect durable goods orders to increase 0.4% in the preliminary January report, given higher-than-usual January commercial aircraft orders. Slowing global growth and declines in manufacturing surveys suggest a drag on core capital goods shipments, which we expect to decline by 0.3%.
10:00 AM Construction spending, January (GS +0.4%, consensus +0.4%, last -0.6%); We estimate a 0.4% increase in construction spending in January, with scope for a modest decline in private residential construction, but an increase in nonresidential construction.
Thursday, March 14
08:30 AM Import price index, February (consensus +0.3%, last -0.5%)
08:30 AM Initial jobless claims, week ended March 9 (GS 230k, consensus 225k, last 223k); Continuing jobless claims, week ended March 2 (last 1,755k): We estimate jobless claims increased by 7k to 230k in the week ended March 9, following a 3k decline in the prior week. The claims reports of recent weeks suggest that the pace of layoffs remains low, though it probably remains somewhat higher than in early fall.
10:00 AM New home sales, January (GS +0.8%, consensus +0.6%, last +3.7%): We estimate new home sales increased by 0.8% in January, following a 3.7% increase in the prior month. Single family starts increased sharply in January.
Friday, March 15
08:30 AM Empire State manufacturing index, March (consensus +10.0, last +8.8)
09:15 AM Industrial production, February (GS +0.3%, consensus +0.4%, last -0.6%); Manufacturing production, February (GS flat, consensus +0.1, last -0.9%); Capacity utilization, February (GS 78.3%, consensus 78.5%, last 78.2%); We estimate industrial production rose 0.3% in February, driven by strength in the utilities category and offset by weakness in auto manufacturing. We estimate capacity utilization edged up one tenth to 78.3%.
10:00 AM JOLTS Job Openings, January (consensus 7,250 last 7,335k)
10:00 AM University of Michigan consumer sentiment, March preliminary (GS 95.9, consensus 95.6, last 93.8); We expect the University of Michigan consumer sentiment index to increase by 2.1pt to 95.9, partially reflecting further increases in the stock market.
Source: DB, BofA, Goldman
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After a weekend with relatively few news besides another deadly crash involving Boeing’s new 737 Max which prompted China to halt usage of the airplane and sent Boeing shares plunging and dragging Dow futures lower (Boeing is the biggest member of the Dow), all eyes were on China to see if Friday’s rout when the Shanghai Composite plunged nearly 5% following a key downgrade by a state-owned brokerage, would persist. It did not, and instead the Shanghai and Shenzhen Composites both closed at their highs, up almost 2% for the day following talk of more stimulus from Beijing.
China’s main bourses made back almost half the 4% they lost in Friday’s mauling as the country’s central bank chief pledged more support. The blue-chip CSI300 index jumped 1.9% after Friday’s 4.0 percent fall, which followed poor trade data and a major local bank issuing a rare “sell” rating on a major insurer. China’s central bank on Sunday pledged to further support the slowing economy by spurring loans and lowering borrowing costs after data showed a sharp decline in lending data due to seasonal factors. Furthermore, PBoC Governor Yi Gang stated there is still some room for a RRR cut although the amount of room is less compared with a few years ago and there were also comments from PBoC Deputy Governor Pan that they will keep liquidity ample and set up counter cyclical adjustments, while a central bank official also noted that February money supply data is normal and inline with historical trends. The central bank pledge came as data showed new bank loans in China fell a far more than expected in February, while money supply growth also missed forecasts.
This helped set the mood across both Asia and Europe, where stocks climbed, while S&P futures advanced even as Dow futures tumbled on the previously noted plunge in Boeing shares, while the dollar nudged higher after Fed Chairman Jerome Powell reiterated patience on rates during his first “60 Minutes” appearance, while Treasuries fell.
China’s rebound lifted bullish spirits across the region, with stocks in Japan and Hong Kong also higher, helping lift the MSCI Asia index 0.5%, as traders sought to put the worst week for global stocks of 2019 in the rearview mirror.
European banks helped push the Stoxx 600 Index to its first advance in four sessions, with Commerzbank AG among the biggest winners on reports it’s getting closer to a merger with Deutsche Bank. London’s FTSE made a more impressive 0.8% but that was partly the flip side of a near three-week low for the pound as the chances of Prime Minister Theresa securing support for her Brexit deal at home this week looked increasingly dim. Britain is due to leave the EU in 18 days.
Kallum Pickering, an economist at Berenberg, said a delay to Brexit would be modestly positive for sterling as it would cut the near-term risk of the UK leaving without a transition period in place to minimize economic disruption. “However, it would not completely eliminate the hard Brexit risk which could still come at the end of a delay or as a result of a second referendum,” he added.
In the US, Boeing’s shares were down more than 9% in pre-market trading as China grounded flights involving the model.
With no fresh trade deal “optimism”, the bulls hung on to the “patient Fed” narrative, and as Hans Goetti, founder of HG Research, told Bloomberg TV, “with the Fed taking an easier path rather than continuing to raise interest rates, the outlook for equities is relatively constructive” even if Powell didn’t say anything new at all.
Meanwhile, as Bloomberg notes, a barrage of data releases this week will be watched for clues on growth and the impact of central bank policy in the U.S., European Union and China, with the Bank of Japan the next to meet. On the trade front, Beijing and Washington are in general agreement on many crucial issues and have held meaningful discussions on foreign exchange, People’s Bank of China Governor Yi Gang said.
In rates, Treasuries declined after initially rising as the 10-year Treasury hit a two-month low yield of 2.607%. It last stood at 2.6501% while European bonds traded mixed.
In Fx, the day’s European FX gainer was Norway’s crown, after strong inflation data there raised expectations among economists that its central bank will increase interest rates again soon. With markets trading in a period of low volatility, investors have rushed to buy currencies where central banks are still raising rates or economic data has exceeded expectations, indicating a brighter economic outlook.
“This makes (a) March rate hike from Norges Bank a complete done deal, which is a positive for the currency,” Nordea strategists said.
The optimism over Norway’s economic outlook was in contrast to the general caution over the broader European economy after the European Central Bank last week slashed its growth forecasts for 2019 and postponed its expectations of a first rate hike. Short euro bets, already near a 2-1/2 year high, according to latest futures positioning data for the week ending March 5, is likely to receive a further boost in the coming days, investors said. The single currency shuffled sideways at $1.1247 after falling 1.2 percent last week, its biggest weekly loss in more than six months. The Turkish lira held steady even as the country entered its first recession in a decade.
On Monday, President Trump will release the 2020 budget today (comes into effect in October) in which he is to request USD 8.6BN of funding for border wall and is to ask Congress to reduce non-defense spending by an average of 5% in fiscal 2020 budget. Furthermore, growth is exp. 3.2% in 2019, 3.1% in 2020, 3.0% in 2021 and a 10-year forecast of 3.0%, while the proposal will see a balanced budget in 2034 rather than the typical 10-year horizon that has been a goal for Republicans.
Late on Sunday, Fed Chair Powell said that downside risks to the economic outlook have increased and that more economies began to slow 6 months ago, while he added that US economic outlook is still favourable but that trade talks have added to the uncertainty. Fed Chair Powell also stated the economy is in a good place and rates are appropriate considering muted inflation, while he added the Fed does not feel any hurry to change interest rates again and will wait to observe how global conditions evolve before making any changes.
Elsewhere, oil prices climbed as Saudi Arabia extended deeper-than-agreed production cuts into a second month. West Texas Intermediate crude futures rose 0.5 percent to $56.35 per barrel. Brent futures went up 0.4 percent to $62.98 a barrel. Gold eased about 0.1 percent to $1,296.62 per ounce, after briefly breaching $1,300 for the first time since March 1 in the previous session.
On today’s calendar, retail sales figures for January due at 830am EDT will be a key focus given December’s surprisingly weak reading.
Market Snapshot
S&P 500 futures little changed at 2,751.50
STOXX Europe 600 up 0.3% to 371.83
MXAP up 0.5% to 156.87
MXAPJ up 0.5% to 517.18
Nikkei up 0.5% to 21,125.09
Topix up 0.6% to 1,581.44
Hang Seng Index up 1% to 28,503.30
Shanghai Composite up 1.9% to 3,026.99
Sensex up 0.9% to 36,994.11
Australia S&P/ASX 200 down 0.4% to 6,180.19
Kospi up 0.03% to 2,138.10
German 10Y yield unchanged at 0.068%
Euro up 0.1% to $1.1247
Italian 10Y yield rose 3.4 bps to 2.15%
Spanish 10Y yield rose 11.6 bps to 1.167%
Brent futures up 1.2% to $66.51/bbl
Gold spot down 0.1% to $1,296.74
U.S. Dollar Index little changed at 97.35
Top Overnight News from Bloomberg
While People’s Bank of China Governor Yi Gang addressed this weekend U.S. concerns over China’s potential depreciation of the yuan in order to blunt the impact of tariffs imposed by the Trump administration, he evaded any mention of a one-sided pledge by Beijing to hold its currency stable. That issue has been a key sticking point in talks in recent weeks, as President Donald Trump pushes for a deal
Saudi Arabia will supply its clients with significantly less oil than they requested in April, extending deeper-than-agreed production cuts into a second month, a Saudi official familiar with the policy said
Citigroup Inc. is planning to join UBS with an electronic currency trading and pricing engine in Singapore, setting up systems to boost liquidity in Asia’s biggest foreign-exchange hub
The Bank of England is asking some U.K. banks to hold three times more liquid assets in the event of a market meltdown with a no-deal Brexit later this month, the Financial Times reported, citing people familiar with the situation
Asian equity markets traded somewhat indecisive as the region digested Friday’s mixed US jobs data in which NFPs severely missed expectations and although the declines across the major US indices were only mild, the S&P 500 still posted a 5th consecutive daily loss and its worst weekly performance YTD. ASX 200 (-0.4%) and Nikkei 225 (+0.4%) were mixed with Energy the underperformer in Australia which some attributed to news of Norway’s sovereign wealth fund exiting energy companies and with the Japanese benchmark reflecting a choppy currency. Elsewhere, Hang Seng (+0.9%) and Shanghai Comp. (+1.9%) eventually outperformed despite a steep drop in lending data over the weekend, as some attributed the sharp decline in New Yuan Loans and Aggregate Financing to seasonal factors, while the PBoC also reportedly pledged to further support the slowing economy by spurring loans and reducing the cost of borrowing. Finally, 10yr JGBs were subdued with price action contained by the indecisive risk tone and lack of BoJ presence in the market.
Top Asian News
Hong Kong Tightens Liquidity With $192 Million Peg Defense
China Pushes Against U.S. Trade Demands on Enforcement, Yuan
India Announces Poll Dates as Modi Fights to Retain Power
StanChart Is Said to Challenge Essar Steel Sale to ArcelorMittal
After opening with gains of around 0.5%, major European indices are largely unchanged [Eurostoxx 50 +0.1%] following an indecisive lead from Asia where Chinese stocks eventually outperformed. Goldman Sachs noted that China A shares could be set for large gains as “fear of missing out” takes hold. If retail optimism were to return to its peaks in 2015 and 2018, the CSI 300 would give approximately 50% and 15% potential upside respectively from current levels, Goldman says. Equities across Europe have somewhat waned off opening highs with the FTSE 100 (+0.8%) holding its composure amid a weak domestic currency ahead of a series of Parliamentary votes this week. Meanwhile, Spain’s IBEX (-0.1%) underperforms as heavyweight BBVA (Unch) swings between gains and losses amid reports the Co. is planning board changes in the coming months. Over in Germany, Wirecard (+5.6%) shares lift the benchmark as the Co. expects the final report on fraud allegations soon (Note: Shorting ban on Co shares are still ongoing). Deutsche Bank (+2.2%) also supports the German index amid pre-market reports that the Co. and Commerzbank (+4.6%) have begun tentative merger talks. Finally, Dow Jones Mar’19 futures dipped lower as Boeing shares dropped 10% in pre-market trade following the weekend Boeing 737 Max 8 crash on its way to Nairobi, marking the second disaster for the jet in five months. Several airlines have since grounded the Boeing jet, whilst Airbus shares (+0.4%) are little moved.
Top European News
Banca Ifis Plunges After Main Investor Ousts CEO Giovanni Bossi
Global Risks Threaten to Choke Off Europe’s Growth Engine
Telecom Italia Study on Governance Issues Inflames Investor Spat
Danske Laundering Contagion Feeds a New Fear in Borderless EU
Debenhams in Talks for More Financing as Ashley Circles
In FX, GBP – Sterling remains under pressure across the board, irrespective of latest bullish bank calls (this time via Eur/Gbp rather than Cable), as talks between UK and EU officials on changes to the back-stop continue to hit a brick wall, and the prospects of a breakthrough looks increasingly bleak before Tuesday’s meaningful vote. Indeed, given the ongoing impasse and indications that PM May’s deal will be roundly rejected again, rumours are now circulating about a provisional or conditional vote before going back to Parliament, and with the possibility of adding the Cox amendment to try and coerce more support. Cable briefly reclaimed 1.3000+ status amidst reports that the EU will not demand more money from Britain in exchange for an extension to the March 29 Article 50 deadline, in contrast to earlier suggestions, but is back below the round number and not far from circa 1.2950 lows hit when stops were said to have been tripped around the 1.2960 level (trend-line support). Meanwhile, Eur/Gbp is hugging the top of a 0.8675-40 range, leaving the aforementioned short strategy underwater at this stage, as the institution entered at 0.8630 with a 0.8760 stop and 0.8400 target.
NOK – The Norwegian Crown is also bucking an otherwise relatively muted and rangebound start to the week for G10 currencies/pairings, but outperforming in wake of significantly stronger than forecast CPI data, and especially the core inflation measure. Eur/Nok fell from 9.8250+ to just shy of 9.7600 in response, but is currently holding near 9.7700.
EUR/NZD/AUD/CAD/JPY/CHF – All narrowly mixed vs the Greenback, with the single currency reclaiming some lost ground after its sharp post-ECB demise, but struggling to sustain recovery gains much beyond 1.1250 with resistance seen at 1.1270 (Fib level) and 1.1298, while hefty options may also keep Eur/Usd in check given 2.7 bn sitting between 1.1300-20 and not much on the downside until 1.7 bn at the 1.1200 strike. Meanwhile, the Kiwi is still performing better than the Aussie down under, partly due to post-NFP weakness in its US counterpart and switching via the Aud/Nzd cross that is pivoting 1.0350. Consequently, Nzd/Usd is hovering just above 0.6800, while Aud/Usd is capped circa 0.7050. Elsewhere, the Loonie continues to benefit from upbeat Canadian jobs data in contrast to the headline US tally, and firmer crude prices to an extent, as Usd/Cad eases back from recent 1.3460 highs. Turning to Usd/Jpy and Usd/Chf, both are nearer the apex of respective 111.30-110.90 and 1.0095-70 trading parameters, as the broad Dollar and DXY regain some composure – index meandering between 97.500-250.
In commodities, WTI and Brent futures are trading with firm gains of around USD 0.50/bbl each with recent upside exacerbated by comments from a Saudi Official which stated that the Kingdom plans to cut April crude exports below 7mln BPD. This follows comments from Saudi Energy Minister Al-Falih last week who noted that the Kingdom is currently exporting around 7-8mln BPD of crude. Furthermore, the Official stated that Saudi are to keep oil production in April well below 10mln BPD, compared with February’s output of 10.316mln BPD; according to Industry sources. In the metals complex, spot gold remains sub-1300/oz as the yellow metal is largely dictated by USD-action. RBC notes that gold may still be “well off its YTD highs” although they caveat this by stating “[they] remain of the view that macro headwinds have softened”. The bank also reiterated their 2019 annual average price forecast at USD 1338/oz, and launched a 2020 forecast at USD 1367/oz. Elsewhere, Dalian iron ore prices fell as much as 3.6%, hitting the lowest levels for this month so far as demand waned due to restrictions on steel productions.
Looking at today’s calendar, the main data focus will be in the US where the January retail sales report is due to be released. Prior to that we’ll see the January industrial production and trade balance prints in Germany, and February industrial sentiment reading in France. December business inventories in the US will also be out. Meanwhile, President Trump is expected to release his proposed fiscal 2020 budget, Euro Area finance ministers are due to meet in Brussels and the BoE’s Haskel is due to speak.
US Event Calendar
8:30am: Retail Sales Advance MoM, est. 0.0%, prior -1.2%; Retail Sales Ex Auto and Gas, est. 0.6%, prior -1.4%
Retail Sales Control Group, est. 0.6%, prior -1.7%
10am: Business Inventories, est. 0.6%, prior -0.1%
7pm: Powell Gives Welcome Remarks at Conference in Washington
DB’s Jim Reid concludes the overnight wrap
Welcome to a new week. My category 5 man-flu has now been downgraded to a cat 3 cold. This has been a brutal 10 days with the miracle that it didn’t come from my family or hasn’t been passed onto them. The other good news is that it’s obliterated my hay fever symptoms but as I’m slowly getting better they are reminding me of their presence. All I know is that ahead of next winter I’ll be barging past old ladies and children to get to the front of the flu jab queue. I didn’t bother getting one last year and I won’t make that mistake again.
Markets have gone from relatively healthy to decidedly under the weather over the last 36-48 business hours although markets have bounced a little in Asia overnight. Sentiment completely changed after the ECB confused monetary policy meeting on Thursday. A little more doubts creeping in on an imminent trade deal plus a soft payrolls report (albeit with a bumper average hourly earnings print) also contributed. This helped reinforce what was generally the worst week of the year for equities (S&P 500 -2.16%, Stoxx 600 -0.98%, MSCI DM -2.16% , MSCI EM -2.04% and MSCI Global -2.14%) and best week for government bonds.
European banks led equity declines last week on the ECB, trading down -5.78% (-1.89% on Friday) and weighing on the broader STOXX 600 which fell -0.98% (-0.89% Friday). The euro weakened -1.14% (+0.38% Friday), touching its lowest level since mid-2017, and the dollar gained +0.87% (-0.31% Friday). US equities joined the selloff, with the S&P 500, DOW, and NASDAQ dropping -2.16%, -2.21%, and -2.46% (-0.21%, -0.09%, and -0.18% Friday) respectively. Small-caps underperformed sharply, with the Russell 2000 down -4.26% (-0.11%).
Global sovereign bond yields broadly rallied with Bund yields down -11.4bps (+0.2bps Friday) and Treasury yields -12.5bps (-1.1bps Friday). Yield curves flattened, with the US 2s10s curve down -3.7bps (-0.2bps Friday) but within its recent range at 16bps. The German yield curve hit its lowest level since 2016 at 60bps, having fallen -9.1bps (-1.0bps Friday). Peripheral spreads rallied as well, with BTP yields down -22.8bps (+3.5bps Friday). Somewhat surprisingly, despite the broad selloff in equities and the rally in rates, measures of implied volatility remained relatively low, with the VIX increasing +2.5pts (-0.5pts Friday) to 16.1 and the V2x up only +1.0pts (+0.5pts Friday) to 14.4.
The week in Asia has started on a positive note with markets largely heading higher with the Nikkei (+0.37%), Hang Seng (+0.65%), Shanghai Comp (+1.54%) and Kospi (+0.01%) all up. Elsewhere, futures on the S&P 500 are trading flat (-0.02%). Over the weekend we got China’s February credit stats with aggregate financing dipping sharply to CNY 703bn (vs. CNY 1300bn expected) and new loans standing at CNY 885.8bn (vs. 950.0bn expected). The February credit data should however be taken in the context of outsized gains in January (aggregate financing at CNY 4,635.3bn vs. 3,307bn expected). So we probably need another month or two to eat the whole picture. In the meantime, China’s February CPI came in line with consensus at +1.5% yoy while PPI stood at +0.1% yoy (vs. +0.2% yoy expected)
In other news, the PBOC Governor Yi Gang said that they still had some room to cut the amount of money banks must hold in reserve, but it’s much smaller than in previous years. Elsewhere, on trade the White House economic adviser said that the US is making “headway” in trade negotiations with China, brushing off reports suggesting diminishing prospects for a deal and push-back from China while adding that he remains “optimistic” that President Trump and China’s President Xi Jinping would meet to sign a trade pact at some point — possibly in March or April.
Turning to yesterday’s interview by Feb Chair Powell now where he said that the Fed will pay close attention to today’s retail sales report after the surprise dip in December. He also said that the Fed didn’t stop hiking rates because of pressure from President Trump and added that the current rate setting is “roughly neutral”.
Moving on to this week now and with markets suddenly feeling a bit fragile again all eyes turn to Brexit this week in what could be a crucial few days. How many times have we said that about Brexit at the start of a week? Could this really be the one? A BoJ meeting (Friday) and US CPI (Tuesday), PPI (Wednesday) and retail sales data (today) are also highlights, while we’ll get the important monthly data dump in China (Thursday). China’s NPC also enters its second week while the European Parliament votes on a resolution about security threats linked to Chinese tech.
In terms of Brexit, on Tuesday the House of Commons is scheduled to hold a meaningful vote on the amended Withdrawal Agreement. In the meantime, the Telegraph reported over the weekend that if PM May is forced to extend Brexit this week then the EU is preparing to impose punitive conditions, including a multi-billion pound increase in the £39 bn divorce payment. If true this will go down like a lead ballon amongst leavers. The rest of the weekend news has been very quite in terms of progress on the backstop. Unless a legal rabbit is pulled out of the hat very soon tomorrow’s vote will likely result in another huge loss for Mrs May. So surely lots of news today on whether any progress has been made. If the vote is rejected tomorrow, lawmakers will then be asked on Wednesday if the UK should take a no-deal Brexit option off the table in its negotiations. If they do, then on Thursday Parliament will hold a vote on an extension to Article 50. Should the extension be accepted then this would likely result in it being signed off at the March 21/22 EU summit. It’s worth noting that we also get the likely overshadowed Spring Statement from Chancellor Hammond on Wednesday. No policy announcements are expected however we will get an updated set of forecasts. See our UK economists’ preview here .
As for the BoJ on Friday, no change in policy is expected and the meeting also doesn’t include an outlook report so it’s likely to be mostly a non-event. The most important data releases in the US this week include January retail sales today, February CPI on Tuesday and February PPI on Wednesday. We’ll also get important preliminary January durable and capital goods orders data on Wednesday and February industrial production on Friday. For retail sales today, core sales are expected to have risen a solid +0.6% mom during the month following the very weak December stats which lead to a lot of head scratching. CPI is expected to have risen +0.2% mom at the core level (DB at +0.17%) which should still leave inflation running towards the upper end of what would be consistent with the Fed’s inflation target, with both the three- and six-month annualised rates expected at 2.38%. Meanwhile PPI is expected to also be up +0.2% mom at the core. Friday’s 0.4% mom AHE print shows that there is some inflation pressure out there. The 3.4% yoy rate was the highest since April 2009. Even just before the GFC we were only generally in the low to mid 3% range. If you want to get an up to date feel for what all relevant measures are telling you about the US economy, our economists have just started a new monthly dashboard which includes things like their momentum index, FCI, recession probability models, and their hawk-dove scorecard for Fed officials, among others. See here for more.
The highlights in Europe this week are January industrial production reports in Germany, UK and the Euro Area today, Tuesday and Wednesday respectively, January GDP in the UK on Tuesday, and final February CPI revisions for Germany and France on Thursday and the Euro Area on Friday. After the weekend data, China also see’s February’s retail sales, industrial production and fixed asset investment on Thursday. It’s also note worth noting in China is that the NPC will begin its second week from tomorrow. The Congress will conclude with Premier Li Keqiang’s annual press conference on Friday.
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One day before Theresa May is expected to call a second meaningful vote on her Brexit plan, the prime minister is facing another massive defeat, with the Telegraph reporting that the vote tally will likely be unchanged from her first go-round, when the margin of defeat was an historic 230 votes, the biggest loss for a British government since before the Second World War.
Weekend talks with the EU have – unsurprisingly – yielded no progress, with the only silver lining being Jean Claud-Juncker’s suggestion that if May could show she could win a majority for a deal with an altered version of the thorny Irish Backstop, the EU27 might consider tweaking the withdrawal agreement at a make-or-break EU summit later this month.
But according to MPs and cabinet ministers who have shared their grievances with the Telegraph, BBC and other British media outlets, it’s possible that May could be forced to resign before she gets there. Here’s May’s current conundrum, summarized as best we can (since, as the press readily admits, nobody knows exactly what’s going on amid the chaos): Last month, May promised to hold a series of meaningful votes: A vote on her deal, if that is defeated, a vote on whether Parliament would support a ‘no deal’ Brexit, and if that is defeated a vote on a Brexit delay. However, given that another destabilizing defeat could cede more leverage to Labour and remainer MPs – who could then try and seize control of proceedings and push through a softer version of Brexit that could involve remaining in the customs union and single market and preserving the free movement of people (i.e. Brexit in name only). Adding another layer of pressure, Labour is threatening to table a no-confidence motion in May’s government if the deal is defeated.
With this in mind, many of May’s senior cabinet ministers are pushing her to opt for a conditional vote instead, per the Telegraph.
Under the plan, instead of holding a meaningful vote tomorrow, the government would instead lay a conditional motion setting out terms that might be acceptable to Parliament to deal with the Irish backstop issue. Supporters of the plan say it would send a message to the EU about the kind of deal that might get a majority in the Commons.
“As it stands her deal is going to be defeated,” a senior party source told The Times. “It has been made clear to Downing Street that it would be eminently sensible to avoid that happening by proposing a motion that the party can support. Whether they listen or not is another matter.”
May is expected to discuss the plan Monday morning during a meeting with her senior cabinet ministers.
Though holding a conditional vote sounds like a more sensible option given where we are in the Brexit process (Brexit Day is less than three weeks away, and it might be helpful to finally establish what Parliament would support, if it’s not going to be May’s plan), there is another complication: Many opposition MPs, and even some Tories, would regard the cancellation of the meaningful vote, and the subsequent votes May had promised, as a betrayal, with some whispering that she could face a mutiny to oust her if she cancels the vote.
Case in point: The statement below, made by a Tory MP, is indicative of the “reception waiting for PM” if she cancels the vote, or opts for the conditional vote instead.
👇this is the reception waiting for PM if she downgrades or cancels this week’s votes https://t.co/5v5JhLU8nm
One cabinet minister “even said we’d have to remove her”. So far, PM May’s spokesman has insisted that the votes will take place this week.
So, once again May has been stuck with an impossible dilemma: Opt for the conditional vote, and risk being ousted, or go ahead with the meaningful vote(s), and risk being ousted.
Whatever she decides will probably be revealed in a statement from the PM later today.
Meanwhile, the pound is headed for its longest losing streak in 10 months as it becomes increasingly clear that May’s deal remains supremely unpopular.
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While not exactly a surprise after its currency tumbled in 2018 as inflation soared, interest rates jumped, credit collapsed and the country was briefly targeted by US sanctions, overnight Turkey reported that its GDP tumbled by 2.4% last quarter in line with expectations, following a decline of 1.6% in Q3, officially entering a recession for the first time since the financial crisis.
The economic contraction will likely deal a blow to Turkey’s executive president Recep Tayyip Erdogan as the country heads toward bellwether municipal elections this month, although it is unlikely to result in any major political surprises.
For much of the past decade, capital poured into Turkey during an era of record monetary stimulus around the world driven by Erdogan’s push for growth at all costs and his pressure on the central bank to keep interest rates low. However this uninterrupted expansion that boosted the economy by an average of nearly 7% each quarter since late 2009 ended abruptly following a currency crash, policy missteps and an unprecedented diplomatic rift with the U.S, Bloomberg reported.
“This is an indictment of Erdonomics and a direct consequence of a monetary policy in 2018 conducted in the interests of short-term political expediency rather than economic pragmatism,” said Julian Rimmer, a trader at Investec Bank Plc in London.
The recession lays out the dilemma facing both Erdogan and his central bank: while the country desperately needs lower rates to preserve its impressive economic growth rate, inflation remains solidly in the double digits, and any interest rate cuts threaten to unanchor the lira, sending it tumbling once again and unleashing runaway inflation. Meanwhile, investors are worried that that Turkey will face a long slog to recovery as the torrent of foreign capital dries up while households and companies begin paying down debts. Indeed, private consumption tumbled at a whopping 8.9% last quarter, with Turkey’s GDP per capita falling to $9,632 from a little over $10,000 in 2017.
The Turkish lira declined as much as 0.5% after the data release however it has since recouped all losses as Japanese retail investors scrambled to buy the latest dip.
Despite the downturn, Treasury and Finance Minister Berat Albayrak said the silver lining is that the worst is now behind Turkey and the economy is on track for a rapid recovery. Rising exports and tourism income will be the key drivers for growth, he said on Twitter.
Whether he is right remains to be seen, however the undoing of Turkey’s growth model comes at a sensitive time for Erdogan, who braces for his first test at the ballot box since assuming vastly expanded executive presidential powers last year. After the March 31 vote, Turkey isn’t scheduled to hold another election for four years.
In its scramble to reboot growth, the government has pressured state banks to ramp up lending, helping annualized credit growth turn positive last month for the first time since August. It recapitalized three of its lenders by selling bonds to Turkey’s unemployment fund, and is working on a fresh plan to further bolster state-owned banks’ capital. However, for now the outlook remains bleak. GDP may be in contraction through the first half of 2019, followed by four quarters of tepid growth that will average less than 3 percent from a year earlier, according to analyst consensus.
Adding to Turkey’s misfortunes, the central bank is holding rates high to stabilize the lira and keep inflation in check; as a result of high rates, credit shrank by 7.2% on a quarterly basis in the last three months of 2018. This trickled through the economy where industrial production recently plunged by the most in a decade.
“Unlike Turkey’s past V-shaped recoveries, there’s the significant risk that the recovery will be much slower this time round,” said Inan Demir, an economist at Nomura International Plc in London. “The entire Turkish economy may be facing deleveraging pressures.”
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Boeing ADRs traded on Germany’s Tradegate exchange in Stuttgart slumped more than 9% early Monday as Chinese and Ethiopian airlines grounded their fleets of Boeing 737 MAX 8s as experts question the plane’s safety after an unprecedented series of crashes. Meanwhile, Boeing opened more than 10% lower in the US premarket, weighing heavily on Dow futures, which were off by triple digits.
While some airlines opted not to ground their fleets following Sunday’s devastating crash, where an Ethiopian Airlines flight dropped out of the sky six minutes after takeoff, killing everyone on board – including nearly 160 passengers and crew (including 8 Americans) – the fact that the Ethiopian Air crash happened so soon after a similar crash involving a 737 operated by Indonesia’s Lion Air has raised questions about the model’s safety.
On Monday (local time, late Sunday in New York), China’s Civil Aviation Administration of China said all Chinese airlines must suspend their use of the 737 MAX 8 by 10 am London Time.
The CAAC said flights would not resume until Boeing had proven that no design flaw contributed to the crashes. China’s regulator said it would notify airlines as to when flights could resume, after it has heard back from Boeing and the FAA.
“Given that two accidents both involved newly delivered Boeing 737-8 planes and happened during take-off phase, they have some degree of similarity,” the CAAC said. It added that it has a “zero tolerance” policy for safety risks.
Chinese airlines have a total of 96 737 MAX 8 jets in service, the state company regulator said on Weibo, including Air China, China Eastern Airlines, China Southern Airlines and Hainan Airlines.
Meanwhile, after initially insisting that its fleet of 737s would remain in the air, Ethiopian Airlines backtracked on Monday and grounded its 737s until further notice as an “extra safety precaution.” The investigation into Sunday’s crash is just getting started, while the probe into the Lion Air crash has yet to produce a conclusive finding.
Cayman Airlines, the British overseas carrier, said it would ground its 737s, though most of the major airlines around the world have not grounded their planes.
Flight ET302, the Ethiopian Airlines flight that crashed on Sunday, was the second 737 MAX 8 to suddenly crash, killing everybody on board, within five months. In late October, the crew of a Lion Air flight reported technical problems with the plane before it suddenly dropped into the Java Sea off the coast of Indonesia. The two crashes were eerily similar, in that both occurred just minutes after taking off.
The 737 line is Boeing’s cash cow, and the aerospace company has roughly 5,000 737s on back order – so making material redesigns for safety purposes could be hugely problematic for the company’s production, and possibly lead to a flurry of cancelled orders. Already, 350 of the planes are in service around the world.
via ZeroHedge News https://ift.tt/2NVM9cB Tyler Durden
